Leading a climate of change

For more than two decades, economist Dr Martin Parkinson has been playing an important role in helping to shape national and international policy. Today he is one of two Adelaide graduates leading the Federal Government's new Department of Climate Change, injecting economics into sustainable environmental practice.

Tackling climate change was one of the key pillars of the new Rudd Government's election platform. True to its word, the Government signalled its commitment to climate change policy in Australia by establishing a Department of Climate Change just nine days after being elected.

While much has been written about the new Minister for Climate Change, University of Adelaide graduate Senator Penny Wong, the all-important role of Secretary of the Department of Climate Change - the most senior Public Service role -- has gone to yet another Adelaide graduate, Dr Martin Parkinson.

A macroeconomist, Dr Parkinson is a graduate of Adelaide (B Ec (Hons) 1980), the Australian National University (ANU) (M Ec 1982) and Princeton (PhD 1990). He has had a long and distinguished career in the Commonwealth Public Service as well as with the International Monetary Fund (IMF).

Dr Parkinson spoke with Lumen about his student days at Adelaide, his career, the importance of economics in public policy, and what he describes as "the most challenging and exciting initiative in government".

Lumen: What can you tell us about your time as a student at the University of Adelaide?

Martin Parkinson: I started a Bachelor of Economics degree in 1977 and graduated with Honours in 1980.

Treasury funded me to do my Honours year which didn't involve any time in the department, but a pre-commitment to work in Treasury once I graduated. In exchange they provided a stipend for my studies.

Having come straight from secondary school, it was really exciting being at university where there were lots of people with different perspectives who were prepared to argue and debate. It was an environment where you could question the status quo and that was great.

It was at the University of Adelaide that I realised that economics as a discipline could really make a difference to the quality of people's lives, for good or for bad. This was the period of the Fraser Government - the Whitlam Government had been sacked with all the turmoil that ensured. Australia as a nation faced the multiple problems of high unemployment, poor growth, poor fiscal performance, relatively poor productivity - there were many economic issues that were all intermingled and there was a real question of what was the right way
to go forward.

Within the Economics Department these were big issues that we, as students, were trying to get our heads around at a time when there clearly wasn't a consensus in the economics profession about what was the right way to address these things.

Also, the social life at the University was outstanding. There was always something happening - bands, movies, debates - and that was very enjoyable.

Lumen: How would you describe the progression of your career in the Public Service?

MP: I've tended to describe myself quite deliberately as an "accidental policy adviser". I didn't consciously set out to have a career in Treasury or, indeed, to go into policy advising in the long-term.

I was attracted to going to work in Treasury for a while, though, in part because (distinguished academic and leading economist) Geoff Harcourt used to say: "You need to be willing to play on the opponents' home ground before you can expect them to play on yours."

And this was a period that was really tumultuous - people didn't know what the right policy mix was, there were huge debates about that, and Treasury itself was a dramatically different organisation to what it is now.

I never imagined when I started studying economics that Australia was on the verge of two decades of dramatic change in public policy, and that economists would be central to those discussions. It was only when I got to Canberra that I realised we were on the verge of this big change. As my friend Ken Henry - the Secretary of the Treasury - has said previously, economists were in the "engine room" of that change.

I came to Canberra and worked on reform of government business enterprises when the idea of appropriate pricing regimes was alien to most of the public sector. In 1985 I was part of a small team to prepare a draft White Paper on tax reform - Paul Keating's "option C". When I came back from Princeton, I was appointed senior adviser to John Dawkins when he was Treasurer in the midst of the recession of the early '90s. I got to work on labour market and industrial relations issues at a time when there was liberalisation occurring there, and on macroeconomic policy and economic forecasting.

I never set out to become a policy adviser, but I was just hooked on it. I was incredibly lucky that I arrived in Canberra just at the time things were beginning to change, and I've had this fantastic seat at the table through many of the major issues over the period since the early `80s.

Lumen: Tell us about your work with the International Monetary Fund.

MP: I went to the IMF in mid 1997, just as the financial crisis in Thailand was occurring, and stayed there until the end of 2000.

At the IMF I got to work on South Africa, which was just coming out of the apartheid era and faced the generation long challenge of delivering better opportunity and living standards to the bulk of the population. But I also worked on reform of the international financial system as a result of the aftermath of the 1997 Asian crisis.

I came back from the IMF at the beginning of 2001 and became Deputy Secretary of the Treasury when Ken Henry was promoted to Secretary. I continued to work on IMF reform in part through running the G-20 (Group of Twenty summit) in 2006 when it met in Australia.

Lumen: How did you move from that kind of work to what you're doing now, with climate change?

MP: Last year I was seconded to head up the Task Group on Emissions Trading - established by Prime Minister Howard - and its subsequent work, designing the emissions trading scheme and beginning to focus on climate change. And now I find myself running what I think is the most challenging and exciting initiative in government - the new Department of Climate Change.

Last year Ken Henry gave a speech about the need for Treasury to be more centrally involved in water, climate change, and the like - I think it was really a case of convincing the political process that more of the same wouldn't work and we needed to think again about how we responded to climate change. In doing so, it became a natural entry point for economists into the issue.

We have to marry science and economics together in the environmental area. We need to have a good appreciation of the science in order to understand what is happening and to understand the consequences on the environment, on human wellbeing and the like. But then you need economics to think about how best to meet the challenge that the science has highlighted. I see science and economics as the two building blocks upon which all of the work we do will be constructed -together, they provide the foundation for everything we're aiming to do.

STORY DAVID ELLIS