Presentation - Economic Survey of Australia

OECD ECONOMIC SURVEY OF

AUSTRALIA

Achieving sustainable economic growth 26 OCTOBER 2023 oe.cd/AUSTRALIA

@OECDeconomy @OECD

The economy is slowing after a rapid recovery Real GDP growth (year-on-year)

% 12 10 8 6 4 2 0 -2 -4 -6 -8 Mar-19

Dec-19

Source: OECD Economic Outlook Database.

Sep-20

Jun-21

Mar-22

Dec-22

Sep-23

Jun-24

Mar-25

Dec-25

Inflation has peaked but remains high %

Headline inflation (year-on-year)

12 Australia

10

United States

Euro area

OECD

8 6 4 2 0 -2

2015

2016

2017

Source: Australian Bureau of Statistics, OECD Statistics Database.

2018

2019

2020

2021

2022

2023

A restrictive monetary policy stance remains appropriate Official policy rates

% 7

Australia

6

United States

Euro area

5 4 3 2 1 0

2022

2022

Source: Reserve Bank of Australia.

2022

2022

2022

2022

2023

2023

2023

2023

2023

Growth is projected to slow further, bringing inflation back down 2022

2023

2024

2025

Real GDP growth, %

3.7

1.8

1.3

1.8

Consumer price index, % change

6.6

5.5

3.3

2.8

Core inflation, %

5.9

5.9

3.3

2.8

Annual growth rates

Source: OECD.

Addressing fiscal challenges

Continue efforts to narrow the fiscal deficit given significant future cost pressures Federal government fiscal balance

% of GDP 1 0 -1 -2 -3 -4 -5 -6 -7 -8

2013

2015

Source: Commonwealth of Australia.

2017

2019

2021

2023

2025

2027

2029

2031

2033

There is scope to broaden the base of the Goods and Services Tax Ratio of Goods and Services Tax collected to revenue if it was applied to all consumption at standard rate

Ratio 1.1 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2

Note: Data are for 2020 in all countries other than Türkiye (2019).

Source: OECD Consumption Tax Trends database.

TUR

COL

MEX

GRC

ITA

ESP

GBR

CRI

IRL

BEL

ISL

CAN

PRT

FRA

SVK

POL

AUS

LTU

SVN

OECD

DEU

FIN

NLD

AUT

HUN

CZE

SWE

LVA

CHL

ISR

DNK

CHE

KOR

JPN

EST

LUX

0.0

NZL

0.1

Greater emphasis on preventive care would reduce high hospitalisation rates Preventive care expenditure as a share of current health expenditure

% 14 12 10 8 6 4

Note: Data are for 2022 or latest available year.

Source: OECD Health Expenditure and Financing Dataset.

ISR

CRI

SVK

COL

POL

NOR

CHE

MEX

BEL

PRT

AUS

JPN

ISL

CHL

ESP

GRC

LUX

FIN

USA

SWE

DNK

LVA

SVN

FRA

LTU

IRL

CAN

DEU

ITA

HUN

KOR

CZE

EST

NLD

AUT

0

GBR

2

Raising productivity

GDP per capita growth should be revived GDP per capita growth, average rate

% 3.0

Australia

OECD

2.5 2.0 1.5 1.0 0.5 0.0

1996-2000

2001-2005

Source: OECD Growth in GDP per capita, productivity and ULC Dataset.

2006-2010

2011-2015

2016-2021

School reforms would boost economic prospects Score in the Programme for International Student Assessment, by competency

Mean score 550 540 530 520 510 500 490 480 470 460

Australia science

OECD top 5 science

Australia mathematics

OECD top 5 mathematics

Australia reading

OECD top 5 reading

2000

2003

Source: OECD Growth in GDP per capita, productivity and ULC Dataset.

2006

2009

2012

2015

2018

Reforms to licensing and regulatory systems would improve the business environment Product Market Regulation Indicators

Index 3.0

Australia

OECD

OECD - Top 5

2.5 2.0

Increasing regulatory burden

1.5 1.0 0.5 0.0

Assessment of impact on competition

Interaction with interest groups

Complexity of regulatory procedures

Simplification and evaluation of regulations Note: Data are for the most recent vintage in 2018.

Source: OECD.

Admin. requirements for limited liability companies and personally-owned enterprises

Licenses and permits

Administrative burden on start-ups

Improving gender equality

The gender gap in labour income has declined but remains significant Decomposition of gender gap (men-women) in labour income

% 60

Employment gap

Hours gap

Hourly wage gap

50

40

30

20

10

0

2001

2003

2005

2007

2009

Source: Household Income and Labour Dynamics in Australia Survey, OECD calculations.

2011

2013

2015

2017

2019

2021

Slower benefit withdrawal would reduce work disincentives for some women Effective tax rate on increasing working hours

% 80 70

Australia

60

OECD

50 40 30 20 10 0

Second earner parent

Second earner non-parent

Minimum wage

Single parent

Second earner parent

Second earner non-parent

Single parent

67% of average wage

Second earner parent

Second earner non-parent

Single parent

Average wage

Note: Tax rates are for different wage rates and an individual with two children increasing work hours from 50% to 100%. For the couple, the partner is assumed to earn the average wage. The calculations include social assistance benefits and housing benefits. This calculation does not include childcare costs. Data are for 2022.

Source: OECD Tax and Benefits Model.

Better access to affordable childcare would lower barriers to work Per cent of earnings lost to higher taxes, lower benefits and childcare costs when entering employment and using centre-based childcare after receiving minimum income benefits

% 120 100 80 60 40

EST

BGR

ITA

KOR

LVA

SWE

ESP

FIN

GRC

HRV

NOR

JPN

POL

PRT

LUX

AUT

DEU

HUN

SVK

OECD

NLD

FRA

LTU

ISL

ROU

BEL

CHE

CAN

IRL

SVN

AUS

GBR

CZE

USA

NZL

0

DNK

20

Note: This indicator measures the percentage of earnings lost when a parent takes up full-time employment at 67% of the average wage and uses centre-based childcare. Calculations refer to a couple with two children aged 2 and 3 where the other parent works full-time at 67% of the average wage and the family claims social assistance and/or Guaranteed Minimum Income (GMI) benefits but not unemployment benefits. Data are for 2021 or latest available year.

Source: OECD.

More paternity leave paid at a higher rate would encourage men to take on caring roles Paternity leave for fathers (left axis)

Payment rate (right axis)

Note: The indicator incorporates paid paternity leave and paid father-specific parental and home care leave provided by the government. Data are for 2022.

Source: OECD.

USA

ISR

NZL

CHL

MEX

TUR

HUN

LVA

CRI

COL

CZE

CHE

ITA

GBR

AUS

DNK

POL

ISL

BEL

PRT

SVK

LUX

FRA

JPN

KOR

LTU

0

EST

0

SVN

20

CAN

10

NLD

40

IRL

20

DEU

60

FIN

30

GRC

80

AUT

40

SWE

100

NOR

50

ESP

60

% of average earnings 120

Weeks

Better training programmes and work experience would reduce gender segregation %

Share of women studying and working in science, technology, engineering and mathematics fields

40 2020

35

2015

30 25 20 15 10 5 0

University completions in the fields

Working in the fields with university qualifications

Source: Department of Education, Skills and Employment.

Vocational education and training completions in the fields

Working in the fields with vocational and education and training qualifications

Achieving the climate transition

Emissions are projected to fall but further policies are required to achieve targets Mt CO2-e

Historical and projected greenhouse gas emissions

800 700 600 500 400 Historical emissions Trajectory to 2030 and 2050 targets Projected emissions

300 200 100 0

1990

1995

2000

2005

2010

Note: Including land-use, land-use change and forestry (LULUCF).

Source: Department of Climate Change, Energy, the Environment and Water.

2015

2020

2025

2030

2035

2040

2045

2050

Further increasing renewable electricity generation would support decarbonisation TWh 90

Electricity generation by source Hydro

80

Solar

70

Wind

60 50

Biogas Solid biomass Renewable share (right scale)

40

35 30 25 20 15

30

10

20

5

10 0

%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source: IEA World Energy Statistics.

0

Increased energy RD&D funding would spur green innovation and adoption % of GDP

Public expenditure on energy research, development and demonstration

0.12 0.10 0.08 0.06 0.04 0.02 0.00

NOR FRA JPN FIN AUT ESP CAN NLD BEL GBR DEU SWE CHE HUN KOR USA DNK PRT ITA EST POL SVK AUS CZE LTU NZL IRL TUR CHL MEX Note: RD&D stands for research, development and demonstration. Data are for 2023 or latest available year.

Source: IEA.

Stringent federal fuel economy standards would help reduce transport emissions Passenger transport energy intensity

Passenger energy intensity (MJ/pkm)

3.0 2.5 2.0 1.5 1.0

Australia

France

Germany

Japan

United Kingdom

United States

0.5 0.0

2005 Source: IEA.

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Reduction needed to achieve global net zero emissions target

2025

2030

Exposure to climate change risks should be considered in land use planning decisions % 45

Percentage of population exposed to very high or extreme wildfire danger

40 35 30 25 20 15 10

0

AUS CRI CHL PRT COL MEX USA OECD SWE DEU POL FRA CAN ITA TUR SVK NLD SVN NZL KOR ESP LVA LTU GRC EST CZE FIN AUT BEL DNK HUN ISL IRL ISR JPN LUX NOR CHE GBR

5

Note: Data are an annual average over 2017-2021.

Source: IEA/OECD Climate-related hazards: Wildfire, Environment Statistics database.

Strengthened training schemes could help workers during the green transition % of GDP 0.50

Public expenditure on training-related labour market programmes

0.45 0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00

AUT FIN FRA DNK PRT BEL DEU LUX ITA CHE EST CRI OECD IRL NLD ESP KOR NOR SWE CAN NZL ISR SVN LVA LTU USA AUS CHL JPN Note: Data are for 2023 or latest available year.

Source: OECD.

OECDEconomy OECD

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