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Abstract
The efficiency and equity effects of economic policies affecting the quarter of Australians
who live in rural and regional Australia (RARA) are reviewed. For the
most part it is argued that economy-wide policies, rather than region or industry
specific policies, are appropriate. Progressive income taxation, means-tested social
security payments and government funded education, health and other services
directly and efficiently redistribute to support equity. Subsidies for particular
industries in RARA, such as dairy, and input subsidies targeted at RARA, such as
community service obligations, misallocate resources and are ineffective in meeting
equity goals. Better property rights and procedures for allocating most natural
resources, especially water, are necessary.