* The meaning of the term 'Microeconomic reform'.

* Examples of recent microeconomic reform

* Possible effects of microeconomic reform in the Australian economy.

Microeconomic reforms (MER) are the actions to reform particular product and factor markets with the aim of raising the economy's long term growth rate and increasing its flexibility. It also refers to the set of policy initiatives aimed at prompting structural change in the Australian economy so that resources can flow freely from one use to another. Any barrier to the free flow of resources in response to price signals creates inefficiencies in the economy, adding to cost.

MER has many aims. Firstly it is used to improve resource allocation by maximising output of scarce resources. It is also to encourage efficient operations of markets (adoption of world's best practice) and encourage efficiencies-allocative (limited resources allocated to the most uses for its output to be maximised), technical (aims to produce at the scale where costs per unit are the lowest) and dynamic ( how firms achieve and maintain

In recent years there have been many examples of developments in MER. The last fifteen years of MER has been the crucial factor in improvements of the status of the economy on Australia especially the return to low inflation. In the product markets, MER has been reducing protection, and improving the competition policy through the introduction of the Trade Practices act (1974) and the Hilmer report in 1993, as a decrease in regulations mean increased competition. This led to privatisation and corporatisation of GBEs and deregulation. In Factor markets, such as the capital markets, deregulation occurred from the early 80s which included the deregulation of financial markets and float of the dollar ('83). Labour markets also went under some structural changes with the decentralisation of wage-fixing with the introduction of enterprise bargaining instead of arbitration and the end of National Wage cases in the early 90s as well as restructuring of awards. Under the Howard govt. the introduction of the WRA has brought on AWAs (individual contracts), simplification of awards and measures to reduce union power. Some deregulation has occurred through some reduction of the role of the IRC in wage fixing and industrial relations. In the public sector, the most important MER of the decade are the corporatisation and privatisation of former GBEs such as the Commonwealth Bank of Australia, Qantas, Telstra (partial)(end of monopoly in 1991 and full competition in 1997) and corporatisation of Australia Post. Taxation has gone under some changes with the introduction of capital gains tax, fringe benefits tax and the possible introduction of a GST and tax indexation (linking tax brackets to inflation rates so that individuals would not be under the influence of bracket creep due to inflation. Also income tax cuts-from 60% to 47%-provide incentives to work and i

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Approximate Word count = 1258
Approximate Pages = 5 (250 words per page double spaced)