The Structural Changes Facing Australia

Tuesday, June 10, 2014

During the past few years Australia has had a tough time in achieving economic reform. The first attempt in a decade at serious tax reform got bogged down with debate around the poorly designed Resource Super Profit Tax in 2010 leading to the less than optimal mining tax, the attempt to put a price on carbon pollution looks like it will soon be terminated and getting the budget back under control is proving very difficult.

Key points
> Australia faces three key structural challenges: the end of the commodity price boom is leading to slower growth in national income; this is putting pressure on the budget; & it’s all occurring when productivity growth has slowed.
> To get growth in economic activity and in material living standards back onto a strong sustainable path will require more serious economic reform, including getting the budget under control, tax reform, more privatisation, more infrastructure spending and reduced regulation.
> This will likely be necessary to ensure strong sustained performances from Australian asset classes.

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