Australia’s new prime minister Julia Gillard has set out to attract international investment and stimulating growth at home, whilst cleaning up the country’s energy output
Australia’s Reserve Bank has the highest benchmark interest rate among major developed nations, though small reductions have been periodically enacted. Paul Bloxham, chief economist for HSBC, in Sydney, predicts that will accelerate if the central bank cuts rates further in the near future.
All is not doom and gloom, however. Interest is strong in Australian government bonds and investors are turning to them in preference to direct bets on China’s growth, which has had its own labour battles of late. Australia’s conservative approach and fiscal discipline have given the country safe haven status for investors, who are fleeing the economic uncertainties of many European countries and looking for a more secure return on their funds.
In her keynote speech to the Australia-Israel Chamber of Commerce in early February, Gillard noted that, “there will be more ups and downs in global markets for as long as it takes for Europe to get its house in order.” Meanwhile, mining investment in Australia had reached near-record levels, bringing trade to a 140-year high, before the announcement of a new mining tax. Chevron alone has invested $29bn in its Wheatstone liquefied natural gas field in the Pilbara region of northwest Australia.
Gillard’s plan for Australian economic recovery includes increasing the skill level of Australian workers so they may successfully compete for better tech jobs, along with tax cuts that will provide an economic boost to companies, thus encouraging them to hire new workers and expand their operations to more successfully compete abroad. Along with that comes a push to increase the savings rate of the Australian population and to encourage investment in the technology sector, especially for high-speed broadband internet. Faster internet connectivity would mean that Australian companies should be able to work much more efficiently at a much lower cost.
Clean energy is also firmly in Gillard’s sights; Australia’s investment in clean energy appears to be on target to reach $6.8bn in 2013, with a goal of $45bn by 2020. Currently, the country only derives 8.7 percent of its power from renewable sources, mostly solar, but is looking to meet the worldwide average of 20 percent by 2020. This new focus on encouraging investment is designed to stimulate the economy and create many new, high-paying, technology jobs.