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Australia's long span of positive output growth continues, demonstrating the economy's resilience. In the absence of negative shocks, policy rates should start to rise soon, as wage growth and price-inflation pick up. Fiscal discipline will nevertheless still be required to bring balances to surplus. Despite countervailing measures, the housing market and related debt pose macroeconomic risks. Furthermore, as flagged in previous Surveys, there is room to improve the tax system, notably through greater use of value-added tax and less use of inefficient and distorting taxes, such as real-estate transactions tax. Levels of well-being are generally high but climate-change policy still lacks clarity and stability and there are socio-economic challenges. Some groups are at high risk of being disrupted by globalisation and technological change and this is the theme of this Survey's in-depth chapter. Further reforms to education, including efforts to improve PISA scores and vocational education, and better target disadvantaged students, are important. So too is activation policy where there is scope to improve employment services, support for displaced workers and measures helping parents combine work and family life. Australia's highly urbanised population means that good metropolitan transport, planning and housing policy can importantly boost labour-market flexibility, as well as living standards.

SPECIAL FEATURE: COPING WITH GLOBALISATION AND TECHNOLOGICAL CHANGE