|
September 11, 2010
In Danger lurks in playing it safe in The Australian Paul Kelly refers to the shift in economic governance that occurred in the 1980s in Australia. In From the Australian Settlement to Microeconomic Reform: the Change inTwentieth Century Policy Regimes Geoffrey Brennan and Jonathan Pincus argue that a substantial shift in the economic policy regime in Australia:
The first regime held from federation through the 1970s. It focused on extensive development, through the attraction and retention of selected immigrants by a set of mutually-supportive policies centered on trade protection. The second strategy, of recent vintage, concentrates more on intensive development and, in contrast with the earlier, relies on economic competition, rather than attempting to suppress it.
They describe this shift as wide-ranging micro-economic reforms that began under the Hawke and Keating Labor governments, 1983 to 1996, and continued under the Howard Coalition governments that followed: The old developmental strategy was largely overthrown. In its place was a set of policies that encouraged competition in product markets and in capital markets. The change was dominated by the Commonwealth’s decisions to reduce and almost eliminate tariff protection. Broadly, however, the States, under Liberal, National or Labor governments, as well as the Commonwealth embraced the switch to a regime putting much greater reliance on competition to achieve policy aims
Why did this shift in economic governance happen? Brennan and Jonathan Pincus point out that as Australia was not alone in its economic liberalization so there were common influences. The most important of these were changes in the external economic environment, which altered the costs and benefits of a protective policy. Internal Australian conditions determined how and when policy responded.
They argue that the developmental strategy, pursued since the early years of federation, which was to erect protective walls behind which ‘tariff factories’ would be attracted, bringing capital and expertise to employ native and immigrant workers in relatively labour-intensive industries, proved to be too costly and limiting in a global economy dominated by Japan and the US. The protection regime had been structured around the UK, when the British trade policy was being re-oriented towards Europe and away from its former dominions. These changed economic circumstances impacted on the economic policy regime causing the shift to a more market orientated mode of governance.
|
