Australia has been working on making efficient allocation of resource and maintaining substantial economic growth by introducing series of policy as ‘microeconomic reform’ during last 30 years. The motivations behind those policies were poor performance of Australian economy and loss of international competitiveness. So reforms were undertaken with intention to get more individual agency and market into economic activity and less government intervention in private sector, enhancing economic flexibility.
Before Hawk-Keating government came into power, the growth of The NBFIs (non bank financial institutions) was damaging the effectiveness of monetary policy. what’s more the breakdown of the Bretton Woods Agreement in 1970s and increasing growth in international capital flow made the Australia can not maintain its fixed exchange rate no more. So Hawk-Keating government made following reforms on financial sector. 1.Australian dollar was floated in December 1983 and the government abandoned the control over foreign exchange. 2.Control over bank interest rates were deregulated and bank lending was with less constraint gradually. Furthermore, there were 16 foreign banks which had been licensed to operate in Australia in 1985. Those reforms in financial sector was regarded as beginning of microeconomic reform in Australia. As a result, a rapid expansion occurred to financial sector of Australia, GDP increased from 4.2 per cent to 6 per cent during 1980-1990. And market shares of banks had increased by 6 per cent from 1983-93. Besides, external shocks in Australia economy had been partially eased by floating of exchange rate. The reforms had played a great role in macroeconomic policy making and enhanced the stability of macroeconomic. By having a look at labor market, there was a deficit of $9000 million when Hawke was sworn in the position of PM in 1983. So the priority was to solve the high unemployment and inflation. Before 1983 the Price and Income Accord was highly centralized. Wages could not increase beyond the given national wage standard. So under Hawke-Keating government, The Price and Income Accord had been modified which varied from centralized wage fixing towards enterprise bargaining. Then in 1996 further reforms had been introduced by Howard Government’s Workplace Relations Act of 1996, which reduced the role of awards and put forward Australian Workplace Agreements, a system of individual employment contracts. Those reforms had made remarkable changes in wage aspect in Australia. By 2000, 37 per cent …show more content…
So in the late 1980s government business enterprises had been transferred into either partially privatized or fully privatized. Hence entrance of government business operated market was deregulated. Moreover, competitive tendering, contracting out, performance-based funding, and user-pays pricing had been introduced in a timely manner during Hawk-Keating-Howard reforms as well.
However, some analysis found out that the sale of Commonwealth Bank actually had a negative impact on net worth while the sale of CSL, Qantas had a positive impact on net worth.
In a conclusion the microeconomic reforms in past 30 years had played a significant role in activating Australia economy performance. Through privatization, those public institutions were exposed into market forcing them to cut costs and increasing productivity which in turn made them more efficient. Through cutting tariff which means lower taxes on imports making Australian economy more competitive thus Australian companies would use their resources in a efficient