It’s Good Policy That Delivers Productivity

Posted 30th October 2018

CMU-A public policy and management students had the privilege of an exclusive session last week with Australian’s Productivity Commissioner, Mr Ken Baxter.

In Adelaide to present to the Carnegie Mellon University’s Executive Workshop on the Future of Governance, Mr Baxter shared his personal position on issues facing countries in our region – such as New Zealand, Japan, Singapore, Indonesia, Malaysia and on a wider spectrum China, India, Vietnam and the Philippines.

“What I sense is a seismic movement in the tectonic plate of international trade and that major political and economic changes are underway, Mr Baxter told his audience.

“This change is influencing quite strongly, political, financial, manufacturing and ultimately diplomatic and military alignments. It is happening and will continue to happen – it will be only the rate of change and its nature that might differ,” he said.

Mr Baxter discussed the influence that US politics and politicians are having on the region in particular the impact on trading blocs and strategic alliances.

Prof Tim O'Loughlin with Mr. Ken Baxter (right)

In his role as one of Australia’s Productivity Commissioners, Mr Baxter is part of a team who conduct public inquiries, at the request of the Australian Government, on key policy or regulatory issues bearing on Australia's economic performance and community wellbeing.

For Mr Baxter, productivity isn’t just about achieving one quantum improvement. He marvels at the incremental nature of productivity. In this sense he only partly agrees with the thesis that you “can only introduce electricity once”.

“History has demonstrated that in many cases this is not so. Incremental productivity improvements can and do follow suit. Certainly, the initial introduction of electricity had massive ramifications for productivity. But it didn’t stop there, said Mr Baxter.

“You can then improve the way it is generated, reduce the cost of its generation, dramatically improve the way it is used (domestically and commercially) build in pricing incentives that influence demand patterns and set up solar panels which may have the impact of reducing the use of power transmitted over long distances.

Mr Baxter is excited about the future gains from productivity which will be delivered with advances in technology.

“Examples of the last 15-20 years suggest we have not exhausted productivity improvements. I predict we will we vast improvements in rail transportation; of both freight and people through more effective timetables and greater ‘on time’ running which will deliver large increases in patronage.

“Automation, computerization and GPS technology will change the way we do things and deliver greater efficiencies, user satisfaction and increased productivity, he said.

Mr Baxter is currently a commissioner for the Economic Regulation of Airports inquiry. He was a commissioner for the Regulation of Agriculture inquiry and has recently been working on the Transitioning Regional Economies study.