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Policy reforms in Australia and what they mean for Canada

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Canada and Australia share many common cultural, economic, governmental, political, and socio-economic characteristics, yet few researchers have carried out comparative analyses of their public policy experiences. These two papers— the first by Stephen Kirchner, the second by Sean Speer and Jason Clemens— are another step in the Fraser Institute's effort to fill this gap.

Stephen Kirchner's study examines public policy reforms in Australia that are pertinent to policy in Canada today. The three policy areas covered are fiscal reforms made over the last two decades, Australia's experience in reforming its retirement savings system, and changes to Australia's labour laws governing unionization and collective bargaining. Kirchner shows that successive Australian governments have pursued a set of policies in favour of sound public finances, a relatively market-based retirement savings system, and labour market liberalization. These policy changes helped to unleash the Australian economy in the 1990s, raising labour productivity and living standards. They continue to position the country as an economic leader relative to many other industrialized nations.

Speer and Clemens find that Australia's experience with fiscal policy legislation is similar to the Canadian experimentation with fiscal rules in the 1990s. Some Canadian governments experimented with fiscal policy legislation, setting out balanced budget requirements during this period, and the outcomes match Kirchner's analysis. These balanced budget laws were associated with improved budgetary positions but were not necessarily effective in constraining spending growth. The Australian experience with compulsory, employment-based retirement savings accounts seems to show that there are options to expand pension coverage and increase retirement savings apart from raising the CPP. The lessons from Australia's experience with fundamental labour market reform are less applicable to the Canadian context, though this does not mean that Canada's labour market is not in need of reform.


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