Australian Economic Policies Essay Research Paper Australian

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Australian Economic Policies Essay, Research Paper Australian Economic Policies Despite it s relatively small population, Australia can be considered one of the important trading nations of the world. In 1991 alone the value of Australia s exports of goods and services amounted to $51955 million from a total GDP of $377 114 million, which accounts to 14% of the total GDP. From our earliest days as a prison farm, when the number of convicts sent to Botany Bay was the key influence on our economic health, through to the present, when forthcoming speeches by the Governor of the US Federal Reserve can send our markets into spasm of paranoia, what happens outside Australia has had profound effect on the hip pocket nerves of all Australians. But is Australia simply in the hands of

international banksters and agencies, which pull the strings to make us dance? Or, are many of our problems associated to the fact that we try to ignore developments in the world economy and do not undertake appropriate actions? Democratic governments such as in Australia function in the interest of their electors, and therefore are inclined to implement policies, which will ensure their political survival. The characteristics of these polices have to benefit the economy by offering protection of business interests and securing domestic industries from foreign competition. Usually these policies are aimed at dealing with economically advanced nations and therefore restrict the expansion opportunities of less-developed countries through high protection barriers such as for example

high tariffs. To understand this conflict more clearly, we must comprehend what are protection policies, how are they used and which ones apply to the Australian economy. Protection is any policy implemented by the government to provide domestic producers with artificial advantage over foreign competitors. Free trade is based on purely market forces without any intervention by governments. In the real world, international trade blueprints are far different from those proposed by the notion of free trade. Markets of countries are commonly disfigured by the protective manners of governments, which execute numerous measures to certify that domestic industries endure in opposition to foreign competition and even compete in global markets. Tariffs are the central protection feature. A

tariff is an indirect tax imposed on a given imported commodity when it enters a country. Although tariffs generate revenue for the nation s government they also amplify the price of imports in attempt to persuade consumers to purchase locally manufactured goods. Another protective instrument used in addition to tariffs are import quotas, which in the recent years have become popular by the Australian Government. They are imposed on imports for which there is inadequate demand. Therefore, consumers who consistently purchase imported goods are paying the landed cost of the item in addition to the tariff imposed by the government. Ironically, those who buy local produce are obligated to pay a price, which is higher than what it would be under free-trade conditions. Overall outcome

is that all consumers wind up paying more regardless whether the commodity was locally produced or imported. A quota specifies in what amounts a product can be imported. For example, a motor vehicle importer may be allocated a quota of 140 units per month. If they exceed the allocated quantity, the additional vehicles are seized in bond by the custom authorities until the importer is entitled for the next period s quota. In the mean time, the importer will sustain penalties that are intended to discourage such practises. Import licensing is a popular protective measure also, and is closely related to the use of quotas. For a car dealer to import vehicles into the country, they must posses an import licence. The availability of licenses is determined by the extent to which imports