Description: Argues That Fiscal Policy In Australia Is Shifting Away From Being Used As A Tool Of Macroeconomic Management Towards Being Used As A Political Tool.

1161 words - 5 pages

The stance of fiscal policy has changed significantly over recent years. Fiscal policy involves the use of the Commonwealth Government's Budget in order to achieve the Government's economic objectives. The Howard Government's primary fiscal objective has been 'to maintain budget balance, on average, over the course of the economic cycle'. This infers using fiscal policy as a tool of macroeconomic management: deficits during recession years, and surpluses during years of higher economic growth. During its first two terms in office the Howard Government used fiscal policy as part of its macroeconomic agenda. However, the last two budgets have shifted away from using fiscal policy as a macroeconomic tool of economic management and have reflected what the government considers to be its long term role - playing a minor support role while monetary policy plays the major role in economic management. This shift in the role of fiscal policy can be attributed to the fact that monetary policy is a more effective macroeconomic tool, the recent reduction in government debt and the increasing use of fiscal policy as a political tool opposed to an economic one.

YearBudget Result $ Underlying Balance

1996/97Actual $5.3 billion cash deficit

1997/98Actual $1.2 billion cash surplus

1998/99$4.2 billion cash surplus

1999/00$12.7 billion cash surplus

2000/01$2.3 billion cash surplus

2001/02$0.5 billion cash surplus

2002/03$2.1 billion cash surplus

During its first two terms in office the Howard Government used fiscal policy as a tool of macroeconomic management to achieve balanced budgets. Fiscal policy was used to reduce public sector debt. By reducing the large amount of public sector debt incurred over the late 1980s and early 1990s the Government ensured that future budgets will focus on domestic rather than external needs. The Howard Government argued that Australia's high Current Account Deficits (CAD) were the result of excessive government borrowing and low public savings. By running large surpluses it reduced Australia's net public sector debt from around 30% of GDP in 1996 to 12% of GDP in 2002. These large budget surpluses recorded over the late 1990s were accompanied by expansionary monetary policy. The graph above shows that the cash rate reached relatively low levels (around 5%) during the fiscal consolidation period. Lower interest rates stimulate the economy via the multiplier effect:

Between 1999 and 2001, the Howard Government made fiscal policy increasingly expansionary: the underlying balance recorded ($12.7 billion surplus) in 1999/00 was reduced to $0.5 billion by 2001/02. This expansionary stance in fiscal policy was used to pump prime the economy in face of an economic downturn and to compensate for the introduction of the...

Find Another Essay On Description: argues that fiscal policy in Australia is shifting away from being used as a tool of macroeconomic management towards being used as a political tool.

To what extent was James Cook figure used as a mythological tool to account for the imposition of Western ideas in Hawaii?

3757 words - 15 pages INTRODUCTION Captain James Cook was the first European to visit the Hawaiian Islands. Upon stepping on the island of Oahu and upon being received by natives as their god Lono, he brought with him Western ideology and practices that would forever change the Hawaiian culture and way of living. The world now knew about Hawaii and established trading ties; Christianity was soon manifested upon the native people and old traditions to be...

Passive Resistance as a Powerful Tool for Social and Political Change

1511 words - 6 pages Passive Resistance as a Powerful Tool for Social and Political Change Passive resistance, simply defined as “peaceful resistance by fasting or refusing to cooperate,” (hyper-dictionary) is a complex issue, and potent tool to attain a means through absolutely zero violence. As Martin Luther King Jr. and Gandhi, have argued, passive resistance is a noble means to a peaceful end, in which only the followers of a movement risk themselves and...

An Inspector Calls as a Tool for the Political and Social Criticism

1265 words - 5 pages An Inspector Calls as a Tool for the Political and Social Criticism of the Elite "An Inspector Calls", by J.B. Priestly, is in effect a method the playwright uses to convey an imperative political and social message to his readers. John Boynton Priestley was born in Bradford, West Yorkshire, in the north of England. After finishing school, he decided to abandon education to pursue his passion for writing and literature. In 1914 at the...

Being Muslim in Australia A personal reflection

817 words - 3 pages How do I start? I as a Muslim love Australia as much as another Australian does. It's where I grew up, it's where my kids will grow up and it's where I'll most probably come to pass. There are so many things I love abut Australia, the people, the land and the lifestyle. It's a society where people from all over the world have come together and live in peace and harmony. In a...

Research Question: How does the Chinese Communist Party (CCP) use religion as a tool to achieve its political target?

3668 words - 15 pages IntroductionReligion always requires its people's loyal beliefs and unquestionable, sometimes irrational, devotion to it. Likewise, Tibetan Buddhism, a religion existed for centuries in the highest plateau on the world, had been believed, highly esteemed, and set above everything among the Tibetans. The Tibetan people believed that material progress alone would not give lasting pleasure or satisfaction which means that scientific...

When is drug testing not nearly enough? This essay is about the pre-employment tests that are being used in order for an applicant to get a job. It focuses on drug testing and psychological testing.

1822 words - 7 pages When is Drug Testing Not Nearly Enough?It seems that it is getting harder and harder to get a job. From going through many interviews, to having to take drug testing and psychological tests, companies are making it extremely difficult for the "wrong" kind of people to gain access to their work environment. But are all these pre-employment tests...

Echelon, violating our rights one step at a time : Essay about the spy tool used by USUK govenments

628 words - 3 pages Echelon, violating our rights one step at a timeThe forth amendment is under attack by the United States of America's National Security Agency. The United States Constitution's Forth Amendment states "The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall...

Discuss the principal instruments used to achieve the object of Macroeconomic Policy?

918 words - 4 pages The Macroeconomic policy is made up of two main instruments, which are the Fiscal policy and the monetary policy.The instruments of policy that are used are there to regulate the economy. They are designed in such a way so that they are able to give the government a level of control of the behaviour of the economy. When markets have failed this will give the...

Argues the benefits or disadvantages of Human Resources being a strategic business partner

958 words - 4 pages This essay is to write a discussion paper which argues the benefits or disadvantages of Human Resources being a strategic business partner giving consideration to the impact of Human resources polices and practices on strategy, people and organizational culture.Strategic human resource is considered as a term to describe an integrated approach to the...

A deconstruction of the movie 'Edward Sissorhands' showing the devices used to construct the discourse of being different.

736 words - 3 pages Everything changed the day the Avon Lady came callingEdward lived alone where he could hurt no one, and no one could hurt him. Until the day, the Avon lady came calling. Jonathon Mason takes another look at Tim Burton's masterpiece

What are three types of appeals/themes being used in advertisements? Explain what it should be used and provide examples

771 words - 3 pages What are three types of appeals/themes being used in advertisements? Explain what it should be used and provide examplesWhat are the pros and cons using celebrity sports figures to promote a company's products? Explain the kind of impact sports celebrity endorses have in the average person purchases.Advertising is any paid form of non personnel presentation and promotion of ideas, or services by an identified sponsor. Advertisers...

Similar Essays

Language being used as a tool to affect our emotions

1397 words - 6 pages Braeley DaviesIn Shakespeare's 'Othello', we see an abundance of evidence displaying language being used as a tool that affects our emotions. Language is not only selected thoughtfully and with great intent but is crafted in a way that has an impact on the reader, evoking emotion.There is a powerful contrast between the language of Othello and...

Show how code switching can be used for strategic purposes. In what way is code switching similar to or different from style shifting as a strategic tool.

2365 words - 9 pages Codeswitching and style shifting are the two common means of communications today. The definition of code switching by Swann (2002) is "The switch between languages or language varieties, during the course of a single interaction". For example, codeswitching from the English to Swahili a seen in "Wache Mimi nielekee tauni tukutane this evening". (Let me go so...

Veiling the Truth: A Look at How the Hijab is used as a tool of Oppression and Resistance in Iran With Comparisons to Indonesia

3230 words - 13 pages Introduction As I sat in an airport one day, I noticed a family approaching the same waiting area as mine. This family was not the same as your ordinary family; the mother was completely covered, with only her eyes and hands showing. I immediately found myself wondering, being in America, the land of the free, did she choose to wear that or is it mandatory for her due to her religion. I also wondered if she knew that people were looking at...

Can Games Such as 'SimCity' be Used as a Successful Learning Tool?

2359 words - 9 pages The aim of this essay is to evaluate whether or not the game "SimCity" can be used as a successful learning tool and if students learn from this game. I am going to illustrate the potential for learning available within this game and what the game can teach students. I will study and analyse experiments that assess the idea of computer games as a learning tool and how “SimCity 2000” and "SimCity Creator" specifically has been used as a method of...