Accounting management assignment on: Australian Government’s budgetary and monetary policies
Paul Keating’s proposed changes on the Australian Government’s budgetary and monetary policies:
Some of the proposed changes on the Australian Government’s budgetary & monetary policies have been discussed in the following section of the write up. In the year 2004, the federal election campaigns had one of the major decisive issues in relations to the implications of the change within the government officials relating to the level of interest rates. The controversy was unable to generate debate which would enlighten the public regarding the rise in the rate of interests which might influence the Australian government (Congressional Budget Office, 2010).
The main story regarded the rise in the rate of interests was the emergence of RBA from the year 1980’s. The emergence in the year 1980’s led to the evolution as an independent policy maker in the year 1990’s. Following the deregulation, RBA had to fetch out a new way within the new environment. This led to carrying out the monetary policy within the various open operations within the short term money market. The main target was upon the “cash” rate which led to gauge the various actions which affected the economic activity (Berg & Moran, 2010).
From the beginning, RBA was talked due to the financial instability within the Australian economy. Firstly, there were high levels of depreciation within the current accounts crisis recorded in the year 1980’s. The depreciation was majorly due to the instability within the interest rate as well as the rate of exchange. In order to deal with the problem, RBA had raised short term interest rates which led to the resistance amongst the downward pressure over the inflationary issues, experiences, etc. In the year 1987 & 1988, RBA had to deal amongst the economic “boom” which was characterized by high levels of expansions that lead to fuel the assets inflation.
One of the major problems which was seen within RBA was in the year 1980 was in regards to the policy framework within the government. Uncertainty within the role of RBA was seen in respect to the policy making after abandoning the monetary target bin the year 1985. Amongst the government, reducing or decreasing the rate of inflation was not only the primary goal. It has been discussed that, RBA has attained high levels of independence without any legislation (Congressional Budget Office, 2010).
However, it has been seen in the late 1980’s that the senior mangers working at RBA began to push a more independent light over the rise in inflation. This type of change in the attitude has helped in order to coincide the political as well as the economic events. Initially, RBA was given a task to slow down the boom within the economy as the fiscal policy prevailing currently was hamstrung. The government of Australia was bound to reduce the level of taxes levied as well as negotiate over the levels of wages provided to the employees working in the different sectors. The monetary policy has been designed in order to resolve the various current problems related to the opportunity which mainly focused upon the reduction of inflation, decentralized wages system, better policy makers & fade the rate of inflation (Congressional Budget Office, 2010).
The central bank were made independent from the government in order to gain popularity from the 1980’s as well as the 1990’s when countries such as New Zealand, France & Britain were legislated towards the policy making of the Central Banks. Legislators believe that, by giving them power to conduct the monetary policy without any government intervention, the central banks play one of the crucial roles in order to attain high levels of credibility in the goal suppressing to the levels the rate of inflation as well as ensure monetary policies which would be influenced by the inflationary expectations in a much effective manner (Berg & Moran, 2010).
Taking into consideration a global trend, in Australia the central bank independence began in the year 1980’s. This was supported with the help of the financial sector as well as opposed a conservative opposition between the governments. It has been seen that, RBA attained the level of independence without any such legislations. It was seen that, in the year 1990-1991, the rate of inflation in Australia was brought down from twp percent to six percent (Steketee, 2012). Taking into account the people who played one of the most crucial roles had some types of disagreements between Keating & RBA. The disagreements were in regards to the various concepts such as changes within the interest rates, general agreement between the lowering of the rate of inflation. The lowering of the inflation rate would lead to have a better opportunity for the years to come. This was resolved with the slowness with which the RBA would lower down the rates during the peak recession as well as retain the inflationary expectations in the year 1994-1995 (Congressional Budget Office, 2010).
This new resolve was demonstrated by the slowness with which the RBA lowered rates from very high peak levels during the recession and by its pre-emptive raising of rates in 1994 and 1995 to restrain inflationary expectations during the economic recovery.
The RBA has been regarded to as an agent for the government. It has been argued that, RBA has been running on this type of inflation since 1990. It has gained high levels of independence over the monetary policy. As RBA has gained high levels of credibility, especially within the financial markets the government of Australia was incline not to challenge its new independence.
It has been interpreted that, RBA’s performance in the year 1990 was not at all satisfactory. It was claimed to the monetary policy of RBA which played one of the main weapons to expand it offerings, etc. Such type of a period has been referred to have low inflation as well as have a sustained economic growth which would decrease the levels of unemployment (Steketee, 2012). It is believed that, enough credit for the success of the reforms has been implemented within the Australian governments. Such type of reforms has led in the overall improvements of the international competitiveness, etc. Definitely, an increase in the productivity as well as the growth of the labor in the year 1990 has led to a significant reduction in the workforces, adopted new technologies which has led to a decrease in the levels of inflation. Such type of structural changes has also led to a decrease in the overall reduction of the strength which has been made in RBA to reduce the inflationary expectations much easier. A reduction in the rate of environment has led to an overall decrease in the levels of inflation (Russell, 2000).
The government has been termed to be quite happy in order to ride up the back over the economic success. This would lead to a push within the edges of privatization along with the deregulation of the market reforming an indirect taxation system which would help to maintain a restrictive fiscal stance. Within an overall positioning within the policy, it has contributed towards the growth of the private households within the Australian economy. It has been stated that, monetary policy has been termed to be one of the most important weapon. Such type of a development has led to more responsibility within the macroeconomic policy of RBA.
Social security policy:
With a rise in the population of the Australian economy, the number of social benefits has increased. This would continue to grow with a further increase in the rise of the population. The programs would increase as faster as the revenues generated by the same. The long term perceptions are uncertain & would lead to a broad range of assumptions which might benefit the scheduled current law system when it exceeds the revenues (Mathew, 2005).It has been projected that, in the year 2039 the social security administration would not be in a position to pay f the social security benefits. When the levels of revenues have increased, the levels of benefits would decrease or cut by approximately 20 percent in order to equalize the revenues as well as the outlays. The proportionality lower payments which would be accounted to social security recipients are known as payable benefits. One of the most common measures which have been used in order to take up the long term financial conditions refers to a big gap between the resources dedicated towards the social security & the cost of the program covered under the current law.
It has been seen that, approximately, smaller deficits would occur in the beginning of the projection & the larger one would arise in the end. It has been projected that, in the year 2084 the scheduled outlays have been measured to b e 1.4 percent of the total GDP (Flint, 1999).
This study takes into consideration, the overall effect which would be portrayed within each type of finance included in the social security policy. Some of the options such as payroll taxes would be reduced or eliminated from the social security policy as compared to the various smaller financial effects. This study also analyzes the various options over the effect on taxes which would be paid along with the various types of benefits which would achieved by the participants of the programs (Quiggin, 1997). Some of the options which would lead to an increase in the overall, payroll tax rates have led to a reduction in the number of benefits but would lead to have disparate efforts on people with higher earnings over the additional taxes on the levels of earnings in order to increase the progressivity of the social security policy.
The Australian economy:Paul Keating’s proposed changes on The Australian Economy have been discussed in this section of the report. The election slogan was “bringing Australia together”, the government held a National Economic Summit in the year 1983. This summit involved political parties, people from the union, and employers of the various big organizations who were aimed to form a national consensus on the topic economic policy.
The prices as well as the income agreement were made between the union members as well as announced an election campaign in the year 1983. Former improvements were made within the economic performances which were pursued within the various consultative means. It included the Tax Summit an economic planning advisory council & the Australian Labor Advisory Council (Buckthrope, 2012).
The government policies of Australia were strengthened, dampening the usual tensions amongst the various sectors as well as the government as a whole. Labor in the year 1983 took charge as well as inherited a deficit of approximately $9000 million. This economic crisis led to the entire policy making within the Australian economy. The main priority was to restore the economic as well as employment growth thereby making high levels of reduction in the levels of unemployment & rate of inflation (Congressional Budget Office, 2010).
Both also believed the only solution lay in finding a structural and policy path that accommodated both labor and business. The path has been designed in order to encourage the effectiveness as well as efficiency within the Australian Industry. The industrial issues along with the various policies have been involved in the restructuring as well as bargaining of the enterprise. Based upon one of the leaders, it has been seen that there are various revolutionary changes amongst the price as well as the income levels, proper access to the superannuation & increase in the social wage system. Assistance in terms of finances to the various low income families was increased. This led to an achievement & a new slogan was made “Till the year 1990 no Australian child will live in poverty”. The Australian government had adopted policies which led to the integration of the employment along with fair training sessions, minimal education& to improve the retention rates in schools (Berg & Moran, 2010).
Employers & Employees:
One of the most important aspects which have been seen in regards to the workforce f Australia with effects of Paul Keating’s proposed changes on the employers, employees & workplace is in regards to the employment relations reforms. Workplace issues have been termed to be one of the most crucial aspects that are quite debatable within Australia & the other major political parties within both macro & micro economic reforms.
Industrial relations have been regarded to be one of the most common agenda within the two big political parties in Australia. Both the political parties have proclaimed the need for market flexibility within the labor market situated in Australia. Despite of the various action programs related to the workplace and industrial relations the British Council of Australia (BCA) represents its employees as well as introduce different types of enterprise based bargaining without the involvement of the union members (AustralianPolitics.com, 2012).
Taxpayers and individuals as a whole:
Some of the effects of Paul Keating are proposed changes on taxpayers & individuals as a whole can be seen with respect to the proposed government pension changes which would help to save taxpayers millions. The city of Australia has been fetching out various sways with which the cost of pension plan for the employees could be reduced. The various employee representatives will hold a meeting in order to discuss the City Pension Plan for its employees (Australian Government, 2012).
It has been taken into consideration that, the newly revised plan consists of the variety of both public safety as well as government employee pension funds. This would help in order to provide a better place for the senior citizens as well as the employees to have a better living to stay.
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