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2023 OECD Economic Surveys: Australia 2023

image of OECD Economic Surveys: Australia 2023

The Australian economy rebounded robustly in the wake of the pandemic. However, inflation has risen and fiscal pressures are on the horizon due to population ageing and climate change. Monetary policy should remain restrictive until underlying inflation is clearly on track to meet the central bank target, while fiscal buffers need to be rebuilt through reducing tax exemptions and improving public spending efficiency in areas such as health. In the medium-term, achieving inclusive and sustainable economic growth requires an ongoing focus on key social objectives such as reducing gender inequality and achieving the climate transition. Gender inequalities have steadily declined but remain visible in the labour market. Further reforms to tax, childcare, education, social benefits and parental leave can improve labour market opportunities for women, promote more equal sharing of unpaid work between genders and help more vulnerable women, notably single mothers. The climate transition is also underway, but further policy measures are needed to meet emissions goals, support the reallocation of workers and adapt to climate change. Given the abundance of renewable energy resources and a large wealth of critical minerals, Australia can secure the energy transition while remaining a key player in international energy markets.

SPECIAL FEATURES: FULLY REALISING THE ECONOMIC POTENTIAL OF WOMEN; ACHIEVING THE TRANSITION TO NET ZERO.

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Achieving the transition to net zero in Australia

Australia has committed to achieving net zero greenhouse gas emissions by 2050 and more recently outlined a more ambitious intermediate target for emission reductions by 2030. However, achieving these targets will be challenging given a historical reliance on coal generation and the presence of significant mining and agriculture sectors. It will require a rapid transformation of the electricity grid, significant emissions reductions in highly-polluting sectors such as industry and agriculture, and sufficient offsets generated by “negative emissions” technologies and practices to counterbalance any emissions that cannot be fully eliminated. At the same time, Australia is particularly vulnerable to the physical impacts of climate change, as the driest inhabited continent on the planet with the majority of the population living on the coasts. Further significant reforms are required to meet the emission reduction goals, support the reallocation of workers and adapt to climate change.

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