Structural change presents both opportunities and challenges: opportunities to achieve higher real wages, increased employment and higher living standards; and the challenges of creating the right environment to take advantage of the opportunities available to the fullest extent possible.
The role of policy is to facilitate the process of change by providing a stable macroeconomic environment and a flexible and responsive microeconomic structure. International experience suggests that a comprehensive strategy with macroeconomic and microeconomic policies directed towards this end is likely to yield the best results. This provides a conceptually sound and tested general policy framework for industry.
There is evidence to suggest that reform in Australia is delivering results. Improvements in productivity growth, service improvement and lower prices are clearly evident in some key sectors such as transport, electricity and communications. For the economy as a whole, the trend decline in productivity growth in the 1970s and 1980s appears to have been reversed so far in the 1990s. Australia's recent performance also appears to have been relatively better than for industrial countries as a whole. These are encouraging developments.
Despite the progress made, there is a need to exploit to the fullest extent possible the reform of structural policy. While Australia's relative performance has improved, productivity levels in many industries remain low compared with international standards. The challenge for policy and for Australian businesses and workers will be to continue moving forward at a faster pace than other countries, laying foundations for more jobs and higher living standards.
