At the beginning of the 20th century, the country of Australia became unified and The Commonwealth of Australia officially came into being on January 1, 1901. Today, Australia’s economy is one of the largest mixed market economies in the world, and has since the Commonwealth’s establishment over hundred years ago experienced numerous changes to its economy in terms of its focus. Often regarded as primarily a producer of agricultural commodities, minerals and energy but all of these products suffered a decline in relative importance throughout the twentieth century. Instead, the service sector has grown massively and accounts for by far the largest proportion of both economic activity and employment today. Generally, the Australian government has had a limited role in the economy in line with the traditional government role in a market economy, but the actual extent of their role has fluctuated over the years.
At the beginning of the twentieth century, the role of government was still enjoying a steady growth spur that was initiated at the end of the nineteenth century as the government made a group of decisions related to economic development, such as introducing a national currency, the Australian pound, in 1910. In the 1920s, agricultural producers were not making the desired profits and paired with cutbacks the government made in spending expenditure and some additional factors (such as cutbacks in borrowing and private expenditure) led the Australian economy into a recession that lasted about 18 months. Due to concern coming from the British about Australia’s public debt, the government set up a Loan Council in 1927, to better control excessive overseas borrowing by the United States. Two years later, in 1929, the Wall Street crash triggered the Great Depression, which in turn initiated an economic reconstruction in Australia that would come to take the better part of the following two decades. Unlike the United States, the government of Australia decided to reject a proposed Keynesian program of spending in order to recover, but still managed to initiate a recovering process by 1932. …show more content…
Instead, the government decided to run with a more conventional deflationary response of balanced budgets to battle Australia’s current high levels of debt. The basics of this response were to balance the budget through expenditure and wage cuts, but without any additional borrowing from overseas. It also demanded reductions in social welfare programs, defense spending and other sweeping cutbacks. Furthermore, a process that began with the Australian government deciding to take the Australian pound off the gold standard in 1929 as an emergency response of the outbreak of the Great Depression, continued in 1930 when Australian banks began to intentionally slowly devaluing the currency. In turn, this devaluation led to an increase in costs of both imported goods and servicing government overseas debts. As World War II began in 1939, it would come to have a significant impact on the Australian economy and forever change the way it was run. Before 1939, the federal government of Australia had a minimal role in managing the economy. Instead, the state governments collected most of the income tax, and international trade was entirely controlled by Australia’s relationship with the British Empire. Following Japan’s attack on Australia in 1942, the government decided to adopt an specific war policy, which called for the full mobilization of the Australian economy and the workforce and a range of economic and industrial controls, such as rationing, production controls along with military and industrial conscription. These new economic policies managed to greatly stimulate the Australian economy, as production increased and unemployment decreased significantly, and what was initially wartime measures would come to serve as the base for a rapid economic growth starting in 1945, and the adoption of a policy that would allow the government to maintain a higher level of control over the economy. At the end of 1940s and beginning of the 1950s, the Australian government continued to regulate the economy, but implemented a more indirect approach of management where applicable. The positive trend that came to be at the end of World War II continued into the 1950s as the economy continued to grow, employment levels remained high, foreign investments increased and new markets emerged. By the mid-1960s, the Australian economy
At the beginning of the twentieth century, the role of government was still enjoying a steady growth spur that was initiated at the end of the nineteenth century as the government made a group of decisions related to economic development, such as introducing a national currency, the Australian pound, in 1910. In the 1920s, agricultural producers were not making the desired profits and paired with cutbacks the government made in spending expenditure and some additional factors (such as cutbacks in borrowing and private expenditure) led the Australian economy into a recession that lasted about 18 months. Due to concern coming from the British about Australia’s public debt, the government set up a Loan Council in 1927, to better control excessive overseas borrowing by the United States. Two years later, in 1929, the Wall Street crash triggered the Great Depression, which in turn initiated an economic reconstruction in Australia that would come to take the better part of the following two decades. Unlike the United States, the government of Australia decided to reject a proposed Keynesian program of spending in order to recover, but still managed to initiate a recovering process by 1932. …show more content…
Instead, the government decided to run with a more conventional deflationary response of balanced budgets to battle Australia’s current high levels of debt. The basics of this response were to balance the budget through expenditure and wage cuts, but without any additional borrowing from overseas. It also demanded reductions in social welfare programs, defense spending and other sweeping cutbacks. Furthermore, a process that began with the Australian government deciding to take the Australian pound off the gold standard in 1929 as an emergency response of the outbreak of the Great Depression, continued in 1930 when Australian banks began to intentionally slowly devaluing the currency. In turn, this devaluation led to an increase in costs of both imported goods and servicing government overseas debts. As World War II began in 1939, it would come to have a significant impact on the Australian economy and forever change the way it was run. Before 1939, the federal government of Australia had a minimal role in managing the economy. Instead, the state governments collected most of the income tax, and international trade was entirely controlled by Australia’s relationship with the British Empire. Following Japan’s attack on Australia in 1942, the government decided to adopt an specific war policy, which called for the full mobilization of the Australian economy and the workforce and a range of economic and industrial controls, such as rationing, production controls along with military and industrial conscription. These new economic policies managed to greatly stimulate the Australian economy, as production increased and unemployment decreased significantly, and what was initially wartime measures would come to serve as the base for a rapid economic growth starting in 1945, and the adoption of a policy that would allow the government to maintain a higher level of control over the economy. At the end of 1940s and beginning of the 1950s, the Australian government continued to regulate the economy, but implemented a more indirect approach of management where applicable. The positive trend that came to be at the end of World War II continued into the 1950s as the economy continued to grow, employment levels remained high, foreign investments increased and new markets emerged. By the mid-1960s, the Australian economy