To What Extent Has Business Dominated Industry Policy in Australia - Case Study Example

GOVERNMENT-BUSINESS RELATIONSHIP: TO WHAT EXTENT HAS BUSINESS DOMINATED INDUSTRY POLICY IN AUSTRALIA? Name Institution Course Date Government-Business relationship: to what extent has business dominated industry policy in Australia? Introduction Since 1970s, Australia has been undergoing a remarkable transformation in the relationship between business and government. This has been the case to ensure Australian competitiveness in the global economy. There has also been a growing anticipation among interest groups of all kinds that they would be consulted at pertinent stages of public policy development. Business interests, particularly small business organizations, have been active participants in the increasing demand to be consulted by government, and as a result, there have emerged novel lobbying structures and strategies, driven by the attempt to manipulate the consultative arrangements to attain advantageous policy results. Small business groups became more active in trying to influence government sponsored consultative processes in the 1980s and 1990s. Through these consultations, all levels of government in Australia have recognized the need to improve service delivery, to treat citizens as customers, and to devolve decision-making and authority. Recent Australian experiments with co-regulation have relieved business of a number of its concerns related to bureaucratic compliance burdens, by putting pressure on relevant industries and groups to manage the process and handle the issue of quality as well as other issues. In doing so, the government is allowing businesses to write their own regulation and control processes, but they must also be willing to take the responsibility of being effective and delivering to the public. This paper discusses the extent to which business has dominated industry policy in Australia. Trade and industry control and microeconomic reforms Trade and industry domination in Australia has gone through radical transformations since 1970s. A majority of these transformations are linked with the market-oriented strategies generally known as micro-economic reforms. Micro-economic reform I this context is used to refer to a wider neoliberal guidelines plan intended at minimizing both state involvement as well as state power, Quiggin, 2001c. Surprisingly, such pursue for effectiveness was not a key strategy focus for a great deal of the twentieth century in Australia, Quiggin, 1996. Nevertheless, due to the evidence of widespread inefficiency and rising pressure on economy, the microeconomic reform became a major factor of trade and industry policy in Australia since 1970s. The period of microeconomic restructuring in Australia could be split into three most important phases, which overlap to some extent; The first phase was called deregulatory phase. The main concern was rationalizing public involvement in private segment markets, with an aim of making sure prices were okay. This phase started in 1973 with the Whitlam government’s 25 per cent slash in all tariffs, as well as other associated slash in agricultural support of which the most contentious was the elimination of a bounty on purchase of superphosphate. This deregulatory segment attained its culmination in the mid 1980s with monetary deregulation (floating the dollar, elimination of exchange controls and many more). Privatization was the second phase. In this phase, the concentration moved to market-oriented transformations of the public segment, together with corporatization and privatization as well as competitive contracting. This phase begun in the mid 1980s and was principally focused on restructuring the public sector and was based on policies adopted in the United Kingdom. The member of the Labor government justified the movement towards privatization so as to refurbish the welfare state by minimizing unnecessary obligations, Castles and Shirley, 1996. The shift towards micro-economic reforms on market-oriented lines I the mid 1980s was vital. Incompetence in publicly-provided transportation services was perceived as hindrance to the growth of competitive export industries. There were high hopes that if the efficiency was improved in the sectors of transport, electricity as well as telecommunication systems, then it would improve exports and turn around the speedy escalation in the current account insufficiency that followed the financial deregulation in the early 1980s. The third phase was called competitive regulation phase. In this phase, the notion of deregulation was substituted by regulation intended to bring about competitive market results. Several authoritarian measures were formed in areas like telecommunications and electricity, assuming that there would be a speedy shift to a completely aggressive market. A good example of the transitional policy was National Competition Policy, Hilmer Report, 1993. As it was being formulated initially, the policy was an accord by the states to a complete execution of the deregulatory and public sector reorganization program, in return for a limited re-establishment of Commonwealth financial support fundings, Quiggin, 1997b. The period of microeconomic restructuring has brought about significant amendments in the responsibility of government along with the process of trade and industry control. The language and standards of the market encompass the policy deliberation and have to a greater extent displaced the idea of public service that formerly dominated the public sector. Regulation of trade focused on stabilizing production and employment, or enhancing growth in specific sectors is now seen as unlawful, Nahan, 2000. Self sufficiency and structural adjustment The government of Australia has been changing the role it used to play in industry policy by diverting to a market-oriented policies and regional development. The most current and still prevailing policy approach to regional development is the drive for business and communities to be self-reliant, with governments assisting with structural modification to simplify the transition to these states. The new standard was apparent in a 1986 rural policy paper, where the center of attention was on the benefits that would flow to rural industries from globally focused macro-economic policies as well as reduced export costs, Hwake and Kerin, 1986. It also elaborated on the need to keep on reducing protection to other industries so as to minimize input costs, Hwake and Kerin, 1986, meaning that to be consistent there could be no additional assistance for agriculture, apart from delaying progress on deregulation. Generally, there was a implicit effort to ‘wean’ industries ad communities away from assistance, with industry and regionally specific programs seen to distort the efficiency of cumulative individual choices, Freebairn, 2003. The goal was to reduce the direct involvement of governments in economic production and service delivery, Beer et al. 2005. In Australia, governments have moved away from directly supporting producer establishment. This is mainly due to the rise of neo-liberalism apart from the trend of these producer establishment schemes generating significant social, economic as well as environmental costs that are worrying the governments. Enhancing competition in services Australia has made various reforms that not only concern the traded sectors of agriculture, manufacturing and mining, but also on-traded sectors that offer considerable business inputs. These reforms comprise of corporatizing and privatizing utilities as well as opening network industries to competition. In 2001, all forms of telecommunications had unrestricted market access in 27 OECD countries, compared to only a few some years earlier. Furthermore, Australia is among the OECD countries that have recognized the significance of opening public services to competition with an aim of making the delivery of public services more efficient. Australia has made a most important dedication to trade liberalization through its membership of APEC (Asia-pacific Economic Cooperation). In 1994, APEC members reached a consensus on an objective of free trade in addition to investment by 2010 (for industrial countries) and 2020 (for developing countries). Trade liberalization is widely recognized as a helpful unilateral policy objective. There is extensive appreciation nowadays that the trade liberalization has led to an extra strong and globally aggressive industrialized sector and the returns for this are now evident in robust exports of highly changed manufactures in addition to much stronger production intensification, Quiggin, 2001c. The government of Australia has made several key commitments to changes the industry policy as from 2000 and beyond. These commitments to changes will be carried out in the framework of Australia’s APEC commitments; the evaluation of sector for the passenger motor vehicles (PMV), textile, clothing and footwear (TCF) and information industries; as well as a resolve to offer extra aid for investment promotion. Due to hard trading situation, there are new calls, particularly from business welfare, for government/industry collaboration in inventing and putting into practice industry policy. It has been noted with a lot of concern that there is a lesser amount of emphasis on the security of Australian jobs and an added emphasis on the responsibility of government in attracting investment, in particular overseas investment, to Australian industry in the current debate. In an increasingly global economy, it is argued that it is important to establish tactical joint venture linking government and Australian industry to attract overseas investment to Australia as well as promoting Australia’s competitiveness in global markets. In addition, the governments of several Asian nations have embarked on a vigorous responsibility of determining the course of industry growth and that Australia needs to follow suit so as to achieve the superior development rates in manufacturing enjoyed by these nations, Hilmer, et al. 1993. Due to the current Australia’s economic, social and environmental needs, the industry policy has been dismantled to a great extent in favor of businesses and especially exports. In its place, the industry’s interests are met by government pursuing suitable macro-economic and micro-economic policies to create a business atmosphere in which business can function without restraint devoid of government involvement. Conclusion Australia is a tiny country and is currently more reliant on doing business than its larger trading associates and its best development prediction in trade are in the superior value added to its products and services. The country needs to be globally aggressive and it needs to be successful in export market access for its goods and services. For this to happen, the country must be a leader in the road to free trade, Nahan, 2000. There is substantiation that trade liberalization policies for the last thirty years have been linked with a reorganization of the Australia manufacturing segment, better specialization, and a stronger export orientation as well as a general perfection in global effectiveness. The enhanced export performance is revealed in a better share of production traded in addition to exports coming from a wider variety of industries. This is in contrast to the common view that freer trade might make Australia to concentrate in a constricted variety of rural and mining industries which would leave the country more susceptible to instability in global goods markets. Improved trade seems to have been victorious in generating the openings as well as the industrial will to pursue innovative goods, new-fangled course of actions along with new markets, both locally and overseas, Roseau, 1994/95. It has expanded the ability of Australian manufacturing to fine-tune to new market opportunities in addition to novel technology and administration openings. References: Beer, A, Clower, T, Haughtow, G. and Maude, A 2005. ‘Neoliberalism and Institutions for Regional Development in Austrlia’, Geographical Research, vol. 43, no.1, pp. 49-58. Beer, A., 2000. ‘Regional policy and development in Australia: Running out of solutions?’, in McManus, P and Pritchard, B (eds), Lands of Discontent: The Dynamics of Change in Rural and Regional Australia, UNSW Press, Sydney, pp. 167-194. Castles, F. and Shirley, I. 1996, ‘Labour and social policy: gravediggers or refurbishers of the welfare state’, in Castles, F., Gerritsen, R. and Vowles, J. (eds.) The Great Experiment: Labour Parties and Public Policy Transformation in Australia and New Zealand, Allen & Unwin, Sydney. Department of Commerce and Trade, 1999, A Regional Development Policy for Western Australia: Draft for Public Comment, Perth: Department of Commerce and Trade. Freebairn, J. 2003, ‘Economic policy for rural and regional Australia’, The Australian Journal of agricultural and Resource Economics, vol. 47, pp. 389-414. Hawke, R and Kerin, J. 1986, Economic and Rural policy, Australian Government Publishing Service, Canberra. Hilmer, F., Rayner, M., and Taperell, G. 1993, National Competition Policy, Report by the Independent Committee of Inquiry, AGPS, Canberra. Nahan, M. 2000, Economic Liberalism and the Community Service Sector, Paper for Symposium: Markets and Social Responsibility: The Influence of the Market on the Work of the Service Professions, Perth: Edith Cowan University. OECD Working Group on Innovation and Technology Policy, 1999, Promoting Innovation and Growth in Services, Directorate for Science, Technology and Industry, Committee for Scientific and Technology Policy, Paris. Quiggin, J. 1996, Great Expectations: Microeconomic Reform and Australia, Allen & Unwin, St.Leonards, NSW. Quiggin, J. 1997b, ‘Estimating the benefits of Hilmer and related reforms’, Australian Economic Review, 30: 256–72. Quiggin, J. 2001c, ‘Market-oriented reform in the Australian electricity industry’, Economic and Labour Relations Review, forthcoming. Roseau, J. 1994/95, Governance in the Twenty-first Century, in Global Governance: A Review of Multilateralism and International Organizations, Vol. 1, No 1, pp 13-43. Read More