Australia must streamline its regulatory framework and lift productivity to cash in on Asia’s strong rebound, an Organization for Economic Cooperation and Development (OECD) report said yesterday.
The review praised Australia’s performance in the financial crisis but urged it to ease restraints to speed up infrastructure spending.
“Australia needs to boost productivity to return to long-term sustained growth,” OECD Secretary-General Angel Gurria said in a statement. “An efficient regulatory system is a main step to achieve that goal.”
The review said the government needed to keep up its drive for regulatory reform, including moves to give states greater autonomy. But it said investment was being held back by unnecessary costs.
“With the global recession putting downward pressure on the terms of trade, persistently low productivity growth are now of increasing concern,” the OECD said. “Catching up to the global technological frontier in some industries remains an important challenge.”
The report said that productivity had been held back by a long-term drought affecting Australia’s main farming region. It added that Australia will need to coordinate national regulations.
“An important long-run policy challenge in Australia is to fully benefit from globalization and the emergence of China and India as major markets,” the OECD report said.
“Capacity limits stemming from the drought and persistent bottlenecks in certain infrastructure sectors have prevented Australia from taking full advantage of them,” it said.
The OECD also urged Australia to encourage open markets through free trade agreements and cut back on government assistance for industry and services.
The OECD added that Australia’s screening process for foreign investments raised “some concerns about its transparency and predictability.”
“Although business proposals have been very rarely rejected, some investors raised concerns in relation to transparency, time delays and lack of clarity concerning reasons for decisions,” it said.
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