CURRENT MACROECONOMIC CONDITION AND RELATED FISCAL POLICY
This paper will use macroeconomic indicators to build a picture of the current macroeconomic condition in Australia, particularly in June quarter 2015. The main indicators discussed include GDP, unemployment rate, CPI and interest rate. Other relevant indicators such as exchange rate will be discussed under the main indicators. Further, relevant fiscal policies will be reviewed following the current macroeconomic condition under each indicator. In the conclusion, this paper will highlight the Australian Government’s current budgetary condition and its policies.
As illustrated in the table 1 (ABS, 2015), there has been a slowdown in economic growth through the year ended June quarter
…show more content…
The conflict between the decreased aggregate demand and the stable unemployment rate can be explained by lower population growth and very low wage growth, which may encourage the employer to retain staff when profit growth is modest.
Generally, the current labor market has proven more resilient than expected, but there is still evidence of spare capacity in labor market. It is shown that some employees are working fewer hours than they desire. Also, the labor force growth shows a trend of rebalancing the demand away from the resource investment to service sector and dwelling investment. As is discussed before, the service sector has developed quickly due to the depreciation in exchange rate.
Due to lower-than-expected wage growth and the spare capacity in labor market, the tax receipts from individuals are estimated to be $16.4 lower over the past four years to 2017-2018 (Budget, 2015). In order to improve the situation, the Australian Government provides the job package which makes it easier for the unemployed, particularly young people, to move into long-term employment. The $4.5 billion Families Package also provides more support to Australian families in order to assist the workforce
First, I will discuss the time period between 1973-1974. Because the unemployment and inflation rates are higher than normal, we can assume that the aggregate-demand curve is downward-sloping. When the aggregate-demand curve is downward-sloping, we know that the economy’s demand has slowed down. When the economy’s demand has slowed down, businesses have to choice but to raise prices and lay off workers in order to preserve profits. When employers throughout the country respond to their decrease in demand the same way, unemployment increases.
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...
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.
"Macroeconomics/Employment and Unemployment." Macroeconomics/Employment and Unemployment - Wikibooks, Open Books for an Open World. N.p., n.d. Web. 04 July 2017.
This paper is structured as follows. In order to better understand the Great Recession, the first section includes an examination on some of the key causes. Section two outlines some of the fiscal policy responses made by the government to the Great Recession. In the third section, relevant extant literature relative to studies on the fiscal policy implemented in response to the Great Recession will be discussed with a focus on potential problems. For problems noted, recommendations for resolution will be included. The objective of this paper is to consider relevant problems that might require further consideration in a research project about the long-term after effects of fiscal policy implemented by the U.S. government in response to the Great Recession.
Monthly Unemployment for 2000-2001 was lower than average, but reached 5% towards the end of 2001. Overall unemployment steadily increased during 2001. The highest point was reached in December of 2001 at 5.7%, while the lowest point was at 3.8% in April of 2000. Controlling unemployment is discussed later in the paper.
In today’s economy, fiscal policy plays a vital role in influencing the financial direction and economic goals of the United States. Furthermore, government spending and taxation are two main economic activities that influence a nation’s economy and are generally referred to as the fiscal policy. Not only does the fiscal policy help determine a nation’s budget, but it also determines how much resources need to be allocated to help achieve their economic goal. Therefore, the fiscal policy has many functions and consists of allocating, distributing, stabilizing and developing the nation’s economy.
"Australia." Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption. N.p., n.d. Web. 2 Dec. 2013. .
A referendum has been a relatively effective mechanism in facilitating the shift of power from the States to the Commonwealth. The referendum (section 128) is a concept that aimed to change the wording in the Australian Constitution to give the commonwealth more specific powers. This is done through the passing of the constitutional alteration bill through parliament. Since federation, all citizens have the right to vote in referendums with any proposed changes either being accepted or rejected by the people. The way this works is that the Governor general authorises a referendum and this referendum must meet dual criteria in order to be successful for instance, the federal criterion which is having a majority of states and democratic criterion; having a majority of voters. The Commonwealth has tried to use the process of the referendum to shift power. For example, the referendum for Constitutional Alternation (Aboriginals) in 1967 aiming to remove racial discrimination, such as including them in
Over the past five years the Australian economy has gone through many changes experiencing both the peaks and troughs associated with business cycle.
Government spending is a highly debated topic as to how much money should be spent and how it should be spent, but the fact remains government spending is rising each year and will become unsustainable in the future without major changes. Government spending is currently around 40% of GDP as compared to 7% at the start of the twentieth century (Chantrill, NP). Government spending has had ebbs and flows that can be traced since the start of the twentieth century, which include two world wars and a great depression. However, from the 1980’s through the early 2000’s government spending was lower to mid 30% range of GDP (Chantrill, NP). Increase in spending has been seen since the stock market crash of 2008, to the current levels of around 40% of GDP (Chantrill, NP). Various reasons are behind the major increases of government spending, but the “...
The idea of the globalisation of Australian businesses, the process where businesses develop themselves internationally is one of the main issues in our current society. The concept of globalisation has occurred due to many factors, such as reduced trade barriers, a reduction in tariffs and quotas, new developments in technology and also new innovations in transportation technology. These factors that have caused globalisation can result in many consequences, both positive and negative. These consequences are free trade caused by a reduction in tariffs and environmental costs such as pollution caused by factories and greenhouse gasses causing global warming.
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)
The 2015 Federal Budget is part of the Government’s Economic Action Strategy to return the budget and erect a robust and prosperous economy. The ‘Budget’ marks a major erect by the Government to transform the role of state in companions’ lives. The Government will effort to supply equality of turn for all Australians and to redirect taxpayers’ dollars from unaffordable consumption today to productive vestment for the futurities, while support a strong safeness snare. The substantial savings decisions in this Budget put Australia back on vestige to a sustainable and responsible stiff position, with surpluses scheme to construct to well over one per cent of GDP by 2024-25, taking into calculation by and by toll remedy.
It is difficult for government to achieve all the macroeconomics objectives at the same time. Conflicts between macroeconomics objectives means a policy irritating aggregate demand may reduce unemployment in the short term but launch a period of higher inflation and exacerbate the current account of the balance of payments which can also dividend into main objectives and additional objectives (N. T. Macdonald,