How does Australia Compare?

On Tuesday, January 11, 2011, we went back to the University of Sydney to hear speakers Geoff Dow and Frank Stilwell.  Geoff Dow, Reader in political science and political economy at the University of Queensland, informed us how Australia measures up to different countries throughout the world.  He believes that unemployment is the most important indicator of an economy.  In the information packet he provided, Australia’s average unemployment for the 30 year period from 1974-2004 was 6.6%.  The USA was 6.2%; both countries were near the middle of the scale.  Spain had the highest unemployment rate at 13.2%, and Iceland had the lowest at 1.9%.  He chose the time period of 1974-2004, so that he could get a broad range of data and also did not want it to include the period during the global financial crisis.  Professor Dow emphasized that although Australia’s unemployment was at about an average level, they do not really have a working poor since their minimum wage is so high.

Professor Nesiba awarding Professor Dow
with a gift of appreciation

Another interesting variable that Professor Dow used to compare Australia to the rest of the world was the average annual hours worked per person.  Since we are visiting Australia during their summer holiday, it sometimes seems as if everyone is on vacation.  I found out that in 1979, Australians were working an average of 1831 hours for the year.  In contrast, Turkey lead the hours, with 2004 average hours worked during 1979.  Netherlands workers had the lowest hours with 1388 for 1979.  In 2009, Australia had moved down to 1690 average annual hours worked per person.  The United States was recorded at 1802 hours worked for 2009.  This difference is quite significant.  On average, an Australian worker is working 112 hours less than an American worker.  Professor Dow talked about the importance of vacation time and how it can contribute to job satisfaction. 

Professor Dow also compared different countries’ current account balances as a percentage of GDP.  The data used was the yearly average from 2001-2010.  He informed us that the current account balance should theoretically be at zero. Australia was sitting at -5.4%, while USA was -4.8%.  At the extreme ends of the spectrum, Iceland was -12.3% and Norway was +14.7%.  Budgets should be balanced, so that countries can have control on their spending and are not required to run deficits. 

One of the gorgeous sandstone buildings
on the University of Sydney campus

Professor Frank Stillwell spoke with us in the afternoon and talked about the concept of the “lucky country.”  Many people label Australia as the lucky country because they have such a high quality of life, but in some ways operate as a developing country.  They were not hit as hard as others during the global financial crisis, which was partly due to the demand for resources from China, their stimulus program, and their continued population growth.  Professor Stillwell was a very dynamic speaker and was not afraid to address any of our questions and concerns regarding Australian economics.

During World War II, Australia had an increased development of their manufacturing sector.   Following the economic boom of the 1950’s, Australia began exporting numerous resources to Japan.  By the mid 1970’s, Australia experienced a major economic crisis and suffered from stagflation.  In the 1980’s, the financial sector expanded and they also experienced manufacturing decay and restructuring.  In the past 20 years, they have started to recover partly because China is now demanding many of Australia’s natural resources.  The economic crisis of 2008/2009 had some effect on Australia, but not nearly as dramatic as the impact it had on United States.

Australia’s GDP has increasing gone up in the past 5 years.  Also, inflation has greatly affected Australia.   In the past year, the Australian dollar has appreciated by 19%.  Australia’s primary trade and finance partners today include China, Japan, and Korea.  Most of what they are exporting is coal, iron ore, and gold.