There is a lot in the paper about the Global Financial Crisis which apparently was most critical just 12 months ago. I thought it began much earlier. I transferred my main investments from Balanced to Conservative in 2 movements, first in January then in April of last year. However according to the article:
Australia outperformed the world.
"Australia is the only developed country to avoid recession," attests the World Bank's chief economist, Justin Lin. "It is a unique achievement" in the midst of the sharpest global downturn since the Great Depression of the 1930s.
The economy suffered a mild contraction in the last three months of last year before growth returned. It was a single quarter of shrinkage in a world where two in a row makes a "technical'' recession.
And the latest statistics show the recovery in the first quarter of 2009 actually accelerated in the three months that followed.
The world economy came down with pneumonia. Australia sneezed. Once.
Is this due to our connection to China?
Australia is China's quarry. And China, after a brief falter, has rebounded. So isn't Australia simply riding the China boom?
While the US suffered a 15 per cent slump in exports last financial year, and Japan a staggering 29 per cent, Australian exports were essentially unchanged, down just 0.2 per cent, protected largely by rampant demand from China.
But exports themselves have made only a slight contribution to Australia's recovery. In the second quarter of this year, for example, net exports actually sapped growth, contributing minus 0.2 per cent to national economic growth.
The main drivers of Australian recovery have been the instruments of official stimulus. The Reserve Bank, by cutting interest rates to their lowest since the 1960s, and the Federal Government, by allocating $42 billion in extra new spending, sent a surge of cash and confidence into the economy.
Australia's banks not only survived but prospered, in substantial profit throughout the global crisis. The Big Four are now among the world's dozen top-rated banks.
Australia's economic stimulus package was one of the largest in the world proportionately, second only to China's, according to a forthcoming World Bank report. Yet Australia's government finances were in such a strong surplus pre-crisis that the country will emerge with the lowest government debt of any developed country, on current Treasury projections.
Australia's unemployment rate has worsened markedly, from 4.2 per cent in 2008 to 5.8 per cent today. Yet this is better than all but six countries - only Austria, Denmark, Japan, the Netherlands, Norway and South Korea have lower unemployment rates.
And even today's elevated rate is a level considered impossibly low in Australia until just a few years ago. The European Union average is the same as that of the US at 9.5 per cent.
Australia's political economy offers an alternative to the two familiar options of the American versus the European. It enjoyed faster economic growth than the US over the past decade. Yet it also offers universal health care and other social welfare benefits that the US does not. Unemployment is lower than America's, and without the glaring income disparities that characterise US growth.
The US may be a rich country but its bounty is very unevenly shared. One result is that for the broad mass of its citizens, America has the sort of health indicators of a much poorer country. Australia has chosen a more egalitarian policy set. Life expectancy is the fifth highest in the world. Child poverty is half the American rate. No one in Australia dies because of lack of health insurance.
But neither does Australia suffer the customary handicap that goes with a humane welfare system - a crushing burden of government spending. As a proportion of gross domestic product, total government spending in Australia is the third lowest in the Organisation for Economic Co-operation and Development and slightly less than in the US. In 1996 Australia paid off all outstanding federal debt - the federal government became debt-free for the first time since the 1970s.
Western Europeans are leaving their children a debt of insupportable proportions.
Australia is a country that seems to have achieved a sweet spot, combining the vigour of American capitalism with the humanity of European welfare, yet suffering the drawbacks of neither.
Australia is a case study in the benefits of economic reform tempered by a concern for fairness. It is a prototype society illustrating that vigorous capitalism can coexist with a humane welfare system. Affordably.
The article does share the credit for this result with both the economic changes begun by the Hawke Keating Labor Governments from 1983 to 1996 and those continued by the Howard Liberal Governments from 1996 to 2007 as well as the emergency packages of the Rudd Labor Government in 2008-2009. However it mentions that the Howard government did see an increase in the income gap between rich and poor which the crisis is helping to reduce. I know that the prices of homes in the wealthy suburbs have fallen greatly while thankfully those in suburbs like mine have remained steady or even slightly increased.
The son of my next door neighbour is unemployed, he was in the finance sector, the most hard hit. My funds on which I depend fell alarmingly from January 2007 and reached bottom in March 2009 but are on the rise again as seen in the graph below.