Interview: Australia’s extraordinary boom masks need for economic reform
Australia hasn’t experienced a recession in 26 years and the good times are set to continue over the next year, the Australian central bank said in its latest statement early October. What lies behind Australia’s extraordinary run of uninterrupted economic growth?
“Some people describe Australia as being a twin-engine aircraft,” Andrew Charlton, Sydney-based director at AlphaBeta Advisors, told Bloomberg TV this week. “One of those engines is a housing boom and one of these engines is a mining boom. And we have had two decades of uninterrupted growth mainly because we have been lucky enough that when one of those engines has been out, the other engine has been firing.”
However, Dr. Charlton warns that the ongoing boom is veiling an urgent need for reform in Australia: “Clearly we’ve had an era where there’s been very little reform over the last several years. I think we’ve had a very challenging time politically. And in the context of political turmoil, it’s hard to get up the momentum for reform.”
Dr. Charlton said the average tenure of a Prime Minister in 2007 was still 7 years. Today, the average tenure has declined to 23 months. “That type of churn really saps the energy and momentum for reform. And until we get back some stability, it will be very challenging to put in the type of reforms that we need.”