The article below, on the deep structural reforms successfully instituted by successive Australian governments over the last 25 years, and translated into English from the original Greek was published today, Sunday, 19 February 2012 in the Kathimerini newspaper. We believe Australia’s experience is a useful case study of how reforms can be implemented successfully both in the economy and across a country’s public sector. The lessons are many, but the key concept is simple. The reform process must be continuous and sufficiently broad in scope to allow a positive synergy, meaning that key structural reforms in the functioning of the economy and labor market have to work together with improvements in public administration. Australia was of course not a member of a currency union, meaning it had a broader range of macroeconomic and financial policy options than Greece does today. But it struggled with a large, expensive and inefficient state bureaucracy for many decades before finally reinventing it to serve the public’s interest and to support investment and development.
Lessons learnt in Australia for Greece
By Jenny Bloomfield*
Many ask what the steadily rising achievements of the Australian economy and the unprecedented prosperity that the country is experiencing today is due to. The answer is that because of the implementation of painful and radical reforms, we were able to reconstitute our economy and to be now in a position to take advantage of our natural resources in the best way possible and thus to benefit from the economic boom in our region.
In the 80’s and 90’s, Australia underwent an exceptionally painful period of economic restructuring in order to adjust to a new world economic reality, dramatically reducing protectionism and opening up key sectors of the economy to competition. The high cost of protectionism and the support provided to non-productive and non-competitive industries weighed heavily on the consumer who paid dearly for goods and services, as well as on our most productive and export-oriented industries. After 25 years of implementing structural reforms which led the way to two decades of continuous economic growth, Australia has changed significantly.
We strengthened competitiveness by investing in innovation and by increasing productivity. We reduced bureaucracy and the cost of business activity simplifying state procedures whilst in parallel strengthening incentives for people to work. We institutionalised a flexible framework of industrial relations and closely linked salary variations with productivity increases, which was instrumental in increasing employment levels and decreasing inflation.
We opened up the local marketplace, including the state monopolies and state-controlled businesses, to competitive forces, a factor that was a catalyst in increasing productivity. We helped surplus personnel in the workforce to integrate into more productive sectors of the economy through re-training and the acquisition of new skills.
These changes had the immediate effect of increasing the GDP, as well as the establishment of a more flexible, active, dynamic and efficient economic system. The increase in state revenue made it possible for the Australian government to continue improving its social security program. A re-structured, rationalised and effective public sector and open, transparent, accountable institutions made it possible for structural reforms to take place resulting in an improvement of public governance in Australia.
With focused reform measures for the improvement of the administrative framework of state institutions, we strengthened accountability, transparency, the state’s ability to respond to the needs of the citizens and the seamless operation of public services, harmonising the outcomes and productivity of the public sector with the private sector. We gave greater autonomy to public organisations, whilst legislating in parallel a framework for strict criteria of performance evaluation and accountability based on the achievement of predetermined targets and outcomes.
The diligent monitoring of the economic activity and the performance of public organisations contributed substantially to their improved status and better outcomes. Successive governments continued to implement a series of reforms which aimed to maintain and to improve the performance of the Australian economy in the fields of competition policy and productivity, industrial relations and flexibility in the marketplace, public administration, education and investment in innovation and the so-called “knowledge or information economy”.
The Australian people understand the difficult adjustment which the Greek people are currently undergoing to bring the country back to a healthy and robust economic status which will ensure the long-term prosperity of all citizens. The most significant lesson resulting from our experience is that the difficult adjustment program can be implemented successfully as long as there is collective support for the necessary changes and determination to achieve the results.
* Mrs. Jenny Bloomfield is Australia’s Ambassador to Athens.
Original article here, in Greek: