No. 39

STONE the crows! Are we back were we started on productivity reform? Just about the only fair dinkum demonstration during the election occurred in Perth, where hairdressers argued against the abolition of the industry’s state registration board.

The coiffeurs claim letting inadequately trained and unregistered cutters loose on the locks of the golden west will lead to falling wages and slipping standards. That the shortage of snippers makes business better for properly registered hairdressers has nothing to do with it.[i]

Strangely, the story did not get much of a run but it should have, because it shows how little attention Australians paid to 20 years of reform. Despite two decades of effort to reduce regulatory red tape, and the nice little earners which occur without competition and stop the states running their own registration rackets that reward established practitioners, the message has not got through.

There are endless occupation groups who think the same as Perth’s hairdressers and they will fight as hard to save their protected status as the dairy farmers did in the big deregulation fight of the middle 1990s.

Individual dairy farmers who produced fresh milk back then lost money with the end of state subsidies and production quotas. However, overall industry income rose as the industry responded to the end of public assistance with productivity improvements, new products and export markets.[ii]

But today reform has fewer friends than the status quo has supporters and the idea we need a new round of productivity promoting deregulation did not get much of a mention in the election.

Ad man Neill Lawrence nailed it in The Australian on Thursday last, “Post-GFC, we have a nation reeling from a near miss, worried about a second global train wreck and very cautious about its own prospects. Australians don’t want any fancy footwork from government. Certainly no ‘revolutions’ of any kind.”[iii]

Yet, whether the electorate is interested or otherwise, a productivity revolution is exactly what we need to keep the economy expanding. Labor minister Craig Emerson explains why.

According to Emerson, multifactor productivity grew by 2.3 per cent a year between 1994 and 1999 but has less slowed than stopped since, increasing by 0.2 per cent towards the end of the last decade. Labour productivity tells the same sorry story. It was once 86 per cent of the US figure before increasing to 94 per cent in 1999. But by 2008 it was back where it started, at 87 per cent of the Americans’ effort.[iv]

With the low hanging reform fruit long since picked (state government industry protection is largely gone, at least in the east) productivity improvements are harder to find.

But one big area is replacing state anti-competitive arrangements for all sorts of occupations with national accreditation. Increasing competition for Perth’s hairdressers may not sound like much, but it is symptomatic of all sorts of areas across the services sector, which accounts for 28 per cent of GDP.[v]

There is a COAG agreement to establish national standards in 18 areas from “a new national construction code” to “wine labelling”, based on the successful 1990s National Competition Policy tactic – bribe the states to accept Australia is one country.[vi] But getting everybody else to agree is easier said than done, things, even COAG admits are not going well in transport and infrastructure.[vii]

Given how hard it is to get any agreement that things are going at all is amazing. The NSW and Queensland governments initially opposed national occupational health and safety laws because their union pals were unhappy about losing the ability to prosecute employers over alleged safety breaches. And Western Australia was upset because it thought the rules were too kind to the comrades.[viii]

And, if you want a case from Kafka, consider what the bureaucrats had to deal with to secure support for national accreditation and registration of nine medical professions, from doctors to osteopaths. Industry associations wanted to keep self-accreditation and did not like the idea of government getting involved in regulation. The creation of national boards upset industry players with state powerbases. And the West Australian state government talked of pulling the pin because it thought its own accreditation arrangements were better.[ix]

In the end, everybody agreed and since July 2010 Australia has had an Australian Health Practitioner Regulation Agency, which looks like providing public service careers for generations to come. But at least it ends separate state authorities all administering their own patch.

Another one down, but there are many more to go. And the insiders who do well in state based systems, or use regulation to keep competition under control, will fight every reform.

And they will get a sympathetic hearing in the community. While the policy battle for deregulation and national accreditation is won, the political fight is not being fought – it looks too much like reform and just now Australians are not interested.

Which means the old and wacky ways will remain, regardless of how many deals COAG does.

How wacky? Try the Potato Marketing Corporation of Western Australia, a single desk which oversees who can grow what sort of spuds where and what they are sold for in the west.[x]

And nobody seems to mind, demonstrating after 20 years of deregulation the message still hasn’t got through.

It’s enough to make a crow caw.

stephen4@hotkey.net.au


[i] Dale Granger, “Hairdressers want to snip curly law” Sunday Times, August 1

[ii] Productivity Commission, Review of National Competition Policy Reforms, (Melbourne, 2005) 81, 107

[iii] Neil Lawrence, “Forget attacks, positive message will win out”, The Australian, August 19

[iv] Craig Emerson, “Why productivity is not for nerds: Address to the Sydney Institute,” April 7 2010 @ craigemersonmp.com, recovered on August 19

[v] Productivity Commission, Annual review of regulatory burdens: draft research report, (Melbourne, 2010) xvii

[vi] Council of Australian Governments, National partnership agreement to deliver a seamless national economy December, 2008 @coag.gov.au recovered on August 19

[vii] Sid Maher “Limping towards reform” The Australian, July 24

[viii] Steven Scott, “Gillard stands up to unions on OHS” Australian Financial Review, December 14 2009

[ix] Siobhain Ryan, “Professions reject government control bid” The Australian September 27 2008 and “National doctors register at risk”, The Australian, February 24 2009

[x] www.pmc.wa.gov.au recovered on August 18

'2012