2018 OECD ECONOMIC SURVEY OF AUSTRALIA Ensuring further success
Paris, 10 December 2018
www.oecd.org/eco/surveys/economic-survey-australia.htm OECDEconomics OECD
27 years of robust economic growth Gross Domestic Product (real) Index 1975 = 100
Index 1975 = 100
400
400
350
350
300
300
Annual GDP last dipped in 1991
250
250
200
200
150
150
100 1975
100
1980
1985
Source: OECD Analytical Database.
1990
1995
2000
2005
2010
2015
2
Incomes continue to rise Real GDP per capita Index 2005 = 100 115 110
AUS
EA
OECD
USA
105 100 95 90 2005 Source: OECD Analytical Database.
2008
2011
2014
2017 3
Unemployment is falling Rate of unemployment (unemployed persons as % of labour force) 7
6
5
4
3
2005
2007
Source: Thomson Reuters.
2009
2011
2013
2015
2017
2019 4
The quality of life is good Indicators of well-being
Country rankings (1 to 35)
20% top performers
60% middle performers
20% bottom performers
Australia 1
12
11
11
10
7
7
1
5
23 31 Work & life balance
Personal security
Jobs & earnings
Education & skills
Source: OECD Better Life Index 2017 database.
Income
Housing
Subjective well-being
Social Environmental Civic Health status connections quality engagement & governance 5
Monetary policy, housing market and financial regulation
6
Housing markets are beginning to cool House prices in major cities Index 2005Q1 = 100 275 250
Sydney
Melbourne
Adelaide
Perth
Brisbane
225 200 175 150 125 100 75
2005
Source: Thomson Reuters.
2007
2009
2011
2013
2015
2017
7
Household debt remains high Household liabilities as a % of net household disposable income 200
AUS
190
USA
ESP
CAN
180 170 160 150 140 130 120 110 100
2005
2007
Source: OECD Analytical Database.
2009
2011
2013
2015
2017 8
Recommendations on monetary policy, housing market and financial regulation • In the absence of a downturn, gradually increase interest rates • Be prepared for a possible significant correction in the housing market, including bail-in plans in the case of bank insolvency • Assure strong accountability, transparency and competition in the financial sector including an appropriate response to the banking Royal Commission 9
Fiscal policy, tax and spending reform
10
The federal budget position has improved Federal budget balance, % of GDP 2 1 0 -1 -2 -3 -4 -5
2006-07
2008-09
2010-11
2012-13
2014-15
2016-17
2018-19
2020-21
Notes: The balance shown is the “underlying cash balance”, which a main reference balance in federal-government budgeting. It is equal to receipts less payments, less net Future Fund earnings. The dotted line indicates the federal government’s balance projections. Source: Commonwealth (federal) Budget 2018-19.
11
Australia’s goods and services tax remains low Standard rates of Value Added Tax/Goods and Services Tax, 2018 % 27
24
24
21
21
18
18
15
15
12
12
9
9
6
6
3
3
0
0
CAN JPN CHE AUS KOR NZL MEX ISR LUX TUR CHL DEU OECD AUT EST FRA SVK GBR BEL CZE LVA NLD ESP ITA SVN IRL POL PRT FIN GRC ISL DNK NOR SWE HUN
% 27
Source: OECD Tax Database.
12
Recommendations on fiscal policy, tax and spending reform • Ensure fiscal balances remain on track to reach surplus (“budget repair”) • Further shift the tax mix from direct taxes (corporate and personal) and inefficient taxes (including real-estate stamp duty) and towards the Goods and Services Tax and land taxes • Make public services more effective, notably those in health care and long-term care that were flagged by the Productivity Commission 13
Deepening skills to take advantage of globalisation and technological change
14
There are more jobs for the high skilled Changes in employment share, 2001 to 2016, percentage points 8 6 4 2 0 -2 -4 -6
Low skill
Medium skill
Source: HILDA database and OECD calculations (see Sila and Dugain, 2018a).
High skill
15
Many tasks are being automated Share of jobs at risk of automation, % High risk of automation (>70%)
Risk of significant change (50-70%)
KOR FIN EST ISR BEL JPN FRA SWE CHL IRL TUR AUS DNK CAN NOR ESP USA OECD GBR NZL NLD POL SVN GRC AUT DEU ITA CZE
50 45 40 35 30 25 20 15 10 5 0
Notes: Jobs are at high risk of automation if the likelihood of their job being automated is at least 70%. Jobs at risk of significant change are those with the likelihood of their job being automated estimated at between 50 and 70%. Source: OECD calculations based on the Survey of Adult Skills (PIAAC) 2012, 2015; and Arntz, M., T. Gregory and U. Zierahn (2016), “The Risk of Automation for Jobs in OECD Countries: A Comparative Analysis”, OECD Social, Employment and Migration Working Papers, No. 189.
50 45 40 35 30 25 20 15 10 5 0
16
Student performance needs to be improved 530
Average mathematics scores from the OECD’s Programme for International Student Assessment (PISA) OECD
(8)
AUS
(9) (9)
515
(12) 500
485
(18)
2003
2006
2009
2012
Notes: The number in parentheses indicates Australia’s ranking among OECD countries Source: OECD Program for International Student Assessment (PISA), 2000, 2003, 2006, 2009, 2012, and 2015.
2015
17
Recommendations on deepening skills • Continue focus on disadvantaged students in early childhood education and schools • Improve basic-skills provision in VET education and reducing policy bias in favour of university education • Provide better information for education choices including through a single information platform
18
Increasing inclusiveness to avoid groups being left behind
19
Employment among women can be boosted Employment rates for women (25-54 years old) with at least one child aged 0-14 years
% 85 80 75 70 65 60
Year 2014 Source: OECD Family Database.
DNK
PRT
AUT
NLD
FIN
CAN
FRA
BEL
DEU
GBR
OECD
USA
AUS
IRL
ESP
ITA
50
GRC
55
20
The indigenous population remains significantly disadvantaged 90 80
Continuing gaps for the indigenous population Indigenous
Non-Indigenous
70 60 50 40 30 20 10 0
15-64 year-olds Employment rate (%)
Source: Closing the gap: Prime Minister’s report 2018.
Male
Female Life expectancy (Years) 21
Recommendations on increasing inclusiveness • Incentivise jobactive providers to achieve longer job retention, provide better quality training and on-thejob support • Focus further on lone-parents in terms of childcare availability and affordability, and career guidance and training • Give indigenous communities a greater role in policy design and implementation
22
Urban environments matter
23
Australia is highly urbanised Share of population in greater capital city areas % of state population % 80 70 60 50 40 30 20 10 0
Queensland
New South Wales
Year 2016 Source: Australian Bureau of Statistics.
Victoria
South Australia
Western Australia
24
Metropolitan populations are growing rapidly Recent and upcoming population growth % growth in population over the period 40
2006-2016
2016-2026
35
30
25
20
15
10
5
0
Greater Sydney
Greater Melbourne
Greater Brisbane
Greater Adelaide
Greater Perth
Australia
25
Congestion is lengthening commutes Average travel speed on Melbourne’s freeways during the afternoon peak, km/h 80 75 70 65 60 55 50
2005
2006
2007
Source: VicRoads: traffic monitor.
2008
2009
2010
2011
2012
2013
2014
2015
26
Government investment is being ramped up % of GDP
Total government investment spending
5.0
5.0
4.5
4.5
4.0
4.0
3.5
3.5
3.0
3.0
2.5
2.5
2.0
2.0
2000
2002
2004
Source: OECD Analytical Database.
2006
2008
2010
2012
2014
2016
27
Recommendations on urban environments • Improve infrastructure project selection by raising the prominence of cost-benefit analysis and economic returns • Improve road charging, including distance charging and urban congestion charging • Strengthen urban-area governance through greater leadership from federal and state initiatives and the amalgamation of small local authorities
28
Improving environmental policy
29
A sizeable challenge to reduce greenhouse gas emissions MtCO2-equivalent 700 650
Greenhouse gas emissions 2017 projections
Trajectory to minus 28% target
MtCO2-equivalent 700 650
600
600
550
550
500
500
Target is for 26 - 28 % reduction in 2005 level by 2030
450
450
400
400
350
350
300 1990
1993
2000
2005
2010
2015
MtCO2-equivalent: millions of tonnes of carbon-dioxide and equivalent emissions Source: Department of the Environment and Energy.
2020
2025
300 2030 30
Recommendations on environmental policy • Stabilise and strengthen climate-change policy. Develop and implement a national, integrated energy and climate policy framework for 2030 • Strengthen priority on biodiversity in project approval and land use
31
For more information‌.. Visit the OECD Economics department website to download this presentation; an overview of the 2017 Economic Survey of Australia and more www.oecd.org/eco/surveys/economic-survey-australia.htm
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