Productivity Commission veterans have criticised the Albanese government’s economic direction. 

At a speech to the Centre for Independent Studies in Western Australia, the inaugural chairman of the Productivity Commission Gary Banks said new strategies to prompt local manufacturing are a “fool’s errand”.

He said the Future Made in Australia scheme echoed past policy missteps by propping up “political favourites” without genuine competitive merit.

Peter Harris, another former head of the Productivity Commission, has criticised the quality of economic debate in the context of Australia's significant inflationary pressures - the first such test in a generation. 

“It seems the higher the seriousness, the dumber the policy discourse,” Harris said.

Both former PC leaders called for a shift towards fostering genuine productivity and competition, rather than policies that seek to prevent further economic decline. 

Harris has proposed the introduction of a new National Competition Policy, reflecting a throwback to strategies from the 1980s and early '90s that he notes increased household incomes by over $7,000, following their implementation.

Amid these critiques, Prime Minister Anthony Albanese has defended his government's initiatives, specifically the Future Made in Australia Act, designed to consolidate and enhance support for domestic manufacturing. 

“This is not old-fashioned protectionism or isolationism – it is the new competition,” Albanese said, describing the policy as a necessary adaptation in a global economy where traditional market mechanisms fall short.

This legislative push includes nearly $600 million in loans to support critical minerals projects and a further $840 million for the Arafura Rare Earths project, spearheaded by industry figure Gina Rinehart. 

These moves, according to Albanese, are crucial to seizing a “bigger slice of the action” for Australian workers and businesses in a changing world.

However, Banks remains unconvinced, suggesting that such government interventions distort rather than enhance competition. 

“If this is what is meant by new competition policy, it is hardly ‘new’,” he said, suggesting that rather than innovating, the government is retreading old, ineffective strategies under the guise of modernisation. 

“The government’s (self)-celebrated productivity agenda is mainly a spending agenda, indeed a spending more agenda. It is not one that involves the kind of regulatory reforms that are needed,” he said.

In detailing the specific failures of recent policies, Banks pointed to the energy sector and labour market reforms as areas where so-called improvements have instead been detrimental, aligning poorly with productivity goals. 

“Energy and labour markets ... have been particular casualties of so-called reform. I have to say I’m not sure how much more such reform our country can stand,” he said.