OECD Secretary-General

Australia in the Asian Century


Opening Remarks by Angel Gurría, OECD Secretary-General

Dear Ambassadors Barrett, Yoshikawa and Hur, Ladies and Gentlemen,

I am delighted to open this Seminar to discuss the White Paper on “Australia in the Asian Century”. This road map for the Australian Government, business and the broader economy represents your commitment to anchoring long-term sustainable growth for the benefit of future generations. It is welcome, it is useful, and is definitely inspiring.

There is no doubt that Australia is well placed to continue benefiting from robust Asian growth and the gradual shift of the world economy’s centre of gravity towards Asia. But Asia’s dynamism also presents significant challenges for Australia and other OECD countries.

I would like to highlight some domestic policy priorities for Australia to thrive in this Asian Century. I would also like to explore how we might support Australia in these endeavours.

To take advantage of new opportunities in growing Asia, Australia needs first of all to promote productivity growth, which has slowed significantly since its peak in the beginning of this century. Actually, labour productivity growth has been divided by more than three since then. Supporting productivity growth can be achieved through initiatives in a number of policy domains, including innovation, education and skills, and regulation. And you should seize the moment when the economy is strong to implement the reforms that will maintain prosperity in the years to come.

Australia can strengthen its productivity by providing responsive, high-quality training and higher education systems. This means raising the number of students completing vocational training, more flexible and simple apprenticeship schemes and a more outcome-focussed and competitive higher-education system. It also requires closer collaboration between firms and universities. Ongoing efforts in this area could be supported by a well-designed innovation voucher scheme for SMEs, to be used to contract academic research.

But innovation also means looking outwards. Australian business should take full advantage of regional and global value chains and invest in knowledge-based capital, such as patents, brands and trademarks.

Further harmonising regulation across the states, for example in the electricity sector, would also foster competition and improve productivity growth; as would do a more effective infrastructure policy by imposing user fees and introducing traffic congestion charges.

But to ensure the success of these reforms, adaptability is the key word. It is thus wiser to focus on helping workers and firms to adapt, rather than protecting jobs in specific regions or sectors. Some other reforms can help in this regard. This is true for instance for tax reforms that can facilitate the ongoing structural adjustments. For sure, substantial tax reforms have already been adopted to spread the benefits of the mining boom and help firms adapt. But more can be done. For example, a lower corporate tax rate would help businesses outside the mining sector to adjust.

It carrying out these reforms, it is equally important to “Go Social’’. A flexible and fair labour market remains essential for adjustment. The existing framework of direct and decentralised pay bargaining has yielded good results so far, and should be preserved. But efforts to establish more co-operative industrial relations would be worth pursuing given current tensions. This is not easy, but a sector-by-sector approach may help. It is also important to tame the rise in income inequality. It has for sure slowed down recently, but the widening disparities have outpaced the OECD average since 2000.

As for “Going Green”, it is something you have embraced with the recent Clean Energy Legislative Package and other measures. But I encourage you to go further. Our work on Green Growth can be a source of support in this regard.

This is just a taste of some of the recommendations that were developed both in our Economic Survey of Australia released last December and in our 2013 Going for Growth that I will launch this week in Moscow. Most of them chime with those in the White paper.

But let’s not forget that Australia also needs to look outwards to its integration in Asian markets. In this context, the recent launch of negotiations for a new trade agreement with 15 countries in the region is to be commended. For sure other countries in the region have important responsibilities too, and the creation of a level-playing field at the regional and global level is key. Issues such as ageing populations, increasing inequality, urban pollution, protecting energy and raw material supply lines are as important for Australia as they are for Australia’s partner countries in Asia.

This is also an area where the OECD can help.  Our Organisation has been working with our key partners China, India, and Indonesia as well as with partners in Southeast Asia since the mid 1990s. There are many good examples of cooperation, but let me provide one. The OECD, in partnership with ASEAN, will conduct Investment Policy Reviews on eight countries in Asia, supported by the ASEAN-Australia-New Zealand Free Trade Area Economic Co-operation Work Programme. We have already completed reviews for Indonesia and Vietnam.

To conclude, Australia has the opportunity to deliver a strong and resilient economy that is both part of a thriving Asia and open to the rest of the world. But to build an even brighter future, Australia must make the right choices today. The White paper represents a first step on the right path.

We would be delighted to discuss further how our recommendations can support your implementation efforts. If you take one message away from our discussions today let it be: ‘’Count on the OECD” in these important endeavours.    Thank you!


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