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Treasury: slipping up on the job? « Previous | |Next »
March 31, 2004

I've been surfing Treasury's website looking for a strong policy statement of the economic drivers of a sustainable Australia in the context of this. To be honest I didn't expect to find it. Treasury is not that committed to sustainable development these days. It has retreated to the narrow policy horizon of competitive markets.

I found this speech by Martin Parkinson. It tells the standard Treasury story. Australia had spent much of the 20th century up to the 1980s in relative economic decline. Then along came the economic reforms driven by The Treasury. Australia has benefited with sustained economic growth. Treasury can pat itself on the back for driving this.

Let us grant Treasury that.

Parkinson's speech updates the story. The next chapter says that there are no guarantees that Australia's economic performance will continue to be as impressive as it has been over the past decade. The continuation of this performance can only be achieved through:

"... a continuing commitment to economic reform, to ensure not only that past reforms are maintained and built on, but also that future challenges are responded to in ways that enhance the competitive and flexible nature of the Australian economy."

Most of the speech is concerned with the consequences of an aging labour force. Prior to addressing that issue Martin Parkinson sketches the way strong economic growth can come from productivity growth through new technology.

He mentions information and communication technology as economic drivers that can put Australia on the international productivity frontier. He asks:

"How can we assist Australia to continue to approach that frontier? In brief, competition and flexibility in domestic product and labour markets, supported by good education and training in a stable macroeconomic environment seem to be crucial ingredients....Continued strong productivity growth...will require consistant striving for competitive, flexible markets----including resisting the pleas of special-interest groups, no matter who they are, stiving to reduce competition in markets important to them----as well as continuing policy reforms more broadly."

It is pretty much the standard Treasury line.

So where has Treasury been on the energy debate in the light of this commitment to competitive flexible markets. Where is Treasury enabling competition between the renewable energy generators in opposition to the energy-intensive industries using their lobbying to prevent competition and block the develeopment of flexible markets?

If politics is about strategy, policy making and nation building, then the MRET system is an infant industry mechanism designed to build the capacity of the Australian renewable energy industry to reduce greenhouse emissions. This mechanism is helping to create $16 billion renewable energy industry, and it is currently providing jobs and investment in regional Australia and is creating more jobs than coal-fired plants. In contrast, jobs in the conventional generation sector are declining due to deregulation, technological change and productivity gains.

Increasing the MRET target of electricity sourced from renewables (from 2% to 5% then 10%) would enable Australia to develop an internationally competitive manufacture base and exportable intellectual property.

So why is Treasury not consistently striving to create competitive, flexible energy markets? Why is Treasury staying silent in the tussle over the green energy plan? Why is Treasury not commited to ongoing reform to green the Australian economy through encouraging the emergence of flexible competitive energy market? Surely it knows about the MRET energy review. So why is Treasury not supporting David Kemp in his fight against the special interests of coal and aluminium interests seeking protection from green competition. Macfarlane, in contrast, is defending protection and subsidies to an energy industry that is unsustainable.

Surely Treasury hasn't slipped into a short-term, blinkered view of the world?

| Posted by Gary Sauer-Thompson at 5:20 PM | | Comments (0)