Australia - Economic development
Commonwealth and state governments devoted special attention to the production and marketing of main primary products, and after 1920, legislation provided subsidies or other marketing aids to certain commodities. Federal and state aid was given to industries established in approved fields of manufacture during the 1970s. The Export Market Development Grant Acts of 1974 provided government assistance in the development of export markets. Recipients were eligible for up to 50% reimbursement for expenses incurred establishing foreign markets for domestic goods. In 1975, the government set up the Export Finance and Insurance Corp. (replacing the Export Payments Insurance Corp.) to provide Australian exporters with insurance and other financial services not readily available commercially, to provide insurance against political risk.
The government endeavors to prevent undue fluctuation in the economy. Price controls were in effect during World War II and part of the postwar period and are now imposed on a few essential household items. As an alternative to price controls, the Commonwealth government, in mid-1975, introduced a policy of wage indexation, allowing wages to rise as fast as, but no faster than, consumer prices. Major labor unions, however, opposed this restraint, which was ended in as world wide 1981, in the wake of the second oil shock and the on-set of global recession. Monetary policy supported recovery from the recession of the early 1980s by holding to a low inflation rate. From the mid-1980s, Australia's government embarked on a basic reorientation of the economy from inward-looking import substitution industrialization (ISI) to outward-looking export-led growth and liberalization. Key reforms have been unilateral reduction of high tariffs and other protective barriers; letting the Australian dollar float; deregulating the financial services sector; rationalizing and reducing the number of trade unions; privatizing many government-owned services and public utilities, including establishing a fully competitive electricity market, one of only two (with the United Kingdom) among economically developed countries. The transformation and opening of the economy is credited with helping produce, as of March 2001, 43 quarters of uninterrupted expansion (although some data show a decline in 4th quarter, 2000), exceeding in duration the expansions of the 1960s–1970s and the 1980s, which each lasted about 30 quarters. After August 1993, the focus of fiscal policy shifted towards deficit reduction. During this period, the national debt declined from a peak of 19% of GDP in 1995–96, to less than 7% of GDP in 2000/01.
Energy has been a principal growth sector. However, four years' experience with the deregulated electricity market has not all been satisfactory, as the sector has been beset by blackouts, shortages and higher prices. Nevertheless, the Australian government has continued to innovate in this sector. On April 2, 2002, a new and unique market in renewable energy was introduced. Renewable energy from accredited power stations can earn renewable energy credits (RECs) that can be traded as a new form of currency.
The government has also been particularly aggressive in promoting Australia as an "information economy." It is second in the world after the United States in PC use. In November 2000, it was estimated that 40% of house holds and 56% of businesses have PC's. Research by the Economist Intelligence Unit ranked Australia as second (only to the United States) among 60 countries surveyed in terms of providing an environment conducive to the development of e-business opportunities. In 2000, the new tax system aimed at increasing the government budget while stimulating economic growth in such sectors as tourism/services and high technology.