Government should lead the way on productivity: Gottliebsen

Treasury boss Michael Parkinson has called for Australia to lift productivity and he wants a return to structural reforms to boost our productivity.

Parkinson is right about the need to lift Australian productivity but he is wrong about isolating future increases to major reforms and the problem starts with Parkinson himself (and his predecessors).

As Treasury Secretary, Parkinson can personally take actions that will transform Australian productivity and until he accepts personal responsibility and takes those actions Australian productivity will continue to decline. I must also add that major structural reforms will also lift productivity, but they take a long time, whereas Parkinson is in a position to move quickly.

According to the Australian productivity guidebook – the Telstra Productivity Indicator – 72% of Australian and state public servants believe that productivity is a high priority for their organisation. In other words, they accept the Parkinson urgency in principle.

But a miserly 14% of public servants measured their productivity and had key performance indicators related to those measurements. In other words, in the public service productivity is not taken seriously.

Parkinson’s first job is to start with Canberra and use his power first to determine tough productivity measures for government employees and contractors and second to tie public service promotion and the allocation of money to improving productivity.

He does not have the power to implement that change but once he accepts responsibility he can drive it a long way. 

Cynics say the current definition of productivity in Canberra is related to lifting staff numbers and expenses, so Parkinson must move away from the public service barons and find simple ways to measure government productivity. It will not be easy. 

As it happens, today’s graph shows that the private sector is not that much better, with 76% of corporate executives giving a high priority ranking to productivity but only 25% saying they measure it and are in a position to do something about it. 

Telstra defines the gap between stated priorities and action as the productivity “deficit”. In the public service that “deficit” is 58%. 
 
Some companies are very good at productivity measurement, including Orica and Rio Tinto. Parkinson’s people should start with those organisations and adapt the lessons to the public service, and obviously there will be overseas examples to learn from.

Once Parkinson has taken the initiative he can then chide the private sector to lift productivity. Parkinson was right in alerting Australians that falling productivity threatens living standards (and corporate profits).

And he is also right that reforms can deliver in the long term. But the really big gains will come when Canberra and state public servants, plus corporate CEOs, start measuring their efficiency and are therefore in a position to do something about it.

This article first appeared on Business Spectator