Mid September 2008 saw a significant change for the Australian economy, with the collapse of the Lehman Brothers triggering the Global Financial Crisis. The Global Financial Crisis was characterised by a tightening in the availability of money from overseas markets and resulting in governments having to intervene to maintain market stability. The Australian economy and its leaders generated considerable discussion about the prospect of a global recession, while most expected the financial crisis would have a major impact on the Australian economy, a factor that was not considered was the immediacy of its effects. The December quarter of 2008, saw business stocks devalue by $3.4 billion, the largest fall on record. In addition, there was a considerable softening in property prices, resulting in many companies/people having too much debt vs. too little wealth. With this, consumer confidence plummeted which in turn deteriorated consumption. Throughout the month of September and into October, the financial crisis spread from the United States to Europe, and all around the global economy, with economies contracting in growth.
In response to the most challenging global economic conditions since the Great Depression, the 2009-2010 Budget and the Economic Stimulus Plan focused on nation building and was crafted to boost employment, create a solid foundation for future growth and place the Australian economy to capitalise on the global recovery.
Key Initiatives
Stimulus now and investment for the future
A balanced stance on fiscal policy was targeted by the Government in response to the global recession between short and long-term policies. These measures involved bonus payments to low and middle-income Australians to insta...
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(n.d.). Monetary Policy in Australia 2010 (pp. 1-6). West Perth: WACE Revision Centre.
Wayne Swan 2009, ‘Budget Speech 2009-10’, Australian Government. Retrieved May 20th, 2010, from - http://www.ato.gov.au/budget/2009-10/content/speech/html/speech.htm
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The financial crisis of 2007–2008 is considered by many economists the worst financial crisis since the Great Depression of the 1930s. This crisis resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. The crisis led to a series of events including: the 2008–2012 global recessions and the European sovereign-debt crisis. The reasons of this financial crisis are argued by economists. The performance of the Federal Reserve becomes a focal point in this argument.
Lazar, Harvey. “The Spending Power and the Harper Government.” HeinOnline. 34 Queen's L.J. 125 2008-2009
The Australian Budget is an annually published document which details the Federal Government's plans to affect the level of economic activity, resource allocation, and income distribution through the use of fiscal policy. It describes the framework which the government intends to follow during the next financial year which will result in the attainment of their objectives. The budget is a publication of the government's plans regarding the use of fiscal policy, and is published to parliament and the general public on “budget night”, so as to allow open dissemination about the status of public finances and to promote transparency in Australia's fiscal policy.
For government budgeting to be effective, the process that guides it must be an evolving one. As the government gets bigger, it will most likely destabilize the existing method. Therefore, it must change to keep pace with the demands and growth of the country. The process must be capable of handling the complexity of our nation and its multifaceted needs so it will always need revisions and restructuring to face these new challenges. Its ultimate goal must be to reinforce the government and strengthen the country.
Permatasari, S (2011, 7 August) Australia’s Economy has Strength to meet challenges, Swan Says; Bloomberg, Retrieved from http://www.bloomberg.com/news/2011-08-07/australia-s-economy-has-strength-to-meet-challenges-swan-says.html
McManus, Doyle. “Drawing Budget Battle Lines.” Editorial. Los Angeles Times. Los Angeles Times, 14 Apr. 2011. Web. 5 June 2011. .
Canadian Centre for Policy Alternatives, Alternative Federal Budget 2011, Report: Rethink, Rebuild, Renew (pg. 69, 70, 72, 75) Retrieved from: http://www.policyalternatives.ca/AFB2011
Reserve Bank of Australia (2010). Minutes of the monetary policy meeting of the board – 3 August 2010. Retrieved August 20, 2010, from http://www.rba.gov.au/monetary-policy/rba-board-minutes/2010/03082010.html.
"Australia." Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption. N.p., n.d. Web. 2 Dec. 2013. .
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The financial crisis occurred in 2008, where the world economy experienced the most dangerous crisis ever since the Great Depression of the 1930s. It started in 2007 when the home prices in the U.S. Dropped significantly, spreading very quickly, initially to the financial sector of the U.S. and subsequently to the financial markets in other countries.
Austerity: The History of a Dangerous Idea was written by Mark Blyth, and published by the Oxford University Press in 2013. The text conceptualizes the theory of austerity, and provides countless scenarios in which austerity has failed to combat inauspicious economic conditions, for example, the Great Depression of the 1930’s, and the Great Recession of 2007. Austerity is a fiscal policy mechanism used by governments during business cycle contractions to reduce government deficits, usually by increasing taxes, reducing government expenditure or a combination of both tactics.
Australia has had one of the most outstanding economies of the world in recent years - competitive, open and vibrant. The nation’s high economic performance stems from effective economic management and ongoing structural reform. Australia has a competitive and dynamic private sector and a skilled, flexible workforce. It also has a comprehensive economic policy framework in place. The economy is globally competitive and remains an attractive destination for investment. Australia has a sound, stable and modern institutional structure that provides certainty to businesses. For long time, Australia is a stable democratic country with strong growth, low inflation and low interest rate.(Ning)
Howells, Peter., Bain, Keith 2000, Financial Markets and Institutions, 3rd edn, Henry King Ltd., Great Britain.