Danielle Wood’s frank and fearless advice should be cherished, not condemned

Productivity Commission chair Danielle Wood has shown she is prepared to bear the consequences of making public statements in the national interest. Picture: Aaron Francis / The Australian

On the eve of starting in her new role as chair of the Productivity Commission, Danielle Wood in an interview with this newspaper last November made it clear that she was ready to tell the government what it needed to hear, not just what it wanted to hear.

This week she has proved she is prepared to do just that, and the nation should be grateful.

As Anthony Albanese released a plan to – paraphrasing – “make more stuff in Australia” and evoked a new golden era where fighting for handouts was the new competition, Wood warned of the national cost of misdirecting money into the white elephant industries of the future.

“For industries that are not able to ‘stand on their own two feet’ in competing globally, more money will be needed for every year we choose to ‘rent’ the industry,” Wood told The Australian.

“Second, we will see a whole class of businesses whose livelihoods depend on ongoing support, which will have an incentive to spend a lot of time and ­resources ensuring that the tap is not turned off. To make sure that new supports make sense, we would encourage the government to be very clear in specifying their policy objectives.

“Understanding whether we are trying to reduce supply-chain risks, speed up the green transition or create jobs is needed to help evaluate whether the policies stack up.”

Propping up uncompetitive industries was something most economists and serious policymakers had hoped was a thing of the past, but the new wave of interventionist industrial policy triggered by US president Joe Biden’s titanic and ironically titled Inflation Reduction Act has reached its local apogee in the Future Made In Australia Act.

Wayne Swan’s next-day attack on Wood accusing her of being “completely out of touch” just shows how little respect the former Labor treasurer has ever had for the economic orthodoxy that liberalised Australia’s trade and economy and underpinned the extraordinarily high standard of living that we all enjoy today.

Instead, Swan is the anachronism that gleefully smells the stale air of bygone times where the government was the answer to everything and the market not to be trusted.

Again: companies should be competing for customers, not for hand-outs.

Wood’s immediate predecessor at the Productivity Commission, e61 chief executive Michael Brennan, tells The Weekend Australian: “The comments from the PC chair are a really important intervention on the policy issue itself, and also a big positive statement about her independence and that of the institution”.

There’s no doubt that Wood would be copping the blowback from her political masters today.

But her short term pain is the nation’s long term gain if it means it curbs the worst instincts of the PM and his ministers.

In an age where the adage of “frank and fearless advice” has become a faded slogan on a mug in the back of departmental kitchen cupboards, Wood’s full-throated intervention in defence of common economic sense should be cherished by all Australians.