NO.005

OECD SURVEY OF THE AUSTRALIAN ECONOMY

The 2004 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 “in the last decade of the 20th century, Australia

became a model for other OECD countries” in relation to structural reform

and its adoption of medium term macroeconomic frameworks.

The OECD points out that these reforms have “conferred an enviable degree

of resilience and flexibility on the Australian economy”, resulting in

a prolonged period of good economic performance that saw the Australian economy

shrug off crises in its main trading partners, as well as a devastating drought

at home.

Looking forward, the OECD expects a continuation of strong economic growth

over the next two years, underpinned by strong productivity growth and accompanied

by low inflation and an unemployment rate around current levels. The OECD forecasts

the Australian economy to grow by 3.8 per cent in 2005 and 3.6 per cent in 2006.

The OECD mentions some risks to the outlook, including around the price of oil,

exchange rate volatility and adjustment in the housing sector.

According to the OECD, the two main long term challenges facing the Australian

economy are to raise Australian living standards and to prevent the fiscal burden

from rising significantly in the face of an ageing population and the rising

costs of delivering health services.

The OECD endorses the Government’s “pro growth” strategy

as the appropriate response to these challenges and suggests a number of reforms

to the labour market, product markets and to social policies to encourage more

people to join and remain in the work force and to steadily raise their productivity.

The OECD Survey also outlines the productivity benefits of Australia’s

wide ranging competition reforms and notes that we have a process in place for

considering a future reform agenda.

The OECD recognises that the Government has made “commendable progress”

towards reforming the tax system, and supports the direction of the Government’s

workplace relations and welfare reform agendas. The OECD endorses the Government’s

proposed changes to the Disability Support Pension and notes the employment

costs of current unfair dismissal laws.

The Government welcomes the 2004 OECD Economic Survey of Australia and the

contribution it makes to debate on Australia’s economic policy challenges.

MELBOURNE

Contact: Amanda Kennedy

03 9650 0244