History Economics EssayEssay Preview: History Economics EssayReport this essayHISTORY ECONOMICS ESSAYDuring the period 1950 to 1990, Australia experienced many changing economic circumstances. Throughout the eras of the Menzies, Whitlam and Fraser, and Hawke and Keating Governments, many economic strategies were introduced in order to improve Australias failing economy. The main economic factors involved were mining and manufacturing, unemployment and inflation and the issues involving wages and prices. Through the Australia governments attempts to strengthen the economy, the outcomes lead to both cohesive and divisive impacts on the Australian society.
PARAGRAPH 1 – Menzies Era 49-66During the Menzies era of 1949 – 66 there was a major boom within Australias economy, this was referred to as the Long Boom. This period of substantial economic growth was based on the development of proven or newly discovered mineral and power resources, a rapid increase in the labour supply augmented by immigration, and a high level of capital formation (Dennis 1999). The most significant growth of this period was seen in the mining and manufacturing industries. Australias mining industry grew rapidly and for the first time in its history Australia became a major exporter of minerals as more minerals such as iron ore were discovered therefore creating more foreign trade. Along with this there was an increase in manufacturing (particularly in the agricultural sector) due to higher demand, this at first was positive, but as demand increased this resulted in higher prices and higher wages, causing a dangerous inflation. These economic circumstances had both a fairly cohesive and divisive impact on the Australian nation. The beginning of this era can be considered cohesive as the boom of the economy had a positive effect on society, resulting in greater manufacturing of goods and higher wages. This then followed in inflation as the levels of demand and prices of goods and services increase, causing a divisive effect on Australias society due to this having a positive effect of agricultural workers through higher wages and a negative of other citizens through higher prices.
PARAGRAPH 2 – Whitlam and Fraser – 72 – 83From 1972 to 83, the period in which Whitlam followed by Fraser led Australia; there was a major struggle in Australias economy. The Whitlam government came into power during a worldwide recession. This caused lower prices for exports and reduced markets for Australian goods (Dennis 1999). Inflation started to increase during 1973 and the government insisted that they did not have the powers to curb this. This issue of inflation continued to have a divisive effect. The Whitlam government held a referendum in December 1973 in order to obtain control over incomes and prices, this was unsuccessful and inflation continued to increase. Inflation reached 17% in 1974 and the economy
The Whitlam government proposed to reduce the debt and the government’s tax rate and a tax on land purchase. This would allow landowners to pay less land taxes than in 1965, a policy that had not achieved much. At the time of Whitlam’s election in 1973, the debt of South Australia was 9.1 billion dollars.[15] This was $10 billion below the normal budget that existed in 1965.[16][17]
The Whitlam government also proposed to close the government’s state pension scheme.
During Whitlam’s first term, the government proposed to introduce an annual state retirement benefit scheme for the general public, this would be offered to the public in the following year to cover the long term contributions of a portion of the community’s retirement benefit on the grounds that it was the social policy of the government. The scheme would be administered by a private foundation (the Whitlam Foundation) in which government members would have access to an investment fund, a small property tax base and a small pension benefit. The government proposed an annual tax-generating plan for the community that was administered under a similar form which could be delivered by landowners (the government). The plan included a tax on public and private interests, such as land, water, electricity and railways, the same way we paid taxes on land.[18]
In April 1974, after the Whitlam government announced the abolition of state benefits in 1975 and the general financial outlook of the Australian economy continued to deteriorate, a crisis in the Sydney and Melbourne suburbs made it impossible for the Whitlam government to implement some of its promises regarding social security and pensions. However, the Whitlam government introduced another policy to address the issues. The Whitlam government moved to create a fund for families in state or regional government institutions, which was to be responsible for administering the fund. The Whitlam government also proposed a small property tax base which would also be available to small landowners in SA, which was the case in those areas. The Whitlam government set out to increase the maximum property tax rate to 75% from 37% in 1975. However, it later proposed to raise the property tax rate to 42% from the current 35%.
In 1975, the Whitlam government had set aside $3 million over 5 years, in the initial funding period of $150 million. The Whitlam government wanted to increase the amount of money collected from the state (the Whitlam Fund) by $100 million. In 1975, the fund was limited to state and regional governments with a budget and a workforce shortfall. This means that the Whitlam government considered an increase to the national budget to be in order. After the government took over, the Whitlam government proposed a further $2 million to fund its other public works work.[19] Also in 1976 the government began to implement the proposed $3 billion increase, even though with a budget shortfall of just $1 billion,