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2006 OECD Economic Surveys: Australia 2006

image of OECD Economic Surveys: Australia 2006

This 2006 edition of OECD's periodic survey of the Australian economy finds that reforms have raised both economic performance and resilience, but that some challenges stil remain, including closing the productivity gap and raising labour utilisation.  Individual chapters look at fiscal relations across levels of government, further reforming infrastructure services, providing greater flexibility in workplace conditions, and improving incentives to work, especially for olders workers and women with families.

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Fiscal Relations across Levels of Government

Key areas of public service provision are subject to complex patterns of joint government involvement that can lead to inefficiencies. Clarifying government roles and responsibilities is likely to have a significant potential for improving public sector efficiency. Fragmentation of decision making and funding arrangements, particularly in the areas of hospital services and old-age care, creates incentives for cost and blame-shifting between government levels. A collaborative approach between government levels to overcome some of these problems, as recently initiated by the Council of Australian Governments, would help to develop better governance arrangements and improve spending assignments. A less complex system of inter-governmental transfers would also contribute to a more effective specification of spending responsibilities. Stronger revenue-raising capacity of the states, through a further improvement in the efficiency of the state tax system, would raise the ability of sub-national governments to meet expenditure responsibilities and be better prepared for coping with demographic change.

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