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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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The Short-term Challenge

Riding the Commodities Rollercoaster

The major short-term challenge is to maintain macroeconomic stability in the face of a commodities price boom that has boosted the terms of trade by around 30% over the last three years. Recent monetary tightening in the face of relatively weak output growth needs to be seen in the context of strong income gains due to the surge in the terms of trade and the prospective effect this is likely to have on spending. Unusually buoyant tax revenues related to the commodities boom also raise the question as to how ambitious short-term fiscal objectives should be. Recent budget tax cuts are also considered in the context of previous Survey recommendations and a recent study comparing Australia’s tax system with that in other OECD countries.

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