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Forum of Federations and CD Howe Institute Conference, Toronto, 1 February 2010

Addressing Internal Market Barriers and Integration: The Australian Experience Cliff Walsh School of Economics University of Adelaide South Australia. Forum of Federations and CD Howe Institute Conference, Toronto, 1 February 2010. AUSTRALIA. CONSTITUTIONAL CONTEXT

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Forum of Federations and CD Howe Institute Conference, Toronto, 1 February 2010

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  1. Addressing Internal MarketBarriers and Integration:The Australian ExperienceCliff WalshSchool of EconomicsUniversity of AdelaideSouth Australia Forum of Federations and CD Howe Institute Conference, Toronto, 1 February 2010

  2. AUSTRALIA

  3. CONSTITUTIONAL CONTEXT • WHY COOPERATIVE ECONOMIC REFORMS • WHAT REFORMS? • HOW ACHIEVED? • LESSONS FOR CANADA?

  4. CONSTITUTIONALCONTEXT

  5. COMMONWEALTH POWERS: • FEW EXCLUSIVE • MANY MORE CONCURRENT, WITH FEDERAL PARAMOUNTCY • STATES HAVE RESIDUAL POWERS • COVER MOST ECON ACTIVITY AND INFRA PROVISION

  6. “ECONOMIC UNION” PROVISIONS: • CUSTOMS UNION: EXCLUSIVE COMMONWEALTH POWER (s90) OVER CUSTOMS AND EXCISE DUTIES • COMMON MARKET: s92 “… TRADE, COMMERCE AND INTERCOURSE BETWEEN THE STATES … SHALL BE ABSOLUTELY FREE”

  7. s92 ONLY PRECLUDES “DISCRIMINATORY BURDENS OF A PROTECTIONIST KIND” • CONSTRAINS REGULATORY DIFFERENCES • BUT DOESN’T NECESSITATE HARMONISATION

  8. USE OF MOST CONCURRENT POWERS UNCONTENTIOUS BUT NB • EXTERNAL AFFAIRS POWER: CAN OVERIDE STATE LEGN • CORPORATIONS POWER: CAN EVEN REGULATE MATTERS INTERNAL TO CORPORATIONS • GRANTS (SPENDING) POWER: REWARD STATE REFORM ACHIEVEMENTS

  9. CONSTITUTIONAL CHANGE UNLIKELY • REFERRALS COOPERATIVE BUT PRACTICAL AND POLITICAL LIMITS • OTHER MEANS RELIED ON: • TEMPLATE LEGISLATION • MIRROR LEGISLATION • FRAMEWORK LAWS • SIMPLY IGAs

  10. THE WHY, WHAT AND HOW OF AUSTRALIA’S COOPERATIVE ECONOMIC REFORMS

  11. WHY? • ECON CRISIS: UNILATERAL TARIFF REDUCTIONS • INTENSE PRESSURE FOR DOMESTIC ECON REFORMS • STATES’ PARTICIPATION BECOMES ESSENTIAL • ECON AND POLITICAL BENEFITS ALL-ROUND • 2+ DECADES & STILL GOING

  12. WHAT? • DETERMINED SOLELY BY WHETHER INCREASES COMPETITION ETC • PRESUMPTION IN FAVOUR OF COMPETITION BUT COULD BE REBUTTED • FOCUS CHANGES OVER TIME

  13. PHASE 1: 1990s • STARTS MODESTLY EARLY 90s: INFLUENCED BY EU • MUTUAL RECOGNITION AGREEMENT ETC. • BUT NB ALSO PERFORMANCE MONITORING OF GBEs

  14. 1995-2005 COMPREHENSIVE NATIONAL COMPETITION POLICY (NCP). KEY ELEMENTS: • REFORMS TO PREVIOUSLY SHELTERED GBEs: ESPECIALLY ELECTRICITY, GAS, WATER • WIDE-RANGING LEGISLATION REVIEWS : TO REMOVE ANTI-COMPETITIVE LEGISLATION

  15. OTHER ELEMENTS INCLUDED: • WIDENED COVERAGE OF TRADE PRACTICES ACT • COMPETITIVE NEUTRALITY • SEPARATION OF REGULATORY FROM COMMERCIAL FUNCTIONS • VERTICAL SEPARATION • THIRD-PARTY ACCESS REGIMES

  16. SOME INTERNAL MARKET REFORMS BUT NOT HIGH PRIORITIES: E.G. • MORE UNIFORM APPROACH TO REGULATING TRUCKS • NATIONAL INTEGRATION OF INFRA PROVISION

  17. PHASE 2: AGREED 2006 • NATIONAL REFORM AGENDA (NRA) • REGULATORY REFORM STREAM “TO DELIVER A SEAMLESS NATIONAL ECONOMY” • REDUCE FRAGMENTATION • IMPROVE REGN-MAKING & REVIEW

  18. INITIALLY 10 PRIORITY AREAS • PRODUCTIVITY COMMISSION: INCREASE GDP BY 1.33%? • SOME ISSUES IN CANADA NOT IN AUSTRALIA • NOW 27: IN SUMMARY:- • GREATER INTEGRATION OF LABOUR MARKETS: PROMOTE MOBILITY & SKILLS ACQUISITION

  19. REGULATION OF SAFETY & OTHER STANDARDS • CONSUMER INFORMATION AND PROTECTION • STREAMLINE GOVT APPROVAL AND COMMUNICATIONS PROCESSES FOR BUSINESSES

  20. BENEFITS > THAN +1.33% GDP • REFORMS TO REGULATION-MAKING AND REVIEW IMPORTANT • FOR MOST BUSINESSES, EXCESSIVE REGULATIONS • OTHER NRA REFORMS INCLUDE WORKFORCE PARTICIPATION & PRODUCTIVITY

  21. HOW? & LESSONS FOR CANADA? • VITAL: SEPARATE INTERGOVTL FORUM – COAG • ALSO: DRIVEN & MONITORED BY FIRST MINISTERS • REFORMS ARTICULATED AS ABOUT COMPETITION  PRODUCTIVITY  LIVING STANDARDS

  22. BROAD-BASED PACKAGES • MUTUALLY REINFORCING ITEMS • REDUCING INTERNAL BARRIERS ONLY IF HIGH BENEFITS • TAILOR-MADE IGAs FOR EACH PACKAGE & COMPONENT

  23. STATE PREMIERS: SEEN AS NATIONALLY SIGNIFICANT • LITTLE OR NO FINGER-POINTING AT PAST “PAROCHIALISM” • SENIOR OFFICIALS GROUP STABILISED PROCESSES WHEN POLITICAL TENSIONS

  24. REFORM PRIORITIES ESPECIALLY INFLUENCED BY • BUSINESS COMMUNITY (BCA) • PRODUCTIVITY COMMISSION • WHERE POSSIBLE, SET OUT OBJECTIVES AND GENERAL PRINCIPLES • STATES LEFT TO IMPLEMENT TO SUIT LOCAL PREFERENCES

  25. COMMITMENT OF STATES SUSTAINED BY REWARD PAYMENTS • PROGRESS ASSESSED BY INDEPENDENT AGENCY • RESULTS DISPROPORTIONATE TO REWARD $s AVAILABLE

  26. TRANSPARENCY • COMMUNIQUÉS FOLLOW ALL COAG MEETINGS • BACKGROUND PAPERS RELEASED • ASSESSMENTS OF PROGRESS MADE PUBLIC • PC PUBLIC INQUIRIES

  27. OUTCOMES ACHIEVED

  28. PC REVIEW OF NCP (2005) • ESTIMATED +2.5% GDP FROM INFRA REFORMS ALONE • ALSO CONTRIBUTED TO • PRODUCTIVITY GROWTH SURGE: OECD GDP PER CAPITA RANK BACK TO 8TH (18TH LATE 1980s!) • TRADE/GDP RATIO TO OVER 45% (20% EARLY 1980s)

  29. CURRENT REFORMS PROJECTED TO INCREASE GDP BY • 1.33% REGULATORY REFORMS AFTER 10 YRS (ONLY 10 OF 27) • 6% INCREASED WORKFORCE PARTICIPATION. 3% INCREASED WORKFORCE PRODUCTIVITY • BUT N.B. AFTER 25+ YEARS, AND POSSIBLY LARGE IMPLEMENTATION COSTS

  30. SHOULDN’T OVERSTATE • RAISED PRODUCTIVITY RELATIVE TO U.S.A.’s • HOWEVER, ONLY TO 76% AND STILL BELOW 1950 LEVEL • MUCH YET TO BE DONE!

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