Crisis or Opportunity?
Edited by Peter Draper, Philip Alves and Razeen Sally
Chapter 2: Australia
Bill Bowen INTRODUCTION If you go into a pet shop every parrot is screeching microeconomic reform, microeconomic reform, (Paul Keating, Bureau of Industry Economics, 1995: 44) Australia is a case of ambitious, wide-ranging, unilateral trade liberalization having delivered very significant results. With other economic reforms, unilateral trade liberalization has delivered a more competitive, flexible and resilient economy. In Australia’s federal system the Commonwealth is responsible for trade policy. But in many key economic policy areas the states have the main responsibility. While this chapter is primarily concerned about trade policy reform, the Kennett and Greiner governments in Victoria and New South Wales implemented very significant economic reforms which were a central part of the overall reform effort. The costs of reform are obvious, concentrated and incurred upfront. The benefits tend to be opaque, diffused and accrue downstream. A key issue is therefore how governments can compensate those who stand to lose from reduced protection so that the rest of the community can reap a reform dividend. Can social cohesion be maintained during ambitious reform? Can governments hold the line for long enough in the face of those arguing that the costs outweigh the benefits? Australia’s economic reforms, in particular its trade reforms, have transformed the Australian economy so fundamentally that the nature of the challenge is often forgotten – although not by the many economists who argue that the benefits from the comprehensive economic and trade reforms of the 1980s are dissipating and that Australia cannot afford to rest on its...
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