As a long-term critic of the Productivity Commission, and someone who has called for their abolition, even I think the Prime Minister’s recent attack on the government-funded think tank was unfair and inaccurate.
Mon 31 Aug 2026 14.24 AEST
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Human rights advocates have lambasted Western Australia’s Cook government over its proposed “extraordinary powers” for police to use against those protesting a major defence and weapons expo in October.
Parton was famously not-political. It’s how she managed to be so political. She refused to become bogged down in terms or fights over identity politics, while she quietly got on with the work of making change.
As a long-term critic of the Productivity Commission, and someone who has called for their abolition, even I think the Prime Minister’s recent attack on the government-funded think tank was unfair and inaccurate.
Let’s start with unfair.
Economists are renowned for our intractable disagreements and inability to predict the future. Indeed, it’s often observed that the key role of economists is to give astrologers a better name.
But while there is much that economists disagree about, there are important things that unite us, including our view that Prime Ministers are always willing to spend our money to buy themselves some political capital.
And so it goes that Anthony Albanese, like his predecessor Scott Morrison, is willing to spend tens of billions of our dollars shoring up his party in Western Australia.
While it’s considered impolite to say so, all prime ministers love to splash cash to woo voters.
John Howard’s private health and private school subsidies have cost us tens of billions; Kevin Rudd had his $20 billion Building Australia fund. Tony Abbott promised to reduce the deficits yet also promised to “build the infrastructure and the roads of the 21st century” with his Treasurer Joe Hockey’s first budget promising to “take the Government’s total investment to $50 billion by the end of the decade”. And of course, it was Morrison who signed off on the $370 billion secondhand submarine deal. To date, Anthony Albanese has seemed stingy in comparison.
Like every economist I know, I think Scott Morrison’s sweetheart deal for WA was an enormous waste of our money, but what’s even worse is how little political capital it bought him.
The deal was announced in 2018, and at the 2019 election the swing against the Liberals in WA was more than twice the national average. And in 2022, the Liberal vote collapsed with a nine per cent swing against them. Never before has so much public money been spent buying so few votes.
As there was never a real policy case for shovelling Australian taxpayers’ money onto WA voters, it was obviously unfair for the Prime Minister to attack the Productivity Commission for saying what every economist thinks.
But it was also inaccurate for him to call his government’s $40 million think tank, with a chair chosen by his government, economic rationalists.
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While I’m no fan of economic rationalism, it’s a long time since the Productivity Commission was willing to call BS on subsidies for the politically powerful.
Back in 2018, Scott Morrison used the Commission to build the case for why WA was getting a raw deal from the GST deal. As WA’s own Mathias Cormann said, “were able to secure the Productivity Commission inquiry into the national growth and productivity implications of GST sharing arrangements. On the basis of that inquiry, we have put together a plan, which works through a transition to a better formula.”
And even though the then-Morrison government’s changes went further, and cost far more, than the Productivity Commission had recommended, the Commission chose strategic silence over policy principle when Morrison whipped out our cheque book to shore up his vote.
Standing up to powerful groups has never been a strength of the Commission. While they have a long track record of calling for cuts in public spending for those in need, they have always struggled to raise so much as an eyebrow, let alone the alarm, about Australia’s penchant for fossil fuel subsidies.
The Queensland and WA State treasuries have not just admitted they spend billions on subsidies for the fossil fuel industry; both have even asked for a larger share of the GST to help them fund the high cost of hosting the gas and coal industry in their states. The Productivity Commission, however, has never been able to spot such largesse.
Indeed, when current Chair Danielle Wood worked at the Grattan Institute, she was concerned about fossil fuel subsidies, but since taking on a government-funded role, she has not been able to spot a single fossil fuel subsidy worth her Commission’s attention.
The Australian economy faces a wide range of challenges and opportunities, but as long as groups like the Productivity Commission remain resolute that it is only those with the least who receive too much from the government, we will never be able to restore productivity growth or the population’s faith in democracy.
The Commission is right to call out Anthony Albanese’s latest gift to WA, but there was nothing stopping them from expressing the same concerns back in 2018, or in every year since.
Personally, I’m not sure why anyone would want to be called an economic rationalist, but until the Commission is willing to be as hard on Liberal governments as it is on Labor, and as hard on mining subsidies as it is on welfare spending, then it will continue to look weak when the times call for strength.
Richard Denniss is a prominent Australian economist, author and public policy commentator, and has spent the last twenty years moving between policy-focused roles in academia, federal politics and think-tanks. He is a regular contributor to The Monthly and co-chief executive of the Australia Institute.
