The mining boom and jobs all round have made us fat and lazy, according the World Trade Organisation. Its first examination of Australia since the financial crisis finds us complacent, with neither side of politics keen on the sort of economic reforms that drove prosperity in the 1980s and 1990s.
The Organisation says the labour market, infrastructure and tariff reforms of the 80s and 90s doubled our rate of productivity growth and pushed our ranking from twelfth to second in the OECD productivity tables, accounting for more than half our income growth.
Since the latest mining boom Australia’s growth in productivity has stopped and gone backwards, a matter of concern “given its importance in raising living standards in the longer term”.
“Soaring export prices and low unemployment seem to have reduced the appetite for further structural reforms,” the Organisation says... “possibly affecting the prospects for achieving sustained growth in the future”.
Although the Productivity Commission is expert at conducting cost-benefit analysis, “little of the nearly $17.5 billion of gross annual Commonwealth assistance to industry is regularly evaluated to determine whether it yields value for money”.
Launched by the Howard government in 2005 and relaunched by the Rudd government in 2008 after the 2020 Summit, moves the push for a seamless national economy “has been rather slow”.
If we were interested, “competitive reforms in coastal shipping and aviation, significant transport inputs, offer the potential to stimulate innovation and productivity more widely”.
If implemented scheduled tariff reductions for the automotive, textile, clothing and industries would deliver further benefits.
Trade Minister Craig Emerson said he welcomed the report, which vindicated “Australia’s enthusiastic embrace of free trade and our commitment to further reducing trade barriers around the world”.
It will be discussed at meetings of the WTO in Geneva over the next two days.
Separately-released figures show Australia’s run of trade surpluses coming to an end in February with a deficit of $205 million brought about by higher fuel prices and lower gold exports.
Westpac is forecasting a 0.2 per cent slide in economic growth in the March quarter on the basis of the news, backing a suggestion in a Treasury briefing that economic growth would be flat or negative in the March quarter int he wake of the floods and cyclone.
The Reserve Bank board left interest rates on hold at its Melbourne meeting yesterday (TUES) saying while the floods would boost inflation temporally, it would “look through” those effects in making decisions.
Published in today's SMH and Age
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