Economic reform

Microeconomic reform (or often just economic reform) comprises policies directed to achieve improvements in economic efficiency, either by eliminating or reducing distortions in individual sectors of the economy or by reforming economy-wide policies such as tax policy and competition policy with an emphasis on economic efficiency, rather than other goals such as equity or employment growth.

"Economic reform" usually refers to deregulation, or at times to reduction in the size of government, to remove distortions caused by regulations or the presence of government, rather than new or increased regulations or government programs to reduce distortions caused by market failure. As such, these reform policies are in the tradition of laissez faire, emphasizing the distortions caused by government, rather than in ordoliberalism, which emphasizes the need for state regulation to maximize efficiency.

Microeconomic reform dominated Australian economic policy from the early 1980s until the end of the 20th century. The beginning of microeconomic reform is commonly dated to the floating of the Australian dollar in 1983. The last major policy initiatives associated with the microeconomic reform agenda was the package of tax reforms centred on the Goods and Services Tax (GST) which came into force in July 2000, and the privatisation of Telstra which began in 1998 and was completed in 2006.

There were, however, some instances of microeconomic reform before the 1980s, notably including the Whitlam government’s 25 per cent tariff cut. Similarly, the consequences of some microeconomic reforms initiated in the 1990s, such as National Competition Policy are still being worked through.

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