MACROECONOMIC POLICY OF AUSTRALIA

GROUP 12:
KUMAR SOUBHAV
PUROHIT
SHEPHALI
SWATI SUCHARITA DAS
SUSOVAN DWIWEDY

MACROECONOMIC SCENARIO OF
AUSTRALIA

MACROECONOMIC POLICY OF AUSTRALIA

Gross Domestic Product
(US$ IN MILLION)

Population (IN 000S)

23781
23464
23500
23117
23000
22728
22340
22500
22031
24000

22000
21500
21000

2000
1500

1142

1390

1537 1563 1455

1340

1000
500
0

2010 2011 2012 2013 2014 2015

2010 2011 2012 2013 2014 2015

Population

GDP per Capita Income

48000

Growth Rate (%)

45477 45937 45514

46000
44000

41763

42000

42596

40000 39168
38000
36000
34000

2010

2011

2012

2013

2014

2015

4
3.5
3
2.5
2
1.5
1
0.5
0

3.6

2010

2.4

2011

2012

2.4

2.5

2013

2014

GDP growth (annual %)

2.3

2015

PRESENT MACROECONOMIC SCENARIO

UNEMPLOYMENT RATE
1 Australia's seasonally adjusted
unemployment rate stood at 5.6 percent
in October of 2016.
2 The jobless rate stayed at the lowest
level since September 2013, as the labor
force participation was unchanged.

INFLATION RATE
1 Consumer prices in Australia rose 1.3
percent through the year to the third
quarter of 2016 from 1.0 percent in the
threerate
month
period.
The inflation
came
above market
2 previous
consensus of a 1.1

PRESENT MACROECONOMIC SCENARIO

There has been an increase of 0.9% in the Australian GDP in the
last quarter.
In comparison to the world economy it is 1.64% of the world
economy
The major contributors to the Australian economy are the service
sector followed by the agricultural sector and the mining industry
The labour market has remained sluggish
Unemployment fell further but only because of a lower
participation rate and growing part-time employment

GOVERNMENT REVENUES
Government Revenues in Australia
increased to 38090 AUD Million in October
from 24924 AUD Million in September of
2016..
Individuals and companies in Australia are
required to pay taxes or charges to all
levels of government: local, state, and
federal governments.
Income taxes are the most significant
form of taxation, collected by the federal
government through the Australian
Taxation Office. Australian GST revenue is
collected by the Federal government, and
then paid to the states under a
distribution formula determined by the
Commonwealth Grants Commission.
Maintains a relatively low tax burden in
comparison with other wealthy,
developed nations, at 25.6% of GDP in

GOVERNMENT SPENDING
Spending grew faster than GDP over the
period 2002-03 to 2012-13
While real growth in GDP slowed to 2.4
per cent annually over the period 2007-08
to 2012-13, underlying spending grew in
real terms by 3.6 per cent annually or 47
per cent faster than the annual rate of
growth of real GDP.
Social security and welfare and health
spending made up over two thirds of total
government spending.
The remaining one third was spent on
education at $28 billion (7 per cent of the
total), which included spending on higher
education and schools; general public
services including foreign aid at $26
billion (7 per cent); defence, public order
and safety at $25 billion (7 per cent);
industry and economic affairs at $22

EXPENDITURE vs REVENUE

FISCAL EXPENDITURE
Sum of government expenses, including
spending on goods and services,
investment and transfer payments like
social security and unemployment
benefits
Fiscal Expenditure in Australia averaged
13335.82 AUD Million from 1973 until
2016, reaching an all time high of
45954.00 AUD Million in June of 2012
This year government is focussing on job
creation and growth
2016-2017 budget was associated with a
mild contractionary fiscal policy as the
government attempts to rein in spending
and reduce the deficit.

GOVERNMENT DEBT
From 1979-2015:Government Budget in
Australia averaged -0.94 percent of GDP
from 1979 until 2015
in 2000: An all time high of 2.00 percent
of GDP
In 2010: A record low of -4.20 percent of
GDP
In 2015: Fiscal deficit equal to 2.40
percent of the country's Gross Domestic
Product
80 per cent of this is due to the federal
budget and its multi-billion dollar fall in
Commonwealth revenue. (net capital
investment worth $2.5 billion)
Successive falls in tax receipts have
been the "main driver" of this deficit
Government to continue pursuing a 15
per cent GST on everything where low
and middle income families

BALANCE OF PAYMENTS
BoP undermined by a narrow export
base
In 2010 and 2011:Consistent trade
surpluses due to high prices of
commodities.
In 2012 :Trade balance shifted back to
deficit due to a sharp drop in value of
commodity exports and increase in
value of imports due to AUD
depreciation.
Trade
surpluses : China, Hong Kong
Japan and New Zealand.
and
In 2015:
Trade deficits :United States,
Singapore, South Korea, Malaysia
Thailand.

PROBLEMS
Interest rates 13% (up 2%) and Unemployment
11% (unchanged), Poverty and the Gap
between the rich and poor 4% (unchanged),
High cost of living coupled with a weakened
dollar, the price of imports has risen
substantially, making goods produced overseas
more expensive for everyday Australians to
purchase.
Foreign Ownership and Investment 2% (up 1%)
and Over reliance on the Mining Industry 2%
(unchanged), too much government spending
following the end of the mining boom in
Australia.
Taxpayers' incomes and the country'stax base
will grow much slowerthan the governments
have become used to, and this could hamper
economic growth.
Excessive current account deficit, combined
with low investor confidence and the possibility

SOLUTIONS AND FUTURE PROSPECTS

Look forward to economic stability and growth for a
projected economic growth of 3% by 2018
Monetary policy tightening is expected to commence
towards the end of 2017
Reduce the government expenditure on public health
with rise in ageing population
Deal with growingpovertyinAustraliawith an
estimated 2.9 million people or 13.3% of all people
living below the internationally
acceptedpovertyline.
Develop international competitiveness and reduce
heavy reliance on capital goods from overseas to