should be tightened in the true spirit of the WTO ‘administered protection’ accord, not made more permissive. Terminate selective industry subsidies that cannot deliver demonstrable net Unless they rectify a (legitimate) market social benefits (PC 2008a, 2009c). failure, industry subsidies merely serve to sustain the market performance of less productive and competitive firms or activities, lowering productivity Australia’s in the process. Such programs, totalling nearly $9 billion annually from Australian taxpayers (PC 2012e), should be terminated if they cannot be demonstrated to yield a net payoff to the community. (Taxpayer support for private sector businesses cannot even loosely be characterised as ‘co-investment’ unless this test is satisfied.) In particular: subsidies to support including in specific ‘innovation’, ‘green technologies’, industries (such as the assistance programs for the Automotive and Renewable Energy industries) which currently amount to over $3 billion, need to be able to deliver socially valuable spillovers over and above those attainable through generic support (such as the R & D Tax Concession); adjustment assistance should facilitate change and be directed primarily at enhancing the skills and mobility of workers, rather than supporting firms under competitive pressure (PC 2001, 2012e). so as to move from open-ended Extend reforms to drought support (PC 2009d) assistance for farmers facing hardship, to arrangements with common criteria and duration provisions. Favouring local Phase out public sector procurement preferences (PC 2008a). suppliers on grounds other than price and quality inflates budgetary costs, detracts from government service performance (including defence Australia’s capability) and, once again, undermines productivity by enabling less productive firms to retain market share and hold onto scarce resources. Conduct a second, more focussed round of NCP reviews (PC 2005a, 2011i) Reviews need to target the more significant restrictions on competition that avoided, or were not adequately subjected to, rigorous and independent scrutiny in the first round of NCP legislative reviews, or where the economic environment has significantly changed. Priorities include: which add to healthcare costs for little pharmacy ownership restrictions, apparent benefit which raise transport costs and make it harder to reduce taxi licence quotas, urban congestion, without demonstrably enhancing either safety or quality
‘administered protection’ should be tightened in the true spirit of the WTO accord, not made more permissive. Terminate selective industry subsidies that cannot deliver demonstrable net social benefits (PC 2008a, 2009c). Unless they rectify a (legitimate) market failure, industry subsidies merely serve to sustain the market performance of less productive and competitive firms or activities, lowering Australia’s productivity in the process. Such programs, totalling nearly $9 billion annually from Australian taxpayers (PC 2012e), should be terminated if they cannot be demonstrated to yield a net payoff to the community. (Taxpayer support for private sector businesses cannot even loosely be characterised as ‘co-investment’ unless this test is satisfied.) In particular: subsidies to support ‘innovation’, including ‘green technologies’, in specific industries (such as the assistance programs for the Automotive and Renewable Energy industries) which currently amount to over $3 billion, need to be able to deliver socially valuable spillovers over and above those attainable through generic support (such as the R & D Tax Concession); adjustment assistance should facilitate change and be directed primarily at enhancing the skills and mobility of workers, rather than supporting firms under competitive pressure (PC 2001, 2012e). Extend reforms to drought support (PC 2009d) so as to move from open-ended assistance for farmers facing hardship, to arrangements with common criteria and duration provisions. Phase out public sector procurement preferences (PC 2008a). Favouring local suppliers on grounds other than price and quality inflates budgetary costs, detracts from government service performance (including Australia’s defence capability) and, once again, undermines productivity by enabling less productive firms to retain market share and hold onto scarce resources. Conduct a second, more focussed round of NCP reviews (PC 2005a, 2011i) Reviews need to target the more significant restrictions on competition that avoided, or were not adequately subjected to, rigorous and independent scrutiny in the first round of NCP legislative reviews, or where the economic environment has significantly changed. Priorities include: pharmacy ownership restrictions, which add to healthcare costs for little apparent benefit taxi licence quotas, which raise transport costs and make it harder to reduce urban congestion, without demonstrably enhancing either safety or quality
productivity-policies.docx