ben moretti on 23 Mar 2001 07:49:52 -0000 |
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<nettime> Hold your nerve, PM told |
<sarcasm>it really is great to see the imf encouraging governments to be responsive to the electorate's needs</sarcasm> http://www.theage.com.au/news/2001/03/23/FFXCTJRBLKC.html Hold your nerve, PM told IMF REPORT By TIM COLEBATCH ECONOMICS EDITOR CANBERRA Friday 23 March 2001 The International Monetary Fund has urged Australia to push on with more economic reforms, including abolition of all tariff protection of industry, reducing the award system to a simple safety net, slashing the top tax rate and "substantially" increasing work tests on the unemployed. In its annual report on Australia, the IMF praises the Howard Government's economic management, but advises that "there is no room for complacency" and says the pace of reform should be stepped up. The report offers buoyant economic forecasts, apparently prepared in December but now overtaken by events. It says Australia's medium-term growth prospects appear sound unless the world economy turns down. At a time when opponents of economic reform have gained the upper hand politically, the IMF report is a mixed blessing for the government. While it uncritically applauds Australia's management, it simultaneously urges the government to move faster in directions in which the electorate is resisting any movement at all. The hottest potato in the IMF staff report is its proposal that the government end the indexation of pensions and welfare benefits to average weekly earnings and let pensions fall relative to workers' incomes. Warning against "an excessively softly-softly approach" to welfare reform, the IMF argues: "Key to balancing the various, potentially conflicting objectives is to take early action to delink pension and disability payments from wage growth, while substantially increasing participation requirements for welfare recipients." But the report recounts resistance to this from "authorities". Among those who spoke with IMF representatives were Treasurer Peter Costello, Treasury secretary Ted Evans and Reserve Bank governor Ian Macfarlane. "The authorities ... stressed that in light of the high value placed on social cohesion in Australia, the country would be willing to pay some price to ensure a strong safety net for the poor and the disadvantaged, and saw little scope for a radical approach to cutting welfare benefits or eligibility", the report says. Similarly, when the IMF mission urged that tax cuts focus on reducing the top 47 per cent marginal tax rate, and raising the $60,000 threshold at which it cuts in, saying high tax rates could increase the brain drain from Australia, the report says the authorities took the point "but also noted the importance of balancing equity with efficiency considerations". But the report records no such resistance to its other proposals, which include: Removing all tariff protection of industry. Scrapping the present goal of balanced budgets over the business cycle in favor of modest surpluses, to be invested to meet the future health bills of an ageing population. Reintroducing legislation to strip back industrial awards and remove protection for employees of small business from unfair dismissal. "While the reforms of the past 15 years will continue to bring dividends, the reform effort must be sustained if Australia is to retain its place amongst the leaders in productivity growth", it concludes. Releasing the report, Mr Costello highlighted the IMF's praise while ignoring its reform agenda. He said its assessment "underscores the need for sound economic management amid uncertain economic developments". -- ben moretti mailto:bmoretti@chariot.net.au http://www.chariot.net.au/~bmoretti news and events in adelaide: http://www.active.org.au/adelaide __o _`\<,_ (*)/ (*) # distributed via <nettime>: no commercial use without permission # <nettime> is a moderated mailing list for net criticism, # collaborative text filtering and cultural politics of the nets # more info: majordomo@bbs.thing.net and "info nettime-l" in the msg body # archive: http://www.nettime.org contact: nettime@bbs.thing.net