Print this pageWhat we do
PM&C's economic Division and Industry, Infrastructure and environment Division advise and support the Prime Minister on relevant issues.
We also coordinate briefings to the Prime Minister throughout the annual Budget process, and manage the work programme of the Council of Australian Governments (COAG).
How we measure our performance
For this output group, our overall focus is on ensuring that the Prime Minister, our executive and other stakeholders are satisfied with the timeliness and quality of our work.
We also conduct an annual evaluation of Budget preparation and coordination processes.
Key results in 2005–06
Recipients of Australia Day Achievement Awards
In 2005–06 PM&C continued to advise the Prime Minister on a range of economic and industry policy issues. Major areas of work included:
- COAG—we managed a substantial COAG agenda and supported two COAG meetings plus nine senior officials meetings (see Chapter 2, page 16)
- the annual Budget process—we coordinated contributions from many different parts of PM&C (see special feature opposite)
- national competition policy—we led a review of national competition policy that resulted in COAG's new competition and regulation reform agenda (page 22)
- energy issues—among other things, we supported Prime Ministerial taskforces on biofuels and nuclear energy (page 24 and 25), and
- water reform and climate change—we contributed to work on these issues at a national and international level respectively (page 26).
Feedback was obtained from the Prime Minister, his office and PM&C's executive throughout the year. This indicated that:
- the majority of economic and industry policy advice and coordination was timely and of high quality, and
- the personal and professional commitment of PM&C staff to delivering the 2006–07 Budget was appreciated.
In addition, two teams received 2006 Australia Day Achievement Awards for their contributions to their work on COAG issues (see page 16) and to workplace relations reforms (see photo at right).
Special feature—PM&C's role in the budget process
The annual Budget process is always a challenge as government seeks to pull together ideas and to work out which ones should get some of the limited funds available.
PM&C's part in planning the annual Budget process starts in May, right after the handing down of the previous Budget.
We work with the Treasury and the Department of Finance and Administration (Finance) to review what worked, what didn't, and how best to tackle the next Budget process.
The resultant Budget Process Rules are then reviewed by Cabinet, and released to agencies around September each year.
PM&C then organises the Senior Ministers Review (SMR) in November/December, when ministers write to the Prime Minister with their suggestions for the Budget.
SMR decides which ideas should be developed further for consideration by the expenditure Review Committee (ERC) of Cabinet.
Ministers then put together their portfolio budget submissions, where they provide details of all of their proposals with costings agreed by Finance.
PM&C is very busy at this time, working to check that submissions comply with SMR decisions and the Budget Process Rules. Where a submission does not comply, we will reject the submission and require changes—this often involves hard negotiation.
PM&C may also coordinate budget submissions on whole-of-government issues.
In addition, we provide briefings to the Prime Minister on the expenditure and revenue proposals to be considered at ERC and the Ad Hoc (Revenue) Committee.
ERC then considers which proposals should be funded, and takes its recommendations to Cabinet for endorsement. In the 2006–07 Budget, more than 470 expenditure measures were agreed at a cost of over $18 billion over four years.
Following preparation of the Budget papers, the Treasurer delivers the Budget on the second Tuesday of May.
PM&C's job does not end when the Budget is finalised. The reality of government is that there are always urgent, unavoidable and unforeseen proposals that come up between Budgets.
Issues that had to be dealt with between the 2005–06 and 2006–07 Budgets—and that involved many different parts of PM&C as well as many other agencies—included COAG developments (see page 16), and emergency and disaster situations across the world (page 44) and in Australia.
Major review of national competition policy undertaken
National competition policy (NCP) reforms to key industries—electricity, gas, urban water, telecommunications and transport—have delivered significant benefits to Australia over the last two decades.
However, further reform is important to maintain a strong economy as national population trends start to bite and global competition intensifies.
At its meeting in June 2005, COAG asked senior officials to look into and report back on a range of issues. Issues included the 2004 Productivity Commission report on national competition policy reforms, and the June 2005 report of the Prime Minister's Taskforce on exports and Infrastructure.
PM&C played a significant role in this work. We chaired the senior officials' working group—involving all states, territories and the Commonwealth. We also led the Australian Government officials taskforce that helped the Australian Government to formulate its position.
COAG considered the taskforce recommendations at its February 2006 meeting. These recommendations underpinned two of the three strands of a new National Reform Agenda to help deliver future prosperity:
- Competition. Governments have agreed to further reforms to encourage more productive investment in, and efficient use of energy, transport and other export-oriented infrastructure.
- Regulatory reform. Governments have agreed to a range of measures to ensure best-practice regulation making and review, and to tackle specific regulation 'hot spots'.
Under the third strand—human capital—a range of options are being explored to maintain a healthy, skilled and motivated population with high levels of workforce participation and productivity (see page 35).
Following on from the COAG meeting, PM&C is now playing a leading role in implementing COAG's decisions on competition and regulation, and more specifically in:
- leading the Commonwealth–State working group that is driving the implementation of the new competition and regulation reform agendas, and
- ensuring all governments have measures in place to protect against the introduction of red tape and to identify priorities for removing it.
Good progress is being made, with the July 2006 meeting of COAG noting that important milestones have been achieved:
- the COAG energy Reform Implementation Group has been established and an issues paper released for public comment
- an intergovernmental review of urban congestion is well underway, and
- the Productivity Commission has released a discussion draft on freight infrastructure pricing for public comment.
Work is continuing on specific reform proposals for COAG to consider at its next meeting in early 2007. PM&C is also coordinating across governments the establishment of the COAG Reform Council, which will independently assess the costs and benefits of specific reform proposals.
Australian government supports red tape reduction
Over the last decade, the Commonwealth, state and territory governments have reviewed over 1500 pieces of legislation, and where appropriate reformed these to reduce excessive regulatory burdens on business (red tape).
However, reducing red tape is an ongoing policy challenge and this was the focus of a government taskforce announced in October 2005.
The taskforce was asked to examine and report to the Prime Minister and the Treasurer on areas where regulatory reform could provide significant and immediate gains to business. It comprised:
- Mr Gary Banks, Chairman of the Productivity Commission (Chairman)
- Mr Richard Humphry, the former head of the Australian Stock exchange
- Mr Rod Halstead, a corporate law expert with Clayton Utz, and
- Ms Angela MacRae, small business consultant and Chairman of the Independent Contractors Association of Australia.
A whole-of-government secretariat including a PM&C officer was established to support the taskforce to deliver its report by 31 January 2006 as required.
PM&C—working closely with the Treasury and the Department of Industry, Tourism and Resources—led the development of the Australian Government response to the taskforce report. This was an effort that involved many areas of PM&C and most Australian Government agencies.
The interim government response to the report—which dealt with 86 of the report's 178 recommendations—was released by the Prime Minister and the Treasurer on 7 April 2006. The final government response was released on 15 August 2006. Among other things, the government has made a commitment to:
- increase fringe benefit exemption and reporting exclusion thresholds from 1 April 2007
- make it easier for new businesses to find out about their compliance obligations and the help available
- continue to work with state, territory and local governments on issues including OH&S, mine safety, workers compensation, chemicals and plastics, and building regulation
- enable businesses to do business with government online more securely and cost-effectively through the existing www.business.gov.au portal, and
- use a new Business Cost Calculator, to enable public servants to estimate the costs to business of compliance more accurately and consistently.
Next steps for PM&C will include helping to oversee the introduction of the new regulatory framework arrangements, and working with agencies to ensure that Cabinet papers meet the new standards.
Energy issues a focus for major work
Australia's energy needs and technologies were the subject of wide-ranging public debate in 2005–06.
PM&C played a central role in assisting government to explore key issues including biofuels and nuclear energy issues. It is also working on energy market reform as part of COAG's competition work agenda (page 22).
The biofuels industry was the focus of a Prime Ministerial taskforce announced on 30 May 2006.
The taskforce was asked to review the costs and benefits of biofuels, with attention to the impact of ethanol and other biofuels on health, the environment and motor vehicle operation. It comprised:
- Dr Conall O'Connell, Deputy Secretary, Department of environment and Heritage (Chairman)
- Dr David Brockway, Chief, Division of energy Technology, CSIRO
- Dr John Keniry, Chairman Ridley Corporation Limited, and
- Mr Max Gillard, Vice President and Chief Operating Officer, Toyota Technical Centre, Asia Pacific Australia.
PM&C set up a whole-of-government secretariat to support the taskforce to deliver its report. We also:
- published information about the taskforce and its work on our website at www.pmc.gov.au/biofuels
- advised government on options for implementing the taskforce's recommendations, and
- participated in meetings with oil companies, petrol retailers, car manufacturers, consumer groups, and the biofuels industry.
When releasing the taskforce report on 22 September 2005, the Prime Minister reaffirmed the government's commitment to achieving at least 350 megalitres (ML) of biofuels production by 2010. He also committed the government to:
- work with major oil companies to develop action plans to deliver the 350ML target
- demonstrate its confidence in ethanol blended fuel by encouraging E10 fuel use in Australian Government vehicles
- work with states and territories to enact more consistent fuel standards, and
- implement a range of other measures to improve consumer information on and confidence in ethanol blends.
PM&C provides advice to the Prime Minister on progress with these commitments.
At PM&C, we also monitor and encourage the use of e10 blended fuel in our own vehicle fleet. More than 39 per cent of the fuel we used in June 2006 was e10.
Uranium and nuclear energy was the focus of a Prime Ministerial taskforce announced on 6 June 2006.
The taskforce is reviewing the economic, environmental, health, safety and proliferation aspects of uranium mining and processing and of nuclear energy (UMPNER). It comprises:
- Dr Ziggy Switkowski, former chief executive officer of Telstra and nuclear physicist (Chairman)
- Professor George Dracoulis, a world expert on nuclear physics, nuclear reactors and their design
- Professor Warwick McKibbin, a world expert on the economics of energy and economic aspects of climate change
- Dr Arthur Johnston PSM, a world expert on the effects of uranium mining on people and the environment
- Mr Martin Thomas AM, who has extensive experience in the energy, science and commercial sectors, and
- Professor Peter Johnston, who has extensive experience in nuclear science and engineering.
PM&C has set up a whole-of-government secretariat to support the UMPNER taskforce, bringing together experts from the Department of Industry, Tourism and Resources and six other agencies.
Australia's Chief Scientist, Dr Jim Peacock, is also supporting the review, including through a peer review of the scientific aspects of the taskforce's report.
A draft report is to be released for public comment by November 2006 and a final report is to be delivered to the Prime Minister by the end of 2006.
More information about the review and its progress is available from our website at www.pmc.gov.au/UMPNER.
A key role on water and climate change issues
Water reform was another high priority in 2005–06.
PM&C provided water policy advice to the Prime Minister and to our Parliamentary Secretary, working closely with other agencies to bring a whole-of-government perspective to and support the Australian Government's important role in water policy in Australia.
Major areas of advice in 2005–06 included:
- the ongoing implementation of the National Water Initiative and related policy issues
- the Australian Government decision to provide $500 million for projects in the Murray-Darling Basin over five years
- a tender process under the Living Murray initiative, to purchase for the environment water saved through improvements in water use efficiency without reducing productive capacity, and
- a discussion paper canvassing issues of private sector involvement in water supply.
A new Office of Water Resources within PM&C was announced by the Prime Minister on 26 September 2006, to provide and coordinate policy advice across Australian Government agencies.
It will complement the activities of the National Water Commission, which was set up to facilitate implementation of the National Water Initiative.
Climate change. In 2005–06 PM&C contributed to significant international and national action to address climate change.
A significant area of work was the Asia–Pacific Partnership on Clean Development and Climate. PM&C led an interdepartmental committee of six agencies that advised the government on potential areas of work under the partnership.
The inaugural ministerial meeting held in Sydney on 10–11 January 2006 brought together Australia, the People's Republic of China, India, Japan, the Republic of Korea, and the US. Together, these six nations account for about half of the world's economy, population and energy use.
Ministers agreed on a communiqué, charter and work plan that outlined a ground-breaking new model of public–private taskforces to address climate change, energy security and air pollution.
PM&C is now working with key agencies to progress the partnership's work plan with partner countries.
Another significant area of work was the Plan for Collaborative Action on Climate Change endorsed by COAG in February 2006.
PM&C contributed to the development of the plan and is now leading work to implement it and explore the scope for further cooperation, working closely with the SA Department of the Premier and Cabinet.
We also continued to monitor and advise on the implementation of the Australian Government's domestic climate change policy.
Other issues receive attention
PM&C has been and remains active in many other areas of economic and industry policy.
Economic modelling. As a member of the Joint Economic Forecasting Group, we worked with the Treasury and Reserve Bank of Australia to prepare detailed forecasts of Australia's economic outlook. These forecasts form the basis of the economic and fiscal estimates published in the Budget papers and other government documents.
Australian Government finances. We advised on issues including the establishment of the Future Fund to accumulate sufficient financial assets to offset the Australian Government's unfunded superannuation liability.
Taxation. We advised the Prime Minister on tax issues including major reforms announced in the 2006–07 Budget.
Venture capital. As a member of the Venture Capital Review Advisory Committee, we advised on options for increasing activity in this sector. The government has now introduced a new investment vehicle, and reduced restrictions on venture capital limited partnerships.
Insurance. We continued to advise the Prime Minister on issues including competitive neutrality in medical indemnity insurance, and the effectiveness of recent reforms implemented via the Medical Indemnity Policy Review Panel.
Workplace relations. We advised the Prime Minister on aspects of the Workplace Relations Amendment (Work Choices) Bill 2005 including the content of awards, the role of the Australian Industrial Relations Commission, the new Australian Fair Pay Commission and the new Fair Pay and Conditions Standard.
Manufacturing. We provided advice on issues including assistance to Ford Australia announced by the Prime Minister on 5 May 2006, and the Australian Government response to the announcement by BlueScope Steel of the rationalisation of its Port Kembla operations.
Communications. We advised the Prime Minister on telecommunications issues including the further sale of Telstra, future-proofing of services in regional Australia and regulatory issues. We also advised on foreign and cross-media ownership and on digital broadcasting reform following a series of statutory reviews and public consultation conducted by the Department of Communications, Information Technology and the Arts.
Infrastructure. We kept the Prime Minister briefed on progress in implementing AusLink, the government's five year $15 billion national land transport plan, and the recommendations of the Prime Minister's exports and Infrastructure Taskforce. We are leading the development of what will be the first five–yearly report to COAG on infrastructure in early 2007.
Imports and exports. We advised the Prime Minister on quarantine and customs issues, including challenges related to the successful implementation of an integrated cargo management system.
Rural industries. We assisted government to develop its response to the report by the Agriculture and Food Policy Reference Group (the Corish report). We also advised on the delivery of drought relief measures and rural industry assistance more generally, and reviewed the tax treatment of plantation forestry jointly with the Treasury.
Tourism. We assisted the government to develop the National Tourism Investment Strategy launched in March 2006 and strategies to target emerging markets in India and China. We also advised on regulatory changes to reduce unethical behaviour by inbound tourist operators under Australia's bilateral tourism arrangement with China.
Environment. We advised the Prime Minister on changes to the Environment Protection and Biodiversity Conservation Act 1999 to improve its administration and outcomes, and on resource management policy including the $3 billion National Heritage Trust and $1.4 billion National Action Plan for Salinity and Water Quality.
Fisheries. We advised on domestic and international fisheries issues including the $220 million Securing our Fishing Future package announced in November 2005 and the management of southern bluefin tuna and the Torres Strait prawn fishery.
Sport. We advised the Prime Minister on issues including the Active Australia initiative to address childhood obesity, other government initiatives to promote and support sport, and aspects of the Australian Government's contribution to the successful staging of the Melbourne 2006 Commonwealth Games.
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