Potential benefits of the National Reform Agenda

Commission research paper

This commission research paper was released on 28 February 2007. An errata (updated 9 March 2007) was issued with the report.

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This study assesses the potential maximum (outer-envelope) gains that could be achieved through COAG's National Reform Agenda (NRA) in the long run — assuming full implementation of the NRA, and full adjustment of the economy to the effects of reform.

There has been limited information on which to base such estimates and the results should be viewed as exploratory or, at best, broadly indicative.

Because of inherent differences between the competition and regulatory reform streams and the human capital reform stream, it is not possible to aggregate results into a single measure of the 'impact of the NRA'.

  • That said, the NRA as a whole could be expected to significantly raise activity levels and incomes in all jurisdictions. The benefits would be additional to benefits from 'ongoing' reform programs.

Improving productivity and efficiency in energy, transport, infrastructure and other activities through the competition and regulatory reform streams could provide resource savings of around $10 billion.

  • After a period of adjustment, GDP could be increased by nearly 2 per cent.
  • Governments' combined net revenues could rise by up to around $5 billion, with the distribution between governments varying across reform areas.

Achievement of a 5 per cent improvement in the productivity of health service delivery could equate to resource savings (or additional resources to spend on health care) of around $3 billion.

  • After a period of adjustment, this would imply a potential increase of nearly $4 billion in net revenues of Australian governments after 10 or more years.

Enhancement of workforce participation and productivity though the NRA stream directed at health promotion and disease prevention, education and work incentives could potentially result in increases in GDP of around 6 and 3 per cent, respectively, after 25 or more years.

  • However, the magnitude of prospective net gains in GDP, and in governments' fiscal balances, would depend on the magnitude of costs incurred by governments in implementing specific reform programs.