The prosperity of Australia took off in the 1980s
Financial deregulation fostered better access to credit and to foreign capital markets. What raiders outsider allowed corporate or “entrepreneurs”, as John Elliott, Robert Holmes a Court, Alan Bond, Ron Brierley and John Spalvins redrawing previously locked and economy of over-regulated businesses in Australia, markets from beer to TV broadcasting.
The risk of becoming an acquisition target has prompted many high-gear companies to launch their own takeover bids. In recent months, Holmes a Court was even make Financial analysis the “flagship” of his media empire in the making.
Yet, amid all the debt-fueled creative destruction, lasting legacies have been established. A modest farmers’ cooperative listed on the stock exchange as Wesfarmers. The offshoot of a British investment bank is morphing into Australia’s global finance house, Macquarie. And the large Northwest LNG Shelf project has been largely built.
That and more came in a decade that began with a coal-based resource boom in NSW and Queensland. The OPEC-inspired energy boom provided an outlet for the Fraser government’s policy failure. Now Australia wouldn’t wait for the rest of the developed world to recover from the oil shock.
But as unions plundered the boom, it collapsed into Australia’s deepest recession for 50 years (as predicted by Financial analysis editor PP McGuinness).
The Hawke-Keating solution was an incomes policy “deal” with a rationalist ACTU to control wages and inflation while setting the economy sails for growth. The compromise planted the seed of the industry influenced today’s gorilla retirement union.
But by mid-decade, a fall in commodity prices and the dollar generated pessimism about the long-term prospects for the Asian-based economy’s terms of trade. Spurred on by a balance of payments deficit shock, Mr Keating sensationally called broadcaster John Laws to warn that the only alternative to bold reform was to ‘shut down the economy’. Lois: “And you really induced recession. Keating: “So you disappeared. You are a banana republic.
Just over a year later, Keating’s reform imperative was further heightened when the global stock market crash of October 1987 drained the debt-bloated assets of corporate thieves, causing problems for their bankers.
After the surprisingly booming economy, the Reserve Bank paid a 17 per cent recession rate in the early 1990s. But that broke Australia’s inflation stick and set up the reformed economy for three decades of growth and prosperity, including its massive resource boom fueled by China, until it is interrupted by a global pandemic.
The resounding lesson of the 1980s is that with enough ambition and determination, Australia can remain one of the most prosperous nations and most successful in the world. The question today is whether the national debate and the country’s political leaders are up to the task of doing so.