OECD Recommendations For Economic Growth of Australia

Question: 1. Understand and comprehend the principles, concepts and theories underpinning economics as a discipline and the role of economics in contributing to organisational and business thinking.2. Comprehend the role of economics within the wider contexts of economies and understand the relationship between macro and micro economic theories and practices and their impact upon businesses and organisations.3. Apply the theory and practice of economics to a variety of business contexts, problems, and managerial decision making models, and evaluate and propose solutions to business problems based on economic practice and theory. Answer: Introduction Australia is the largest country in the Australasia and Oceania continent. Due to its vast territorial ground, it easily has the largest economy in the region and ranks among the worlds biggest economies. Globally, it ranks high in terms of its diversified economy with mining one of its core industries. An understanding of this countrys economic structure, factors in an in-depth evaluation of its documented reports. Such reports provide a path in which meaningful progress can be launched. This essay, digs into Australias economic reports as projected by the Organization of Economic Co-Operation and Development (OECD). From these reports, it looks into the actions that OECD recommends in a bid to improve the countrys economy (Glynn, 2012). Improvement in the tax system efficiency and effectiveness Australia prides in being a capital- importing country. However this does not bode well with its low consumption tax rates coupled with heavy taxes on income. As a result, it makes little benefits from its exports. Furthermore, it will have a higher corresponding company taxes. Notwithstanding, there was an encouraging move made by the government in its 2014/15 budgetary allocations (The Economist, 2016). There was a substantial reduction in the corporate tax to as high as 1.5%. In order to effectively control its taxation, the government also reintroduced indexing of excise on vehicle fuels. Further control should be realized through further reduction of the corporate tax while having a closer eye at the low tax rate on the goods and services as per now. By doing this, it will also widen its base, eventually. According to OECD, the Australian government (2016) will further this cause by acting on the international agreement in a bid to prevent erosion of its base and subsequent shif ting of the profits within its reach. Ensuring better equity and performance in education Sound economic growth is forged by sound policies in its grassroots. With regard to this, the educational institutions need to be streamlined to stay in tune with this foundation. Australia has low levels of pre-primary school enrolment. Mostly, children coming from disadvantaged households face many challenges that contribute a shortfall in the skills later needed in the economy. In response to this, the national government in collaboration with the state governments advanced the universal early child education in 2013 dubbed the Gronski reforms. The adoption of this measure factored in the allocation formula whereby socio-economic factors played a key role. Children from all backgrounds could be reached through this mechanism. The OECD in line with this move, recommended that the government should focus more on provision of affordable healthcare that conforms to family life. Fostering innovation for green growth Green growth alludes to fostering sustainable economic growth while making sure that natural assets continually provide resources and subsequent environmental services on which a countrys well-being is founded (OECD, 2015) With regard to this, innovation is essential in integrating growth from natural capital depletion and eventually contribute to economic growth and creation of employment opportunities. While business is the driving factor, there is need for the Australian government to provide clear and stable market through carbon pricing (Glynn, 2016). This will be realized through:-private-public partnership; private sector investment in research is key in driving long term green innovation through its in-depth market research that identifies gaps. Incentives such as reduced taxation on the private sector furthering this course. Secondly, developing a green revolution into an ICT revolution. The government should introduce subsidies in the green technologies in order to drive jo b creation in its application. This will encourage private investments in the ICT which has not quite achieved its objectives with regard to job creation when compared to other OECD countries (BBC, 2015) Youth investment The unemployment witnessed in the Australian economy is largely represented by the 15-29 year olds. They are majorly short of education beyond secondary level. This has made them vulnerable to any economic realignment. Consequently, they are at risk of being left behind in the competitive labor market. Initiatives that are wired to help young people need to be developed to close the labor market gap that could result from this neglect. Increasing government expenditure on the youth departments will enable a larger round to be covered in a bid to bring the disillusioned youth on board. More so, the existing youth platforms such as Australian Youth Affairs Coalition will ensure that the government policies are connected to the youth and hence forging inclusiveness which has been lacking for a long time. Inclusiveness with the indigenous communities The Australian economy is consistently filled with huge gaps. These gaps separate the indigenous communities with the rest of the countrys population. Consequently, there has been regional imbalance in its quest for economic progress. In this case, economic growth has continued to be stifled by those who feel they have been left behind. Such unfortunate circumstances have been revealed in employment, life expectancy, consumer goods and services among other macroeconomic variables. To tackle this problem, the OECD proposes a strict rationalization of the indigenous community support. Small programs should be developed with a specific objective of targeting such communities. Labor-market involvement should be emphasized while health outcomes should also be improved to keep in pace with the rest of the country. General improvement of these aspects will be reflected in the whole economy. Improvement of the re-employment chances of displaced workers Expansion of training for displaced workers with enhanced skills evaluation. Australia suffers from consistent job displacements whereby economic difficulties compel firms to downsize (Australian Department of Employment, 2013). Such instances hurt the health of an economy and it often spreads disastrous effects to other sectors. In the long run, the economy plummets. While this is a common phenomenon, conducting skills assessment tests and subsequently training the displaced workers will equip them effectively. Through this, a smooth transition is established whereby these former workers will be best placed to get sustainable jobs (Syvret 2012). The labor market gains their expertise. A number of the OECD countries have adopted this mechanism. For instance, Sweden has made better use of it. A huge bit of an explanation to its economic expansion is based on this policy. Capacity enhancement coupled with infrastructural regulations; Infrastructure adds value to production activities through movement of goods and services from one place to another. Australias production capacity has fallen behind because of its inefficient transport and communications systems. Better infrastructure improves productivity scales while forging sustainable growth. The government recently expedited wider plans to better infrastructure. These plans included federal government incentives targeting the sale of assets and use the returns to further the course of infrastructure. The OECD advises development of new infrastructure that integrates environmental issues that ensure congestion charges are factored in. furthermore, infrastructural development fuses public-private partnership in creating a value for money model (Colebatch, 2012). Mental health reforms Building on the mental health reforms targeting the employment outcomes of workers with mental issues; according to the Australian Bureau of Statistics, (2012) the Australian government spends an equivalent 28.6 billion dollars each year on mental health concerns. This equates to about 2.2% of the countrys Gross Domestic Product. Such expenditure shrinks the economys capacity to diversify. Mental health problems directly affect the economys productivity either through death, frequent absence. In the long run, the output decreases and firms may be forced to adopt retrenchment schemes so as to operate within their capacity to produce. Handling this menace will be key in converting such huge expenditure into other productive economic ventures. OECD report indicates Australia has absolutely no collaboration involving health care and employment (Gaynor 2007). In that medical practitioners lack knowledge to handle mental problems. OECD recommends that Australia should put in place coherent support structure across the country. It should ensure that cases of early school leaving due to mental illness receive support that enables their transition to work. Furthermore, policies should be developed to put a bit of responsibility in the employers court. Employers should thus be offered occupational mental health services. Tackling the high levels of obesity; Australias impressive growth of the health sector has been overshadowed by its huge rate of obesity. It ranks third in obesity among the OECD countries with 8.6% which is way above the average 5.0%. According to the Public Health England (2016), obesity leads to development of a wide range of complications. Cancer, diabetes, stroke and worst of them reduction of life expectancy. The economy losses its workforce as a result. Lost workforce implies cut-backs on output leading to unemployment. Unfortunate events such as increased demand for the few goods leading to inflation which hurts the economy both in the short and long run. Overweight is often coupled with obesity and both contribute disastrously to the economy. Governments are compelled to increase their benefit payments as well as social care costs. Conclusion Australia is one of the worlds thriving economies. There is a remarkable progress among its key sectors. However, there is absolute need to spur the economy into better growth according to the Organization of Economic Co-Operation and Development (OECD). Based on their reports, Australia is primed to realize more economic prosperity if it adopts particular measures they recommend. Inclusiveness of the youth and indigenous communities will create strong background in which deployment of new technologies can be launched. This approach is also in line with enhancement of equity and performance in the education that is relied on to provide skilled labor for better management of the economy. Health issues such as obesity and mental illness are a recurring menace that needs action once and for all. Integrating these components into an economy assures progress eventually. References Alexander, S, 2016. A forgotten pioneer of Health Economics in Australia? Australia Economic Review Journal, Vol. 49, issue 2 pages 169-173 Australian Bureau of Statistics, 2012, household income and income Distribution, Australia, 2007-2008 Journal of economics Vol. 22 No. 16 Pg. (342-348). Australian Government, 2016. Trade and economic statistics: Department of foreign Affairs and Trade. [Online].Available atwww.gov.au/trade/resources/trade-statistics/Pages/trade-statistics.aspx [Accessed August 5, 2016] Colebatch, T. 2012. State close to recession, Sydney morning herald. [Online] 8 March. Available at https://www.smh.com.au/business/state-close-to-recession-20120307-1ukme.html [Accessed August 5, 2016] Department of Employment 2013. Labor force region. [Online] 15 November. Available at https://lmip.gov.au/default.aspx%3FLMIP/LFR [Accessed August 5, 2016]. Gaynor, L. et al. (2007), The future nursing workforce in Australia: baseline date for a prospective study of the profule, attrition rates and graduate outcomes in a contemporary cohort of undergraduates, Australian Journal of Advanced Nursing, 25(2), 11-20. Glynn, J. 2016. Australias economic growth hits three and a half year high on strong exports. [Online] 1 June. Available at www.wsj.com/articles/australias-economic-growth-accelerates-on-strong-exports-1464764224 [Accessed August 5, 2016]. Health Workforce Australia (2014). Australias Future Health Workforce - Nurses Overview Report. Canberra: Commonwealth of Australia. Organization of Economic Co-Operation Development, 2015. In it together: Why less inequality is a benefit to us all, [online] 21 May. Available at www.oecd.org/social/inequality-and-poverty.htm [Accessed August 5, 2016]. Public health England 2016. Economic impact, [online]. Available at: https://www.noo.org.uk/LA/impact/economic [Accessed August 5, 2016] Syvret, P. 2012. Mining punches through recession, courier [online] 7 April. Available at www.couriermail.com.au/business/mining-punches-through-recession/story-fn7kjcme1226320756339 Mobile De [Accessed August 5, 2016]. The BBC, 2016. Australias economy growth stronger than expected. [Online] 1 June. Available at www.bbc.com/news/business-36423205 [Accessed August 5, 2016]. The Economist, 2016. Coming back down under: Australia is the first large, rich country to raise interest rates in more than a year, [online] 6 October. Available at www.economist.com/node/14582762?zid=295ah=0bca374e65f2354d553956ea65f756e0 [Accessed August 5, 2016] The Wall Street Journal, 2016. Risks to Australias Economic Miracle: Leading the pack fueled by resources, [online] 29 June. Available at www.wsj.com/risks-to-australias-economic-miracle/ [Accessed August 5, 2016]