The size of the deficit has little if any significance as an indicator of short-run macroeconomic policy. Government expenditure should be determined by longer term aspirations. Taxation (and other revenue measures) must be used, along with monetary policy, for short-term economic management, but whether revenue should be at a level that results in a deficit or not depends on many things including the composition of government expenditure and the state of the economy. At present, our economy requires a brake on total consumption expenditure and this may require a rise in taxation levels despite the high current level of unemployment. A high rate of capital accumulation is essential to change the structure of production and to increase output and productivity, but the brake on consumption must be eventually relaxed. Without an expectation of healthy consumption growth there will not be an ongoing high rate of accumulation in the private sector.

Over the last two years the Committee for Economic Development of Australia (CEDA) carried out a major project: a vision for the Australian economy and practical policies to attain that vision by the year 2000. One of the key goals was to halve the official unemployment rate. The results are outlined in this article. Emphasis is placed on a policy and incentive structure that is skewed in favour of exports, productive investment and savings, a more structurally efficient and flexible labour market, responsible aggregate wage outcomes and acceptance that growth is only sustainable if the short—term costs of structural reform are borne equitably.

The major economic problem from which Australia suffers at the present time is an excessively—high rate of unemployment. Australia also appears to have, at present, an excessively—low rate of saving. In contrast to the views of the “minimalists”, who argue that government macroeconomic policy should not be adjusted to offset high rates of unemployment, it is argued in this paper that a policy for recovery is desirable. This argument is based on empirical evidence which suggests that the degree of price flexibility required for the economy to return automatically to full employment does not exist. The appropriate policy for recovery, given the low rate of saving, is an expansionary monetary policy. Indicators of monetary policy do suggest that the current stance of monetary policy is indeed expansionary. It is difficult to say whether an even more expansionary monetary policy should be adopted.

Long term unemployment is now Australia’s most difficult and costly labour market problem. This paper argues the case for a different policy reorientation to what has been followed in the past. The first conclusion is that in the absence of a substantial reorientation of policy long term unemployment will remain very high, with the absolute number staying above the level inherited from the 1982/83 recession — which was until the current recession the highest in Australian history. Second, the equity and macroefficiency costs of not doing anything radically different are argued to be very high.

A final part of the analysis considers the fundamental challenge of the Job Compact policy suggestion made in the Government’s Green Paper on unemployment. However, the way in which the policy is to be instituted needs attention. It is likely that the use of the current JOBSTART wage subsidy scheme will not be enough to achieve the desired outcomes.

The Green Paper makes the fundamental point that rapid economic growth of around 4 to 5 percent a year is necessary to substantially reduce unemployment, but even 5 percent growth will not greatly reduce the numbers of long-term unemployed. Policies targeted specifically at this group are also necessary. Its analysis of the policies conducive to rapid economic growth and its arguments that things like more rapid productivity growth and reductions in the participation rate have little effect on unemployment in the medium to long run are supported by simulations of the Murphy model which assumes the results that the Green Paper argues that it demonstrates. On the other hand, the Green Paper is rich in policy suggestions to reduce long—term unemployment and to improve the working of the labour market. The Job Compact is central but improvements to social security and education and training are also important.

This paper examines the changes taking place in Australian industrial relations. It takes as its starting point the policy objective of improving workplace productivity and examines the impact of reforms on this objective using Lewin’s framework for the analysis of change and a mining operation as a case study. The paper suggests that the reforms are only facilitative and this exposes a reliance on management for the achievement of the policy objective. The dominance of managerial perspective changes the fundamental nature of the industrial relations system and raises several important policy considerations, in particular issues relating to the recognition of trade unions.

The introduction of enterprise bargaining poses a fascinating dilemma: with whom should politicians negotiate about their wages and conditions? The question has different implications for Labor and the Coalition. The form of enterprise bargaining proposed by the Government can accommodate current arrangements for MP salaries, though not without some special pleading. The more radical proposals of the Coalition, which emphasise a principal—agent relationship between employer and employee, pose greater challenges. This paper explores the dilemma of salaries for MPs under enterprise bargaining, and suggests a policy solution which ensures that politicians are subject to the rules they propose for others.

The 1993 Congress endorsed extensive revisions to the ACTU’s rulebook including major changes to the ACTU’s decision making structure. Congress reaffirmed the importance of enterprise bargaining for wage fixation in conjunction with awards as safety—nets and the foundation for bargaining. This was the Congress that saw the bulk of members in twenty unions.

Australia’s economic future depends on policies to achieve economic allies and prosperity within the Asia—Pacific region. To do this more than expanding primary exports is needed, because the growth rate of primary industry is relatively low. There are already countries in the Asia—Pacific region who have specialised in secondary industry, but Australia is well placed to specialise in leisure and tourism and also in the information industry, meaning not computing but consulting work and research.

In a recent article appearing in this journal, Burgess (1992) argues the case for the immediate introduction of a public sector job creation scheme. He claims that on “both efficiency and equity grounds there is a strong case for public sector job creation schemes (PSJCS)” (p. 116). In this short note, we show that it is extremely unlikely that PSJCS can promote any substantial net job creation which will be sustained beyond the short-term. Moreover, we argue that such schemes typically promote less efficient outcomes. In effect, the case for PSJCS boils down to the equity effects. However, even here the case remains relatively weak given there are considerable doubts whether PSJCS actually impart valuable skills to participants or enhance their employment prospects.