Output 1.1 Economic and industry policy
| Advice and support to the Prime Minister and
assistance in coordination of government policies on economic,
industry, infrastructure and environment issues,* including
on presentation of the government’s decisions in these
Manage and coordinate the work programme of the Council of Australian Governments.
| Quality: The degree of satisfaction of
the Prime Minister, the Prime Minister’s Office and the
departmental Executive, as expressed through formal and informal
feedback mechanisms, with the quality and timeliness of advice
and the achievement of key tasks.
Annual evaluation of Budget preparation and coordination process and ad
hoc internal evaluation of major policy advising activities.
Cost of outputs - $9.6m
* Administrative responsibility for natural disaster
relief was transferred from International Division to Industry,
Infrastructure and Environment Division on 22 November 2002.
The Prime Minister, the Prime Minister’s Office and the
departmental Executive provided feedback on Output 1.1. The assessment
of our performance by these key stakeholders assisted us to refine
our systems, procedures and work practices and determine priorities.
The group adopted a flexible approach to the allocation of responsibilities
and resources, allowing us to manage a number of highly complex
issues simultaneously, while maintaining the throughput of day-to-day
Output 1.1 was assessed as having provided effective and timely
advice, briefing and support on economic, industry, infrastructure,
environment and resource policy issues.
Feedback from our key stakeholders indicated that Economic Division
played an important role in the development of the 2003-04
Budget. In particular, the division supplied early strategic advice
on budget processes and priorities and, with the Cabinet Secretariat,
supported the consideration of budget proposals by Cabinet and
the Expenditure Review Committee of Cabinet.
Feedback also indicated that we played an important role in the
development of the government’s medical indemnity reform
package and in ministerial meetings on insurance sector reform.
As in previous years, feedback also indicated satisfaction with
the role we played in providing advice and support for the effective
operation of COAG, and our secretariat support to the Sustainable
Environment Committee of Cabinet and the Strategic Investment Coordinator.
Broad satisfaction was indicated with the work of Industry, Infrastructure
and Environment Division across the gamut of industry, environment
and infrastructure matters.
Feedback indicated that the work of the Energy Taskforce Secretariat
has assisted ministerial consideration of a number of key energy
Formal individual performance reviews provided further feedback
at all levels. Additional feedback was provided through regular
meetings, formal discussions with the Prime Minister’s Office
and contact with the departmental Executive.
Financial sector policy
In 2002-03, the Economic Division advised the Prime Minister
on a number of significant reforms to the financial sector.
The division played a particularly significant role in the development
of the government’s medical indemnity package. The department
chairs the Medical Indemnity Taskforce that coordinates policy
development and advises ministers on options for addressing the
affordability and adequacy of medical indemnity insurance.
More broadly over 2002-03, problems in the general insurance
market were impacting on the provision of important community and
private sector services. The division advised the Prime Minister
on reforms to improve the affordability and availability of public
liability and professional indemnity insurance. The Australian,
state and territory governments met on a number of occasions and
introduced a significant number of such reforms. We advised
the Prime Minister on the Australian Government’s role in
promoting national consistency in tort law reform among state jurisdictions,
a major determinant in reducing pressure on premiums. Our advice
also extended to insurance coverage against loss caused by acts
The division advised the Prime Minister on the HIH Royal Commission
recommendations and the preparation of the government’s response.
We also advised the Prime Minister on reforms to address community
concerns about auditor independence and corporate disclosure. This
work included analysis of proposals contained in the ninth instalment
of the Corporate Law and Economic Reform Programme legislation,
to claw back directors’ bonuses paid in the lead-up to a
company becoming insolvent, and disclosure of executive remuneration.
The division continued to provide advice on reforms to the prudential
framework for superannuation in response to the findings of the
Superannuation Working Group.
We also participated in the Review of the Commonwealth Government
Securities Market process, which reported in the 2003-04
Budget, and advised the Prime Minister on the range of options
it presented to government.
Economic conditions and analysis
This year was a particularly testing one for the Australian economy
in the face of the worst drought in a century, global economic
weakness, the war in Iraq and other international tensions. The
division provided economic assessments and advice for the Prime
Minister with respect to those issues and their impact on the Australian
and international economies. The division also conducted analyses
of domestic developments such as the outlook for consumption, household
wealth, business investment and the housing cycle.
On a quarterly basis, we continued to conduct macroeconomic forecasting
of the Australian economy as part of our participation in the Joint
Economic Forecasting Group (JEFG). The JEFG is an interdepartmental
committee that provides economic forecasts and assessments to the
government. The JEFG forecasts formed the basis of the Mid‑Year
Economic and Fiscal Outlook in November 2002 and the 2003-04
Economic Division provided advice to the Prime Minister on fiscal
strategy and the budget position, and worked with other divisions
to ensure the consistency of the department’s advice in all
policy areas. We also provided advice on the achievement of the
government’s strategic policy framework within overall fiscal
In addition we advised on debt management policy, on Commonwealth-State
financial arrangements and on emerging public financial management
issues such as private financing of public infrastructure.
The division played a significant role in the 2003-04 budget
process by again supporting the Prime Minister in his role as Chairman
of the Expenditure Review Committee of Cabinet, and provided coordinated
advice to the Prime Minister and senior ministers on expenditure
and revenue options.
The division conducted an evaluation of the 2002-03 budget
process, in consultation with other divisions and the Prime Minister’s
Office, and contributed to a broader evaluation conducted with
other central agencies. The results of the evaluations were taken
into account in planning for the 2003-04 Budget.
Taxation and superannuation policy
The division provided advice to the Prime Minister and his office
on a wide range of tax issues throughout 2002-03, including:
- revenue proposals in the context of the 2003-04 Budget
- personal income tax cuts
- the Review of International Taxation Arrangements by the Board
- the government’s business tax reforms (primarily in relation
to consolidation and the simplified imputation system)
- goods and services tax issues as they emerged.
The division also made a significant contribution to the Energy
Taskforce Secretariat’s consideration of fuel excise reform
and to the deliberations of the Work and Family Taskforce. We also
provided advice on philanthropy related tax issues raised by the
taxation subcommittee of the Prime Minister’s Community Business
We continued to provide advice on a number of the government’s
superannuation related election commitments, including choice of
superannuation, portability of superannuation, the reduction of
the superannuation surcharge and the government co‑contribution
for low-income earners. The division also contributed to the government’s
response to the High Court’s decision in Austin & Anor
v. The Commonwealth of Australia (2003),which dealt
with the application of the superannuation surcharge to state judicial
Workplace relations policy
In 2002-03, the division prepared advice for the Prime Minister
on the government’s workplace relations reforms, including
the government’s response to the Royal Commission into the
Building and Construction Industry, the expansion of the Commonwealth’s
unfair dismissal scheme, and the Australian Industrial Relations
Commission’s role in the Safety Net Review.
We continued to brief the Prime Minister on issues relating to
the operation of the General Employee Entitlements and Redundancy
Scheme and contributed to the government’s submission to
the Australian Industrial Relations Commission 2002-03 Safety
Net Review of wages.
Responding to the challenges of an ageing society is one of the
government’s strategic priorities. Economic Division coordinated
the department’s advice to the Prime Minister on the development
of policy to respond to the ageing of Australia’s population
and participated in the interdepartmental taskforce focusing on
challenges posed by an ageing society, which was chaired by the
Treasury. In this context, advice was provided to the Prime Minister
on retirement incomes, workforce participation (with a particular
focus on mature age workers), and managing expected increases in
government spending in areas affected by demographic change.
Industry, Infrastructure and Environment
In an address to the Committee for Economic Development of Australia
in November 2002, the Prime Minister identified areas that are
key whole-of-government strategic policy issues for the medium
term. These included issues on which the Industry, Infrastructure
and Environment Division provides core policy advice and analysis:
science and innovation; sustainable environment; energy; rural
and regional affairs; and transport.
To reflect the government’s strategic approach to those
issues, the Industry, Infrastructure and Environment Division was
reorganised during 2002-03 to enhance effort on natural resource
management issues - particularly water and vegetation management.
A new Natural Resource Management Branch replaced the Rural and
Environment Branch. Responsibility for rural issues, previously
handled by the Rural and Environment Branch, was transferred to
the Infrastructure and Regional Policy Branch. Changes were also
made within the Industry Policy Branch to establish a specialist
area to deal with competition and energy policy issues.
Regional and rural policy
The division undertook activities of particular significance to
regional and rural Australians during 2002-03, including:
- assisting with implementing a series of drought relief measures,
including changes to Exceptional Circumstances assistance, the
provision of one-off income support, and other drought initiatives
such as small business interest rate relief
- assisting in the development of the Sugar Industry Reform Programme,
designed to assist cane growers and help ensure the industry’s
- participating in Exercise Minotaur, the national simulation
of a foot and mouth disease outbreak.
We also provided advice on a range of policies aimed at improving
services in rural and regional Australia.
Natural disaster management oversight
Responsibility for the department’s oversight role in relation
to natural disaster management was transferred during 2002-03
from International Division to the Infrastructure and Regional
Policy Branch. The division chaired the annual meeting of the Commonwealth
Counter-Disaster Taskforce in December 2002, as well as meetings
held with relevant departments and agencies in the wake of the
bushfires that occurred in January 2003 - particularly those
in Canberra and surrounding regions. We were also involved in the
development of the Disaster Mitigation Australia Package,
aimed at reducing the economic and social costs of natural disasters.
The division provided advice on communications and information
technology issues, including issues surrounding the implementation
of the social bonus programmes funded by the partial sale of Telstra,
and the government’s consideration of the November 2002 report
of the Regional Telecommunications Inquiry.
In the transport policy area, we advised the Prime Minister on:
- measures to improve the provision of road and rail services
across Australia, including the development of the Auslink Green
Paper, which aims to achieve better integration of land transport
- reform of the Civil Aviation Safety Authority to strengthen
its accountability and improve the levels of industry consultation
- other policies and programmes to improve the efficiency and
safety of transport networks across Australia.
The division coordinated arrangements for a COAG meeting held
on 6 December 2002. The meeting agreed on significant
initiatives in a range of important policy areas, including counter-terrorism,
handgun control, public liability insurance, and indigenous child
We also coordinated the establishment of a review of the Mutual
Recognition Agreement and the Trans Tasman Mutual Recognition Arrangement.
Sport and tourism
The division provided advice on the development of the Tourism
Green Paper released in June 2003. The division was also closely
involved from an Australian Government perspective in planning
for major international sporting events to be held in Australia,
including the 2003 Rugby World Cup, the 2005 Deaflympics and the
Melbourne 2006 Commonwealth Games.
Industry, science and resources
As well as general industry policy issues, the division provided
advice on a number of major industry, science and resource issues
during 2002-03, including:
- development of new assistance arrangements for the Australian
automotive industry for the period 2005 - 06 to 2014 - 15
- development of a new pharmaceutical research and development
programme to replace previous assistance arrangements in 2004 - 05
- review of the National Biotechnology Centre of Excellence selection
- implementation of Backing Australia’s Ability initiatives
- establishment of the Science and Innovation Committee of Cabinet
- work of the Prime Minister’s Science, Engineering and
- establishment of the National Research Priorities
- restructuring of government support for the Australian Magnesium
Competition and energy policy
During the year the division also provided advice on:
- developing an Australian Government strategy for a joint Commonwealth-state
response to the recommendations of the COAG Energy Market Review
(the Parer review), and the need for a national energy policy
- establishing the Prime Minister’s Energy Taskforce of
officials, and enabling the smooth functioning of the Energy
Committee of Cabinet
- facilitating the Timor Sea Treaty negotiations, which provided
a framework for the development of Timor Sea oil and gas resources
to the benefit of Australia and East Timor
- assisting in the preparation of the government’s responses
to the Productivity Commission report on the National Access
Regime, and the Review of the Competition Provisions of the Trade
Practices Act (the Dawson review).
In addition, we advised on the development and implementation
of the National Strategic Framework for Attracting Foreign Direct
Investment and the restructuring of Invest Australia, and on the
future of National Competition Policy and associated payments to
the states beyond the expiry of the current agreements that underpin
the policy, in 2006.
Natural resources policy
The division provided support and advice in several emerging areas
of natural resources policy. We led the development of terms of
reference for a Productivity Commission inquiry into the impact
on landholders of regulations for the management of native vegetation
and other ‘non-water’ natural resources, and the development
of an Australian Government position on property rights over natural
resources, particularly water. A water taskforce, which includes
officials from a number of agencies, was established within the
division for the purpose of progressing the issue of water access
rights on a whole-of-government basis.
We also led the Australian Government’s participation in
negotiations with Queensland over a proposal to reduce land clearing
in that state, and to meet the Australian Government’s objectives
relating to greenhouse emissions abatement, biodiversity conservation,
and reduced land degradation.
The division also provided advice on the:
- continuing implementation of the $1.4 billion National Action
Plan for Salinity and Water Quality agreed to by COAG in November
- implementation of a $1 billion extension to the Natural Heritage
- continuing development of a national approach to coastal management
- implementation of Australia’s Oceans Policy
- review of the Australian Government’s fisheries policy
and issues relating to illegal fishing, particularly in northern
Australia and the Southern Ocean
- development of the Great Barrier Reef Water Quality Protection
- management of cultural and natural heritage issues.
We continued to provide secretariat support for the Sustainable
Environment Committee of Cabinet. With regard to environmental
issues, the division also advised on the:
- Energy Committee of Cabinet’s consideration of the tax
treatment of cleaner fuels and measures to encourage the adoption
of renewable fuels, including biofuels
- development of a forward strategy for climate change for Australia,
encompassing domestic and international elements, through Cabinet
and COAG processes
- development of climate change action partnerships with the
United States, Japan and New Zealand
- introduction of a new formal consultation process between the
Australian Greenhouse Office and the Industry portfolio, on greenhouse
Energy Taskforce Secretariat
The Energy Taskforce Secretariat was established in January 2003,
charged with developing a comprehensive and coordinated national
energy policy. The taskforce reports to the Energy Committee of
Cabinet and comprises high-level representatives from the department;
the Treasury; the Department of Transport and Regional Services;
the Department of Industry, Tourism and Resources; Environment
Australia; and the Australian Greenhouse Office. It is chaired
by Russell Higgins, Associate Secretary, and supported by a cross-portfolio
secretariat located in the department. The taskforce is scheduled
to conclude its work in November 2003.
During 2002-03 the taskforce played a role in ensuring
a high degree of coordination in the development of policies related
to energy, and prepared a number of memoranda to be considered
by the Energy Committee of Cabinet. One was an overview paper addressing
seven broad areas of energy policy: market development; resource
and/or industry development; energy security; environment; energy
efficiency or productivity; innovation; and revenue. The taskforce
also advised on excise reforms, announced in the 2003-04
Budget, which established a transition period for bringing all
fuels into the excise net from 1 July 2008.
The Associate Secretary also chaired an industry - government
working group responsible for examining ways of improving consumer
confidence in ethanol. Secretariat members were also involved in
the preparation of advice to ministers on ethanol related policy