Australia’s two-decade economic expansion has not been simply a function of chance or benefiting from the nation’s rich natural endowments. This historic growth period has occurred despite the Asian Financial Crisis; the Russian and Long Term Capital Management (LTCM) crises; the 2001 bursting of the technology bubble; the quintupling of oil prices; the global financial crisis and subsequent deep recession in advanced economies; and the ongoing European sovereign debt crisis. Success has been enabled by public policy settings that have encouraged flexibility, efficient resource allocation and innovation in the economy.
There is widespread belief among CEDA members that Australia’s recent policy making has not been at a best practice standard. Some reasons that have been given for the presumed decline in quality of public policy debate and execution are:
A heightened emphasis within governments on opinion polls and responding to perceived popular opinion;
Changes in the media landscape and its influence on public information; and
Issues in the relationship between the public service and politicians.
While these issues have not stopped important policy development, such as the Henry Tax Review or the white paper on Australia in the Asian Century, many of the reforms put forward have been considered too difficult or politically unpalatable for government to pursue. The major exception is the National Disability Insurance Scheme, now DisabilityCare Australia. However, despite wide community and bipartisan political support for the initiative, contentious issues associated with its ongoing funding have proven intractable.
It is vital that Australia rediscovers its ability to clearly identify and implement challenging economic reforms.
As the stimulus from the mining boom fades, Australia’s prosperity will become increasingly subject to the pressures of the international marketplace. This will occur in an environment of heightened human and financial capital mobility and fast paced technological advances that can rapidly undermine sources of traditional comparative advantage. Whether recent economic success fades into memory or continues will be substantially determined by the quality of policy implemented by government.
Related identifier: ISBN 0 85801 289
