Australia, Economy | See Australia.
‘”We will just end up being a third-rate economy…a banana republic,” warned Paul Keating in 1986. He used such threats to persuade the country to accept a series of radical economic reforms over the next decade, when he was treasurer (finance minister) and then prime minister. Along with his predecessor as pm, Bob Hawke, Mr Keating floated the Australian dollar, abolished import quotas, slashed tariffs, deregulated the financial sector, privatised state-owned enterprises, overhauled the tax code and did away with country-wide wage accords in favour of company-by-company “enterprise bargaining”. Many of these reforms were instituted during Australia’s last recession in the early 1990s (“the recession we had to have”, in Mr Keating’s words). Most economists believe they have saved it from subsequent recessions by providing the flexibility needed to adjust promptly to changing economic conditions. To this far-sighted macro-economic management, the next government, of John Howard (1996-2007), added fiscal prudence, running surpluses in eight out of its 11 years in office and turning the government from a debtor to a net creditor. It also created a regulator to oversee banks and other financial institutions. Not all is perfect, of course. A common concern is that the economy relies too heavily on China, which is the biggest buyer of Australian minerals, the biggest source of tourists and foreign students, even the biggest consumer of Australian wine. People worry that if the Chinese economy falters, it will drag Australia’s down with it. Another fear, somewhat at odds with the first, is that China might try to use its economic power to blackmail Australia into weakening its alliance with America,’ Source: ’The Wonder Down Under, The Economist Special Report 27th Oct 2018.
Britain is still a big investor in Australia, but only its 7th largest trading partner (The Economist: 18th July 2020, p.42).