Australia. 2002-2003.

Table of contents......Page 4
Basic statistics of Australia......Page 8
Assessment and recommendations......Page 10
Factors shaping domestic demand......Page 24
Figure 1. Key indicators in international perspective......Page 25
Figure 2. The current expansion compared......Page 26
Table 1. Demand and output......Page 27
Table 2. Household assets......Page 28
Figure 3. Household debt and debt-service burden......Page 29
Figure 4. Housing affordability and dwelling approvals......Page 30
Figure 5. Corporate profits and business investment......Page 31
Figure 6. Corporate gearing......Page 32
Foreign trade and the current external account......Page 33
Figure 7. Foreign trade indicators......Page 34
Figure 8. Value of exports......Page 35
Table 3. Current account of the balance of payment......Page 36
Price and wage inflation......Page 37
Table 4. The labour market......Page 38
Figure 9. Employment and unemployment......Page 39
Figure 10. Actual and expected inflation......Page 41
Table 5. Costs and prices......Page 42
The outlook to 2004......Page 40
Figure 11. Confidence indicators......Page 43
Table 6. Short-term prospects......Page 44
The effect of monetary and fiscal policies on long-term economic growth......Page 46
Figure 12. Economic growth and inflation in a long-term perspective......Page 47
Macroeconomic policies in the short run......Page 48
Table 7. Changes in official interest rates......Page 49
Figure 13. Money and capital market interest rates......Page 50
Figure 14. International comparison of long-term interest rates......Page 51
Lending rates and financial intermediation......Page 52
Figure 15. Nominal and real lending rates......Page 53
Exchange rate behaviour and monetary conditions......Page 54
Fiscal policy......Page 55
Figure 17. Factors affecting monetary conditions......Page 56
Figure 18. The Taylor rule......Page 57
Figure 19. Fiscal consolidation in selected OECD countries......Page 58
The 2001-02 Commonwealth Budget outturn......Page 59
Figure 20. Government finance......Page 60
Table 9. Commonwealth government budget developments......Page 61
The Commonwealth Budget for 2002-03 and medium-term fiscal strategy......Page 62
Debt developments and medium-term issues......Page 63
Figure 21. Commonwealth general government net debt and net worth position......Page 64
Box 1. Options available to the Commonwealth government for the CGS market: An overview......Page 66
Issues of fiscal sustainability......Page 67
Figure 22. Age-related spending in selected OECD countries......Page 68
Table 10. Commonwealth demographic spending in the longer term......Page 69
Health care expenditure......Page 70
Health care reforms......Page 71
Progress towards reforming the tax system......Page 72
Rapid economic growth was underpinned by strong productivity gains......Page 76
Figure 24. Growth performance: an international comparison......Page 77
Figure 25. Estimates of potential output growth......Page 78
Table 11. Decomposition of potential output growth......Page 79
Figure 27. Changes in multi-factor productivity growth in selected OECD countries......Page 80
Box 2. ICT and productivity acceleration in Australia and the United States in the 1990s......Page 81
Figure 28. Factors promoting the use of ICT......Page 83
Table 12. Share of ICT investment in total non-residential investment......Page 84
The move to a more flexible industrial relations system......Page 85
Progress in implementing decentralised bargaining......Page 86
Figure 29. Workplace pay agreements......Page 87
The role of skills in the growth process......Page 88
Table 14. International comparison of employment/population ratios and participation rates......Page 89
Table 15. Decomposition of country deviations from OECD average per capita output growth rates......Page 90
Going forward......Page 91
Figure 30. International comparison of income and productivity levels......Page 92
Table 17. Implementing structural reform: an overview......Page 94
The role of awards......Page 93
Figure 31. Working days lost in labour disputes......Page 101
Figure 32. Employment protection legislation......Page 102
Labour market assistance......Page 105
Box 3. The Job Network System - main features and an assessment......Page 107
Welfare reform: policies to raise participation......Page 109
Box 4. The main features of the Australian Income Support System......Page 110
Figure 33. Public social expenditure: an international comparison......Page 111
Figure 34. Indicators of welfare use and spending......Page 112
Education and training......Page 117
Figure 35. Education indicators in comparison......Page 118
Figure 36. Transition indicators......Page 119
The reform framework......Page 123
Box 5. Competitive neutrality requirements for Government businesses......Page 124
Infrastructure industry reforms......Page 125
Figure 37. Electricity prices in industry and households......Page 128
Figure 38. Railway system performance: an international comparison......Page 131
Financial system reform......Page 133
Sustainable development in Australia......Page 136
Providing a sustainable income for the elderly......Page 137
Table 18. Performance indicators: sustainable retirement income......Page 138
Table 19. The evolution of state pension benefits......Page 139
Table 20. The effect of taxation on portfolio returns inside and outside a superannuation fund......Page 141
Figure 39. Effective marginal tax rates for the elderly......Page 142
Helping developing countries to achieve sustainable growth......Page 144
Table 21. Australian imports from developing countries, 1980-2001......Page 145
Figure 40. Average tariff rates by country......Page 146
Table 22. Combined tariff, budgetary and pricing assistance to agriculture and industry......Page 147
Table 23. The structure of bilateral aid programmes by sector and country......Page 149
Managing natural resources in a sustainable fashion......Page 150
Table 24. Areas where soil conditions constrain agricultural yield......Page 152
Table 25. Water run-off and diversions in Australia......Page 153
Table 26. Progress in establishing tradeable water rights......Page 155
Introduction......Page 158
Figure 41. Overseas-born as a percentage of the total Australian population......Page 159
Figure 42. Foreign-born by origin, principal countries at birth at selected censuses......Page 160
Figure 43. Population growth: natural increase and net migration......Page 162
Migration policy......Page 161
Table 27. Types of entry visa for Australia (2000 to 2001)......Page 164
Figure 45. Net permanent and long-term temporary migration, 1987-2000......Page 165
Labour market outcomes......Page 169
Integration......Page 170
Figure 46. Unemployment and participation by age, Australian-born and foreign-born......Page 171
Figure 47. Unemployment and participation by date of entry, country of origin and sex......Page 172
Impact on output and incomes......Page 174
Figure 49. Educational qualifications: immigrants and Australians......Page 175
Figure 50. Age distribution: permanent migrants and resident population......Page 176
Income distribution: winners and losers from immigration?......Page 178
Entrepreneurship......Page 179
Fiscal impacts......Page 180
Table 28. Budgetary impacts by migration category......Page 181
Trade, FDI and balance of payments......Page 182
Conclusions......Page 183
Notes......Page 186
Bibliography......Page 210
Annex I. Policy issues in periods of declining public debt......Page 220
Annex II. The new tax system......Page 221
Annex III. Business tax reform implementation......Page 223
Annex IV. Some aspects of Australian immigration policy......Page 225
Figure A1. Points test score distribution......Page 226
Box A1. Australian points system – General Skills Categories......Page 227
Annex V. Calendar of main economic events......Page 231