OECD economic surveys : Australia, 1999-2000.

170 Pages·2000·0.856 MB·English

by  OECD

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ECONOMICS
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Australia a OECD
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Special Feature: Structural Reform 2 Economic Surveys
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Latest Surveys Available: Surveys of
Australia
Australia, January 2000 "Partners in Transition" Countries
Austria, May 1999 Slovak Republic, February 1999
Belgium-Luxembourg, January 1999
Canada, August 1999 Non-member Countries
Czech Republic, May 1998 Bulgaria, April 1999
Denmark, January 1999 Romania, February 1998
Finland, July 1999 Russian Federation, December 1997
France, January 1999 Slovenia, May 1997 ECONOMICS
Germany, November 1999
Greece, December 1998
Hungary, February 1999 O
Iceland, December 1999 E
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Ireland, May 1999
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Italy, December 1998
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Japan, November 1999 c
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Korea, August 1999 n
Mexico, April 1999 o
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Netherlands, March 1998
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New Zealand, April 1999
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Norway, February 1999 u
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Poland, June 1998 v
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Portugal, October 1999 y
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Spain, March 1998

Sweden, July 1999
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Switzerland, July 1999 U
Turkey, June 1999 S
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United Kingdom, June 1998 R
United States, May 1999 A
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ISSN 0376-6438 ISBN 92-64-17504-0
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2000, No.1 January 2000
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OECD
ECONOMIC
SURVEYS
1999-2000
AUSTRALIA
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960,
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countries in the process of economic development; and
– to contribute to the expansion of world trade on a multilateral, non-discriminatory
basis in accordance with international obligations.
The original Member countries of the OECD are Austria, Belgium, Canada,
Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the
Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the
United Kingdom and the United States. The following countries became Members subse-
quently through accession at the dates indicated hereafter: Japan (28th April 1964),
Finland (28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973),
Mexico (18th May 1994), the Czech Republic (21st December 1995), Hungary
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Table of contents
Assessment and recommendations 9
I. Recent trends and short-term prospects 21
A resilient economy in the face of the Asian crisis 21
The labour market 35
Price and wage inflation 38
The outlook to 2001 43
II. Macroeconomic policies 47
Monetary management 48
Fiscal policy 60
III. Progress in structural reform 73
Productivity growth has strengthened 80
Labour market policies 86
Education and training 100
Product market competition 109
Tax reform 121
Notes 125
Bibliography 132
Annexes
I. Deriving the fiscal balance 135
II. Sector contributions to the actual increase in productivity growth 137
III. Second tranche national competition policy non-compliance issues
and recommendations 139
IV. Calendar of main economic events 149
Statistical annex and structural indicators 155
Boxes
1. Differences between cash to accruals 63
2. Competitive neutrality requirements for Government service providers 96
3. The Job Network 97
4. Privatising a competitive electricity industry: the case of Victoria 113
•••••
OECD 2000
4 OECD Economic Surveys: Australia
Tables
1. Demand and output 25
2. Current account trends 34
3. The labour market 35
4. Costs and prices 42
5. Short-term prospects 45
6. Changes in official interest rates 1994-99 49
7. Financial aggregates 53
8. The effect of non-accommodating monetary policy in response
to the Asian crisis 58
9. The impact of a one percentage point fall in nominal interest rates
under floating exchange rates 59
10. Commonwealth budget developments 64
11. Changes in the general government underlying cash balance 68
12. Follow-up on OECD recommendations for structural reform 74
13. Productivity growth 80
14. Trend productivity growth, by sector 83
15. Distribution of productivity gains 85
16. Budget cost of modifications to the tax package 122
17. Budget impact of the final tax package 123
Annexes
A1. Deriving the fiscal balance 136
A2. Productivity growth, by sector 138
A3. Second tranche non-compliance issues and recommendations on 1999-2140
competition payments 140
A4. Second tranche issues subject to supplementary assessment 142
A5. Progress of reviews scheduled by jurisdiction, at 31 March 1999 148
Statistical annex and structural indicators
A. Selected background statistics 156
B. Gross domestic product 157
C. Income and expenditure of households 158
D. Prices and wages 159
E. Balance of payments 160
F. Foreign trade by commodity 161
G. Foreign trade by area 162
H. Production structure and performance indicators 163
I. Labour market indicators 164
J. The public sector 165
Figures
1. The current expansion compared 22
2. Key aspects of economic activity 23
3. Contribution to GDP growth 26
4. Household saving ratio 28
5. Gross national saving 28
6. Household debt and debt-servicing burden 29
OECD 2000
Table of contents 5
7. Foreign trade indicators 32
8. Value of exports 33
9. Patterns of employment 36
10. Unemployment and vacancies 36
11. The achievement of low inflation 39
12. Selected components of inflation 40
13. Money and capital market interest rates 49
14. Lending rates 50
15. International comparison of long-term interest rates 52
16. Real asset yields 53
17. Exchange rates 55
18. Monetary conditions 57
19. Underlying budget balances 66
20. Revenues and underlying outlays 67
21. Net government debt 69
22. Trend TFP growth 81
23. TFP growth by business cycle 81
24. Capital-, labour- and total-factor productivity 82
25. Trend TFP growth by sector 84
26. Distribution of wage agreements 89
27. Change in the dispersion of federal wage agreements 89
28. Working days lost in labour disputes 91
29. Percentage of the population scoring at IALS literacy level 3 or higher 102
30. Business and residential tariff basket trends 116
31. An international comparison of performance indicators
in telecommunications 117
OECD 2000
BASIC STATISTICS OF AUSTRALIA
THE LAND
Area (1 000 sq. km) 7 682.3 Population of major cities, 30 July 1997 (1 000):
Agricultural area, 1986-87, per cent of total 61 Sydney 3 935
Urban population, 1991, per cent of total 85 Melbourne 3 322
Brisbane 1 548
Perth 1 319
Adelaide 1 083
THE PEOPLE
Population, March 1999 (1 000) 18 918 Civilian employment, 1998 (1 000) 8 553
Number of inhabitants per sq. km 2.4 of which: Agriculture 421
Natural increase, 1998 (1 000) 121 Industry1 1 869
Net migration, 1998 (1 000) 112 Other activities 6 263
PARLIAMENT AND GOVERNMENT
Composition of Parliament following latest elections:
House of
Party Senate
Representatives
Australian Democrats 7 –
Australian Labor Party 29 49
Independent 1 5
Greens 2 –
Liberal Party of Australia 31 75
National Party of Australia 5 18
Country Liberal Party 1 1
Total 76 148
Present government: Liberal/National Party coalition
Next general elections for House of Representatives: October 2001
PRODUCTION
Gross domestic product, 1998 Gross fixed capital formation, 1998
(A$ million) 579 111 Percentage of GDP 23.8
GENERAL GOVERNMENT SECTOR, PER CENT OF GDP, 1998
Current disbursement 32.0 Current revenue 35.2
Current transfers 13.9 of which: Direct taxes 17.8
FOREIGN TRADE
Main exports, 1998, per cent of total: Main imports, 1998, per cent of total:
Food, beverages and tobacco 18.3 Food, beverages and tobacco 4.4
Raw materials 20.1 Raw materials 1.7
Fuels 17.0 Fuels 4.4
Machinery and transport equipment 12.0 Machinery and transport equipment 45.9
Other manufactured products 32.5 Other manufactured products 43.7
THE CURRENCY
Monetary unit: Australian dollar Currency unit per US dollar, average of daily
figures:
Year 1998 1.5923
October 1999 1.5347
1. Including mining, electricity, gas and water, and construction.
This Survey is based on the Secretariat’s study
prepared for the annual review of Australia by the
Economic and Development Review Committee
on 10 November 1999.
•
After revisions in the light of discussions during the
review, final approval of the Survey for publication was given
by the Committee on 25 November 1999.
•
The previous Survey of Australia was issued in
December 1998.
Assessment and recommendations
Strong economic The performance of the Australian economy since the onset
growth, of the East Asian currency and banking crisis in July 1997 has
an improving exceeded most expectations. Real GDP grew by 41/2 per cent
labour market in fiscal year 1998-99, only slightly slower than the year
performance and before and substantially above its trend rate of some
low inflation… 31/2 per cent over the past thirty years. By mid-1999, the
current expansion had entered its ninth year, making it the
longest upswing since the 1960s. It was accompanied by
robust employment growth, a substantial reduction in
unemployment, a pick-up in trend productivity and much
lower inflation than experienced at any time since the early
1960s, factors which underpin the sustainability of the cur-
rent expansion. However, the unavoidable negative effects
on export demand of the weaker regional and global envi-
ronment, the deterioration in Australia’s terms of trade from
falling world commodity prices and strong import growth
induced by robust domestic demand led to a widening
current external deficit, which rose to 5.5 per cent of GDP as
a whole for 1998-99 and around 6 per cent of GDP by
mid-1999.
… based on The robustness of domestic demand at the time when the
a judicious mix Asian crisis became apparent is an important factor which
of sound helped the Australian economy to overcome the negative
macroeconomic impact on growth of the contraction of many of its major
and structural export markets. The basis for the continuation of the strong
policies… domestic demand had been laid by a judicious mix of
sound macroeconomic and structural policies, which inter alia
had brought inflation under control, reduced public sector
borrowing and generated an acceleration of productivity
growth. High rates of productivity growth have allowed sub-
stantial increases in real wages to be reconciled with
OECD 2000