Productivity Commission fires blanks in report on boosting innovation

By Peter Roberts

The latest report from the same mob whose policies brought you today’s fragile and narrowly based economy – the Productivity Commission – gives us more of the same faith in markets as suitable drivers of an economy that has so patently hobbled productivity growth.

The PC, and its ally the Treasury have had a focus on building on comparative advantages – not creating competitive advantage as with industry policy – meanwhile tinkering in the way markets work through a focus on things like skills, childcare and deregulation.

The Commission, in their new report – 5-year Productivity Inquiry: Innovation for the 98 percent – actually admits that its policies have abjectly failed.

Their media release today begins: “With only between one and two per cent of Australian businesses producing new to the world innovation, consideration must be given to how to help the other 98 per cent adopt and adapt existing technologies and practices to improve performance and productivity.”

The PC’s dry policies have long guided Australia’s economy, yet despite recognising this national failure in productivity it goes on today to recommend more of the same – though a few crumbs for skills and education included this time.

Said PC deputy chair, Dr Alex Robson in launching the report: “There are worrying signs that the principal vehicles for acquiring and transferring knowledge – what we refer to as diffusion – have slowed or stalled.

“While previously we could have relied on labour mobility and investment in machinery, equipment and intangible capital to spread ideas, these have all been either stagnating or declining.

“Diffusion has the potential to lift the performance of over a million businesses.”

Diffusion it should be pointed out requires the sort of government intervention and expenditure which the PC has decried as activist industry policies and the phrase it has so successfully weaponised – picking winners.

Here in Australia while countries like the United States under Joe Biden are putting billions behind industry policy to transform the economy we are looking at more of the same focus on market forces:

Robson said: “The drivers for diffusion are less about specific government funding programs than about getting broad market settings right to create a vibrant business environment.

“This includes a more open trade and investment regime and recognition of the value of skilled migration as a source of new ideas.

As Emeritus Professor at the University of Technology, Roy Green said on social media: “Good luck with that.”

More reading:
ELECTION 22 THE REAL ISSUES – THE INDUSTRY POLICY DOG THAT DIDN’T BARK BY ROY GREEN

Picture: Dr Alex Robson