POLICY IMPLICATIONS ON STAKEHOLDERS 1 Essay Example

Topic: Policy Implications on Stakeholders

The
primary
test
for a policy is maintaining a sustained
recovery by promoting
vital
structural
changes. Australia has continually
weathered its strong
currency
reflecting
major macroeconomic measures. Australian growth
slowed which led to stimulus
withdrawal and
various
economic
sectors
became
more
cautious. Non-mining tradable industries
have
continually
suffered from the
high
exchange
rate
accredited to the
mining
boom. Nevertheless, basics remain
unshaken with the
unemployment
rate
ever
rising
coupled with increased
inflation
and
national
debt
.

The
present
monetary
and
fiscal
policy mix is necessary to sustain recuperation and Australia is in a better
position to respond to threats. Financial easing in the
basis of reduced
inflation is supporting
economic
activities
such as the
recovery of the tourism and
manufacturing
industries. The
government
plans to place
the
budget on surplus
this will be an additional
incentive
for
economic
recovery. In the
anticipation of a cyclical weakening, the
monetary
authority should ease
further and
fiscal stabilizers should be permitted to work, even
if
this
shifts
the
return to the budgetary surplus. While
financial
policy ought to be the
initial
line of defence, if a fresh, total
world
crisis
similar to the one in 2008-09 appears. Fiscal
expansion should be implemented to support
the
measures can be warranted. Stronger short-term fiscal institutions could be better
placed to cope with the
instability in natural
resources
returns. The
government’s short
term
goal of reducing
net
liability is welcome. The
government should regard
developing a stabilization fund to build up mining-related returns
when
they are abnormally high to protect
the
budget
and
expenditure, thereby
lowering
the
risk of pro-cyclical fiscal
measure. These cautionary measures would caution
the
major
economic
sectors like manufacturing
and tourism (Commonwealth Bank, 2011).

The authorities have financial and fiscal resources to respond to short-term shocks. The RBA has the scope and resources to reduce the interest rates and ease monetary conditions to assist buffer against a downward scenario. As experienced during the global financial turmoil the free-floating Australian currency provides an additional caution against outside shocks and fluctuations of exchange rates. In absence of the above measures, reduced economic performance will continue to be experienced by making Australia an expensive country for visiting and for doing business.
The structural changes originating from the mining boom can be assisted by sustaining flexible markets and providing tax reforms. Australia should encourage even reallocation of resources by taking opportunity of fresh chances prompted by development in Asia and should lower adjustment expenses by preserving a distributed and flexible labour markets. Subsidies in tourism and manufacturing sectors should not be utilized to hold resources in these sectors where Australia competitive advantage is declining. Tax restructurings such as a minimized corporate tax percentage, a wider resource rent levy and more effective state levies would facilitate continuing structural changes. A fair distribution of the burden and benefits of changes would facilitate acceptance of adjustments. Ongoing good performance will need to support productivity growth. Partly the slowed multifactor productivity development is semi-permanent, as primary resource or infrastructure ventures are yet to come to stream and the structurally frail industries are slowly adjusting to the prevailing conditions. Further, sustaining wide-based increases in living standards requires policies to improve vocational and education results to sustain future needs (Australian Government, 2011).

By taking advantage of the government’s mining policies, the production industries should take advantage of persistent growth in the mining and services industries. This offers manufacturers a chance to concentrate their endeavors locally and associate themselves to the consistently growing sectors. It in addition offers a chance for producers to extend their enterprise models into the developing sectors. The government should introduce policies to ensure that wealth is flowing evenly in the manufacturing sector by ensuring improved procurement regulations and equal access to Australian business opportunities. These addition practices will assist producers to maintain existing skills and locate methods to integrate their enterprises into major supply channels. The above measures coupled with persistent responsiveness from production enterprises will assist manufacturers to shed off challenges originating from the strong Australian dollar and related export and commerce pressures packages (Australian Bureau of Statistics, 2009).


Since the strong dollar seems to stay for the predictable future, policies to caution the Tourism and manufacturing sector ought to be introduced. The sectors’ players will have to adopt more innovative approaches towards providing value added products and services before the introduced policies becomes fruitful. New and attractive innovations will persuade the locals from travelling abroad for they will find value for their money locally. The government should, therefore, implement tax reforms aimed at providing support towards the struggling tourism industry (Commonwealth Bank, 2011).

The strength of the Australian dollar is undoubtedly hurting the tourism industry. Compared to other industries, Australian tourism sector will progressively more face difficult times in a strong Australian dollar experience. The tourism and transport platform has indicated that the number Australians travelling overseas exceed by far the number of international visitors arriving into Australia. A time lag amid arranging a trip and reach the destination represents the full impact on international visitors arriving into Australia is not being seen in the data. For international tourists appearing in Australia full awareness that the destination has become extremely expensive destination has reduced the number of tourists’ arrivals. These perceptions might last long after the dollar comes down this represents difficult times ahead. Policies to make internal destinations cheaper would significantly improve the tourism sector. In addition, the number of visiting tourists would substantially increase (Taylor, 2011).

The authorities’ resistance to introduce policies has lead to the dollar crushing competitiveness of the production industries and the occupation security of the employees by increasing the costs of their goods and services on the international markets. A majority 93 percent of producing industries believe that would increasingly find it hard to obtain foreign orders with the dollar’s strength in competition with China. The shift to the elevated currency value has rendered Australia a high cost economy. This destroys margins for local manufacturers and makes competing against cheaper imports extremely hard. The strong dollar is discouraging international investors since it is more expensive to invest in Australia compared to other nations. The effect of exchange rate to an industry depends on whether the industry is linked to international trade; highly trading industries are more impacted as compared to less trading industries. The authorities taking in mind that manufacturing industries are the backbone of the economy should lower the exchange rate to reduce the price of exports (Australian Government, 2011).

Tax reforms will be the key towards alleviating the effects of a strong dollar. Tax reforms must be supported by strong investments creation, and infrastructure growth. Tourism and other enterprises of the economy require continuing developing new brands and offering value added services to their consumers. Investments in these sections can allow Australia to draw more visitors every year and in addition make Australian enterprises more competitive. There is a need to adopt a steady economic and monetary policy to stabilize inflation and interest rates. This would make certain that the elevated price of the Australian dollar cannot unnaturally inflate further in the recent times. A steady worth of the Australian dollar will enable companies to prepare and invest confidently in the future.

References

Australian Bureau of Statistics, (2009). Foreign Currency Exposure, ABS Cat No 5308.0, March Quarter 2009

Australian Government, (2011). 2011-12 Mid-Year Economicand Fiscal Outlook

Commonwealth Bank, (2011). Aussie Dollar Barometer, Retrieved from; http://www.commbank.com.au/about-us/news/media -releases/2011 /2508 11-aussie-barometer-august.aspx

Taylor, W. (2011). How the recent grounding of tiger airways highlights australia’s struggle in tourism. Retrieved from http://taylorwoodings.com.au/Assets/files/Australian-Tourism-Update—13-July-2011.pdf