Dec 14, 2012

OECD hands govt praise — and an awkward to-do list

The latest OECD report on the Australian economy is positive towards many government policies, but makes some politically unpalatable suggestions about future reform. Is the hand of Treasury at work here?

Bernard Keane — Politics editor

Bernard Keane

Politics editor

The OECD has given the Australian economy and the government’s stewardship of it a ringing endorsement while urging a series of unpalatable reform to further strengthen it in its latest economic survey, released this morning. It has also urged the government to abandon its commitment to surplus in the event that growth weakens.

The current outlook for the economy is positive, the OECD concludes, “even though there are mainly negative risks stemming from the external environment, to which Australia is however less vulnerable than many other OECD countries”. Our “current monetary and fiscal policy mix is appropriate to sustain recovery, and Australia is in a good position to respond to risks”. However, “in case of a sharper-than-expected cyclical weakening, the central bank should loosen further and the fiscal automatic stabilisers should be allowed to work, even if this postpones the return to budgetary surplus”.

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27 thoughts on “OECD hands govt praise — and an awkward to-do list

  1. Jimmy

    Very good article and the OECD report agina shows 2 things the “ALP can’t manage the economy” crowd continue to ignore – the economy is actually going reasonably well all things considered and Howard wasted his boom years by creating a structural deifct through vote buying middel class welfare.

    I also predict that elsewhere the OECD reoprt will be reported as “OECD predict govt wn’t produce surlpus”

  2. Coaltopia

    Now to convince Swanny to remove these “fossil fuel subsidies for extractive industries”:

    “Adam Collins, spokesman for the Treasurer, Wayne Swan, said none of the programs qualified as subsidies under the G20 definition.” – SMH March 2011

    Oh yeah, then “Swan says no to sovereign wealth fund” in May 2012.

    Then there’s the MRRT…

  3. Simon Mansfield

    Dorthory wrote this report for Dix to read on the plane home tonight.

    Only the Lemming Party would ever enact a broad based property tax in Australia. Gillard didn’t even have the guts to broaden the GST tax base this year let alone take on the issue of GST on imports below $1000.

    Why do we pay people at Treasury to write these reports for their OECD counterparts to rubber stamp. Nominate just one of these suggestions/recommendations that will ever see the light of day.

  4. Gavin Moodie

    Mightn’t the high capital inflows inflating the value of the $ be tempered by a Tobin tax, which may also increase revenue?

    While it is true that many such OECD reports (and presumably much Treasury advice) may not seem immediately feasible, they make important contributions over the medium term. In the 1990s it seemed impossible to get State governments to balance their budgets over the economic cycle, but of course that is now orthodox, altho taken to a damaging extreme.

  5. Simon Mansfield

    Reports like these should focus on a few ideas at a time.

    Broadening the GST base is probably the number tax reform needed at present. It would have the complete support of all the state govts and the current opposition – unless Tony wanted to be complete dumbo. Only the Greens would oppose it outright. The last COAG meeting should have signed off on it with Jan 1 2013 as the start date. Now that would be a sign of gutsy economic leadership.

    Instead we have policy wonks in Canberra pretending they are so clever suggesting the state governments of Australia bring in a broad based property tax on homeowners.

  6. Gavin Moodie

    Broadening or increasing the GST is opposed vociferously by the Coalition.

    It is also regressive, while a broad based property tax would be progressive, easier to collect and harder to avoid.

  7. Simon Mansfield

    Broadening the GST was Coalition policy. They’d be hard pressed to oppose it. Increasing it to 12-15% is another matter entirely. A broad based property tax on the family home is never going to happen.

  8. Jimmy

    Simon – I think was is the operative word there – Abbott isn’t going to either support any ALP policy, especially something that “hurts working families” and Abbott wouldn’t take a tax increase to the election

  9. Jimmy

    Simon – I think was is the operative word there – Abbott isn’t going to either support any ALP policy, especially something that “hurts working famil ies” (even if it doesn’t) and Abbott wouldn’t take a tax increase to the election

  10. Gavin Moodie

    ‘Mr Abbott was keen to quash the possibility of a change to the tax. “The Coalition has no plans to change the GST, none whatsoever,” he said.’

    Hayward, Andrea (2012) ‘Abbott quick to quash Coalition GST hike talk’, Canberra Times, September 17 2012.

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