The federal government’s pick for the next Productivity Commissioner, senior Victorian bureaucrat Chris Barrett, has pulled out of the role to take up another appointment.

Grattan Institute CEO Danielle Wood will replace Mr Barrett, who was to begin this month, as the recommended Productivity Commissioner for the next five years.

Treasurer Jim Chalmers announced in July he would recommend Mr Barrett to head the Commission, with a brief to refocus and renovate the organisation.

 On Wednesday, Mr Chalmers said Mr Barrett had informed the government he would not proceed with the appointment.

The Treasurer said Mr Barrett will be pursing another opportunity.

“Chris Barrett has decided not to proceed with the appointment,” he told reporters.

“That is ultimately a matter for him. As I understand it there is another opportunity that he has that has either been announced or is about to be announced. And he’s decided to take up that opportunity and I genuinely wish him well.”

Mr Chalmers described Ms Wood as an outstanding economist who would bring exceptional public policy expertise to the Productivity Commission.

Ms Wood was previously Principal Economist and Director of Merger Investigations at the Australian Competition and Consumer Commission, a senior economist at NERA Economic Consulting, and a senior research economist at the Productivity Commission.

She is the President of the Economic Society of Australia and co-founder and first Chair of the Women in Economics Network.

“Her track record of leadership and innovative research at the Grattan Institute will greatly contribute to the PC’s mission,” Mr Chalmers said.

Ms Wood will be the first woman to lead the Productivity Commission or any of its predecessor agencies that stretch back for more than a century.

Subject to the Governor General’s approval, Ms Wood will take up her position as soon as possible.