Oz must boost productivity through regulation

Australia should boost productivity through better regulation, says OECD

Strong regulatory frameworks and sound policies have helped Australia weather the global crisis better than most OECD countries. But further efforts are needed to harmonise regulations, strengthen competition and streamline infrastructure regulation if Australia is to reduce unnecessary costs to business and boost productivity, according to a new OECD report.
Australia: Towards a Seamless National Economy says lifting regulatory constraints and removing bottlenecks in some infrastructure sectors would enable Australia to take full advantage of the rapid rebound of some Asian economies, notably China.
“Australia needs to boost productivity to return to long-term sustained growth. An efficient regulatory system is a main step to achieve that goal,” said OECD Secretary General Angel Gurría.
The report argues for the need to maintain the current commitment to regulatory reform. Recent initiatives include Commonwealth fiscal reforms that give greater autonomy to states, a sharper focus on States performance and financial incentives to the States to undertake reforms over a five year period.
This reform agenda is likely to yield substantial economic benefits in the years to come, says the report. Success will depend on continued co-ordinated actions by a number of agencies at state level, as well as Australian parliaments passing and amending state laws. Productive Commonwealth-state relationships are therefore crucial for the reform agenda.
The report also recommends that Australia should:

• Ensure national institutional arrangements can support ongoing regulatory reform, including by developing formal arrangements for ongoing consultation with business;
• Strengthen the development of regulation through regulatory impact analysis and benchmarking across jurisdictions;
• Promote competition in core infrastructure sectors. Tackle remaining exemptions and special regimes to complete the National Competition Policy legislation review;
• Introduce reforms to the quarantine inspection system, as recommended in the Beale report;
• Enhance Australia’s open markets by harmonizing free trade agreements; reducing and rationalizing government assistance for industry and services and harmonizing Australian and international standards.

In the future, the challenge will be to co-ordinate regulation of national markets. This needs to ensure that new barriers are not created and so that all jurisdictions regulate with regard to the national interest without requiring the current financial incentives, maintaining a seamless national economy.

Australia is among 26 OECD and non OECD countries to undergo a broad review by the OECD of its regulatory practices and reforms. Set within a macroeconomic context, this review presents a general picture of Australia’s regulatory achievements and challenges, including regulatory quality at the Commonwealth level as well as across sub national levels of government, competition policy and market openness. It also includes a special focus on state-federal relationships.

For further information please contact Stéphane Jacobzone, (email stephane.jacobzone@oecd.org, tel.: +33 1 45 24 85 56) and Gregory Bounds, (email gregory.bounds@oecd.org, tel.: +33 1 45 24 84 43) in the Regulatory Policy Division of the OECD.

For more information on Regulatory Reform in Australia see: www.oecd.org/gov/regref/australia.

ENDS

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