“Never waste a good crisis” – Post-COVID-19 Federal Government reform agenda

The Prime Minister flagged yesterday (23 April 2020) that the Federal Government is actively reviewing policy options presented in a multitude of review papers from the past decade to identify, and implement, productivity enhancing reforms in order to ready Australia’s economy for a post-COVID recovery. You can read the transcript of that press conference here.

What reforms might be involved?

In yesterday’s press conference, the Prime Minister made clear that all previously mooted policy options were on the table and being considered afresh, however he made specific mention of the Productivity Commission’s 2017 ‘Shifting the Dial’ Report as receiving some of the Government’s attention.

Scott Morrison commissioned that report when he was Treasurer in 2017.

The Shifting the Dial Report suggested that the benefits of recommending its recommendations could eventually generate about $80 billion each year in economic gains to the national economy.

Some of the more controversial reform recommendations in the Shifting the Dial report, included:

Energy

1. Putting a price on carbon:stopping the current piecemeal and stop-start approach to emission reduction, by adopting a vehicle for reducing carbon emissions and putting a single effective price on carbon

2. Achieving consistency in energy market regulation: by developing more stringent institutional structures and a nationally consistent approach to regulation.

3. Improving pricing efficiency for the energy market: with pricing provided to renewables generators to reflect the additional costs they impose on the system (e.g. frequency management); charging for access to the energy grid rather than just use of it (so that those who connect to the grid for secondary back-up power are charged for that privilege); ensuring consumer pricing reflects the nature of the demand they require from the system.

Infrastructure and land-use

1. Public cost-benefit analysis of each major project: ensuring all proposed projects are subject to cost-benefit evaluations, and that these evaluations and evaluations of alternative proposals are available for public scrutiny before project approval decisions are made

2. Reforming road funding and investment: by developing ‘cost-reflective’ pricing for public road infrastructure including trialling ‘direct road user pays pricing’ and linking road use related payments/taxes to actual expenditure on roads.

3. Land-use/development reform: reducing the number and complexity of restrictions on land use created by prescriptive development and planning zoning systems; moving towards a risk-based and best practice fast tracked approach to the assessment of new development proposals in each State and Territory.

Tax

1. Abolishing stamp duty-based State taxes: by moving away from state-based stamp duty taxes on residential and commercial properties to a broad-based land tax on the unimproved value of land and including provision for low income households to defer payment of these land taxes to be paid from their estate at death or upon the sale of the asset (whichever occurs earlier).

Innovation:

1. Establishing consumer rights over their own data: including a right to the transfer of their data

2. Providing greater access to public data: removing barriers to greater use of public data, in order to fuel more rapid innovation

3. Relaxing copyright laws to fuel growth, education and innovation: by developing fair use exceptions to copyright law to fuel innovation, where the focus is on whether the use of the copyright material would harm the right holder’s interests, as opposed to a strict blanket prohibition on use of copyright material

Health

1. Moving away from community/retail pharmacy: which is viewed as overprotected by antiquated anti-competitive regulation and a retail based-model that is incongruent with public health outcomes, instead moving to more automation and using technology like e-scripts and automatic dispensing machines, supervised by a ‘suitably qualified person’ (who may not be pharmacist) to dispense drugs. Significantly reducing the number of pharmacists being trained at university, and moving clinical pharmacy into an integrated care system.

2. Moving to a uniform volumetric tax for alcoholic beverages: so that alcoholic beverages are taxed on alcohol content and it is not possible to buy high-alcohol beverages at very low prices, correcting the inconsistent approaches to the current taxing of alcoholic beverages in Australia.

3. Eliminating health treatments that have limited proven clinical value: such as knee arthroscopies, and improving access to information for patients including hospital and clinician data on clinical results and complication rates, to allow better informed health care treatment and provider choices by patients.

4. Moving towards more preventative health: by restructuring the funding of health to create a ‘Prevention and Chronic Condition Management Fund’ distributed to health and local hospital networks to implement activities and innovation designed to improve community health and reduce hospitalisations, with those hospitals profiting from returns on those innovations and preventative health initiatives

5. Making patients the centre of Australia’s health-care system: by greater transparency on pricing and performance of hospitals and clinicians; measurement and publication of patient experience at different hospitals and with clinicians, improving patient health literacy to drive better self-autonomy over patient health-care decision making; making better use of data and IT platforms such as the Government’s My Health Record for patients to make health decisions and reform to the training of medical practitioners with a greater emphasis on patient-centric care.

Education

1. Improving school teacher quality: by targeted professional development of teachers to reduce the frequency of teachers teaching subjects without training or experience in that subject (teaching “out of field”), and by paying teachers more for teaching subjects experiencing a shortage of teachers

2. Reforming universities/higher education to maximise the focus on student outcomes: by more closely aligning university interests and incentives to student development rather than prestigious academic research, through enhancement of student rights (by giving students ‘consumer law’ entitlements under existing consumer laws, i.e. the ACL, and liability of higher education institutions to students for courses and programs that are not fit for purpose or misleading and deceptive as to their educational and career value), introducing contingent funding based on student performance, and restructuring the HELP fee assistance programs to maintain HELP debt sustainability.

3. Embracing work-based/informal modes of education to achieve professionally recognised qualifications, breaking the monopoly on higher education held by universities: as an alternative to learning through tertiary education, on-the-job training to be developed as an alternative pathway for some professional and currently higher education obtained qualifications (e.g. on-the-job higher apprenticeships leading to accounting qualifications without studying accounting at a university).

The full report and recommendations can be read in detail here.

In a perhaps not so subtle suggestion of how seriously Prime Minister Morrison views the merits of the Shifting the Dial Report, the overseer of its compilation and delivery to Government was the then Productivity Commission Chairman, Mr Peter Harris. Mr Harris is now the Chief Executive Officer of the Government’s newly formed National COVID-19 Co-ordination Commission – which will coordinate advice to the Australian Federal Government on responses to the economic and social impacts of COVID-19.

The upshot: prepare for more change.

Whatever is unveiled as the national reform agenda, make no mistake, the Federal Government will be looking to ensure it does not waste the current crisis and instead uses it to implement major policy and regulation shift towards more innovation, more productivity and more free-enterprise in Australia – using the recent reports and policy options to springboard policy development. As recently as yesterday, Federal Environment Minister Sussan Ley signalled potential changes to the Environment Protection and Biodiversity Conservation (EPBC) Act (Cth) to speed up the process of obtaining environmental approvals for major projects.

On a personal level, it is likely Prime Minister Morrison sees the current moment as a unique opportunity to lead a major reform agenda that fundamentally changes Australia, for the better, in a move that could become a proud hallmark of his political career. Only time (and the Senate) will determine whether that ends up being the case.