Introduction

• DOI: http://doi.org/10.1111/1467-8462.12276
• Published date: 01 June 2018
• Date: 01 June 2018
• Author: Ross Williams

Policy Forum: Shifting the Dial, The Productivity Commission’s

Productivity Review

Introduction

Ross Williams*

In 2016 the federal government requested

the Productivity Commission to undertake an

inquiry into Australia’s productivity perfor-

mance and provide recommendations on

productivity-enhancing reform. The request

arose in part because of concerns about the fall

off in measured productivity in recent years.

The terms of reference (Productivity Commis-

sion 2017, p.3) explain the motivation further:

It is particularly important at present that policy settings

facilitate structural change and productive investment

in the economy to support its transition from the

resources investment boom, and promote its eff‌iciency

and competitiveness given population ageing and the

evolving global economy.

The subsequent Report, entitled Shifting the

Dial: 5 Year Productivity Review, was pub-

lished in October 2017. It is envisaged that this

will be the f‌irst of regular f‌ive-year reviews.

The main Report is supplemented by 16

supporting papers of more detailed analysis.

The Report critically examines current

practices and makes recommendations in f‌ive

general areas: health, education/training, cities,

market eff‌iciencies and government. The f‌irst

three areas were chosen because reform is

longer term and more fundamental. They are

also sectors that involve both public and private

providers. In this Forum selected aspects of

the Report are examined: health, education/

training and taxation arrangements. A f‌inal

article addresses the issue of productivity

measurement.

The f‌irst sectoral chapter of the Commis-

sion’s Report is entitled ‘Healthier Austral-

ians’. The recommendations are set out and

carefully evaluated by Anthony Scott in the

f‌irst article in this Forum. He concludes, along

with the Commission, that the issues boil

down to ‘the basis of any well-functioning

market: information and system design’. One

of the most politically diff‌icult recommenda-

tions is to change the pharmacy model to one

which anticipates automatic dispensing and

moves away from community pharmacy.

Pharmacists would then play a collaborative

clinical role with other primary health pro-

fessionals. The Commission recognises that

this change has signif‌icant implications for

tertiary institutions.

Chapter 3 of the Commission’s Report

sensibly links education with work skills and

the labour market. International benchmarking

is now a favoured way of evaluating education

systems. Concern about school performance

has in part been driven by the scores obtained in

the OECD Programme for International Stu-

dent Assessment (PISA). Mean scores for

Australian students are in the middle range for

OECD and East Asian countries and have been

falling in absolute levels. In the 2015 results,

Australia ranked 16th for reading and 25th for

mathematics. These ranks for generic skills

carry over to those with tertiary education. In

the OECD Programme for Assessment of

Adult Competencies (PIACC), Australians

aged between 20 and 25 with tertiary education

are ranked 14th for literary skills and 21st for

numeracy out of 31 countries.

1

Concurrent

with average performance in generic skills has

been the ever-present plea from employers

* Melbourne Institute, University of Melbourne, Victoria

3010, Australia; email <rossaw@unimelb.edu.au>.

The Australian Economic Review, vol. 51, no. 2, pp. 244–46

°

C2018 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research

Published by John Wiley & Sons Australia, Ltd