COAG Needs Well-Defined Process for Key Reforms

05 October 2006

The Australian Financial Review

By Hugh Morgan
Business Council of Australia

The recent Council of Australian Governments meeting of political leaders vindicated growing calls for a new round of economic reform. The view on the future direction of Australia's economy from a range of organisations, from the Reserve Bank and Productivity Commission to groups like the Business Council of Australia, was united.

The benefits of previous reforms are waning. As a result, Australia requires a fresh wave of change if the benefits of low inflation, low unemployment and rising living standards are to continue.

The undoubted positive arising from the meeting is that COAG again is front and centre of Australia's reform agenda.

However, what is missing from the various reform processes COAG has set in train is the absence of any external input or transparency let alone urgency.

The BCA is concerned COAG's terms of reference and reporting processes, as outlined in its communique, do not focus enough on defined outcomes.

Nor do its time frames point to any sense of urgency. In all but one of the reviews, the working parties are being asked to report back to federal and state leaders by the end of this year, or early next year.

All this points to a basic lack of connection between those attuned to the need for reform, and those charged with delivering it. As a result, we have got a vital debate on Australia's future now effectively occurring behind closed doors.

The smoke signals from COAG are, in true Yes Minister style, of Sir Humphrey being given the task of finding a solution to protect his minister, rather than facing the serious issues the community sees very clearly.

The next one to two years will be crucial in determining our economic performance over the next 10 years.

Yet, the risk is that when the various working parties report back to COAG next year, the recommendations may well amount to committee-style policy meanderings, as opposed to a precise set of recommendations or plan of action that is urgently needed.

We must also remember that when COAG meets again next year to consider these recommendations, two state premiers and possibly the federal government will be entering the business end of their respective electoral cycles. As a result, there will be increased sensitivity to the political costs of any reform program.

To avoid these potential problems, we need to see greater urgency and transparency. The BCA would like see the working committees reporting to COAG leaders though regular updates and the process available for public comment.

This would ensure directions set by COAG are being achieved, and more importantly, everyone would know what is being achieved.

Quarterly reporting is a basic benchmark expected of business it should also apply to governments.

There is too much at stake to put Australia's most important reform opportunity at risk.




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