This document is a 1427-word essay arguing that Australia is a lucky rather than vulnerable country. It provides examples of how Australia has overcome economic challenges through the mining boom, effective government intervention, and adapting different models of government-business relations. However, it also notes that Australia's heavy reliance on mineral exports and current focus on reducing debt through spending cuts could make the country more vulnerable in the future if not properly managed. The essay concludes that while a few factors could potentially affect Australia's economy negatively, it has generally benefited from economic booms and known how to deal with uncertainty, showing that it is currently a lucky country.
This document is a 1427-word essay arguing that Australia is a lucky rather than vulnerable country. It provides examples of how Australia has overcome economic challenges through the mining boom, effective government intervention, and adapting different models of government-business relations. However, it also notes that Australia's heavy reliance on mineral exports and current focus on reducing debt through spending cuts could make the country more vulnerable in the future if not properly managed. The essay concludes that while a few factors could potentially affect Australia's economy negatively, it has generally benefited from economic booms and known how to deal with uncertainty, showing that it is currently a lucky country.
This document is a 1427-word essay arguing that Australia is a lucky rather than vulnerable country. It provides examples of how Australia has overcome economic challenges through the mining boom, effective government intervention, and adapting different models of government-business relations. However, it also notes that Australia's heavy reliance on mineral exports and current focus on reducing debt through spending cuts could make the country more vulnerable in the future if not properly managed. The essay concludes that while a few factors could potentially affect Australia's economy negatively, it has generally benefited from economic booms and known how to deal with uncertainty, showing that it is currently a lucky country.
This document is a 1427-word essay arguing that Australia is a lucky rather than vulnerable country. It provides examples of how Australia has overcome economic challenges through the mining boom, effective government intervention, and adapting different models of government-business relations. However, it also notes that Australia's heavy reliance on mineral exports and current focus on reducing debt through spending cuts could make the country more vulnerable in the future if not properly managed. The essay concludes that while a few factors could potentially affect Australia's economy negatively, it has generally benefited from economic booms and known how to deal with uncertainty, showing that it is currently a lucky country.
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1004GIR Government-Business
Relations
Australia is a lucky country that has the ability to sufficiently overcome economic challenges
Michaela Hardwick s2895058
Word count: 1427
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Australia is a vulnerable rather than a lucky country. Do you agree?
Give examples to support your argument. Australia has been perceived as both lucky and vulnerable by Australians and other countries. There is the increased perception that Australia is vulnerable due to the changes occurring in the economic market. The global environment is facing increased pressures and becoming more volatile due to environmental uncertainty, recessions and other financial crises. Globalisation has added to this volatility in recent times as events in one country are more likely to have a domino effect and impact other countries
as
well
(Conley,
2013).
It
is
therefore
essential
that
Governments and businesses work together to find solutions to these
vulnerabilities or at least try to be minimally affected by them. This has been a strategy present between Australian businesses and the Government; even during times when the rest of the world has had trouble. They have overcome many of these pressures and continue to manage and deal with any that arise which shows that Australia is a strong country. This essay will demonstrate that Australia is a lucky country rather than a vulnerable one through an analysis of Australias mining boom, the Australian Government-business relation and how they intervene appropriately and how there has been a shift of focus from spending to reducing debt.
Many countries believed that Australia made a negligent decision by not
taking advantage of the technology boom, however; when that ended negatively, Australia was benefited by focusing on other aspects, most notable is the mining boom (Conley, 2013).
Countries are becoming
increasingly reliant on minerals and metals which means there is a higher
demand for them to be extracted and exported globally (Prior, Giurco, Mudd, Mason & Behrisch, 2011). Australias recent mining boom has seen output tripled since the 1970s and in the process there has been an increased number of job opportunities which has caused a low unemployment
rate
(Schandl,
Poldy,
Turner,
Measham,
Walker
&
Eisenmenger, 2008). However, some perceive this current boom to be
unsustainable over a long period of time using the current methods.
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According to the Australian Department of Foreign Affairs and Trading
(DFAT), in 2011, Australia exported $158.7 billion in minerals and fuels which contributed to 50.6% of the total exports. The next highest export being
services
which
contributed
just
16%
(DFAT,
2012).
This
considerably large figure indicates that Australia is heavily reliant on
exporting minerals and fuels in order to create substantial revenue from exports and is neglecting other industries such as manufacturing. This is significant as it could suggest that Australia is becoming a banana republic because all the focus is being placed on a single export that is not sustainable over a long period of time (Moberg, 1996). At this present moment in time, Australia is lucky because of the mining boom and all it has done for the country (low unemployment rates, lessened impact of the GFC). However; if Australia does not begin to diversify away from just exporting minerals and fuels then it may create economic problems in the future. While Australia continues to excel in the mining industry, the Government in Australia has also been seen to adapt the different models of Government-business relations effectively throughout different stages of the economy and business cycle.
The Australian Government continuously changes its approach to
government-business relations in order to cope with various issues that the country has and will face. Prior to the 1980s, the Australian Government had a Keynesian approach and there was an extensive amount of protectionism (tariffs and trade barriers) which protected businesses. There was also colonial socialism which focussed on the Government spending money to build up the countrys infrastructure (Conley, 2013). This Keynesian approach was seen as co-operative (providing assistance) because the government was working with the businesses to achieve goals. Australia began reducing and abolishing these trade barriers and tariffs during the Great Depression which created more of a developmental (working together) approach (Eichengreen & Irwin, 2010). This shift is noteworthy as it demonstrates that the Government realised the unsustainability of the developmental approach in the market that was present. Australia shifted further away from the developmental approach and more into the regulatory (adversarial) as
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globalisation occurred and it was no longer a viable option if Australia
wanted to maintain a competitive advantage on a global scale (Conley, 2013). This is an important example because it highlights that the Australian Government was somewhat willing to reduce the amount of control over businesses in order to allow the markets to expand. The most recent case of Australia appropriately adapting methods to manage situation is the Global Financial Crisis (GFC) in 2007-2009. The Australian Government appropriately intervened in order to mitigate the countrys losses. One of the major reasons that Australia was less affected by the GFC was due to having more regulations over the financial sector than the USA and UK did (Pais & Stork, 2011). This increased regulation is significant as the GFC was a result of lack of regulation. It indicates that Australia adapted the developmental (proactive) government-business relations model when it came to the financial sector. This is important as it shows that the impact of the GFC was also likely lessened due to Australia shifting from Keynesianism to Neo-Liberalism in the 1980s and accumulating a surplus by the 1990s that strengthened the economy (Conley 2013). Australia is a lucky country because the government has so far been able to appropriately adapt the most suited Governmentbusiness approach for situations that have occurred. While Government intervention has been appropriately implemented when necessary, the Government has become focussed on reducing debt that accrued during the GFC and creating a more sustainable environment.
Both Australian citizens and the Government have become very
conscious of reducing Government debt and creating an environment that is sustainable in the distant future. This has been the focus since the 1990s when John Howard became Prime Minister and took the Neo-liberal approach to creating a surplus (Conley, 2013).
With Australias public
debt being 29.3% of the GDP (gross domestic product) at 2012 (The World Factbook, 2012), Australians want to focus on reducing that debt as soon as possible regardless of how it is done. However; many experts have suggested that cutting back on Government spending is not an effective way to reduce debt in the long-term. The Liberal Party of Australia has recently outlined what they will be doing to reduce the
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budget deficit, claiming budget cuts of $31 billion (Liberal Party of
Australia, 2013). Diane Elson (2010) suggests that reducing spending often results in more recession in the long-term as well as increased unemployment and inequality. This is significant as it highlights that Australias current plan to reduce debt could actually have a negative impact and degrade Australias current economic position in the future. The considerably large budget cuts have the potential to cause Australia to become a more vulnerable, unstable country. Australias deficit is not actually that large considering other countries, such as Japan, have debt that is 200% of their GDP (Organisation for Economic Co-operation and Development 2013). When comparing Japans debt to Australias, it can be inferred that Australia is actually in a reasonably sound position when it comes to the level of public debt. Therefore, although Australia currently has more debt than earlier years they are still in a better economic position than other countries at this current point in time. However; if the Government continues with their plans to reduce spending then it could see Australia becoming a vulnerable country. Despite a few concerning factors, Australia is a lucky country and is relatively capable of overcoming economic challenges that it faces. The most significant factors that have the potential to negatively affect Australias economy are relying on one export (minerals and fuels) which could lead to a repeat of the banana republic and an increasing amount of debt that the current Government is planning to reduce in a way that could result in more debt and higher unemployment. With the exception of these factors, Australia has benefited considerably from the mining boom which has seen record low unemployment rates and an increased GDP and the Government has intervened to successfully avoid impacts of the GFC (2007-2009) and the Great Depression (1930). Australias ability to only have a small amount of debt compared to many other countries in the current state of the global economy is another reason why Australia is a lucky country. Australia is a lucky country that knows how to deal with environmental changes and uncertainty, and has the potential to continue being lucky if they continue making the appropriate decisions for the country under the circumstances present.
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References Australian Department of Foreign Affairs and Trading, Trade at a Glance 2012, viewed 10 September 2013. http://www.dfat.gov.au/publications/trade/trade-at-a-glance2012.html#p10 Conley, T 2013, The Great Transformation? The Political Economy and Structural Change in Australia, in E van Acker & G Curran (eds), Government and Business in Volatile Times, Pearson Australia, Frenchs Forrest, NSW, pp. 129-162. Eichengreen, B & Irwin, D 2010, The Slide to Protectionism in the Great Depression: Who Succumbed and Why?, The Journal of Economic History, vol. 70, no. 4, pp. 871-897, viewed 18 September 2013. Elson, D 2012, Austerity Policies Increase Unemployment and Inequality but dont reduce budget deficits and government borrowing, Journal Of Australian Political Economy, no. 71, pp. 130-133, viewed September 16 2013. Liberal Party of Australia 2013, Our Plan to get the Budget under control, viewed September 16 2013, http://www.liberal.org.au/latestnews/2013/08/28/update-coalitions-responsible-savings Moberg, M 1996, Crown Colony as Banana Republic: The United Fruit Company in British Honduras, 1900-1920, Journal of Latin American Studies, vol. 28, no. 2, pp. 357-381, viewed 16 September 2013. Organisation for Economic Co-operation and Development 2013, Economic Survey of Japan 2013, viewed 17 September 2013, http://www.oecd.org/eco/surveys/japan-2013.htm Pais, A & Stork, P.A 2011, Contagion risk in the Australian banking and property sectors, Journal of Banking and Finance, vol. 35, pp. 681-697, viewed 18 September 2013, Elsevier Ltd, doi: 10.1016/j.jbankfin.2010.05.012 Prior, T, Giurco, D, Mudd, G, Mason, L & Behrisch, J 2012, Resource depletion, peak minerals and the implications for sustainable resource management, Global Environmental Change, vol. 22, pp. 557-587, viewed 18 September 2013, Elsevier Ltd, DOI: 10.1016/j.gloenvcha.2011.08.009 Schandl, H, Poldy, F, Turner, G.M, Measham, T.G, Walker, D.H & Eisenmenger, N 2008, Australias Resource Use Trajectories, Journal of
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Industrial Ecology, vol. 12, no. 5/6, pp. 669-685, viewed 10 September 2013, DOI: 10.1111/j.1530-9290.2008.00075.x The World Factbook: Australia, viewed 16 September 2013, https://www.cia.gov/library/publications/the-world-factbook/geos/as.html
