OECD Economic Surveys: Australia 2017 (Volume 2017)

139 Pages·2017·3.785 MB·English

by  Organization for Economic Cooperation and Development

OECD Economic Surveys O
E
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AUSTRALIA D
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o
n
OECD Economic Surveys are periodic reviews of member and non-member economies. Reviews of member o OECD Economic Surveys
m
and some non-member economies are on a two-year cycle; other selected non-member economies are
ic
also reviewed from time to time. Each Economic Survey provides a comprehensive analysis of economic S
u
developments, with chapters covering key economic challenges and policy recommendations addressing these r
v
challenges. e AUSTRALIA
y
s
Australia’s economy has enjoyed considerable success in recent decades, refl ecting strong macroeconomic
policy, structural reform and the long commodity boom. Living standards and well-being are generally high,
though challenges remain in gender gaps and in GHG emissions. The economy is now rebalancing following
the end of the commodity boom, supported by an accommodative macroeconomic stance and currency
depreciation. The strengthening non-mining sector is projected to support output growth and spur further
reductions in unemployment. Low interest rates have supported aggregate demand but are ramping up investor
risk taking and putting pressure on the housing market.
V MARCH 2017
Improving competition and other framework conditions that infl uence the absorption and development of o
lu
innovation are key for restoring productivity growth. Innovation requires labour and capital markets that facilitate m
new business models. Productivity growth could be boosted through stronger collaboration between business e
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and research sectors in R&D activity. 0
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Australia’s adjustment to the end of the commodity boom has not been painless. Unemployment has risen, and /6
inequality is rising. In addition, large socioeconomic gaps between Australia's indigenous community and the
rest of the population remain. Developing innovation-related skills will be important for the underprivileged and
those displaced by economic restructuring and can help reduce gender wage gaps.
SPECIAL FEATURES: INNOVATION-DRIVEN PRODUCTIVITY; BOOSTING R&D OUTCOMES

A
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Consult this publication on line at http://dx.doi.org/10.1787/eco_surveys-aus-2017-en. A
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This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and statistical databases. IA
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Volume 2017/6 ISSN 0376-6438
2017 SUBSCRIPTION
March 2017
(18 ISSUES)
ISBN 978-92-64-27149-4 M
9HSTCQE*chbeje+ a
10 2017 06 1 P r
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0
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OECD Economic Surveys:
Australia
2017
This document and any map included herein are without prejudice tothe status of or
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Pleasecitethispublicationas:
OECD(2017),OECDEconomicSurveys:Australia2017,OECDPublishing,Paris.
http://dx.doi.org/10.1787/eco_surveys-aus-2017-en
ISBN978-92-64-27149-4(print)
ISBN978-92-64-27150-0(PDF)
ISBN978-92-64-27151-7(epub)
Series:OECDEconomicSurveys
ISSN0376-6438(print)
ISSN1609-7513(online)
OECDEconomicSurveys:Australia
ISSN1995-3089(print)
ISSN1999-0146(online)
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TABLEOFCONTENTS
Table of contents
BasicstatisticsofAustralia .................................................. 8
Acronyms ................................................................. 9
Executivesummary......................................................... 11
Assessmentandrecommendations........................................... 15
Macroeconomicdevelopmentsandnear-termprospects:post-boom
adjustmentcontinues ................................................... 20
Monetaryandfinancial-marketpolicy:copingwithlowinterestrates.......... 29
Fiscalconsolidation,taxandspendingreform .............................. 35
Encouragingbusinessproductivityandinnovationthroughframework
conditions ............................................................. 41
EncouragingproductivityandinnovationthroughR&Dpolicy ................ 44
Addressinginequality,enhancinginclusivenessanddeepeningskills .......... 49
Tacklingenvironmentalchallenges:progressingreenhouse-gasemission
policy ................................................................. 52
Bibliography............................................................ 55
Annex.Follow-uptopreviousOECDpolicyrecommendations .................... 57
Thematic chapters
Chapter1.Creatinggoodconditionsforinnovation-drivenproductivitygains ...... 63
GaugingAustralia’sproductivityperformanceandinnovationcapacity......... 64
Enhancingproductivityshouldbeacoreobjectiveofinnovationpolicy......... 67
Productivity-enhancinginnovationcanstrengtheninclusiveness.............. 70
SpecificpolicyissuesforAustralia......................................... 71
Promotingcompetitionandflexiblemarkets................................ 72
Improvingresourcereallocationthroughfirmdynamics...................... 77
EnsuringSMEsupportisefficientandeffective.............................. 79
Ensuringintellectualpropertylegislationrewardsinnovationwithout
compromisingdiffusion.................................................. 81
Facilitatinginternet-platform“disruptors”.................................. 82
Ensuringaccesstolowcost,highspeedICT ................................ 87
Educationandskillsforinnovation:whatspecialmeasurescanbetaken? ...... 92
Public-servicesinnovationhaspotentialtoboostaggregateproductivity
andwell-being.......................................................... 93
Recommendationsonframeworkconditionsforinnovation....................... 98
Bibliography............................................................ 99
OECDECONOMICSURVEYS:AUSTRALIA©OECD2017 3
TABLEOFCONTENTS
Chapter2.BoostingR&Doutcomes ............................................ 101
Innovationinputisstrongerthanoutput................................... 102
Weakcollaborationbetweenresearchandbusinesssectorsremains
akeyissue ............................................................. 110
Policyleversforstrengtheningcollaborationbetweentheresearch
andbusinesssectors .................................................... 114
AchievinggreatercommercialimpactfromAustralia’spublic-sectorresearch ... 121
TaxincentivesformthecoreofAustralia’sfinancialsupportforbusinessR&D .. 124
Enhancingcoherenceandco-ordinationinthescience,research
andinnovationsystem .................................................. 130
Strengtheningthemonitoringandevaluationofinnovationprogrammes....... 131
RecommendationsonboostingR&Doutcomes................................. 132
Bibliography............................................................ 133
Boxes
1. Progressonclosingtheoutcomegapsbetweentheindigenouspopulation
andtherestofthepopulation......................................... 18
2. PredictingdownturnintheAustralianeconomyusingtheOECD’s
resiliencedatabase .................................................. 28
3. Themacroprudentialmeasurestakenin2014 ........................... 32
4. TheNationalScienceandInnovationAgenda............................ 43
1.1. InfluencesonproductivitytrendsinAustralia ........................... 65
1.2. LinksbetweenR&DandproductivityinAustraliandata................... 67
1.3. Australia’sfeeonforeigninvestmentapplications........................ 75
1.4. Keyelementsofinsolvency ........................................... 79
1.5. The“InternetofThings”intheAustraliancontext........................ 88
1.6. EducationprogrammesproposedintheNationalInnovation
andScienceAgenda ................................................... 92
1.7. Effortstoimprovepublic-serviceinputandoutputmeasurementcontinue.. 94
2.1. Australia’sresearchsystem ........................................... 103
2.2. ExplainingchangesinAustralia’sR&D,intensityversuscomposition ....... 106
2.3. Australia’sCooperativeResearchCentresprogramme:anexample
ofstrongcollaborativeresearch........................................ 113
2.4. Themainfeaturesofthereformofthehighereducationresearch
arrangements....................................................... 115
2.5. Theprosandconsofa“useitorloseit”schemeforpubliclyfundedIP
inuniversities....................................................... 120
2.6. CSIRO:mainfeatures................................................. 122
2.7. R&DTaxIncentive:mainfeatures...................................... 124
2.8. InnovationandScienceAustralia ...................................... 130
Tables
1. Macroeconomicindicatorsandprojections.............................. 25
2. ExtremevulnerabilitiesfortheAustralianeconomy ...................... 29
3. PastOECDrecommendationsonmonetaryandfinancialstability.......... 33
4. Fiscalindicators..................................................... 36
5. PastOECDrecommendationsonmaintainingfiscalprudence
andensuringefficienttaxandpublicspending .......................... 38
4 OECDECONOMICSURVEYS:AUSTRALIA©OECD2017
TABLEOFCONTENTS
6. Selectedtaxmeasuresproposedinthe2016-17Budget ................... 39
7. PastOECDrecommendationsonframeworkconditionsforbusiness........ 49
8. PastOECDrecommendationsonemployment,healthandwelfare ......... 51
9. PastOECDrecommendationsonenvironmentpolicy..................... 54
1.1. RecentmeasurestosupportinnovativeSMEs............................ 80
1.2. Examplesofsize-criteriainSMEsupport................................ 81
1.3. NotableelementsoftheProductivityCommission’sdraftreport
onIntellectualProperty (releasedApril2016)............................ 81
1.4. DevelopmentofAustralia’smobilenetworkoperators .................... 91
1.5. Examplesofpublic-servicepolicyinitiativesinAustralia.................. 93
Figures
1. GDPpercapitaishighandwell-beingindicatorscomparefavourably....... 17
2. Productivitygrowthhasslowed........................................ 18
3. Inequalityhasbeenrising ............................................ 19
4. Australia’sgenderwagegapislargerthanmany......................... 20
5. Outputgrowthhasweakened,unemploymentisup,investmentisdown.... 21
6. Rebalancingisseeninservicesexports,employmentandmigration........ 22
7. Consumer-priceinflationandwagegrowthareslowing................... 23
8. Australia’sgrossforeignliabilitiescontinuetogrowbutremainlargely
denominatedinAUDorarehedged .................................... 23
9. Totaldebthasincreasedandhouseholddebtisaboveaverage ............. 24
10. ChinaisAustralia’slargesttradingpartner.............................. 26
11. Non-commodityinvestmenthasyettopickup .......................... 26
12. Macro-financialvulnerabilitieshaveeasedsincetheglobalfinancialcrisis .. 27
13. Recentdatasuggestthereissomeriskofadownturn..................... 28
14. Monetarypolicyremainsaccommodative,whilefiscaldeficits
aredeclining........................................................ 30
15. Housingmarketindicatorsshowhintsofaslowdown .................... 31
16. Indicatorsofcostsandrisksinhousingcredit ........................... 32
17. Banking-sectorresilienceisbeingbolstered............................. 34
18. Governmentexpenditure,taxationandpublic-debtarecomparativelylow .. 35
19. Consolidationinthefederal-governmentbudget......................... 36
20. Underthegovernment’soperationalgoalthedebt-to-GDPratiowillbeput
onadownwardtrack................................................. 37
21. Increasesinpublicspendingcomparedwithpre-crisislevels .............. 37
22. ThestandardrateofGoodsandServicesTaxislowininternational
comparison......................................................... 40
23. Australia’sgovernmentinvestmentisbelowtheOECDaverage............. 41
24. Australia’sadvantageinlighterregulationshasbeeneroded............... 42
25. Collaborativeresearchislimited....................................... 45
26. Commercialimpactcouldbestrengthened.............................. 46
27. TaxsupportplaysanimportantroleinR&Dpolicyandthecostisrising
rapidly ............................................................. 47
28. AustraliaisfallingbehindleadingcountriesinPISAresults................ 51
29. GreengrowthindicatorsforAustralia................................... 53
30. Australia’sgreenhouse-gasemissionreductionisnowfocused
onthetargetfor2030 ................................................ 54
OECDECONOMICSURVEYS:AUSTRALIA©OECD2017 5
TABLEOFCONTENTS
1.1. Australiahasjoinedtheproductivityslowdown.......................... 64
1.2. Investmentinknowledge-basedcapital(KBC)iscomparativelylow......... 66
1.3. Influencesonbusiness-sectorinnovationandproductivity................ 68
1.4. Spendingonimportedintellectualpropertyhasbecomeincreasingly
important .......................................................... 69
1.5. Structuralfactorsandlearningfromtheglobalfrontier................... 70
1.6. Australia’sleadinlighterproductmarketregulationhasnarrowed......... 74
1.7. Australia’sservicestradeisleastopenintransport-relatedsectors ......... 75
1.8. IndicatorssuggestAustralia’sexportandimportcompliancecosts
maybeheavy ....................................................... 76
1.9. SkillmismatchiscomparativelyhighinAustralia........................ 77
1.10. Policyreformscanhelpreduceskillmismatches......................... 78
1.11. Ride-sharinghaspromptedfallsintaxi-licencesvalues................... 84
1.12. Australia’sAirbnbmarketiswelldeveloped ............................. 85
1.13. Australia’smobiletelephonypricescomparemorefavourably
thanitsbroadbandprices............................................. 88
1.14. Broadbandspeedandpenetrationareinthebottomhalf
oftheOECDdistribution.............................................. 89
1.15. Publicprocurementspendingaccountsforasignificantshare
ofpublicspending................................................... 94
1.16. Australiahasalreadymadegoodprogressinmakinggovernmentdata
widelyavailable ..................................................... 96
1.17. OECDRecommendationonDigitalGovernmentStrategies ..................... 97
2.1. Thereisscopetobettermatchinnovationinputandoutput............... 102
2.2. AustralianGovernmentsupportforscience,researchandinnovation
bysector,2016-17.................................................... 103
2.3. Researchqualitycompareswellinternationally.......................... 104
2.4. R&Dtrendsandinternationalcomparisons ............................. 105
2.5. DecompositionanalysisonbusinessR&Dintensity ...................... 106
2.6. R&Dexpenditurebysourceoffunding.................................. 107
2.7. Somecriticalinnovationoutcomesarelowininternationalcomparison .... 107
2.8. Australia’spatentperformanceisbelowaverage......................... 108
2.9. Commercialisationoutcomesarelaggingbehind......................... 109
2.10. Collaborativeresearchinlimited....................................... 111
2.11. Internationalcollaborationperformanceismixed........................ 112
2.12. TrendsinCRCandfundingcompositionofCO2CRC ...................... 113
2.13. HighereducationR&Dexpenditurebysourceoffunding,2014............. 116
2.14. UniversityR&Dexpenditureonengineeringandtechnologyislow ......... 117
2.15. Thecommercialimpactofpublic-sectorresearchcouldbestrengthened.... 123
2.16. GovernmentsupportforbusinessR&D:trendsandinternational
comparisons........................................................ 125
2.17. CostdevelopmentsoftheofR&DTaxIncentive.......................... 126
6 OECDECONOMICSURVEYS:AUSTRALIA©OECD2017
This Survey is published on the responsibility of the Economic and
Development Review Committee (EDRC) of the OECD, which is charged with the
examinationoftheeconomicsituationofmembercountries.
The economic situation and policies of Australia were reviewed by the
Committeeonthe12thofDecember,2016.Thedraftreportwasthenrevisedinthe
light of the discussions and given final approval as the agreed report of the whole
Committeeonthe3rdofJanuary,2017.
The Secretariat’s draft report was prepared for the Committee by Philip
HemmingsandVassilikiKoutsogeorgopoulouunderthesupervisionofPirittaSorsa.
Statistical research analysis was provided by Taejin Park. Administrative
assistancewasprovidedbyAnthonyBoltonandBrigitteBeyeler.
ThepreviousSurveyofAustraliawasissuedinDecember2014.
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OECDECONOMICSURVEYS:AUSTRALIA©OECD2017 7
BasicstatisticsofAustralia
(NumbersinparenthesesrefertotheOECDaverage)*
LAND,PEOPLEANDELECTORALCYCLE
Population(million) 23.9 Populationdensityperkm2 3.1 (35.1)
Under15(%) 18.9 (18.0) Lifeexpectancy(years,2014) 82.4 (80.9)
Over65(%) 14.9 (16.3) Men(2013) 80.1 (77.8)
Foreign-born(%,2014) 28.1 Women(2013) 84.3 (83.1)
Latest5-yearaveragegrowth(%) 1.4 (0.4) Latestgeneralelection July2016
ECONOMY
Grossdomesticproduct(GDP) Valueaddedshares(%,2014)
Incurrentprices(billionUSD) 1229.6 Primarysector 2.6 (2.4)
Incurrentprices(billionAUD) 1633.8 Industryincludingminingandconstruction 25.4 (26.6)
Latest5-yearaveragerealgrowth(%) 2.7 (1.9) Services 72.0 (70.9)
Percapita(000USDPPP) 46.7 (4.1)
GENERALGOVERNMENT
PercentofGDP
Expenditurea 35.7 (41.7) Grossfinancialdebta 44.2 (111.6)
Revenue 34.2 (38.5) Netfinancialdebta -14.6 (72.7)
EXTERNALACCOUNTS
Exchangerate(AUDperUSD) 1.329 Mainexports(%oftotalmerchandiseexports)
PPPexchangerate(USA=1) 1.462 Crudematerials,inedible,exceptfuels 31.8
InpercentofGDP Mineralfuels,lubricantsandrelatedmaterials 25.3
Exportsofgoodsandservices 19.3 (5.5) Foodandliveanimals 14.3
Importsofgoodsandservices 21.6 (5.1) Mainimports(%oftotalmerchandiseimports)
Currentaccountbalance -4.8 (0.2) Machineryandtransportequipment 39.6
Netinternationalinvestmentposition -56.8 Miscellaneousmanufacturedarticles 15.1
Manufacturedgoods 12.2
LABOURMARKET,SKILLSANDINNOVATION
Employmentratefor15-64year-olds(%) 72.2 (66.2) Unemploymentrate,LabourForceSurvey(age15andover)(%) 6.1 (6.8)
Men 77.5 (74.1) Youth(age15-24,%) 13.1 (13.9)
Women 66.8 (58.5) Long-termunemployed(1yearandover,%) 1.4 (2.2)
Participationratefor15-64year-olds(%) 76.9 (71.2) Tertiaryeducationalattainment25-64year-olds(%) 42.9 (35.7)
Averagehoursworkedperyear 1665 (1766) GrossdomesticexpenditureonR&D(%ofGDP,2013) 2.1 (2.4)
ENVIRONMENT
Totalprimaryenergysupplypercapita(toe) 5.5 (4.1) CO2emissionsfromfuelcombustionpercapita(tonnes,2014) 15.8 (9.4)
Renewables(%oftotal) 6.5 (9.6) Waterabstractionspercapita(1000m3,2011) 0.6
Fineparticulatematterconcentration(PM2.5,µg/m3) 6.7 (14.5) Municipalwastepercapita(tonnes,2011) 0.6 (0.5)
SOCIETY
Incomeinequality(Ginicoefficient,2014b) 0.337 (0.31) Educationoutcomes(PISAscore)
Relativepovertyrate(%,2014b) 12.8 (11.0) Reading 503 (496)
Medianequivalisedhouseholdincome(000USDPPP,2014) 31.3 (22.4) Mathematics 494 (494)
Publicandprivatespending(%ofGDP) Science 510 (501)
Healthcare,currentexpenditure 9.3 (9.1) Shareofwomeninparliament(%,August2016) 31.9 (27.8)
Pensions(2014b) 6.9 (9.1) Netofficialdevelopmentassistance(%ofGNI) 0.27 (0.39)
Education(primary,secondary,postsec.nontertiary,2013) 3.9 (3.7)
Betterlifeindex:www.oecdbetterlifeindex.org
a) 2014fortheOECDaggregate
b) 2013fortheOECDaggregate.
c) 2011fortheOECDaggregate.
* Datareferto2015unlessotherwisestated.WheretheOECDaggregateisnotprovidedinthesourcedatabase,asimpleOECDaverage
oflatestavailabledataiscalculatedwheredataexistforatleast29membercountries.
Source: Calculationsbasedondataextractedfromthedatabasesofthefollowingorganisations:OECD,InternationalEnergyAgency,
WorldBank,InternationalMonetaryFundandInter-ParliamentaryUnion.
8 OECDECONOMICSURVEYS:AUSTRALIA©OECD2017