A Quest for an Economic Model for Australia

Australia is an economic anachronism.

It has the lifestyle of a developed country but derives its income the way that a developing country does; mostly from the sale of commodities and a smaller proportion from farming. Even its neighbor, New Zealand, which Australia tends to regard as a poor relation, owns some significant brand names, while Australia has none. As an aftermath to the recent world recession, many countries came out badly mauled while Australia was relatively unscathed. It would be nice to think that this was the result of prudent management; but it was not. It was the result of digging into its inheritance. This inheritance should not be seen as a sort of current account to be appropriated at will by the present generation; but rather as funds, owned by present and future generations of Australians, with the present generation acting as custodians.

The mode of access to these funds to these funds should be written into law. Any bonanzas it receives should be credited to this fund.

Let us consider how this principle operates in the case of a few countries, say, Britain. At the end of World War II, it had an enormous manufacturing base; ships, planes, motor cars, textiles, etc. But it also owed a lot of money. By the time it had brought its finances into order, the one-time ‘Land of Hope and Glory’ was being described as ‘the Sick man of Europe’. To its good fortune, oil was discovered in the North Sea, just off the coast. With the availability of funds from oil, Britain, under the direction of Margaret Thatcher, was able to transform itself from a manufacturing economy to a service-based economy, with London as the financial centre of the world.

A more appropriate example in the Australian context, is Norway. In a former incarnation, I had some involvement with maritime affairs and naturally had contacts with Norway. In the early 1970s, shortly after oil had been discovered in the Norwegian sector of the North Sea, I happened to be in Oslo. While chatting with my host, a director in his company, I mentioned he should have reason for jubilation with the find. To my utter amazement, however, he said the find was a disaster and wished somebody would just take it away, (among Scandinavians, Norwegians are noted for being dour, a feature which is jokingly explained as being due to a sunshine deficiency. In this case it wasn’t) and continued to explain. Norway, he said, was a little country. (Its total population was about that of Sydney ). It had no inherited resources, and its people were totally dependent on their creativity. If now, he continued, large amounts of oil derived money became available, a lot of people would give up their jobs to pursue leisurely activities. In time the oil would be exhausted and people would have lost their creativity; how would Norwegians then survive? I had to concede that he had a point. So what did the authorities do? They formed a state oil company which was the sole recipient of oil revenues, which could only be spent on research and other state designated activities. The quasi-Government quality assurance agency Det Norske Veritas which oversaw safety concerns in off-shore oil drilling and production, received finance from this source.. Another field was electricity generation by Ocean Thermal Energy conversion (based on the fact the water temperature on the sea surface is higher than it is deep down) and also on the design of a water turbine which generates tidal power when the tide is coming in and also when it is ebbing. Not only does Norway derive much of its income from electricity export but it does so without atmospheric pollution.

The bigger harm that Australia does to itself in seeking political solutions rather than technological ones, is that it forces the more creative Australians to seek employment abroad. These people are not visible. They don’t go shouting slogans and waving red flags. If they feel wanted they stay, if not, they quietly move on. I recall Bob Hawke, in the course of electioneering speech saying that he wanted to transform Australia from being a ‘lucky country’ to being a ‘clever country’. Sadly that pledge is yet to be redeemed.

                    —Don Dyer

Please note: the opinions expressed in this post are those of the author and do not necessarily reflect the views of our U3A, its committee, or its webmaster.

Having written that disclaimer, when I received Don's submission I recognised that it was both thought-provoking and original. It has not been posted as a comment on next week's election and, to my mind, is more a matter of economics than party politics.

I asked Don for a couple of biographical pars so that you, the reader, could assess the ideas relative to the author. He supplied the comment in the box below.

Thanks, Don. It's appreciated.