NO.078

OECD SURVEY OF THE AUSTRALIAN ECONOMY

The 2006 Economic Survey of Australia released by the OECD today provides a strong endorsement of the Government’s economic management and Australia’s economic performance.

The OECD Survey notes that Australia’s “recent macroeconomic performance continues to be impressive” and that “living standards have steadily improved since the beginning of the 1990s and now surpass all G7 countries except the United States”.

The OECD points out that “Wide-ranging reforms, particularly to promote competition, were instrumental in this respect. They promoted productivity growth, most notably in the second half of the 1990s. The greater flexibility engendered by these reforms, together with the introduction of robust monetary and fiscal policy frameworks, has also bolstered the economy’s resilience to a series of major shocks over the last decade .”

The OECD sees the main long‑term challenge facing the Australian economy is to sustain its impressive performance, particularly in the face of population ageing. The OECD goes on to say that sustaining performance requires progress on three fronts: improving fiscal relations across levels of government, boosting productivity growth and raising labour market flexibility and supply.

The Government has a significant reform agenda in these areas, with the implementation of the Work Choices and Welfare to Work reforms and the new CoAG National Reform Agenda.

The Government is working closely with the States and Territories to continue to clarify respective roles and responsibilities in areas such as health and aged care. For example, the Australian Government has provided funding of $152.7 million over five years to improve care for older patients in public hospitals by enhancing in-patient services and the transitions to appropriate long–term care.

The Survey’s recommendations on boosting productivity growth are directed primarily to further reform of network industries, such as freight transport and electricity. These reforms are well underway. In addition, the National Reform Agenda agreement reached at CoAG in February 2006 sets out a broad program of competition and regulatory reform as well as reforms to significantly enhance human capital.

The OECD has acknowledged the significant gains which the Government has made in reforming the labour market and improving participation.

The Government welcomes the 2006 OECD Economic Survey of Australia and the contribution it makes to debate on Australia’s economic policy challenges.

CANBERRA

31 July 2006