Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.


 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate

Subscribe!
Subscribe





On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.
___________

Syndicate
RSS/XML


RSS 2.0

Turning down the economic turbo boost

By Corin McCarthy - posted Wednesday, 9 September 2009


Second, Keating floated the exchange rate, deregulated the financial sector and reduced tariff rates to near zero, allowing markets to more effectively allocate resources in the economy.

Third, labour and product market liberalisation, started by Keating and extended by Howard and Costello, contributed enormously to our economic “miracle” as well.

Indeed as recently as May 2007, Henry called labour market reform Australia's “shock absorber”, a pivotal policy for achieving full employment and low wage inflation together.

Advertisement

These policies pursued by the last two governments turbocharged the economy by raising labour utilisation and productivity.

According to Treasury figures, labour utilisation rates rose nearly nine per cent from 1978 to 2006 with most of the dividend achieved through higher participation and more hours being worked, as the unemployment rate in 1978 was similar to that in 2006.

This participation dividend was combined with productivity growth nearly one percentage point above trend in the 1990s largely due to labour market reforms, lower tariffs and other deregulatory policies.

This is why Australians are much richer and better positioned today than when we have previously entered recessions.

And yet, the three crucial labour market reforms for achieving this “miracle” are all under partial threat from Rudd Labor.

The first crucial labour market reform is the workplace level reform of enterprise bargaining and then the introduction of AWAs. Both of these instruments received wholesale endorsement by the OECD as recently as last month for improving the operation of the labour market.

Advertisement

Yet, worryingly, the OECD has placed the more regulatory and less flexible Forward with Fairness under a watching brief for its effects on youth unemployment.

And while the Employment Minister Julia Gillard has achieved some efficiency gains by proposing a national industrial relations system, along with simplifying awards, the majority of this gain was achieved through WorkChoices using Federal laws to override state systems in regulating companies.

Any efficiency gains from a national system are also more than offset by the regulatory and wage burdens from increasing the scope of the safety net.

  1. Pages:
  2. 1
  3. Page 2
  4. 3
  5. 4
  6. All

This is an extended version of an article first printed in The Australian on July 3, 2009.



Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

8 posts so far.

Share this:
reddit this reddit thisbookmark with del.icio.us Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Corin McCarthy was an adviser in opposition and government to Craig Emerson MP. He also advised Labor’s 2007 election campaign on small business issues. He has written widely on these issues in The Australian and On Line Opinion. He currently works as a lawyer in London advising on major infrastructure projects. These views are his own.

Other articles by this Author

All articles by Corin McCarthy

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Article Tools
Comment 8 comments
Print Printable version
Subscribe Subscribe
Email Email a friend
Advertisement

About Us Search Discuss Feedback Legals Privacy