Joanne Wilke (Deputy Secretary)
Good morning everyone, and welcome to the launch of the New South Wales Productivity Commission’s White Paper Rebooting the Economy.
For those of you who don’t know me, I’m Joanne Wilke, the Deputy Secretary of Economic Strategy and Productivity at New South Wales Treasury.
To start, I’d like to acknowledge the Traditional Owners of the country on which we meet today, the Gadigal people of their nation, and recognise their continuing connection to land, waters and culture. I pay my respects to their Elders past and present, and pay my respects to Aboriginal people in the room today.
It’s a good way to start a launch like this—recognising the custodianship of the Traditional Owners. It goes right to the heart of what Mr Achterstraat is trying to do in the White Paper here in terms of productivity being nearly everything when it comes to improving the well-being of the people of New South Wales. So it’s a really good connection to make.
I’m very glad to be here today with you. We’re joined by the New South Wales Treasurer, the Honourable Dominic Perrottet, and, of course, the New South Wales Productivity Commissioner, Mr Peter Achterstraat, who will share the culmination of the Productivity Commission’s work over the past three years.
This will be followed by a panel discussion with the Treasurer and Commissioner, moderated by the New South Wales Chief Economist, Stephen Walters.
I would now like to welcome the Honourable Dominic Perrottet, New South Wales Treasurer, to the stage to say a few words. Thank you Treasurer.
[Applause]
Dominic Perrottet (Treasurer):
Well, thank you, Joanne, and for that welcome to country, and, it's great to be in the Preston Stanley Room. It's becoming the economics room, I think, of the New South Wales part. We launched the Blueprint with Stephen Walter some time ago, and it's great to have a packed house. Who would have thought our productivity would be so exciting? So, we've put it on the map.
I want to thank Peter for the work that he has done. It's a huge body of work, and he's been ably supported by Joanne and the team in Treasury, and I think, as many will agree as they go through this paper, that it's incredibly detailed and it's incredibly thought-provoking. So, Peter, thanks very much for the effort you've put in.
When I first became a Treasurer, about five years ago, I remember going down to my first Council of Federal Financial Relations in Canberra. All the Treasurers were there, it was very, very exciting, and we had a presentation by the Productivity—the Commonwealth Productivity Commission at the time. And what was very clear during that presentation was that, over the previous few decades, federal governments have done a significant amount of work when it comes to productivity reform.
Hawke, Keating, Howard, Costello—they had done just about all the heavy lifting in this space. And it wasn't easy for them; it was hard slog politics. But they, to their credit, they took on these politically challenging reforms and even, in some cases, took them to elections and won. And they won because they were the right things to do.
And what was clear, when Peter Harris, who was then Commonwealth Productivity Commissioner, was giving his presentation, was that the real opportunities for future productivity reform, lay wholly, within the jurisdiction of the states. And it was pretty obvious to me that it was the time for the states, to step up and take on the political and difficult productivity challenges and policies to take our nation to where it needs to be.
And that's why, following that meeting, we established here in New South Wales our own Productivity Commissioner, appointed Peter. And that's why this paper today, this report, is so important. And it's important not just for our nation in an abstract way, but for every working Australian trying to get ahead.
This month the federal budget was handed down, as you know—well, it was last month—and continued the important work of rebuilding the national economy and restoring jobs, but also contained some sobering news for those working Australians. Next financial year, the cost of living, measured in CPI, is expected to rise faster than wages. For the two years beyond that, real wage growth is forecast to be flat, and that is despite the national unemployment rate being predicted to fall as low as 4.75 in 2023.
Now, once upon a time, that would be classified as well below full employment, when we would naturally see our wages start to rise. Now, today, we have the RBA Governor suggesting that full employment may even be lower than four percent unemployment. Now, in the wake of a major economic crisis, low wage growth is hardly unexpected. But the forecast has important implications for governments and our post-COVID mission, and that is that getting back to square one is simply not good enough.
If we just go back to pre-COVID levels of unemployment, living standards in Australia will go backwards. So, we cannot allow the pandemic and the recovery from the pandemic to obscure this task at hand. The fundamental goal of our economic system must be to increase the living standards of Australian people. If that requires driving unemployment to record lows, and below four percent, then that must be our ambition.
So, even if unemployment is low, GSP and GDP growth are strong, investment is high, construction is strong, and so on, those indicators won't mean all that much if Australians aren't better off. Now, the challenge of stagnating wage growth is not simply an outcome of the pandemic; it predates it. It is a structural one, and it requires governments at all levels, both sides of politics, to look beyond recovery to the deeper transformation that is necessary to spur the next phase of economic growth in Australia.
And that means, as Joanna said, finding ways to lift productivity. If Australian workers can generate more value for the same amount of effort, our living standards will rise. So, productivity growth is central to our core mission. Productivity is one of the three P's that economists frequently say are essential for economic growth. The other two are population and participation.
So, with fertility rates at record lows, it's not easy to grow your population. Now, as a father of six kids, I'm doing my bit, but I'm only one person. So, the reality is, if we continue to rely on immigration growth, in a post-COVID world we will have real challenges. The other issue with relying on population growth for economic growth is that the gains for individuals and households are marginal.
The economy gets bigger when you add more people, but that doesn't guarantee that people are individually better off. And, with respect to my Treasury friends who are here in the federal Treasury, when Treasuries look at economic growth, population growth seems to be the go-to. But perhaps that is because they don't have a choice. If you don't have a political class that has the courage to take on the political challenges of productivity reform, then the economists in Treasury will say the only way to hit our targets is to simply add more people.
It's a similar story for participation. Yes, it's important to get as many people as possible into the productive workforce, but sometimes increased participation is artificial if you're just moving people out of valuable unpaid work, like volunteering or working in the home, and into paid work. So, if we really want to improve the quality of life that Australians enjoy, productivity growth is it.
But there's a catch: increasing productivity is hard. Harder than just inviting more migrants into the state or transferring hidden workers onto a score sheet. Improving productivity means devising better ways of doing things. It means branching out into industries that have more valuable output. It means honestly examining the economic structures that are in place, like the tax system, and, if they are no longer fit for purpose, then daring to create new ones. Increasing productivity means disrupting the status quo.
Now, this all adds up to political risk, and that's why, time and time again, real productivity reform gets put on the back burner. So, when launching this paper today, I want to talk about three P's—but not the ones you hear economists usually talk about. The first one is productivity, the second is politics, and the third is pragmatism. If we want to grow our economy in a way that lifts people's living standards, in my view these are the three P's that really matter.
First, productivity—I've already covered why it's important, and Peter will talk to you about this in more detail shortly, when he delves into the details of the work that he's done in his white paper. Now, some of these proposals—in fact, I think a lot of them—are, in my view, simple, sensible, and achievable. Others, like his proposal for nuclear energy, are probably a little bit more explosive, but should be taken on board because progress is never made by taking ideas off the table.
Often, reports like this one will be stripped down—or stripped back—or dumbed down by ministers worried about negative media that could be generated. But if we're going to succeed as a nation, we need to be mature enough, not just in politics but in the media, to say, "Let's have a genuine discussion," and not go straight to the beat-up or scare campaign. An idea may or may not succeed, but to refuse to have the debate is to surrender to mediocrity.
And that's why it's important that these ideas come from an independent perspective, precisely because many of them are challenging. Now, Peter doesn't have to take these ideas to an election; he can sit comfortably on his couch, which we put in his office, and put together his utopian dream. But what he can do is look objectively and tell us frankly where the best opportunities for productivity growth will be. The challenge for government will be to find ways to turn the best ideas into policies that work.
So, that brings me to politics. Politics and productivity are not natural allies. Bismarck famously said, "Politics is the art of the possible." That means, sometimes, great ideas cannot be implemented because the political reality is that people won't accept them. The job of politicians is to make the case, to forge a pathway, and to bring people on the journey, and at the very least, plant the seeds for future growth.
And that's why, even if an idea is too difficult to implement now, its time may come. But to make any kind of progress, you have to have the policy thinking behind it, and that's exactly what Peter has done through this work. Our government, since coming to office, has embarked on a range of challenging reforms, and almost every single one of them has been met with a scare campaign—asset recycling to build new infrastructure, council reforms (which didn't go so well) for efficient and accountable local government, planning reform to cut time and cost of getting things built.
And there are smaller ones as well. From experience, I remember when I was Finance Minister and we began the digital driver's licence project. I remember sitting down with Mike Pratt—who wasn't the Treasury Secretary then, he was the Customer Service Commissioner—and I said to Mike, "I want to get a digital driver's licence in New South Wales. Can we do it?" Mike said, "Absolutely, let's just work out how it can be done." Mike Baird, at the time, I thought was excited by it—he certainly supported it—and we announced this in the lead-up to the 2015 election campaign.
So, as excited as I was by this project, it got completely panned. Complete interview after interview, people were saying it was the most ridiculous idea they had ever heard. I remember being on talkback radio, and people calling up saying, "What happens if your phone goes dead?" And then you're like, "Well, what happens if you lose your wallet?" And they'd be like, "Well, you know, I've got a third Nokia 3210, how am I going to get a digital..." I was like, this was the level that we were dealing with.
People were calling it a stunt. They said it's never going to happen. Anyway, that was back then. Fast forward to today, with around half of driver's licences in New South Wales already digital—we wanted to do it, Mike Pratt delivered it, and that was why I was very keen to have Mike Pratt come on as Treasury Secretary, as someone with an attitude of getting things done. We gave people the option when we brought it in, and people are choosing it in the millions because it will make their life just a little better.
We've got rid of the wallet on the way through. I think there are fewer wallets now in New South Wales than anywhere else in the country. There are dozens of stories like this across government. Another one is Uber—it wasn't that long ago that, you might recall, Uber was illegal in New South Wales, and I remember making the mistake of suggesting that we should make Uber legal. I didn't think it was that controversial.
Alan Jones got on the radio and called me a left wing—masquerading in the Liberal Party. First time in my life anyone has called me a left winger, but it was good for the brand. But you can see now, today, how millions of people right across our state—how you couldn't imagine life without Uber, without other Uber Eats, and the rest. It's very difficult, when you sit here now, to believe the outrage that existed back then.
But there are examples that show the importance of governments looking beyond the curve and trying to get ahead of it. Because, despite the political difficulty, you can make changes that improve people's lifestyles, and our government is determined to find ways to lift productivity here in our state. Right now, we're developing a range of reform proposals, like property tax reform.
But on every front lies political risk. Oppositions will be opportunistic; they will drum up scare campaigns and shoot down ideas, even when they know that those ideas are good for the people of our state. But if they were to succeed, our state and our nation would have made no progress at all. We will continue to meander and accept the status quo.
So, my message to the politicians of every creed and party who sit in the New South Wales Parliament—whoever your leader may be—if you want greater prosperity for the people you represent, if you want higher living standards and better opportunities for the working families of this state, don't be part of the problem. Be part of the solution. Assess reform proposals on their merits, resist the temptation to simply shut them down just for the sake of it, and have the courage to have genuine debate and back in good reform when the opportunity arises.
Now, it would be pretty naive of me to think that our political opponents are going to listen to my pleas. And, in any case, the people of New South Wales have elected a state parliament with representatives from a range of parties representing a range of diverse views. In practical terms, we need their support to get legislation through.
So, the political reality for reformist governments is this: if you want progress, you must be willing to compromise. And that brings me to the third P, which is pragmatism. When John Howard and Peter Costello proposed the GST, they made major concessions. And if they hadn't, that reform would have been dead in the water, and we'd still have a raft of inefficient state taxes in place.
The concessions they made are still causing challenges for us today, but those are our challenges to overcome, not theirs. They did the hard yards on making major structural changes to our tax system, and the fact they had to compromise does not diminish the achievement they made. And today, the commentariat who once opposed the GST are now calling for it to be raised and expanded.
That is the reality of what happens when good governments take on reform. The naysayers of today end up being the prosecutors of the cause down the track, and that is a lesson for us when it comes to productivity reform. We cannot allow perfection to be the enemy of the good. What Peter's white paper gives us is a smorgasbord of ideas to explore.
I want the community here in New South Wales to look at these ideas, to debate them robustly, and see where the opportunities lie. By the same token, our government will consider the ideas in this report, and our challenge is to find practical pathways to make real progress. They won't always look pretty, there will be scare campaigns, and there will be compromise. Shots will be fired, and political injury is inevitable, but that is the job we've signed up for as politicians.
Failure to take on these challenges is an abdication of our responsibility as elected representatives. If we're not here to do the hard work of making our state a better place, we shouldn't be here at all. So, I want to thank and congratulate Peter for the work that he's done, supported by Treasury. I've certainly thrown down the gauntlet, and, as difficult as your task has been, now comes the truly hard part—getting it done.
I can't promise that we will succeed on every front. In fact, I can tell you flat out, some of the ideas you've canvassed will be criticised, and there'll be no practical pathway forward. But all ideas should face scrutiny and generate debate, and your work today is paving the way for reform and for a better quality of life for all Australians. That is your goal, that is my goal, and that is the goal of our government, which we will continue to pursue for the benefit of the people of our great state.
Thanks very much.
Peter Achterstraat (NSW Productivity Commissioner):
Thank you very much, Treasurer, and thank you for your commitment to productivity and for improving the quality of life for all Australians in New South Wales.
Welcome everybody. Thank you very much for coming. I’ve got a fairly soft voice. Can you hear me up the back there? Yeah, I always ask that at the start of a talk because I got caught out a bit a while ago with my daughter's Year 12 group. I was asked by the leader of her Bible study group to talk to the Year 12—50 Year 12 girls in the group—about this size—about careers, and there were going to be three speakers. So they said, would you be willing to speak for 15 minutes on your career? I said, absolutely. And I asked my daughter if that was okay, and she said, “Sure, Dad, as long as you don't embarrass me.” And I said, “Okay, I'll promise not to embarrass you.”
So I turned up on the evening, and the first speaker before me was one of the mothers, who was a very famous architect, who was going to talk about all the designs she'd done at the high end of town, and wanted to encourage the young women in the class to become interior designers and decorators for the rich and famous. And then the second speaker was an officer in the Royal Australian Air Force, and she wanted to encourage everyone to be a pilot, to be able to fly the supersonic aeroplanes—the F-18s—and wanted to encourage the girls to do that.
And so then I got up after that, and I was going to speak on why I suggested that the girls all should become cost accountants. I'll tell you when to laugh—that's not the joke, right?
So what happened was I went to the room—all the ladies, the girls were there—and I was giving this really good talk about being a cost accountant. It was absolutely fantastic. I was talking, as you're probably all aware, of the new standard in relation to fair value. I was going, talking about the difference between net present value and discounted cash flow, and it was probably one of my most interesting speeches that I'd ever given. I was also able to tie in operating lease—the new operating lease standard 657—which I thought was really good.
So I was enjoying myself so much in this speech, but after about 10 minutes—I noticed, there was a room about this size—there were a couple of girls up the back who sort of seemed to be dozing off. And I thought, you know, I'm pretty high on the EQ, so I thought, well, obviously the acoustics in this room—these girls can't hear what I'm saying, right? They're missing out on what I'm saying. So I said, “Look, if there's anybody in the room—the acoustics in this room are terrible, similar to this—if there's anyone sitting in a spot where you can't hear me, please put up your hand and we can move you, and you can sit in a spot where you can hear what I'm talking about.”
I thought, that'll—you know, that's EQ all over—you know, these people up the back will come down. So I thought, if you want to move, put up your hands. So a young lady up the front put her hand up, and I said, “Look, what's going on? Can't you hear what I've been saying?” And she said, “Look, Mr Achterstraat, I've been sitting here for 10 minutes, and I've heard absolutely every word you've said about becoming a cost accountant, and I'd gladly swap seats for someone who can't hear.”
So, Year 12 girls are an interesting group, right? And when we're all in Year 12, productivity was just increasing automatically. We didn't have to do anything—it just seemed to increase every year. Traditionally, more goods and services were produced in Australia than the year before. And so, with more goods and services each year, real wages could go up, the quality of life could go up, we didn't have to do anything. But then, as the Treasurer has indicated, over the last few years, productivity has tapered off. The rate of increase has dropped, and last year productivity actually went backwards. Right?
So, what does that mean? It means downward pressure on living standards, downward pressure on real wages. So we've got to do something about that.
Now, productivity is not just about—the goal of productivity is not just about increasing real wages, etc. That's a start. As Benjamin Friedman tells us, there is much more to the GSP, GDP—than just income growth. Much more. Benjamin Friedman tells us that when people feel their economic situation is stagnating, then other things happen in the economy, in society. Other things happen. Society becomes less willing to embrace opportunities, less willing to embrace diversity, and more fundamentally, less generous to be able to support the less well-off.
And so, one of the themes coming through the productivity paper is, yes, I can show all the figures under the sun about how much it's going to increase—the dollars—but we need to improve the size of the cake so we can redistribute it to those who really do need it.
So, working through, the Treasurer already indicated some of the reasons why productivity growth has fallen, and that's structural—which is demographics—but also cyclical in relation to COVID. You can see there that the gaps—productivity, which is the light blue—is falling: labor productivity. So we've really got to make some steps.
So our paper, when the Treasurer appointed me as Productivity Commissioner, he said, “Can you come up with a suite of recommendations to improve it?” I said, “Yes. I'll use the traditional Westminster system for policy development, which is a discussion paper first, where we put out all the problems and said to people: here are the problems, because I felt, I don't give answers if people don't know what the problems are—here are the problems.”
We put that out to society, they all, and we asked for their ideas. They came back with lots of ideas, and we put that into our green paper—their ideas from the community. We had 56 recommendations in the green paper. And the green paper was very well received—we had over three million people cited it on social media. I'm not saying they read all 300 pages—some may have only got to page 250, and some may have only got to the first page—but we've got a lot of feedback, etc., on the green paper, and that has enabled us now to put together the white paper, which is now my final recommendations.
The green paper had the drafts; these are the final recommendations, which I'm putting to government, asking them to debate and to consider. I'll just run through three of the seven major chapters in the green paper. We're covering everything from schools to taxation. The way we've done it is we've given some facts, we've then made a statement of the problem, we've then given a solution, and then we've talked about the possible dollar value increases.
I'll use a couple of examples. And of course, if the total reforms are implemented, then we believe there's a 19-billion-dollar gain to the GSP.
Now, just a couple of examples. The facts: the facts are that spending on schools in New South Wales has been going up faster than inflation over the last 10 years—that's a fact. Another fact is that PISA results have gone in the opposite direction—that's a fact. So what do we do about those facts? So the problem is, we have worsening test scores in key subjects despite increasing education—that's the facts. We say, that's the problem.
Some solutions we're putting forward in the green paper—these are just three, are these just four? One, two: numeracy was never a strong point; three of them—there's three there. New pathways to teaching, give teenagers better feedback, and also keep our best teachers in the classroom rather than requiring them to go into administrative work. So there's some of the solution, and there are others as well. We believe, and our economic modeling has shown, if they are implemented, then these reforms will boost gross state product by 11 billion dollars per year.
So that's schools. Then, if you look at VET, if we look at trades, we can see over the last 30 years there's been a dire shortage in many trades. And you might think, that's all academic—it’s not: air conditioning mechanics, a severe shortage. Now, if you're running a business in rural New South Wales, which requires your stock to be frozen, the food to be frozen, and it breaks down, you've got to get an air conditioning mechanic. It takes ages to get them. So these are where the gaps are in our trades and VET. And so the problem is, there are chronic shortages in VET, chronic shortages.
We put up a couple of possible solutions: we maintain the learn-and-earn new pathways to trades, better targeting the incentives, and also clear information on what the good ones are, or are not. The dollar value of that: 1.5 billion dollars.
And the last one, then, is planning. We all people are saying, oh, temporarily, the housing problem doesn't seem to be as bad as it used to be, right? There's probably a number of reasons for that. One is the migration, the Treasurer pointed to; others are in relation to the fact that children aged between 18 and 29—the percentage of them living at home now has gone from 23 to 32 in the last 10 years. So, people—that is deferring the problem, because one day these people are going to need houses. So you might be looking at, oh, 2022 is not too bad, but it's going to get worse if we don't do anything.
So the problem there is housing supply has not kept up with demand, or targets contributing to under supply, higher rents, etc. Now, we've had a temporary reprieve to a certain extent for a number of reasons: the border closures and others. But we've got some solutions up there: adopt long-term housing targets, backed by evidence and strong governance—not just one person saying, “This is what the target should be for this local government area.” We need to have a more holistic approach: different design regulations and reducing the unnecessary delays in approvals. In New South Wales, sometimes it takes 200 days to get something approved, whereas in Queensland, they can do it in 97 days. And so we're asking, for all these reasons, why is that the case?
And again, the dollar figure there—but let me stress, it's not just a dollar figure. We're all aware of Robert Kennedy, with his famous speech at the University of Kansas, where he said, “Look, yes, the GDP is not just about dollars. It's about the smile on our children's faces as they're working. It's about the success of our marriages. It's about innovation. And more importantly, it's about generosity of spirit.”
And we believe that if we can implement some of these, we're going to be able to be in a position where the pie will be bigger, and then decisions can be made as to how to redistribute it.
So thank you very much, everyone, for coming, and for the team that have been supporting me—not just in Treasury, but also people in the private sector, the industry associations that have given valuable feedback in relation to the green paper, helped us to tweak many of the recommendations to make them a bit more implementable. And so thank you very much for the community for that. Thank you very much.
Panel discussion
Stephen Walters (Moderator), Dominic Perrottet (Treasurer), Peter Achterstraat (NSW Productivity Commissioner)
Stephen Walters (Chief Economist, NSW):
So good morning everyone. So my name's Stephen Walters, I'm Chief Economist here in New South Wales and I also just wanted to commend Peter and the team at the Productivity Commission for their great work. I think it's fantastic to focus on productivity, and Joann alluded to this in her opening comments when she talked about the importance of productivity. It was actually the Princeton professor of economics, Paul Krugman, who said productivity isn't everything, but in the long run it is almost everything.
And particularly with population growth pretty low, it's all about productivity. So Peter, I'll start with you. The sustained fall in productivity that you showed us in that chart—it's not only in New South Wales, it's actually been a global phenomenon which suggests there may be some broader forces at work.
We know that productivity may, will hopefully, rebound once we're out of the pandemic—fingers crossed we're out of the pandemic sometime soon. Why should we care about it right now?
Peter:
Oh, absolutely. Thanks very much for that. Well for starters, I mentioned earlier that there's downward pressure on real wages at the moment. But also, if we want sustainable businesses—and also governments across the world have been required to borrow money during the pandemic—that has to be repaid. There's a number of ways they can be repaid: it can be repaid by higher taxes, but I put it to you that a better way for it to be repaid is if we can boost productivity, boost incomes.
That will have a two-fold effect: one, there'll be people earning more, so there'll be more taxes, but also people will be able to provide the services themselves, which in the past they may have had to rely on governments on. So I believe that productivity is important for all those reasons.
Stephen Walters:
Oh, thanks Peter. Treasury, you mentioned that getting reform up is often difficult. How do you sell reform in the longer term, given the benefits often accrue in the longer term? I think you mentioned some of the earlier reforms that we had by the Productivity Commission back in the 80s and 90s. Yeah, the benefits of those accrue over the very long term, but some of the costs accrue in the near term. How do you balance?
Treasurer:
Well, in addition to that, Stephen, some of the problems accrue in the longer term if you sit back and do nothing. So you've got the political problem on one hand of saying, "Well, we should embark on this reform," but you've got the political problem of the longer term if you sit back and do nothing. And if you—striking there when he was going through the education results—we have a unique opportunity now to embark on education reform because no one can argue the case that we haven't resourced our education system properly.
We have—we are investing more, as Peter said. It's a fact, and our results are getting worse, and that is a fact. So that actually lays a very good foundation for us to tackle those areas. Take planning—there's a whole range of planning reforms in there.
Okay, so what are the two political issues on that side of the coin? You've got, on one hand, issues around overdevelopment and the "not in my backyard" mentality. On the other hand, you've got a major issue that's here now, that's only going to get substantially worse, particularly in Sydney, and that's housing affordability for our young people.
So how you bring the community on the journey is clearly identifying the problem and saying it numerous times so it's well understood, and then working through what those potential solutions could be, and hopefully having a system where negativity for political purposes is overridden by the public putting their faith in, you know, what could be difficult in change for the better of society.
Stephen Walters:
No, thanks Treasurer. Peter, I'll go back to you. The report mentions regulation a lot, and there's a risk with regulation that you regulate for the worst possible outcomes or poor outcomes, and that actually means it's difficult to do things if you're trying to start a business or change a business or innovate. How do we make sure that the regulations in New South Wales are not in that category?
Peter:
A very good question, thanks Stephen. And regulation is—it can be very, very good, and it can also be the sand in the cogs of business. It's good in situations where we regulate the quality of our foods and our water; we can export that to countries which don't have the same stringent regulation. So accept that. One of the ways forward we're putting forward in the paper, Steve, in relation to making regulation better, is to have a continual stewardship ownership of regulation.
It sounds a little bit bureaucratic, but at the moment, regulation is there, and every five years it has to be reviewed—it lapses unless you can have it reinvigorated. And it always seems to just be rolled over, tick the boxes—being a bit facetious, but it's a tick-the-box thing. What we're suggesting is that anyone who puts regulation in, they've got to own that, and they've got to report annually on the website to tell people how it's working, the feedback they're getting, take into account new technologies, etc., keep it up to date on a regular basis—not just wait every five years.
And then we put some specific recommendations in there about particular granular regulations which we think could be tweaked. And once again, these are similar issues when it comes to regulation. So you will have an issue with an apartment building, or an issue with a childcare centre, and the natural reaction from the public is, "Let's increase regulation to make sure this doesn't happen again."
Okay, they may be married in that, but what are the consequences of that overregulation? It is increased house prices, increased—particularly with apartments—and also, you know, increased childcare fees, which makes it unaffordable for people to get back into the workforce. So in each way, whatever way you look at it, there are costs and benefits, and we need to get that middle, sensible centre when it comes to areas like that.
Stephen Walters:
Yeah, absolutely. Peter, I'll stay with you because I'm really interested in the education reforms you're talking about. Why is it so important to get our student outcomes to improve? I mean, obviously it's not about funding, as you said. How does that really, over a lifetime of a student, benefit productivity?
Peter:
Well, education of the students, I believe, is the most fundamental lever we can pull for productivity in the state. I think it's the most fundamental. Yes, we can use our physical assets better; we can use our intangible assets better, but using our human assets better is the way to go. And it starts in kindergarten and it goes all the way through to TAFE.
Why is it important? Well, you simply ask the question: why is it that in America, on average, things are made in four days, where it takes five days in Australia to make? Is it because of different skill sets? Is it because of different training? Well, I believe that is a factor there. Are there other factors as well? Yes. But I believe in the training situation, if we can treat each child as an individual—and a lot of the ideas we've put forward are being implemented in various schools, and we've sort of grabbed ideas from best-practice schools—so it's not as if, as an economist, I've come in with these answers. We've looked at schools, and in some situations, there might be just a snapshot assessment where you're talking to a classroom of people, you're treating them homogeneously. In other schools, they treat each of the individuals separately, and they say, "What's the data behind that? How have they improved? What do they need?" A little bit of extra work needed, but a lot of extra work needed, a different skill set—but because they can tailor it, that's one way.
Also, the feedback for the teachers. Most employees get good feedback or they get feedback—we get regular feedback, and politicians get good feedback every four years. And so I guess we all get feedback, right? And we're asking for the teachers to be able to get feedback, both numerically in relation to how well each of their students do, but also 360-degree feedback with students and peers, etc.
Stephen Walters:
No, thanks Peter. Treasurer, how does the work of Peter and the other members of the Productivity Commission fit in with the broader agenda of the government?
Treasurer:
Well, it's incredibly important because I think this work lays the foundations and a road map to our future. As I said earlier, we can't be sitting here and people talk about economic recovery, and we've set targets in terms of where we want to see unemployment, where we want to see economic growth, where the future of the state is going to be—but we can't achieve that if we don't reform on the way through.
The reason we appointed Peter—and I'm saying we had a discussion early on, and I didn't want there to be any political interference at all in the work he was doing, the Treasurer assisting him with—because I wanted a pure document that the government could consider on its merits. And to the Minister's credit, across the cabinet, I thought I'd get a lot more pushback. And when the green paper was released, it was very rewarding to see a lot of ministers were like, "Well, I might not agree with some of this, but let's get it out there." Perhaps a lot of it wasn't agreed on because people saw the political challenge that may come their way. But that's exactly what we should be here to do.
So I think this is very important in making sure this term of economic recovery moves to economic transformation, and we don't just go back to where we were, because that would, as I said, make us going to be in a position where we're going backwards. Let's use the opportunity of the pandemic to tackle some of these important issues that you don't really get many opportunities politically to achieve. And I think the time is right to do it—not just politically, but it's fundamentally important for the future of our state.
Stephen Walters:
No, thanks Treasurer. Peter, I just have one final question for you, and I know you're particularly excited about emerging technologies. So the report mentions drones and personal transportation devices. What do you think are the biggest opportunities here?
Peter:
I've mentioned those two, and there's a lot of media this morning on those too. Well, yeah, and those two—they might seem fairly small and insignificant to people. I'm glad it's getting a bit of publicity. But I'm a firm believer in the first and last mile. People—if everyone's getting in a car to go to the station or to the bus stop, and then they get in the bus, we've got to make the first mile much easier for them.
I think that personal mobility—e-scooters and e-bikes—I think that's the way to go. But they've got to be regulated. Other states allow scooters—all except South Australia. Allow any scooter. In New South Wales, they're only allowed on private property. I've seen a few not on private property, by the way. And the trouble is, when that happens, when people breach the rule in one way, they tend to breach it in other ways as well.
So I think if we can standardize and regulate the use of e-scooters, we can get more people using it on the first mile and the last mile, and that will prevent the use of the car, etc. We've done quite a bit of analysis which shows there are costs and benefits to things like that, as they are with all of them—the e-scooter, particularly, the benefits of less pollution, less people taking the car out for a short trip or the car for the whole trip, thinking they can use the bus. There is the downside, people suggest there is, and we've quantified—there's a health effect of people using the e-scooter instead of walking. And we take all of those costs and benefits into account when we've come up with our recommendation that the e-scooters are the way to go—but not yet, it might be a bit old for that.
Stephen Walters:
Well, we are out of time, unfortunately. We've just barely touched the surface of so much of the work that's in the report. So I encourage you all to get a copy. There'll be copies online, I'm sure. At 11 o'clock, I think it was Peter, when the Treasurer started speaking. So get a copy of the report—your feedback is welcome. Please comment, send us your thoughts. And as the Treasurer said, the government will be considering the recommendations in the weeks and months ahead.
So thank you to Peter and the team for all the work and for being here today. Treasurer, thank you for being here today and for answering my questions. All of you, thank you for coming. We are having a press conference in this room very soon, so if I can ask you all please to just make your way outside in a very orderly fashion, that would be fantastic. And we'll leave our friends from the media here to question Peter and the Treasurer.
So thanks everyone for coming. Thank you.
