Output 1.1—Economic and Industry Policy

Page Index

• Qualitative assessment
• Key results

Qualitative assessment

Methodology

The Prime Minister, the Prime Minister's Office and the departmental Executive provided regular informal feedback on Output 1.1. Additional feedback was provided through regular meetings and formal discussions with the Prime Minister's Office and the departmental Executive.

Formal individual performance reviews, conducted at all levels, provided a mechanism for further feedback from the departmental Executive.

Feedback

Output 1.1 was assessed as having provided effective and timely advice, briefing and support on economic, industry, infrastructure, environment and resource policy issues.

Specific feedback from our key stakeholders indicated that the Economic Division played an important role in developing the 2004-05 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.

As in previous years, positive feedback also indicated satisfaction with the role we played in providing advice and support for the effective operation of COAG, and with the work of the Economic Division and Industry, Infrastructure and Environment Division across the gamut of their responsibilities.

The assessment of our performance assisted us to refine our systems, procedures and work practices and to determine priorities.

Feedback from the Prime Minister and the Deputy Prime Minister indicated a very high level of satisfaction with the work of the Water Taskforce and the outcome achieved at the June 2004 meeting of COAG.

Feedback from the Prime Minister, his office and the departmental Executive also indicated a high level of satisfaction with the Energy Taskforce work which culminated in the release of the white paper Securing Australia's Energy Future, and with the process which underpinned the development of the white paper.

Key results

Economic Division

The Economic Division is the Prime Minister's principal policy adviser on macroeconomic, financial sector, taxation and workplace relations issues.

Superannuation policy and demographics

The challenges presented by the ageing of Australia's population entailed ongoing policy development throughout 2003-04. The division coordinated the department's role on an interdepartmental taskforce, chaired by the Department of the Treasury, investigating ageing and related issues. The division contributed to the discussion paper Australia's Demographic Challenges and the policy paper A more flexible and adaptable retirement income system. This work included advising the Prime Minister on retirement income policy, labour force participation issues and the management of the long‑term budgetary implications of the population growing older.

The division continued to provide advice to the Prime Minister on other policies to encourage Australians to save for their retirement, including advice on choice of superannuation, portability of superannuation, reductions in the superannuation surcharge and enhancements to the government superannuation co‑contribution.

Taxation policy

During the year, the division provided advice to the Prime Minister and his office on a wide range of tax matters, in particular:

• personal income tax reductions and work incentive issues
• the review of the income tax self‑assessment system
• tax issues related to charities and philanthropy
• revenue proposals for the 2004-05 Budget.

The division also chaired an interdepartmental committee on small business matters that advised the government on a range of issues, including taxation, superannuation regulation and competition issues. This work led to the government's announcement in the 2004-05 Budget of a tax simplification package for small business (and the Prime Minister's subsequent statement of 6 July 2004, Committed to Small Business). The Economic Division also provided advice on the taxation aspects of a range of measures announced in the Prime Minister's statement Securing Australia's Energy Future, including the business credit and excise reforms. Advice was also provided on the tax‑related aspects of the Work and Family Taskforce.

Financial sector policy

The division continued to play a major role in issues relating to medical indemnity insurance. We contributed to a series of major policy measures aimed at improving the affordability and security of medical indemnity insurance, and chaired the Medical Indemnity Taskforce, which helped to achieve coordinated policy development and advise ministers on medical indemnity issues.

Several measures announced during the year placed heavy demands on the division to provide policy advice and other support. They included:

• modifications to the ‘incurred but not reported' contribution of doctors who were members of United Medical Protection/Australasian Medical Insurance Limited
• setting up and responding to the recommendations of the Medical Indemnity Policy Review Panel
• changes made to the High Cost Claims Scheme and the introduction of the Exceptional Claims Scheme
• the implementation of the Run-off Cover Scheme, to provide security for doctors ceasing to practise, and a premium subsidy scheme for doctors facing relatively high premiums
• the provision of additional assistance for rural general practitioners.

In 2003-04, the division also advised the Prime Minister on tort law reforms to improve the availability and affordability of public liability and professional indemnity insurance.

The division's other work on financial sector policy focused on policies to improve the disclosure of information to investors and to protect consumers. This included work on:

• reforms to address corporate disclosure as part of the Corporate Law Economic Reform Programme
• the implementation of the Financial Services Reform Act 2001, which will improve the disclosure of financial products and fees to consumers
• reforms to the prudential framework for superannuation, including the introduction of the Superannuation Safety Amendment Bill 2003
• the implementation of the recommendations of the HIH Royal Commission.

Economic conditions and analysis

The division continued its role of advising the Prime Minister on current and prospective economic developments, domestic and international. This advice covered all major releases of economic data and such issues as the rise in the exchange rate that occurred during much of 2003-04, the housing cycle and factors underlying the strong growth in private sector demand in Australia. The division also coordinated the department's advice on the government response to the Productivity Commission's Inquiry on First Home Ownership.

A key part of the division's work on economic developments stems from its participation in the Joint Economic Forecasting Group. The group continued to meet to discuss the economic outlook and report to the government on issues driving the performance of the Australian and international economies. The group's reports formed the basis for the economic parameters presented in the mid-year economic and fiscal outlook and 2004-05 Budget papers.

Fiscal policy

The Economic Division provided advice to the Prime Minister on fiscal strategy and the budget outlook. The division worked with other divisions to ensure that the department's advice in all policy areas was consistent with the government's fiscal priorities.

In addition, the division advised on establishing an accumulation scheme for the Public Sector Superannuation Scheme, on Commonwealth-State financial arrangements, and on public financial management issues such as extinguishing the government's liabilities to the Telstra and Australia Post superannuation schemes.

The division played a significant role in the 2004-05 Budget process by again supporting the Prime Minister in his role as Chairman of the Expenditure Review Committee, and advising the Prime Minister and senior ministers on expenditure and revenue options.

The division conducted an evaluation of the 2003-04 Budget process, in consultation with other divisions and the Prime Minister's office, and contributed to a broader evaluation conducted with the departments of Finance and Administration and the Treasury. The results of the evaluations were taken into account in planning for the 2004-05 Budget.

Workplace relations

In the context of the government's workplace relations reform agenda, the division prepared advice for the Prime Minister on a broad range of issues such as:

• redundancy pay standards
• workers' compensation and occupational health and safety frameworks
• the Australian Capital Territory's industrial manslaughter legislation
• the General Employee Entitlements and Redundancy Scheme.

The division also contributed to the development of the government's submission to the Safety Net Review 2004 and advised the Prime Minister on the ongoing evolution of building industry reform, including the introduction of the Building and Construction Industry Improvement Bill 2003.

Industry, Infrastructure and Environment Division

The Industry, Infrastructure and Environment Division is the Prime Minister's principal policy adviser on microeconomic, industry, infrastructure and environment and resource issues. During 2003-04, the division hosted the Water Taskforce that developed the National Water Initiative and the agreement to address water over-allocation in the Murray-Darling Basin.

Regional and rural policy

The division undertook activities of particular significance to regional and rural Australians during 2003-04, including assisting in:

• the formulation of the government's response to the report of the Livestock Export Review (known as the Keniry Report) and the resolution of the MV Cormo Express issue
• the development of drought relief measures
• the development of the Sugar Industry Reform Programme 2004, designed to assist the industry to reform itself and secure a viable future
• providing advice on the development of the Australia-United States Free Trade Agreement as it affects rural Australia.

We also provided advice on a range of policies aimed at improving services in rural and regional areas of Australia.

Transport policy

The division provided advice on policies and programmes to improve the efficiency and safety of transport networks across Australia. The division contributed to the development of the government's new land transport plan, AusLink, which aims to better integrate land transport infrastructure and provide a new funding framework based on a broader and more strategic network of road and rail links.

Communications policy

The division provided advice on communications and information technology issues, including issues surrounding the government's response to the Regional Telecommunications Inquiry, the anti-siphoning regime, and the audiovisual and broadcasting elements of the Australia-United States Free Trade Agreement.

Bushfire inquiry

The department established the National Inquiry on Bushfire Management, Prevention and Mitigation announced by the Prime Minister in October 2003. The report of the inquiry is currently being considered by COAG members with a view to making a formal COAG response to the report prior to the 2004-05 bushfire season.

Intergovernmental relations

The division coordinated arrangements for the COAG meetings held on 29 August 2003 and 25 June 2004. The meetings agreed on significant initiatives in a range of policy areas, including important developments in water reform.

During the year a new COAG website, www.coag.gov.au, was launched.

The division also provided advice in other areas of intergovernmental relations, such as the review of the Mutual Recognition Agreement and the Trans-Tasman Mutual Recognition Arrangement, and a review of the protocols and principles under which ministerial councils operate.

Sport and tourism policy

The division provided advice on the Tourism White Paper released in November 2003. The division was also involved in the planning of the Australian Government's contribution to the staging of the 2003 Rugby World Cup and other major international sporting events in Australia, including the 2005 Deaflympics and the Melbourne 2006 Commonwealth Games.

Industry, science and resources policy

The division provided advice on a wide range of industry, science and resources issues, including:

• the government's comprehensive science and innovation package, Backing Australia's Ability—Building Our Future through Science and Innovation
• the government's response to a Productivity Commission review of assistance arrangements for the textile, clothing and footwear industry
• structural adjustment in the automotive manufacturing sector and options for assistance for displaced employees
• the agenda and operations of the Prime Minister's Science, Engineering and Innovation Council
• policy relating to the biofuels industry.

Competition and energy policy

During the year, the division provided advice on a number of competition and energy policy matters, including:

• the development and implementation of the joint Commonwealth-state response to the recommendations of the COAG Energy Market Review (known as the Parer Review), including the Ministerial Council on Energy report presented to COAG (out of session) in December 2003
• Productivity Commission work, in areas such as the reviews of the National Access Regime and the Gas Access Regime
• national competition policy issues, such as the National Competition Council's 2003 assessment of progress in implementing competition policy, and the government's commissioning of the Productivity Commission to consider competition policy reform
• trade practices issues, such as the implementation of the government's response to the Review of the Competition Provisions of the Trade Practices Act 1974 (known as the Dawson Review), and the Senate Economics References Committee inquiry into the effectiveness of the Act in protecting small business
• assistance provided to industry, such as assistance provided to the Australian Magnesium Corporation, and applications for assistance through the government's Strategic Investment Coordination process.

Natural resources and environment policy

The division continued to provide support to the Sustainable Environment Committee of Cabinet, which considers strategic natural resource management policy issues.

The division provided advice on climate change policies. We participated in the development of the climate change strategy package included in the 2004-05 Budget, and advised on the climate change policy included in the Energy Statement. We worked with the International Division and other agencies in engaging internationally on climate change issues, at bilateral and multilateral levels. The division also advised on the government's response to the report of the Review of the Mandatory Renewable Energy Target (known as the Tambling Report) and on other policies relating to renewable energy.

Advice was also provided on environmental aspects of the range of measures in the energy white paper, including the energy efficiency, low-emissions technology and transport measures.

The division chaired the interdepartmental committee that advised the government on proposals to reduce land clearing in Queensland. It also chaired the Taskforce on Queensland Landclearing established by the Prime Minister to conduct consultations with stakeholders, and the working groups looking at the greenhouse gas emissions and biodiversity aspects of the proposals.

The division provided advice on a range of other natural resource management and environmental policies, including:

• the finalisation of the Representative Areas Programme and the Reef Water Quality Protection Plan for the Great Barrier Reef Marine Park
• the government's response to the Productivity Commission report Impacts of Native Vegetation and Biodiversity Regulations
• the finalisation of the South-East Regional Marine Plan (developed under Australia's Oceans Policy)
• the implementation of the government's flagship environmental programmes, the $1.4 billion National Action Plan for Salinity and Water Quality and the $3 billion Natural Heritage Trust
• the establishment of the national biodiversity hotspots framework, and the development of the Regional Biodiversity Hotspots Programme
• illegal fishing and, particularly, enhanced surveillance of Southern Ocean fisheries
• the use of progressively tighter fuel standards and vehicle emissions standards to promote environmental outcomes
• environmental aspects of the Australia-United States Free Trade Agreement.

The division also advised on significant heritage matters, particularly the Department of the Environment and Heritage's Distinctively Australian heritage programme.

Water Taskforce

The division hosted the taskforce that successfully developed the intergovernmental agreements on National Water Initiative (NWI) and to address water over-allocation in the Murray-Darling Basin. These agreements were endorsed at the June 2004 COAG meeting. The taskforce involved officials from the departments of the Prime Minister and Cabinet; Agriculture, Fisheries and Forestry; Environment and Heritage; and Transport and Regional Services. These taskforce members liaised closely with their parent departments to ensure a comprehensive whole-of-government approach to the NWI.

The NWI is a significant initiative that builds on the existing COAG water reform framework, with a view to increasing the certainty of access to water both for those investing in the water industry and for the environment, by facilitating water trade between irrigation districts and across borders where this is physically possible (and environmentally sound), and by encouraging further water efficiency measures in urban Australia. Over the next 12 months each state or territory will develop an implementation plan detailing how the NWI will be implemented in that jurisdiction. Implementation of the NWI will be overseen by the Natural Resource Management Ministerial Council.

An agreement was also signed on funding for the Murray-Darling Basin at the August 2003 COAG by the Prime Minister, the premiers of New South Wales, Victoria and South Australia, and the Chief Minister of the Australian Capital Territory. This agreement outlines the arrangements for investing $500 million in the recovery of water within the basin, over five years, primarily to improve the management of six ecologically significant sites along the River Murray which have been identified as part of the first-step decision of the Murray-Darling Basin Ministerial Council's Living Murray initiative.

Energy Taskforce Secretariat

The Prime Minister released Securing Australia's Energy Future, a white paper providing a comprehensive policy framework for the production and use of energy in Australia, on 15 June 2004.

Securing Australia's Energy Future represents the first comprehensive examination of Australian energy policy to occur in some considerable time. The white paper covers resource development, stationary energy markets, transport energy markets, fuel excise reform, energy efficiency, energy security, energy and climate change, energy and the environment, and energy innovation. Securing Australia's Energy Future identifies a number of major new initiatives, including a complete overhaul of fuel excise arrangements, a longer-term climate change strategy, including substantial support for technology development and demonstration activities, and the introduction of ‘solar cities' trials; and policies to improve Australia's energy efficiency performance. The government also announced that it would not be increasing or extending the Mandatory Renewable Energy Target.

The white paper was prepared by the Energy Taskforce, chaired by the department's Associate Secretary, Russell Higgins. The taskforce was supported by a cross-portfolio secretariat comprising senior officers from the departments of the Prime Minister and Cabinet, Industry, Tourism and Resources, Environment and Heritage, Transport and Regional Services, and the Treasury; and the Australian Greenhouse Office. The taskforce reported to the Energy Committee of Cabinet.

Mr Higgins also chaired the government's Ethanol Confidence Building Working Group, which reported to the Deputy Prime Minister on 3 May 2004.

Preparations for the white paper commenced in February 2003. The secretariat prepared more than 23 substantive policy papers for the Energy Committee of Cabinet, covering a range of energy topics. The taskforce held 24 meetings, and Mr Higgins and members of the secretariat held 164 meetings with stakeholders. Thirty-three informal submissions were received, from industry and other groups.

There has been very strong interest in the document, with 15,697 visitors to the website and 9,006 downloads of the full document up to 30 June 2004.

The operation of the taskforce and its secretariat provided a strong whole‑of-government focus for energy policy. It ensured that issues were considered from a wide perspective and that balances were struck between competing policy objectives. Papers which the taskforce provided to the Energy Committee of Cabinet were supplemented by presentations from the chairman of the taskforce. This allowed for interactive discussion on policy issues.

The taskforce was scheduled to complete its work on the white paper by November 2003, but its term was extended at the request of the Prime Minister.