Microeconomic Reform

The majority of costs rising from MER are centred around equity considerations and social costs. MER provides many economic benefits to the Australian community but it all comes with a compromising cost of social equity (P.J. Forsyth, Microeconomic Reform in Australia, 1992). The social costs of microeconomic reform are said to have outweighed the economic benefits. The main reason for this assumption is the greater income inequality that arises from reform (L. Taylor, The Rocky Road to Reform, 1993). The benefits gained from reform may be widespread; however, the costs affect only certain groups. This is mainly where the issue of social inequity rises. Examples of this are the recent reforms in the airline and telecommunications industries. Prices have been lowered for the community as a whole but increased structural unemployment, resulting from the collapse of two major companies, is concentrated onto one group (Productivity Commission, Microeconomic Reforms and Australian Productivity: Exploring the Links, 1999) . The benefits of MER and the economic growth generated by it, are mostly seen in city areas. The government's task is to ensure that the benefits are distributed equally and to make a smooth transition towards a more productive economy (P.J. Forsyth, Microeconomic Reform in Australia, 1992).…