Australian Economy in Brief

Australian Economy in brief

1939 - 1974

The highest growth in the manufacturing sector was found in the period after the end of the Second World War. Import restrictions implemented by the government of the time led to increased profits to the manufacturing industry, which encompassed a wide range of industries including motor vehicles, metal processing, TCF (textiles, clothing and footwear) and chemicals. The impetus, for the most part, was U.S. investment in Australia. The manufacturing industry was bolstered only to serve the domestic market, led by economic policy makers who implemented “import replacement” strategies. This was afforded by continuing increases in both productivity and economic protection.

In the 1950s and 1960s, Australian manufacturers which were nurtured by government policy failed to increase productivity. This was highlighted by the increases in the productivity of overseas manufacturing that did not have the same level of protection as Australian producers. Foreign investors noticed this lack of competitiveness and investment declined in the manufacturing sector.

Economic growth was not hampered by this, as the development of mining initiatives to exploit Australia’s natural resources attracted foreign investment, which underpinned economic expansion. This establishment of a mining industry continued the high level of economic growth in the post-war period.

Global recession hurt the Australian Economy in the early 1970’s

1974 was the end of the "long boom".

1975-1983 Fraser years

Following an extremely rancorous election campaign, Fraser's Liberal-National Country Party won a landslide victory against the ALP at a general election on 13 December 1975. They won 91 seats (out of 127) in the House of Representatives and control of the Senate with a 6-seat majority. At a general election in December 1977, Fraser retained a huge majority in the House of Representatives (86 seats from a total of 124) and maintained control of the Senate. He easily won the next general election in October 1980, although the ALP won back 14 seats from the Liberals, and gains by the Australian Democrats in the Senate broke the government's control of the upper house. Despite an undeserved reputation for conservatism and determination to slash government expenditure, Fraser's Liberal-National Party coalition continued and extended the process of reform begun under the previous ALP government. Among its innovations were these:

• 1976:
  Establishment of the Family Court of Australia and Federal Court of Australia;
  Northern Territory granted self-government;
  Passage of Aboriginal Land Rights (Northern Territory) Act;
  Position of Federal Ombudsman established;
  ABC FM radio service established.

• 1977:
  National Aboriginal Conference established;
  SBS (Special Broadcasting Service) established to provide multilingual radio and television services.

• 1978:
  Approval for building new, permanent Parliament House on Capital Hill, Canberra.

• 1979:
  Norfolk Island Legislative Assembly established;
  Fraser played key role in ending racial war in the former UK colony of Rhodesia, enabling elections to be held and a new nation - Zimbabwe - to be established under black rule;
  The government established the Australian Refugee Advisory Council to advise it on the settlement of refugees, many of whom had been arriving as 'boat people' from Vietnam since 1978.

• 1980:
  Aboriginal Development Commission established;
  In protest against the Soviet invasion of Afghanistan, the government cut wheat sales to the Soviet Union and discouraged Australian participation in the Moscow Olympics;
  First commercial FM radio broadcasting stations and first ethnic television stations established under SBS (Channel 0 Sydney and 28 Melbourne).

• 1981:
  The government declared a 36,000 square km of the Cairns section of the Great Barrier Reef as a marine park.

• 1982:
  Appeals to the Privy Council were abolished, making the High Court the final court of appeal;
  A a new migrant selection scheme was introduced, based on criteria relating to family reunion and the need for skilled workers.

Although Fraser's government introduced many innovations, it was criticised by some Liberals for not initiating economic reform when it had the opportunity. Fraser proved a true conservative on economic issues, for example resisting economic deregulation and tariff reform. Fraser travelled widely as both Minister and Prime Minister: to Asia, Africa, North America, the Pacific and Europe. He became a prominent figure in 'CHOGM' (Commonwealth Heads of Government Meetings), and hosted CHOGM in Sydney in February 1978 and in Melbourne and Canberra from September-October 1981.

A new 'centre' party, the Australian Democrats, formed in May 1977 by Don Chipp, a former Liberal Minister who had become disillusioned with the party under Fraser's leadership. Chipp took one of two Senate seats the Democrats won seven months later at the general election. At the next general election, in October 1980, they won five Senate seats, gaining balance of power in the Senate.

On 3 February 1983, Fraser gained a double dissolution of parliament and called a general election. He hoped to gain an advantage from the disunity in the federal parliamentary ALP over R.J.L. Hawke's challenges to W.G. Hayden's leadership of the ALP. Twenty minutes later Hayden resigned as ALP leader, allowing Hawke to assume leadership. Following an election campaign largely focusing on Fraser's and Hawke's personalities, the ALP won a 25-seat majority in the House of Representatives. With 30 out of 64 Senate seats, the ALP had the largest number of Senators, but the success of the Democrats in winning 5 seats gave them the balance of power in the Senate. In conceding defeat early on 6 March 1983, the morning following the election, Fraser announced his intention of resigning from the Liberal leadership. He resigned from parliament five days later, on 11 March, and later that day the parliamentary Liberal Party elected Andrew S. Peacock to replace him as leader.

On quitting parliament, Fraser retired to 'Nareen', but remained active in public affairs. In 1985 he was chosen as a member of an international group of 'eminent persons' seeking to end apartheid in South Africa by encouraging dialogue between the opposed racial communities. (He had been a real critic of apartheid since entering parliament.) Later, he became a political columnist for the Australian newspaper and head of Care Australia, an international relief agency with special interests in delivering aid to poverty stricken nations in Africa.

Hawke Years 1983 – 1991

Hawke was elected Labor Party leader on 8 February 1983, and the federal election was called for 5 March 1983. Hawke was Leader of the Opposition for less than a month, and his most urgent task was the brief election campaign. The Labor Party campaign launch was held at the Opera House, Sydney on 16 February, under the slogan 'Bringing Australia together'. In the press statement announcing his resignation, Bill Hayden had said that in the current electoral climate, 'a drover's dog could lead the Labor Party to victory'. After a four-week campaign, Bob Hawke led the Labor Party to their greatest election win in 40 years. His parliamentary apprenticeship had lasted just two years.

Hawke brought the ALP back into government at the general election on 5 March 1983, by gaining a 15-seat majority over the Liberal-National coalition in the House of Representatives. He also held 30 Senate seats, compared to the 28 of the coalition, 5 of the Democrats and 1 Independent.

Concerned with the divisiveness of recent events, Hawke's first major step as Prime Minister was to conduct an 'Economic Summit' meeting in Canberra from 11 to 14 April 1983. The summit involved all political parties, unions and employer organisations and aimed to form a national consensus on economic policy. Hawke's links with business, built up during 22 years at the ACTU, were an effective foundation for such an approach, if an unusual one for a Labor Prime Minister.

These were a by-product of the Economic Summit:

• 'The Wages Accord' with unions, became a major part of government economic policy.

• On 1 July 1983 the High Court upheld the government's right to block construction of the Gordon-below-Franklin dam, in Tasmania. The Government had used its powers under World Heritage legislation to prevent the Tasmanian government from building the dam.

• The government floated the Australian dollar on international money markets and allowed the operation of foreign-owned banks as first steps towards deregulating the national economy.

• Medicare health scheme was introduced on 1 February 1984.

Changes to Australia's education and training system began in 1984 and continued over the following years. Changes included amalgamations of smaller tertiary training institutions; creation of new universities from former Colleges of Advanced Education; the setting of national curriculum standards for schools; upgrading of the Technical and Further Education (TAFE) sector; and the establishment of national training and qualification standards.

Labor came to power in 1983 and inherited a deficit of $9000 million. This economic crisis informed much of the Hawke government's policy-making. The priority was to restore economic and employment growth by reducing high unemployment and inflation. Hawke, and his Treasurer Paul Keating, regarded good management of the ailing economy as vital. Both also believed the only solution lay in finding a structural and policy path that accommodated both labour and business.

This path was designed to increase the efficiency and competitiveness of Australian industry. Complementary industrial relations policies involved award restructuring and the introduction of enterprise bargaining. Despite the irony of a former trades union leader introducing these revolutionary changes, the Prices and Incomes Accord reduced industrial disputes, increased the social wage, and gave workers access to superannuation.

Financial assistance to low-income families was also increased. This achievement was overshadowed by Hawke's characteristically bouyant claim that 'By 1990 no Australian child will live in poverty'. The government also adopted policies integrating employment, education and training and acted to improve school retention rates.

The Whitlam government's Medibank scheme had been partially dismantled under the Fraser-Anthony Coalition government. Hawke established a new, universal system of health insurance under Medicare. The government also obtained agreement with the States on a single-gauge national rail system. The consensus rather than confrontation approach was also effective with voters. The Hawke government was re-elected in 1984, 1987 and 1990 in campaigns described as increasingly presidential. This record, for a Labor government, of four successive terms reflected Hawke's considerable and persisting popularity.

The greatest impact of the Hawke government flowed from the economic reforms that abandoned the traditional Labor reliance on tariffs to protect industry and jobs. During its term from 1983 to 1991, the government reduced the protection of Australian business and industry, increasing competition and at the same time achieving improved employment participation. Efficiencies in the tax system were also introduced.

In its first five years, from 1983 to 1987, the government decided on the moves to deregulate Australia's financial system. This involved 'floating' the Australian dollar (rather than tying its value to a gold standard or to another currency), and removing controls on foreign exchange. Direct controls on Australian interest rates were also removed, and foreign competition in banking was permitted. In its third term, from 1987 to 1989, the Hawke government abolished Australia's two-airline policy, removed export controls on bulk commodities and extended general tariff reductions.

Despite loss of popularity as measured by opinion polls, Hawke took the ALP to a record third term in office at the general election on 8 July 1987. The economic reforms of the 1980s owed much to close cooperation between Hawke and Treasurer Paul Keating. With the deterioration of the Australian economy by 1990, their working relationship also disintegrated and their rivalry intensified. With economic gains dissolving, support for the government dropped abruptly, as did Hawke's almost legendary popularity and authority.

In 1990-91 the Australian economy slid into recession and unemployment reached 11% in 1992 - the highest level since the Great Depression of the early 1930s.

Although Hawke had taken the ALP to a record fourth term in office at the general election in March 1990, uncertainty within the parliamentary party over his ability to win another election during a period of recession led to his removal as leader on 20 December 1991, when Keating made a second and successful challenge to Hawke's leadership. Hawke immediately resigned the Prime Ministership, which Keating then took over.

Just as Hawke had done with Bill Hayden ten years before, Keating provoked an open leadership contest in 1991. Keating claimed that Hawke had reneged on an agreement reached at Kirribilli House in 1988 about the transfer of the leadership. Hawke won a leadership ballot in mid-1991 and Keating retired to the back bench, giving up the Treasury portfolio.

On 12 December, a deputation of Hawke's ministers - Kim E Beazley, Michael Duffy, Nick Bolkus, Gareth Evans, Gerry Hand and Robert Ray - advised him to resign. He resisted, and a week later was persuaded to call another leadership vote. He was narrowly defeated by Keating, who became party leader and was sworn in as Prime Minister on 20 December 1991.

Hawke resigned from parliament soon after quitting as Prime Minister. He entered TV journalism, interviewing international political figures for the Channel 9 network. He subsequently pursued diverse business interests, and in 1994 published his political memoirs, The Hawke Memoirs.

Keating Years 1991-1996

In an address at the parliamentary Press Gallery's annual dinner on 7 December 1990, Keating was indirectly critical of Hawke's leadership - and for good measure, most previous leaders. The speech fanned the flames of speculation about a leadership challenge. Hawke had made no move to retire, as proposed at the Kirribilli House meeting in 1988, and a rift had developed between the Prime Minister and the Treasurer.

By 1991 economic problems had worsened. With unemployment as high as in the Depression 60 years earlier, Australia was in recession. Keating argued the recession was itself an economic lever that would correct problematic trends - "the recession we had to have".

On 3 June he stood against Hawke in a Caucus leadership ballot and lost. Keating resigned both his Cabinet posts and returned to the back benches. Six months later, he made his second challenge. This time he won the ballot and the prime ministership.

After more than four years in office Keating took the nation to his second election as Prime Minister on 2 March 1996. By this time mounting foreign debt, high unemployment and high interest rates were causing widespread concern, and his government's ability to manage the economy was increasingly in question. Labor suffered a resounding defeat, the Liberal-National Party coalition under the Opposition leader, John Howard, winning convincingly.

After the election defeat on 2 March 1996, Paul Keating resigned as Labor leader and resigned his parliamentary seat on 23 April 1996.

John Howard 1996-2000

On 11 March 1996 John Howard became Prime Minister.

The new coalition government put into place a program of sweeping economic reform, including cost-cutting in the public service and the privatisation of Telstra. Industrial relations restructuring included the replacement of award wages with direct employer–employee enterprise bargaining. Tax reform involved the establishment of a new tax system, with a broad-based consumption tax introduced in July 2000. One of the first programs introduced by the new government was nationwide gun control, with a federally funded buy-back scheme.This was in response to the mass murder of 35 people at Port Arthur in Tasmania, just six weeks after the government took office.

After the High Court’s 1996 ‘Wik’ decision on indigenous people’s ability to enter leasehold land where they had customary usage rights, the government legislated to restrict their access and confirm the leaseholders’ title. This aroused widespread hostility among indigenous groups and their supporters. There was controversy over the government’s plans to reduce public debt and make the economy more competitive by disposing of government-owned assets. For example, its policy of funding environmental protection by privatising ownership of its communications corporation, Telstra, aroused widespread opposition. The Senate’s eventual acceptance of the Bills permitting the sale of Telstra in June 1999 was therefore a personal victory for Howard.Forty-nine per cent of Telstra was sold in two share offers between 1996 and 1999.

The government’s determination to eliminate compulsory trade union membership and secure waterfront reform was severely tested in a long-running waterfront dispute during 1998, when a stevedoring company locked out unionists from its wharves and employed non-union labour instead. Among the most widely disputed of the Howard government’s actions during its first term in office, was its plans for introducing a tax on consumption - its proposed goods and services tax or ‘GST’. Popular rejection of the ‘GST’ had been a key factor in the Liberal-National Party electoral loss in March 1993; but Howard and his Treasurer, Peter Costello, confidently entered the elections for a second term in office with the ‘GST’ as central plank in their platform.