Martin Parkinson accepts Australia Day honour with stark economic warning

Head of the Department of Prime Minister and Cabinet urges young adults not to take economic growth for granted

Martin Parkinson is one of Australia’s most respected public servants.

A former Treasury boss, now leading the Department of the Prime Minister and Cabinet, he was a central player in the reform era of Australian politics in the 1980s and 1990s, helping to drag the economy into the modern world.

He has been made a companion of the Order of Australia for eminent service to the community as a public servant, and for the development of economic policy and climate change strategy.

“It was a bit of a surprise, I must say,” he tells Guardian Australia. “You sort of suspect at some point in your career you might get recognised for something, but I didn’t anticipate anything.”

Parkinson is part of a generation of economists who made a genuine mark on Australian society.

Their work made it possible for the economy to record 25 years of uninterrupted growth (and counting) by ushering in huge changes to the country’s economic and institutional architecture.

His career in Canberra began in 1981 when he moved there to work for the Treasury.

At the time, the country’s fiscal position was challenging, its competitiveness eroded, unemployment was newly persistent and inflation was stubbornly high by historical standards.

Malcolm Fraser’s government was failing utterly to combat the stagnant growth. And the then Singaporean prime minister, Lee Kuan Yew, was warning Australia was on the pathway to becoming the poor white trash of Asia.

“One side of politics was in denial about its failures in government while the other side promised much and delivered little in terms of righting the economic ship – it was the lost opportunity of the Fraser years,” Parkinson recalled about the era, in a speech in 2015.

“Thankfully, although we didn’t know it then, this period was leading both major parties to a realisation that we couldn’t keep on as we were.”

But in 1983, with the election of the Hawke government, Australia embarked on one of the most significant reform programs seen in an advanced economy.

Parkinson was in the thick of it.

“We floated the currency, deregulated the financial system and opened up product and labour markets by sweeping away ossifying rules and regulations designed to create a cosy life for business and unions at the expense of consumers,” he has said.

“We also made major changes to macroeconomic policy. Our frameworks for monetary and fiscal policy were set out with a clear medium-term focus.

“And we created an institutional framework, with the establishment of the Productivity Commission and independent regulators, that delivered tough independent policy advice and ensured the implementation of policy within clearly specified frameworks, free of political interference.”

Parkinson says he could never have imagined how exciting public policy could be before joining Treasury, or that policy would go through a period of being based on rigorous analysis, and that economists would be “in the centre of the action”.

He says the range of things he worked on at Treasury show how diverse the job could be.

In 1985 he worked with the then treasurer, Paul Keating, to deliver the fringe benefits tax, the capital gains tax and large reductions in marginal income tax rates.

In the early 1990s he worked as a senior adviser to the then treasurer, John Dawkins, trying to steer the economy out of recession and get the budget back into shape.

In the late 1990s he contributed to international efforts after the Asian financial crisis to implement new approaches to the international financial architecture.

In the early 2000s he helped on postwar planning for Iraq, and Australia’s assistance missions to Papua New Guinea and the Solomon Islands.

But Parkinson has been warning, for a few years now, about one of the serious consequences of his generation’s success at modernising the economy. He says few people have lived experience of what it was like during a recession, and this had led to dangerous complacency.

An interesting statistic: over half of the current workforce (aged 15 to 64) were not even old enough to work at the time of the last recession. Many of Australia’s leaders in business, unions and political organisations have never experienced an economic downturn in their adult lives.

As he sits in his corner office of the Prime Minister and Cabinet building in Canberra, with large windows that look up the hill towards Parliament House, he fears the urgency of needing to compete to sustain growth in living standards has ebbed away, and that Australia’s young adults could be the first generation in modern history with living standards below those of their parents.

He hopes Australia’s political and business leaders figure out a way to work together to prevent that happening.


Gareth Hutchens

The GuardianTramp

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