Economist warns against "re-arranging the deck chairs" in reform

Wednesday, March 16, 2005

A leading Australian economist has warned that Australia needs to get services reform right or risk simply “re-arranging the deck chairs”.

Professor Christopher Findlay says Australia should aim to do more than “simply give foreigners a share of a protected market.”

Speaking following the launch of his Melbourne Asia Policy Paper, “Trade in Services”, Professor Findlay said Australian experience to date suggested there were very big gains to be made from reform.

“Gains to Australia from service sector reform are potentially much greater than from liberalising trade in manufacturing or agricultural products. Services account for over 80% of the Australia’s output and employment, including transport and distribution, broadcasting and telecommunications, education, financial services, infrastructure and posts,” Professor Findlay said.

He said, however, that Australia needed to focus on its domestic reform agenda independently of international trade negotiations.

“If you have a problem domestically, you need to decide what you want – better quality service, more volume, more capacity in the system, infrastructure improvements – then you can “seal” it by making international commitments,” he said.

“In other words, don’t let trade negotiations ‘wag the dog’.” Bilateral, multilateral and regional cooperation could reinforce the domestic reform process, but should not be allowed to lead it.

Chris Findlay is Professor of Economics at the Asia Pacific School of Economics and Government at the Australian National University. “Trade In Services: Policy Options and Implications for Australia-Asia Relations” can be downloaded in PDF at http://www.asialink.unimelb.edu.au/cpp/policypapers/index.html

Melbourne Asia Policy Papers is an initiative of the University of Melbourne with the aim of strengthening Australia’s engagement with Asia through publication of a series of non-partisan policy options papers that have been work-shopped by a panel of experts from government, business and academia.

Asialink, The University of Melbourne

Economist warns against "re-arranging the deck chairs" in reform