Oceania

Australia Economy Between 1950’s and 1970’s

In the Sixties the economy of the Australia has achieved a strong and dynamic rise. The manufacturing industry, which had characterized the economy of the 1950s, was joined, in the following decade, by the notable development of the extractive industries, which replaced, in importance, some agricultural sectors held back by the opposite evolution of the markets. world cup. The contribution of the manufacturing industry to the gross national product has in fact increased from 25 to 29% between 1950 and 1970, and has therefore remained roughly at the same level, while the percentage of agriculture to the gross national product has decreased, in the same period, by two thirds, falling from 27 to 8%; transport and other tertiary activities, on the other hand, increased by up to 50%. On the other hand, the changes that have taken place in the structure of the internal economy have also been reproduced in the structure of foreign trade. For Australian exports, which are mainly composed of products of primary industries, including extractive industries, due to the evolution of the world market (e.g. the replacement of wool with synthetic fibers and the protectionist measures taken by industrial countries towards agriculture), the share of agricultural products in total exports fell from more than 80% in the 1950s to around 50% in 1970 (for a summary, see Table 2).

According to Ebizdir, the share of manufacturing items has instead increased and is around 20%, and that of minerals and metals has marked rapid progress, going from around 5% to 25% for the same period, reflecting the expansionary trend of industries. over the past ten years.

It was also aimed at replacing some imports with Australian products, especially in the oil sector. The manufacturing and extractive industries benefited, in the 1960s, from foreign investments which brought in new capital and techniques; and, consequently, the financial sector has rapidly transformed, and has adapted its structures, with the creation or improvement of the mechanisms of the financial market. The rapid pace of capital inflows and, after 1965, a marked improvement in the current account put an end to chronic balance-of-payments difficulties (in the 1960s, capital inflows financed about 10% of internal capital formation).

During most of the 1960s, full employment and price stabilization were safeguarded, the pace of economic expansion accelerated. The unemployment rate, for the period 1955-68, in Australia was 1.7% (the lowest, after Germany, among the OECD countries), the same can be said for the stability of prices; in fact, even if for the period 1953-70 the average annual growth rate of Australian prices measured by the derived index of GNP (2.9%) was slightly lower than that of the OECD (3.1%), for the period 1960- 70 was respectively 2.8 and 3.4% and thus, for the period 1965-70, 3.5 and 4.2%.

The growth rate of the Australian economy for the period 1950-70, calculated on the basis of the global volume of GNP, was 4.7%, in line with that of the OECD (4.5%). However, if we consider GNP per resident, the results are less remarkable. The rapid pace of the increase in volume of GNP therefore reflects more the relatively rapid expansion of the population than the increase of the same per resident. In the early 1970s there was also a certain change in the data of the national economy and a certain revision of its own orientations. The wage and price rates have risen alarmingly.

Over the past 15 years, budgetary policy has been adapted in two stages to the circumstances that have arisen.

The first time this occurred during the mild depression of 1959. In February 1960, in order to alleviate the pressures to which resources were subjected, the government abolished practically all import quota measures. This led, among other consequences, to a massive influx of imports which resulted in a lowering of reserves. Only in November 1960 were vigorous restrictive measures, both budgetary and monetary, put into motion, but, having already passed the peak of the economic cycle, these measures aggravated the subsequent recessionary movement. It is estimated that the delay brought by the authorities in reversing the trend was such that it took two years (1961-62 and 62-63) to bring the unemployment rate below 1.5%.

The second case, observed in 1971-72, was complicated by an acceleration in the progression of wages and prices.

In 1975 the political crisis resulted in early elections that led the Labor party to the opposition and a coalition between the liberal and national parties, chaired by Fraser, ruled.

In fact, the Labor government had failed to block the state deficit and wage demands in a context of stabilized inflation at around 15%, wanting to continue to privilege the internal market over the international one. The two priorities of the Fraser government were the elimination of inflation and the return to the traditional gap in favor of the private sector. In 1976 the government reduced the discount rate to 10%; also aimed to reduce the Australian dollar exchange rate with subsequent devaluations and revaluations: December 1972 revaluation of 7.05% against the US dollar, February 1973 devaluation of the US dollar by 10%, September 1973 revaluation of the Australian dollar by 5% , September 1974 devaluation of 12%. As a result of this policy, and in spite of an increase in exports, the recovery is stuck at the mid-1976 level. The consumer price index increased at an annual rate of 12.9% over the 1973-74 period., 7% for the period 1974-75 and 12.3% in 1976, while the average weekly wage increased by about 14%.

History. – The early sixties are characterized in Australia by internal political conflicts between the Australian Labor Party and the Democratic Labor Party supported by the Catholic Church, by trade union conflicts but also by a prosperous economic situation which sees an increase in the gross national product and full employment, while a certain amount of inflation continues. Canberra is also concerned about the prospects of commercial damage resulting from a possible British accession to the EEC. Foreign policy focuses on links with the West and active cooperation in international development plans (the Colombo Plan). The nation’s economic vigor sometimes sees the balance of payments deficit coexist with rising prices, a surplus of rural production with demands for industrial protectionism. There are also internal racial problems with the Aborigines to consider. The Australian presence in the Southeast Asian area leads to a confrontation with Indonesia regarding eastern New Guinea and a closer link within the SEATO. It remains to add the problem of relations with the countries of origin of the immigrant workforce and the policy of overcoming the recession, in order to have a complete overview of the Australian situation in the first half of the 1960s. The leader Menzies does not have an easy life inside: disagreements in the government coalition occur over the faculties and limits of the federal government. The search for US support is a constant in foreign policy, also in view of a tougher confrontation with Indonesia and Malaysia, which leads Canberra to controversial participation in the Vietnamese war. Exports rise, but prices and wages also rise, leading to tax increases and a decrease in public spending. Foreign investments are mainly of English and American origin. Holt’s liberals remain at the head of the government after the 1966 elections and the Labor Party moves into an active and lively opposition.

While the controversy over the intervention in Vietnam continues, economic expansion grows, state social contributions increase and referendums are proposed on the question of the situation of the Aborigines and to amend the constitution. Holt’s death leads McEwen to lead the government; Gorton succeeds him in 1968, while Whitlam heads the opposition, represented by the ALP. The major issues of foreign policy in recent years are, as usual, Vietnam and the problem of British investments and the importation of capital. In the 1969 elections the majority of the Liberal Party was reduced but still resisted; there. its presence in the Malaysian area increases after the departure of the British, but also begins a new dialogue with the USSR. The boom economic activity continues and Europe is confirmed as Canberra’s largest trading partner. The Papua-New Guinea problem becomes more complicated as wages, public debt and inflation rise. Internal crisis and controversy within the LCP brought MacMahon to power in 1971, when the withdrawal of troops from Vietnam ended, People’s China was recognized and greater administrative autonomy was discussed for New Guinea and the aborigines.

The ALP wins the elections in 1972 and Whitlam begins an extensive reform program in all fields. The focus is on collaboration with Indonesia, the independence of Papua-New Guinea and a new relationship both with the West and with the area of ​​the socialist countries; the question of withdrawing from Singapore and Malaysia also arises and the ties with New Zealand are consolidated. In 1973, public and social expenditures increase, while discussions are held on the advisability of a Convention for the reform of the Constitution. The strong internal political conflicts over Whitlam’s policy, inflation and hostility from the rural world do not prevent a reaffirmation of the premier in 1974. The economic malaise, however, increases with unemployment and the rise in prices. While conflicts arise with the United States, the door is opened to foreign capital: a policy of tax cuts is also being pursued. Discontent quickly grew rapidly leading to an abrupt change of government in 1975: Whitlam was succeeded by rival Fraser with a different economic program.

Australia Economy Between 1950's and 1970's