The Productivity Commission has released its latest report, Shifting the Dial – 5-year Productivity Review. According to Angus Nardi, it’s like a ‘best hits’ album – old stuff that’s great but already heard, along with other old stuff that’s not so great!
Sometimes, the evolution of public policy can feel a lot like the release of a ‘greatest hits’ album. There is an initial pique of excitement and curiosity, before you come back to reality.
You already have all the albums. Went to the concert. Bought the t-shirt.
Then you realise that for all the good songs, there’s some ordinary ones in there too.
Like the long-term, passionate music fan who asks ‘why is this album even being released?’, the release of some policy contributions leaves heavily invested and well-informed stakeholders wondering: What is the purpose of this? How come so much critical information and analysis has been left out?
Such is the case with the Productivity Commission’s recent release: Shifting the Dial – 5-year Productivity Review. It’s reportedly a ‘first document of its kind’ for the Commission, which looks across ‘the landscape of factors and influences’ in relation to Australia’s economic performance and priorities to enhance national welfare.
This report – which spans over 250 pages (to around 1,000 pages when supporting papers are considered) – was released in late October having been commissioned by the Treasurer, Scott Morrison, in September 2016.
Now, speaking as the representative of a group which would characterise itself as both heavily invested and well informed on a range of policy areas, I have been left wondering: Is this document the equivalent of a Productivity Commission ‘greatest hits’ album?
Assuming you are, like me, sceptical of such albums, you can’t blame the Commission for the report looking like this.
The commissioning, and release, of this report came during a period where there have been extensive and detailed reviews undertaken, and recommendations made, on a range of matters canvassed by the Commission. This has included tax reform, competition policy and law, pharmacy, and retail.
To greater and lesser extents, things have changed or are changing, or things – quite deliberately, I expect – have stayed the same.
That said, the Commission has taken a big swing. Even a cursory look through the document you can see the recommendations which are the equivalent of the chart toppers of their day, and that still gets everyone on the metaphorical dance floor.
Of course, by this I mean that you’ll see recommendations which have been made many (many) times before and which still manage to illicit an immediate national media response and strident statements of support/rejection from potentially affected stakeholders.
And the Commission has recommended some serious ‘greatest hits’: reform of the national electricity market and a price on carbon, road user charging, dismantling community pharmacy, reform of alcohol taxation, the phasing out of stamp duty for the introduction of a broad-based land tax, and removing so-called anti-competitive provisions from land-use planning.
These are nuanced areas of policy, and some of the proposals are less than convincing. Some would be incredibly difficult to implement, not least because it would be near impossible to get key stakeholders on board.
But while some groups hit the dance floor, bopped around and shouted the chorus of reform to each other, it was a different vibe for others.
The Pharmacy Guild of Australia immediately slammed the Commission’s recommendations, suggesting in their media release that the Commission was ‘shifting the dial to dumb’ (a cheeky play on words). (Writing in The Australian newspaper, Judith Sloan called it ‘shifting the dial backwards’).
In what the Guild described as “an astounding piece of short-sightedness” and “irrational”, the Guild has made clear that it “completely rejects the ill-informed recommendations of the Productivity Commission in relation to community pharmacy”.
I won’t even start on what feels like the 100th playing of the tune to deregulate shop trading hours. Good idea but, in music terms, this is the equivalent of a one-hit wonder that has never had a lasting or structural influence.
On tax reform, the Shopping Centre Council is on the record as calling into doubt the rationale behind any proposal to introduce a broad-based land tax and facilitate the associated abolition of stamp duty.
I have written before in these pages about major shopping centre investors holding on to their assets, and generally not transacting frequently. The average holding for our own tax modelling is 13 years.
It’s questionable whether stamp duty distorts the market, particularly for investment-grade assets, as it may do in the housing sector (although it doesn’t seem to have stopped recent house price booms). Our market is also different: in the simplest terms, there are around 9,000,000 residential dwellings across Australia, compared to 1,750 shopping centres.
Operating costs like land tax and associated occupancy costs (let alone the fact that they are also highly regulated), are key issues for our sector and retailers.
So, when the Commission offers up “transition over several years to aid adjustment” when speaking about how this change would be implemented, it’s fair to say that we are left feeling a little cold. We also don’t trust the theoretical lyrics to this tune, no matter how often the band (wagon) screams it out.
In any case, as all good music fans will know, on every ‘greatest hits’ album there are also those songs which never reached the heights of the charts but which the artist always thought were underappreciated by fans.
And this is I why think the Commission has reached into its back catalogue and dusted off its dated and pretty tired commentary (selective referencing included) regarding land use planning and policies.
In our sphere of public policy, there are few more controversial, hot-button and, frankly, misunderstood issues than competition in the planning system. But, even though the world of public policy has well and truly moved on, the Commission has used this opportunity to revive what is, in our view, a failed hit.
The Commission offers this observation: “Policy settings that have particularly egregious impacts on competition include the creation and enforcement of activity centres and regulations that require consent authorities to consider the commercial impacts and viability of established businesses when assessing development proposals. Provisions that explicitly or implicitly favour particular operators or set proximity restrictions between businesses should be eliminated nationwide. These policies are at odds with competition policy and used to protect shops and shopping centres in designated areas from competition.”
An egregious impact on competition.
Really? Policies are being used to protect shopping centres from competition. Are you sure?
With respect, who writes this stuff?
I don’t think that the Harper Competition Policy Review – the comprehensive multi-year review which was set up to specifically and deliberately by the Federal Government to consider issues relating to competition policy and law – used such inflammatory, ‘finger-pointing’ language. More on that review later.
If the Commission is right (they’re not), why, then, has the Greater Sydney Commission (GSC) just released an updated draft metropolitan strategy, ‘A metropolis of three cities – connecting people,’ which reinforces a centres framework for Sydney?
In fact, the GSC lists the “benefits of well-connected centres”, which can be summarised as 1) jobs closer to home, 2) a more effective and efficient public transport network, and 3) businesses are connected to large skilled workforces.
These are all sensible points which speak to the reality that planning systems need to balance a whole range of ‘public goods’ via land use planning and zoning, such as infrastructure and transport efficiency, labor agglomeration, reduction in land use conflicts, and consideration of environmental and heritage preservation.
The GSC goes onto say that “as Greater Sydney grows towards 8 million people over the next 40 years there will be a need to grow existing centres and develop new ones. This draft Plan emphasises that all centres are important.”
Needless to say, we’re happy to side with the GSC. It is being led by Lucy Turnbull as Chief Commissioner, whose achievements and credentials (and connection to another high-profile champion of ‘smart cities’ and infrastructure investment from the Federal sphere) need not be revisited.
An incredibly well-credentialed panel of Commissioners and a highly respected CEO support Mrs Turnbull in her role as Chief Commissioner.
From a competition perspective, the Harper Competition Policy Review in 2015 made a number of sensible and balanced recommendations about competition in the planning system, and we are also on record as supporting them.
Harper, in large part, managed to look past the historical pleas of so-called new entrants and formats for a leg-up via planning systems (including access to cheap industrial land and spot rezonings).
In recommending that so-called “restrictions on competition” in planning and zoning rules be subject to a “public interest test”, Harper acknowledged that planning systems are intended to deliver a range of public benefits to communities, of which competition is one of many.
Treasurer, Scott Morrison released the Government’s response to the Harper review in November 2015. This response supported Harper’s recommendations regarding planning and zoning, and acknowledged that planning and zoning is the terrain of the states and territories.
It is strange, then, why the Commission has not simply deferred to Harper – which, in our view, should be the final word on competition policy reform – in its deliberations, rather than seek to revive the hit by continuing the tired commentary, and finger pointing.
So, where to from here?
The Commission will present the report to State and Territory Treasurers. But, as the Federal Treasurer has already noted, “these are the views and observations of the Commission. This report is not from Government, but produced for all Governments, State and Federal”.
My guess is that, despite all of those bopping around on the reform dance floor, many will have heard it all before and move on quickly and not bother too much.
Some will also realise the unconvincing nature of certain proposals, and return their attention to the detailed policy issues and deliberations (and possibly the realpolitik) on a range of matters whether it be strategic land use planning, tax policy, energy policy, the regulation of pharmacy, or the nuanced world of trading hours reform.
