New chief mandarin Parkinson warns of complacency

By Stephen Easton

December 3, 2015

Prime Minister Malcolm Turnbull has confirmed former Treasury secretary Martin Parkinson will succeed Michael Thawley as head of the Department of the Prime Minister and Cabinet. His appointment comes as Parkinson warned Australia has largely frittered away away the gains of the mining boom and that complacency meant Australia could no longer claim world best in policy design or economic performance.

He begins the job on January 23, returning to the public service after being informed his services were no longer required early in Tony Abbott’s time as PM.

Dr Parkinson also led the former Department of Climate Change between 2007 and 2011.

Turnbull’s statement said:

“He has had an extensive and distinguished career as an economist at the national and international level as well as making a significant contribution to public administration in Australia at the highest levels.

“I look forward to working with Dr Parkinson in his new role.”

The Mandarin publisher Tom Burton sees several key challenges ahead for Parkinson, who has been widely expected to take over the role since the recent announcement that Thawley would step down early next year.

Yesterday, the respected economist gave the 5th Warren Hogan Memorial Lecture, discussing Australia’s place in a region where the primacy of the United States is waning.

In the speech he called on the US to be more strategic in its economic policy for the fast developing Asian region, arguing this is what the US had done when it promoted the Marshall plan for Europe and a similar approach to the rapid reconstruction of Japan, post WWII. The speech was based on a paper Parkinson has recently written for publication by his alma mater Princeton University.

He also penned a paper The Lucky Country: Has it Run out of Luck?In this paper he argued the opportunity offered by the terms of trade shock and resulting revenue boom was frittered away:

“Rarely do developed economies experience such dramatic terms of trade booms. And while Australia is not unique in frittering away the benefits, this is something more typically associated with developing economies than developed,” Parkinson wrote.

” … a quarter century of uninterrupted economic growth means that many of the leaders of our firms, unions, and even political organisations, have never experienced an economic downturn in the adult lives. Indeed, half of the population of working age population (15-64) had not even entered the workforce in 1990-91, the time of our last recession!”

“The result is that complacency became endemic during the 2000s — the urgency of needing to compete to sustain growth in living standards ebbed away as we experienced the biggest, and longest, terms of trade boom in our history. As a result of that complacency, Australia can no longer claim to be world-best in our policy design, and we are far from world best in our economic performance, notwithstanding that we avoided much of the impact of the GFC,” Parkinson wrote.

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