29 September 2014
Don't dump growth strategy by picking winners, says Productivity Commission chair
In these pages and elsewhere in recent weeks, a theme has emerged to imply that the economic reform process that has been so successful in recent years may now be old hat and that a new industry policy is needed.
We should all be interested in this debate. It may set a future pattern for how governments approach industry policy and competitiveness, two quite tricky matters where governments should tread warily.
For a start, it’s hard at any time to interest decision makers in taking the risks associated with quality policy reform. It’s particularly hard when our 23 years of continuous economic growth has persisted even in the face of various financial or political shocks.
A deep desire to believe that economic success will simply continue on painlessly is not uncommon. Further change at the level where government policy intersects with the interests of firms and employees seems to be tomorrow’s problem. Much better perhaps to remain above the fray, wait for a crisis to justify action; and if possible never have to own responsibility for eliminating a subsidy scheme or ending a planning restriction problem.
Part of the process of getting governments and the community to accept that reform at the micro-economy level must be continuously embraced requires analysis and in-depth public review of the kind that the Productivity Commission sees as its core strength.
But the appetite to seek and accept reform options is, for any political leadership, quite rationally dependent on something more than analysis, no matter how strong that analysis might be.
It is dependent on a strategy – and moreover a strategy that can be translated to convincingly link to the interests of the many – in order to overcome the objections of the powerful few.