Can the Australian Reform Model be applied to France? Why and Why not?


Term Paper
BBA Summer Semester 2004




Can the Australian Reform Model be


applied to France?


Why and Why not?





May 2004







Table of Contents:




















I. Subject……………………………………………………………………


II. Introduction.........................................................................................


III. The barriers and obstacles towards changes and reforms…………...


IV. Is the “National Competition Policy” applicable to France ?………….


V. Conclusion…………………………………………………………………


VI. Bibliography………………………………………………………………..


I. Subject:


Question 1:


Compare and contrast the Australian economy and its recent reforms to another country of your choice. What lessons and reforms are applicable to this other country and if not, why not?


II. Introduction
Australia did operate in the two decades changes that had very positive results on an economy, which was described 20 years ago as moribund. After 13 years of economic growth ( N° 1), it now shows a very low unemployment rate compared to the major occidental countries and in addition a low inflation rate.


The major European economies such as France and Germany would envy this very favourable situation.


I will in this paper focus on France, try to apply some of the Australian model reforms on the French economy and explain why it is possible - or not possible - to apply them to my country.


Is France in decline? ( N°2) This question keeps popping up again and again. Some clear economical indices can guide to this easy conclusion.


France growth rate in 2003 was only 0,5%, (N°3) this rate is fairly low compared with the Australian growth rate of 4%. ( N°1) The same type of comparison can be made with the unemployment rate: in March 2004 there were 2,4 million individuals unemployed, corresponding to a 9,8% unemployment rate.(N°4)


A survey done in January by the survey institute CSA ( N°5) showed that the French population believes, it is time to reform the economy and the hole French social welfare model. But barriers still remain and there is still a long way to go before the French government will be able to operate such radical reforms as it was done in Australia.


Another problem is the heavy public sector that is still remaining in France.


Can a country such as France by benchmarking reforms carried out according to the “National Competition policy” reform some sectors of the industry that are heavily subsidised and also reduce its large public sector? What are the threats and what can be copied or adapted from the Australian model?


III. The barriers and obstacles towards changes and reforms.


The first barrier is an ideological one, as it was explained in an article of the very liberal Economist in April: “Most European voters now accept as a general proposition, that if their economies are to return to faster growth, and unemployment is to be cut, their bloated pension, welfare and health care systems, and their rigid labour market regulations, all need fairly radical reforms.” ( N°6)


This is what most voters tend to say, when a survey is done about the reforms that should be done in order to avoid the bankruptcy of our system. The voters are conscious that in general the European welfare model is facing big problems and that reforms have to be done.


But this position does not seem to be transposed into their ballot papers: “Yet at national or local elections, they are proving quick to punish governments that put forward any specific proposal that would inflict pain.” ( N°6)


The ruling right centre party of Jean Pierre Raffarin was heavily defeated 6 weeks ago during the regional elections, winning only in one of the 26 regions, the others being all won by the opposition’s socialist party lead by Francois Hollande.( N°7)


The socialist party is deeply opposed to the reform proposals done by the current centre right government. The main reforms consist in lining up the state employees retirement system on the one of the private sector. Another main reform is to pay the state employee, not any more as it has been done for the last 50years, on their seniority but on their productivity. More generaly thenew policy consists in a reduction of the welfare state in France and of the influence of the state on the economy. (N°8)


This situation is a paradox, the population believes that reforms are needed but does not support the governments implementing them.


“The danger is that politicians may respond to