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"Every individual intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his original intention. By pursuing his own interest he frequently promotes that of society more effectively than when he really intends to promote it." - Adam Smith, Wealth Of Nations

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Unit 1select * from menu where menuparent=5 and securitylevel<=1 order by menuorder;

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Unit 4

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Policy Approach

Policy Impact

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On February 27th the share market index was at 4650. By mid-March it will be closest to:

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Policy Impact

Sustainable Economic Growth

In general, it can be said that the microeconomic reform process should lead to sustainable economic growth in the medium to long term. We have already seen that when properly applied, a microeconomic reform aims to move the supply curve in the affected industry to the right. This should also move the equilibrium point to the right, and so economic growth results.

We can assess whether or not this has happened in the Australian experience by looking at the output of those sectors which have undergone some structural reform.

Aviation – In 1990, the domestic aviation industry consisted of two airlines. With the deregulation of the industry, the privatisation of QANTAS and the introduction of a supervisory body to oversee safety, the aviation industry has been through a considerable period of turmoil. However, the impact on growth is unequivocal. Passenger numbers increased by 75% between 1990 and 1998, and today they are even higher.
National Competition Policy – When the National Competition Policy was introduced in 1995, it was estimated that this one change would add almost 5% to GDP. As a direct result of this new law, we have seen large increases in output in Agriculture, Mining, Manufacturing and the Service sector.
Labour Market Reforms – Changes to the Australian labour market, such as the introduction of the Workplace Relations Act (1996), were designed to increase the productivity of Australian workers. An increase in productivity should, in theory, result in more sustainable growth. In fact, productivity levels have increased dramatically during the second half of the 1990’s. Strong growth results during this period attest to the success of this reform. It was for this reason that the Liberal Party tried to repeat the success of these reforms with the short-lived "WorkChoices" package.
Telecommunications – The telecommunications industry in Australia has undergone significant change in recent years. This has resulted in the introduction of several new carriers, and vast improvements in service access and phone quality. Australians now make more telephone calls, and buy more handsets than ever before. In other words, there has been significant growth in the telecommunications sector.

These are just some examples of the way in which the process of microeconomic reform has added to economic growth in Australia. However, it is worth noting that to gain the benefits of the reforms, the Australian economy may experience some negative fluctuations in the short term. For example, although the automotive industry has increased production recently, the restructuring of the tariff protection in regards to passenger motor vehicles has resulted in discussions about the closure of several plants in Australia. While Australian based manufacturers find ways to compete with producers in South East Asia, further closures are possible as tariffs fall in the near future.

Current Page: Sustainable Economic Growth