The never-ending story of national economic reform

As a country that has frittered away most of the mining boom, weathered the global financial crisis and lumbered itself with high levels of baked-in non-discretionary spending, Australia needs to prioritise productivity. Especially with a sclerotic political climate and endemically resistant Senate, the driver of budget repair will need to be growth on the back of fiscal discipline, rather than expenditure contraction. This may not be the ideal but the past decade has taught us it is the reality. So we must improve productivity. At least the prospects for reform are great and multitudinous.

The Productivity Commission’s five-yearly review series, Shifting the Dial, released yesterday, will be an invaluable tool in this challenge. At the outset the paper is keen to dispel the notion that improving productivity is “about extracting more sweat from the brow of an already hardworking Australian”. Rather, it sees the reform process as reducing barriers to “better investment” in workplaces, encouraging research and the trialling of “new ideas” and resisting “outmoded regulation that prevents consumers and businesses obtaining access to better services”. In short, rather than making individuals, companies and governments work harder, it is about making them work smarter and more efficiently.

In essence this is the project of national development, progress and prosperity that this newspaper has championed for more than 50 years. It is as much about a mindset for constant improvement as it is about any single reform. The review details a series of recommendations, some of which will create political friction and will never be accepted (no matter their merit), and others, such as reform of federal-state relations, that will always be examined even if incremental change is most often the way forward.

The Australian would highlight recommendations for greater efficiency in the tax system and accountability on specific levels of government for the money they raise and spend as areas ripe for national attention. The review also focuses on teacher training as a means to improve responsiveness and outcomes in education. On health, the report focuses on the need to share information to focus on individual patients rather than procedures, so that preventing ill-health is as important as repairing it. Planning co-ordination and user-pays infrastructure funding are addressed as ways of dealing with urban pressures, while the review tackles the energy crisis by calling for simplicity and a user-pays approach.

The ideas are numerous, as are the potential roadblocks. Yet the crucial ingredient is a commitment to reform. It seems like an eon ago that the Coalition endorsed significant economic reforms under the Hawke Labor government, or the Beazley Labor opposition undertook not to “roll back” the Howard government’s GST package. As a nation we must find a way to deliver real reform rather than boondoggles such as the National Broadband Network. We need political courage, intellectual integrity and the occasional dash of bipartisanship.