Productivity Commission should go back to giving frank and fearless advice

Productivity Commission Chairman Gary Banks gave a great speech in Brisbane last week on competition policy (Competition Policy’s regulatory innovations: quo vadis?), which, as usual with the Chairman’s speeches, documents the failure of recent Governments to prosecute much needed reforms. But the speech shows a lack of self-awareness regarding the Commission’s failure to offer frank and fearless advice on anti-dumping legislation.

Traditionally the Commission has been viewed as the provider of hard-line economic rationalist advice. It appears that, to avoid this perception, the Commission has more recently been attempting to offer more politically savvy advice. Unfortunately, this approach failed in the Commission’s 2009 review of anti-dumping laws, as the Chairman relates:

The Commission did not recommend abolition of the regime, notwithstanding its costs, in recognition of the ‘system preserving’ value of a safeguard on what is widely (if wrongly) perceived to be an unfair trade practice. However, its central recommendation to insert a ‘public interest’ clause into the statute, as a safety valve for averting certain anomalous outcomes, was rejected (ironically, being a NCP-related review). More problematic though, given that the protectionist devil always lurks in the detail of anti-dumping administration, was the establishment of a Forum to advise on policy implementation comprising mostly import-competing interests.

Basically, the Commission didn’t recommend anti-dumping laws be scrapped because it sees them as providing some peace of mind to the business sector, and if it weren’t for the anti-dumping laws the business lobby groups might campaign harder for other protectionist measures (e.g. tariffs). But the Commission should be providing frank and fearless economic advice, not playing the political game. I’m confident the Treasury would never ever send up a brief supporting anti-dumping legislation, and I’m surprised the Commission lacked the courage to call bad policy when it sees it. The Commission can do much better.

 

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