Download The International Programs Team

Structural reform in Australia (and the
role of the Productivity Commission)
Gary Banks
Dean/CEO, The Australia and New Zealand School of Government
Former Chairman, Productivity Commission, Australia
Athens
18 April 2013
2
The Australian Federation
Northern
Territory
Queensland
Western Australia
South
Australia
New South Wales
Australian Capital Territory
Victoria
Tasmania
3
Australia’s Federal system of Government
• Powers and responsibilities divided between the
central and state governments
• Westminster-style Parliamentary System
−two dominant parties (but minor parties growing)
• Governments cooperate, but also compete
– The ‘Council of Australian Governments’ is a forum
for cooperation on national reforms
4
The Australian economy: a snapshot
• Population
22.6 million
(as at 3 April 2013)
• GDP
− Primary
− Manufacturing
• GDP per Capita ($)
• GDP growth rate
• Inflation
• Unemployment
• Current A/C deficit: GDP
• Public Deficit: GDP
$1336bn
10.3%
9%
$59 629
3.1%
2.2%
5.4%
-2.2%
-3.7%
5
The previous 'protection for all’ regime
• Centralized prescription of ‘fair’ wages
• ‘Made-to-measure’ tariff protection
• Extensive regulatory barriers to competition
• Government monopolies in infrastructure and human
services
6
Australia’s relative productivity performance
was poor
6.0
Australia
OECD
5.0
4.0
3.0
2.0
1.0
0.0
1960-65
1965-70
1970-73
7
Fall of Australia’s economic ranking
Per capita GDP ranking in OECD
1
Australia ranked
4th
in 1950
2
3
4
5
6
7
8
9
10
11
12
13
Australia ranked
14th
in 1983
14
15
n
2006
2008
2000
2002
2004
1996
1998
1990
1992
1994
1986
1988
1980
1982
1984
1974
1976
1978
1970
1972
1964
1966
1968
1960
1962
1954
1956
1958
1950
1952
16
Source: The Conference Board and Groningen Growth and Development Centre, Total Economy Database, January 2009
8
Wide-ranging structural and competition
reforms
• Trade liberalisation (from early 1980s)
• Capital market liberalisation (from early 1980s)
• Pro-competitive infrastructure reforms (from late 80s)
• Labour market ‘deregulation’ (from late 80s)
• Human services administrative reforms (from early 1990s)
• A coordinated ‘National Competition Policy’ (from 1995)
• ‘National Reform Agenda’ (from 2007)
9
Some features of Australia’s reform
implementation strategy
•
We reduced barriers at the border first
•
We liberalised unilaterally
•
Reforms were implemented gradually
•
We acted on a broad front
•
We assisted adjustment in sensitive sectors.
10
Import protection and industry assistance are
greatly reduced
Effective rates of assistance (per cent)
40
40
35
35
30
30
25
25
20
20
15
15
10
10
5
5
0
0
1970-71 1976-77 1982-83 1988-89 1994-95 2000-01
1970-71
1976-77
1982-83
1988-89
Manufacturing
1994-95
2000-01
Agriculture
11
Increased trade intensity
Trade-to-GDP ratio
12
A surge in productivity and innovation
Business R&D share of
market value added
per cent
Average MFP growth
2.5
1.2
2
1
1.5
0.8
2.3
0.6
1
0.5
1.2
0.7
0.9
0.4
0.2
0
1984-85 to
1988-89
1988-89 to
1993-94
1993-94 to
1998-99
1998-99 to
2003-04
0
1968-69
1976-77
1984-85
1992-93
2000-01
13
Fall and rise of Australia’s economic ranking
Per capita GDP ranking in OECD
1
2
3
Australia ranked
4th
in 1950
Australia back to
Australia
back
5th
to 5th in
in2008
2010
4
5
6
7
8
9
10
11
12
13
Australia ranked
14th
in 1983
14
Source: The Conference Board and Groningen Growth and Development Centre, Total Economy Database, January 2009
2006
2008
2002
2004
2000
1996
1998
1992
1994
1988
1990
1984
1986
1980
1982
1976
1978
1972
1974
1968
1970
1964
1966
1960
1962
1958
1954
1956
1950
1952
15
14
“There is nothing more difficult to carry out … than to
initiate a new order of things. For the reformer has
enemies in all who profit from the old order, and only
lukewarm defenders in those who would benefit from
the new.”
(Niccolò Machiavelli; The Prince, 1513)
15
Political obstacles to reform
• Costs are often immediate, but benefits can take
time
• Costs from reform are concentrated, benefits are
more widely spread
• Potential winners tend to be poorly informed
(compared to losers)
• Bureaucratic structures are fragmented, with
variable capacity and often aligned with sectional
interests
• Multiple jurisdictions complicate progress
16
Some Australian institutional innovations within
government to support reform (and good policy)
• Standing review bodies
− The Productivity Commission
• Regulatory assessment processes
− The Office of Best Practice Regulation
• Monitoring of public sector performance
− Government Services Review
− COAG (National) Reform Council
17
What is the Productivity Commission?
• An independent government agency to publicly review
policies, programs and regulation
−and provide research and advice on reforms that are in
the long term national interest.
• It evolved from a statutory body to advise government on
import tariffs (the Tariff Board, 1922).
−Re-vamped in 1973, 1990 and 1996 – progressively
widening its mandate.
−Currently around 200 staff and $US30m annual budget.
18
Three core design features
• Independence
−Government funded, but arm’s length from the Executive
−underpinned by Act of Parliament (role, tenure)
• Transparency
−public processes (submissions, draft reports)
−published outputs
• Economy-wide perspective
−‘to achieve higher living standards for the Australian
Community’
19
How the Productivity Commission ‘fits’
within Government
Parliament
Cabinet
Public
...
Treasurer
Productivity
Commission
...
20
Steps in the Commission's Inquiry Process
Reference from Cabinet
PC calls for submissions
Initial consultations and Issues Paper
First round of hearings or roundtables
Draft Report publicly released
Second round of submissions and hearings/roundtables
Final Report to Government (subsequently publicly released)
Cabinet submission by relevant Minister
Decision and implementation
21
The Commission’s advisory activities
range widely
• Industry assistance and trade policy
• Regulatory frameworks for infrastructure and utilities
• Competition and consumer regulation
• Labour market reform
• Social and environmental programs/regulation
• Reducing ‘Red Tape’ on business
• Productivity trends and drivers
22
How has the Commission supported reform
in Australia?
• Impartial advice in the ‘national interest’
• Findings publicly scrutinized and evidence-based
• An opportunity for government to test public
reactions
• Ammunition for government in ‘selling’ reform
• Greater community awareness of the costs of
existing policies and benefits from reform
−Facilitating pro-reform coalitions
23
Some recent inquiry topics
•
•
•
•
•
•
•
•
•
•
Regional Trade Agreements
R&D Support
Regulatory impediments in key industries
Urban Land Planning and zoning
Water policy and regulation
Airport regulation
Retail sector performance
Carbon ‘pricing’ international comparisons
Education workforce
Aged Care policy framework
24
Other ingredients in Australia’s reform
story
• Ad hoc policy review processes on specific issues
(tax, labour market,….)
• Coordination and oversight mechanisms within
and across governments
• Political leadership
−strong ‘technocratic’ support
25
Implications for others?
• Countries differ, but face similar reform needs and
obstacles
• Structural reform in Australia benefited from
institutions that provide independent research and
advice
• Scope to adapt such approaches to other countries’
institutional circumstances?
26
Some Australian innovations in policy
development and review (continued)
• Standing review bodies
− The Productivity Commission
• Regulatory assessment processes
− The Office of Best Practice Regulation
• Monitoring of public sector performance
− Government Services Review
− COAG Reform Council
27
The key elements in Regulation Impact
Assessment
•
Explain objective and why government action is needed
•
Identify all relevant options (including non-regulatory)
•
Assess their costs and benefits across the
economy/community
−
and choose the option with greatest net benefit
•
Consult with stakeholders along the way
•
Have an effective implementation strategy
−
and periodically review the outcomes
28
The Australian Government’s regulatory
assessment system
• All regulatory proposals are screened for impacts on
business/competition
• OBPR advises on need for Regulation Impact Statement
−and monitors compliance
• Failure to comply means regulatory proposals cannot proceed
−unless the Prime Minister grants an exemption (and then a
post-implementation review is required)
• All regulations periodically reviewed
−sunset clauses in subordinate regulation
−5 yearly reviews (and ad hoc ‘stock’ reviews)
29
Some Australian innovations in policy
development and review (continued)
• Standing review bodies
−The Productivity Commission
• Regulatory assessment processes
−The Office of Best Practice Regulation
• Monitoring of public sector performance
−Government Services Review
−COAG Reform Council
30
How the Review of Government Services is
structured
Annual reporting on efficiency and
effectiveness of government services
Steering Committee
of senior officials from central
agencies – head by Productivity
Commission Chairman
Secretariat:
Productivity
Commission
Specialist
input
12 Working Groups
of officials from line agencies
31
Services covered in annual reporting
•
•
•
•
•
•
School education
VET
Police
Court administration
Prisons
Emergency management
• Public hospitals
• Primary and community
health
• Aged care
• Disability services
• Children’s services
• Housing
32
Performance indicators for public hospitals
Equity
Access
Equity of access by
special needs groups
Access
Emergency department
waiting times
Waiting times for
elective surgery
Appropriateness
Objectives
Effectiveness
Safety
Separation rates for
selected procedures
Unplanned re-admission
rates
Pre-anaesthetic
consultation rates
Surgical site infection rates
PERFORMANCE
Quality
Responsiveness
Patient satisfaction surveys
Capability
Accreditation
Continuity
Continuity of care
Sustainability
Patient
satisfaction
Sentinel
events
Workforce sustainability
Recurrent cost per
casemix-adjusted separation
Key to indicators
Efficiency
Total cost per casemixadjusted separation
Provided on a comparable basis for this
Text Report subject to caveats in each chart or table
Text Information not complete or not directly comparable
Text Yet to be developed or not collected for this Report
Outputs
Relative stay index
Recurrent cost per
non-admitted occasion
of service
Outcomes
33
Some Australian innovations in policy
development and review (continued)
• Standing review bodies
−The Productivity Commission
• Regulatory assessment processes
−The Office of Best Practice Regulation
• Monitoring of public sector performance
−Government Services Review
−COAG Reform Council
34
COAG Reform Council
• A ‘national’ body
– appointees from different jurisdictions
• Monitors and reports on implementation of agreed
national reforms
– discipline through transparency
• Advises whether state performance meets
requirements for Federal funding in specific areas (eg.
hospitals, schools...)
Structural reform in Australia (and the
role of the Productivity Commission)
Gary Banks
Dean/CEO, The Australia and New Zealand School of Government
Former Chairman, Productivity Commission, Australia
Athens
18 April 2013