OECD says Australia should restart reform

The OECD’s pre­sen­ta­tion of the data shows that Aus­tralians have risen 5 places (from 15 to 10) in the twen­ty-one mem­ber OECD’s rank­ing of GDP per capi­ta between 1990 and 2002.
But this is at the expense of hours worked: pro­duc­tiv­i­ty per hour worked is unchanged in that time!

Aus­tralian pro­duc­tiv­i­ty lev­els are well below those record­ed in sev­er­al oth­er OECD coun­tries, as are par­tic­i­pa­tion rates among some work­ing-age pop­u­la­tion groups. Hence poli­cies should:
  • Main­tain sta­ble macro­eco­nom­ic con­di­tions via macro poli­cies that aim at low infla­tion and at least bud­get bal­ance on aver­age over the eco­nom­ic cycle. Such poli­cies are impor­tant to man­age risks around the short-term eco­nom­ic out­look, includ­ing the price of oil, exchange-rate volatil­i­ty and adjust­ment in the hous­ing sec­tor.
  • Pro­mote high­er pro­duc­tiv­i­ty growth by fur­ther strength­en­ing com­pet­i­tive pres­sures in the econ­o­my via: com­ple­tion of unfin­ished busi­ness of the Nation­al Com­pe­ti­tion Pol­i­cy (NCP) agen­da and the adop­tion of an extend­ed reform agen­da, fol­low­ing the Pro­duc­tiv­i­ty Com­mis­sion inquiry into the future of the NCP.
  • Explore ways of ensur­ing opti­mal invest­ment in reg­u­lat­ed net­work sec­tors that oper­ate across sev­er­al juris­dic­tions.
  • Ensure that the labour mar­ket func­tions more effec­tive­ly by: pro­mot­ing the nego­ti­a­tion of wages and employ­ment con­di­tions at the enter­prise and indi­vid­ual lev­els; remov­ing dis­in­cen­tives to hir­ing, espe­cial­ly of low-skilled work­ers; enhanc­ing human cap­i­tal by improved train­ing and edu­ca­tion; and cre­at­ing stronger incen­tives to par­tic­i­pate in the labour mar­ket, espe­cial­ly for old­er work­ers.
  • Pro­mote nation­al water poli­cies that aim at remov­ing dis­tor­tions in pric­ing as between class­es of users. (oecd)

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