The Great Australian Economic Reforms

Australia’s economic journey over the last five decades is nothing short of extraordinary. Once labelled a basket case in the 1970s, we’ve evolved into one of the world’s most resilient and adaptable economies — a standout among advanced nations. George Megalogenis’ The Australian Moment captures this transformation in sharp detail.

So, how did we get here?

Key Economic Reforms That Reshaped Australia

1. Tariff Reduction and Removal (Whitlam, Hawke)Australia dismantled its tariff walls, forcing local industries to compete on a global stage. This drove productivity and innovation, setting the stage for long-term competitiveness.

2. Floating of the Australian Dollar (Hawke, 1983)Letting the Aussie dollar float acted as a natural shock absorber. In difficult times, a lower dollar boosts exports and cushions the economy.

3. The Prices and Incomes Accord (Hawke)This was a turning point in breaking the back of stagflation. It also significantly reduced the crippling strikes of the 1970s and early 80s.

4. Compulsory Superannuation (Keating)The Superannuation Guarantee policy built up a massive savings pool — now over $1.3 trillion — giving Australia deep financial firepower, especially during the Global Financial Crisis.

5. Introduction of the GST (Howard)Replacing a tangle of inefficient taxes, the GST broadened the tax base and removed distortions, particularly for manufacturing.

6. Commitment to Budget Surpluses (Howard)While not always achieved, the Howard Government established surpluses as a fiscal benchmark, influencing future governments’ budgeting discipline.

Other Significant Reforms and Shifts

• Monetary policy handed to the Reserve Bank, removing direct political interference.

• Deregulation of the financial sector, balanced later by improved prudential oversight after the excesses of the late 1980s.

• Smart policy evolution from lessons learnt during the early 1990s recession.

• Increased migration (Fraser, Hawke) from Vietnam, China, and elsewhere, expanding the workforce and enriching Australia's cultural and economic fabric.

The Results: Low Inflation, Low Unemployment

• In the 1970s, inflation averaged 10.2%, peaking at 17.6% in 1975.

• In the 1980s, it dropped slightly to 8.2%, peaking again at 12.5% in 1982.

• The 1990s saw a sharp improvement, with inflation averaging just 2.5%.

• In the 2000s, inflation stayed manageable at 3.1%.

At the same time, unemployment, which sat stubbornly between 7% and 10% during those earlier decades, now hovers around 5%, a level considered to be full employment.

Final Thought

We’ve come a long way, not by accident, but through decades of deliberate reform. Australia’s success today is built on hard lessons, political courage, and economic foresight. It's a reminder that resilience is earned, and must be maintained through continued adaptation.

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Disclaimer:

The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.