Australia Two-Force Economy Essay

Australia has experienced sustained growth for 25 years, largely due to strong economic policies and a growing demand for resources from China and other emerging economies in Asia (Healey, 2012; OECD, 2017). This demand has resulted in a growth in Australian commodity prices, trade flows, investment and employment in the resource sector, and allowed Australia to only experience a mild downturn in growth during the global financial crisis in late 2008 (Hambur, 2013; Ivanova, 2014; Plumb, 2013). While the resource boom appears to have improved the overall performance of Australia’s economy, there have been uneven impacts and distortions of the distribution of wealth and economic growth across industries, creating a “two-speed economy” of uneven development where mining regions are booming while other sectors are experiencing decline (Mitchell, 2006; OECD, 2017; Perlich, 2014). Western Australia (WA), categorised as a resource economy because of its large mining exports, continues to grow whereas New South Wales’ (NSW) non-resource economy has struggled due to declines in its traditional industries such as manufacturing, finance and tourism (Mitchell, 2006; Perlich, 2014). An

The Reserve Bank of Australia increased interest rates to combat inflation in 2008, which had little impact on the resource states yet reduced economic activity in Sydney, effectively placing NSW further in recession due to Sydney’s high unemployment, poor economic performance and low housing affordability (HIA-Commonwealth Bank, 2012; Perlich, 2014). The Federal government also implemented mining taxes and funding for housing, schools and family benefits in response to the global financial crisis and mining boom, which helped to decrease their impacts and slightly weaken the two-speed nature of the economy (Perlich, 2014; Tiernan,