Blog #11

         Professor Geoff Dow of the University of Queensland in Brisbane was extremely kind to fly to Sydney for one day to give us this lecture and share his ‘compendium’ (using Frank Stillwell’s word) of statistics relating Australia to the world economy.  One of the variables that Dow uses to compare Australia with the rest of the world was unemployment. In Dow’s view, a 0% unemployment rate would be healthy, although it would be extremely unfeasible and prevent movement.  Yet, he said that it was essential to have unemployment under 4%, and that 2% was healthy.  With Australia being a ‘lucky’ nation, it faired particularly well under the global financial crisis.  With quick reaction from the government and its proximity to the Asian countries, unemployment numbers did not greatly increase.  Looking into the past, Australia’s unemployment was 3.4% in the 70’s, 7.2% in the 80’s, 8.4% in the 90’s, 5.3% in the 2000’s, and in 2010-2011 it was 5.1%.  The average over 1974-2004 was 6.6%.  In comparison, the United States’ unemployment was 6.5%-70’s, 7.2%-80’s, 5.6%-90’s, 6.1%-2000’s, and 9.3% in 2010-2011.  As one can see, the United States has been far more dramatically impacted by the global financial crisis in terms of unemployment figures. Unemployment shows the general stability of the country.

         Another issue Geoff Dow brought up was that of public sector investment, which Frank Stillwell also touched on, found on pages 59 and 60.  Investing less than 2% of its GDP in the public sector, there could be possible trouble for Australia. Professor Dow was particular cynical about the effect that the stimulus had upon Australians.  Each Australian household received around $1000 to use however they would like, but many, as Dow would say, went out and bought plasma televisions and did not re-invest the money into a progressive outlet for Australia’s economy.  If the government would have spent that money that they gave households on public works- such as the nations infrastructure, roads, water systems, railways, etc…  Compared to countries like the US with a 2.6% of public sector investment and a general average of 2.8% investment, Australia is under the average and that could potentially be troublesome.

         I chose to focus on the comparison on human development index trends and GDP per capita in 2010 on pages 19 and 20.  GDP does not alone represent the full story of how a country is doing and the lives of its people, but it is a good figure to look at.  Human development looks at more than population and income, it looks at the quality of life, education provided and health are factors present.  In 2010, Australia had a GDP per capita that ranked 6^th, but an impressive human development index 2^nd in the world.  That is a four point differential.  The United States ranked 3^rd in GDP per capita and 4^th in its 2010 human development index.  These two statistics show the major economies of the world in terms of GDP and how they relate on the human development index.  Those that are presented in the top 30 in the human development index are all affluent.  In both the USA and Australia, the quality of life ranks in the top 3 worldwide. 

Outside of one of the old buildings at University of Sydney

Geoff Dow (Santa??)

Geoff Dow

The three economists: from left: Nesiba, Frank Stillwell, Geoff Dow

         

Blog #10

The higher education university system in Australia serves as an export through the amount of students that pay tuition and convert their currency to the Australian dollar.  The number of students that receive higher education, either undergraduate or post-graduate that require an education visa (and lasts at least one semester) in Australia and at Australian institutions abroad factors into education as an export as well.  Overall, education ranks as Australia’s third largest export and according to Evan Jone’s statistics, education related travel services has increased from $16,735 (A) m in 2008-2009 to $18,507 (A) m in 2009-2010 which is a 10.6% growth.  These statistics do not factor in the drastic decrease that the education sector has experienced in the last year.  A break down of each state for education as given to us by Sean Lennon about how states rank education exports from 2009-2010; NSW- 2^nd, Victoria-1^st, Queensland- 3^rd, SA- 2^nd, WA- 8^th, Tasmania- 8^th, NT- 13^th, and ACT- 2^nd. 

         Australia is esteemed as a country with a reputable higher education system, as they have seven of the top one hundred universities in the world as seen in the ranking of the top 100 universities in the world in our course packet. The Monash campus of Malaysia, at Cerawalk, was one offshore program that worked.  Instead of starting their offshore programs with strict and rigid guidelines, Monash University allowed the culture of their offshore location to permeate and influence their actions for the program. Unlike the success story of Monash, there are also failures. The University of New South Wales attempted to off shore a program. During the process they spent $30 million dollars, but were forced to cut their losses and abandon the program after one semester because a lack of numbers which greatly offended the Singaporeans.  This represents a massive failure and lack of integrating the university with the culture and expectations of the location.

            The two greatest factors that have caused the dramatic downturn in educational exports is the rising Australian dollar at a time when the American dollar and the Euro are both weakening, and visa’s to study in Australia are becoming harder to obtain.  Along with this, there was great controversy about Indian students getting assaulted.  Sean’s latest statistic says that the education sector is projected to lose $4.8 B in 2011, and $4.2 B from related spending.  This is absolutely a huge decrease from the $18.5 B generated in 2010.

            The federal government in Australia does not have to adhere to the same constraints as the government in the United States.  In Australia, there is not a separation of church and state.  What that means is that the federal and state governments can help fund private universities in Australia. Right now, there are only two private universities (Bond and Notre Dame- which has 3 campuses) in Australia.  Government has given land, money, and other support such as grants to private universities.  The aboriginal program at Broom (a campus of Notre Dame’s) is almost 100% governmentally funded.  “Notre Dame began in 1989 when it was founded through an Act of Parliament in WA” Leah said in her site report.  It is associated with Notre Dame in the US, but only with its name.  It is actually a separate and independent university.  

Notre Dame Campus ( picture from website)

Map of where Notre Dame's campus' are...via Notre Dame's website

This is a picture of my campus in France.  Learning about the Study Abroad Network brings back so many memories of my semester in France!  In Sean Lennon's statistics, I was so excited to be included in the 2009/2010- 260,327 students that studied abroad.  In France, I was one of the 16,910 students!!

Blog #9

Saturday, our first completely free day since we have been here, I woke up and leisurely took my time on getting to Paddington Market.  When I asked the front desk the best way to get there, I was told either the 378 or the 380, but when I got on the 378, I was getting farther and farther away from the direction I thought Paddington was.  Once at Bronte Beach, the end of the line for 378, I understood that I had to go the other way.  After that I caught the 378 the other way and just took it back to Bondi Junction.  I decided that I knew where Oxford Street was; why not just walk there.  On my way to Paddington Market I passed Centennial Park and some pedestrian shopping areas.  It was a pretty walk and it caused my mind to understand where Bondi Junction and Paddington Market were in comparison to each other and the rest of the city.  Once I was on Oxford Street, I went shopping along the other side of the market where there are fun, more retail boutique stores.  Saving the best for last, the foray into Paddington Market was very enjoyable.  It catered perfectly to my love of art, handmade craft, and eclectic taste.  Instead of being completely based upon souvenirs, which are great too, it showcased the artisans of Australia.  For my mom, I found a great bar of soap that is really a work of art.  I also found a hand-sewn dress and a hand printed tank top with a tree on it! 

            That night was Festival First Nightl.  Knowing only what I learned from Gentry’s presentation, I was very intrigued by the concept the free first night of the festival open to everyone to highlight and celebrate the arts.  The First Night had events for everyone.  It went from 3-11 at night and had events such as “You Can Ukulele,” the burlesque type critically renowned show, “Smoke and Mirrors,” and a great hip-hop ish band called “Arrested Development.”  Just walked up from the train tunnel on the far end of Martin Place presented our group with a culture shock that we are never accustomed to in South Dakota.  The whole area and walkway of Martin Place, from the water fountain to the hospital was jammed packed with people interested in a great time, the arts and the culture of Sydney.

            Today, I got to travel to the Olympic Park and watch the Sydney Tennis Tournament that started today.  I was really hoping to go, but I didn’t know if anyone else would be interested or if it was too far to go out there for one afternoon, but I am so glad I made the expedition.  It turned out to not be overly complicated to get to the park.  The grounds pass was only $10 AU and got us into every court except center court, which we learned didn’t look at the tickets either.  Some of my highlights from the tennis tournament were seeing Igor Andreev play, sitting on center court, and seeing a challenge live!

            I did a fabulous job of stimulating the Australian economy this weekend with trips to Paddington Market, the Olympic Park, the Sydney Opera House and experiencing First Night.  All of the venues and events that I experienced were very tourist related.  Although I feel like less of a tourist because we have been here for going on two weeks and I am becoming increasingly comfortable with the train system (minus the incident getting to Paddington), I am still going to all of the famous tourist locations.  At these locations there are large amounts of people from all over the world.  Just like that first day at the beach, I continually hear multiple languages being spoken around me almost constantly.  This upholds the viewpoint that Australia, and Australia’s largest city is a globalized and well-connected location.  Mostly on an individual and globalization 3.0 basis, thousands and thousands of people are coming together in this city to experience the tourist attractions, stimulate the economy and learn more than just stereotypes about Australians.

First Night Festival

Picture from Sydney First Fight

Tennis Tourney

Blog #8

            What is monetary policy? How has Australia’s Central Bank reacted to the global financial crisis? Is this at odds with the bank’s goal of reducing inflation? Why are Australian interest rates higher than US interest rates? How have the export shares of mining (coal and metal ores & minerals), education, and tourism changed between 2000 and 2007? List and explain two significant differences between the Australian Central Bank and the US Federal Reserve System. What does the US consulate do? How did the speaker characterize current US-Australia relations? Why was the US-Australia FTA significant? Did it have any specific impact on the winemaking industry? Explain.

        

Monetary policy is one of the many responsibilities that the Reserve Bank of Australia has.  According to the course packet, monetary policy aims to achieve a strong economy that has low unemployment rates, stable currency and a controllable rate of growth.  Among others are they’re responsibility for the payment and financial system stability and efficiency, issuing Australia’s currency notes and managing foreign exchange rates.  At the RBA, the senior economic that spoke with our class was Richard Finlay. At the moment, there is a contractionary monetary policy going on in Australia because they have seen 3% inflation in the last year.  The RBA is trying to control inflation by increasing interest rates which is why Australia’s interest rates are higher than the US’s.  Just this year, there has been a 14% appreciation against the US dollar and exchange rates do matter, according to the email that Nesiba sent us with an article attached.  Especially because the United States is still in an economic recession that affected them much more than the worldwide recession affected Australia, the US has had to keep the interest rate at nearly zero.  The hope is that low interest rates will increase consumption, increase consumer confidence and consumer spending.  With Australia being “the first G20 country to increase interest rates in the second half of 2009 in response to emerging inflation risks,” they have faired better than the US.

According to the graphs present in Finlay’s presentation, the export of mining has been enormous.  In the course packet it says that Australian export volumes have grown at a 2.5% annual rate over the last decade.  Though tourism has dropped slightly in the last decade, mining has more than made up for it by exports nearly tripling.  This indicates the growing ties to India and China in particular who are buying a huge amount of the resources coming out of Australia.  During the years between 2000 and 2007, education has seen an increase in overseas enrollment and is now beginning to offshore whole universities.

The major differences that Finlay shared between the Australian Central Bank and the US Federal Reserve System is that the Australian’s are very practical, they focus more on short term goals and are less esoteric.  The board is made up of less academics and the staff is fairly young.  Also, unlike the board for the Fed, which only has internal members and presidents of the regional branches, the Australian system consists of 9 members and 6 of them are external members representing industries such as mining. 

The political/economic officer at the US Consulate spoke to our group regarding anything we had questions over.  At the beginning I thought it was going to be a really formal speech, as the speaker, Chris Corkey was behind a lecture with the Australian flag and the American flag beside him…. Slightly intimidating.  The United States Consulate first and foremost aids in the assistance of American citizens.  If citizens find themselves in emergency situations the consulate is there to get them a new passport, find medical assistance, issuing visa’s and other services.  They provide a connection the United States in Australia and they work as the eyes and ears for the US government.  Chris kept reinforcing the fact that the United States constantly refers to Australia as being its best friend and ally.  They have no better relationship than with Australia.  This is relevant on several fronts.  Australia provides resources, such as iron ore and coal to the United States, but more importantly, Australia has fought with the United States in every major war since WWII.  Also aiding in this strong relationship is the Free Trade Agreement that was initiated in 2005.  This allows free trade to flow between the countries. This agreement has the potential to give the US a huge increase in exports andlower prices for US goods in Australia. Especially in the industry of wine, the FTA has been seen in the increased exportation and sales of Australian wines.  This includes the “coveted” Yellowtail, the mass produced Australia wine found for around $4-$6.  The US received around 70% of all Australian wine exports from Yellowtail according to the course packet article.


  (Curtesy of the Reserve Bank of Australia)


  Examples of Australia's currency

The interesting metal sculpture outside the RBA

Blog #7

Tourism is the second largest industry to Australia, only behind mining.  Technically, Australia is the largest service export industry.  It generates $92 billion of spending from tourism, it contributes $33 billion to the economy and it provides 500,000 jobs to the Australian economy according to the Tourism Australia pamphlet.  There is a worldwide fascination with Australia and it extremely important for the country to get people to stop dreaming about coming here, and actually come.  I really liked Rachel Crowley’s quote that there is “a lot of romance, but not a lot of commitment” in the Australian tourism field.  Tourism to the Australian economy makes it necessary for Australia to stay connected with the rest of the world to spread the word about the country and to market their brand and location.  This industry hugely stimulates the Australian economy, causes them to be continually keeping up with the technological advances, add to its infrastructure, and in all ways, make Australia as efficient and effective as possible.

Currently, foreign tourists account for 38% of dollar expenditures, but Tourism Australia projects the statistic to grow to 45% by 2020.  This is a very important statistic to measure for the Australian economy because it represents money coming into the country from overseas.  When this statistic changes, Tourism Australia can gain insight into the success or failures of their marketing campaigns, the impact of economic or political factors, and the overall attitude toward Australia.  For example, Rachel Crowley was explaining that after two assaults on Indian graduate students, the Indian media had absolutely ripped Australia apart.  This factored into the dramatic decrease of Indian students that are coming to Australia for higher education.

Eco-tourism is a new section of tourism that has influenced the industry over the last ten years.  So far, my experience in Australia is that they are very active in trying to lessen their environmental impact.  In the course packet, there was an article describing eco tourism.  This article shows that Australia is very concerned about ecologically sustainable development and has used this concept to approach to tourism.  Governmental agencies, state governments, conservation groups and people in the tourism industry have created plans for ecotourism (especially in Queensland with the Great Barrier Reef), and formed groups such as the Ecotourism Association of Australia. 

I was particularly intrigued with Rachel Crowley’s explanation of what tourists most do and visit when they come to Australia because she said that preferences change vastly upon their native culture.  The Chinese are not as focused on nature as other groups and German tourism to Australia experiences an increase when a crocodile attack occurs, although, major cities and locations such as the Sydney Opera House and the Harbor Bridge are generally must see’s for everyone.  The four top countries that are coming to Australia or New Zealand, the United Kingdom, the United States and China.  Tourism Australia sees’s great growth potential in tourism from the east.\

This is an aggregate demand and aggregate supply graph that helps depict the impact the economic growth and exports from Australia's stronger dollar in tourism as well as other sectors in the Australian economy such as mining, higher education and wine.  As AD increases, the quantity increases.  With an increasing interest rate, the Australian dollar increases as well.

 

 Tourism Australia is located on the 17th floor of this amazing building.

With two of the most recognizable icons behind us, Leah and I had a great time walking across the Harbor Bridge this afternoon.  We are similar to so many other tourists that visit both these great sites.

Enjoying the Botanical Gardens and this beautiful Eucalyptus tree.

blog #6

According to Andrew Wells, starting in 1788, Australia began undergoing “economic and political transformations in response to internal and external influences.”  At first, Australia’s main purpose was to protect British interests in the Eastern part of the world.  This was focused on the spice trade and other trading with countries.  Then, in the 1820’s wool became a hot commodity that Australia could export.  They discovered that the Merino sheep was highly suited to the Australian climate and that was important because it produced extremely high quality wool.  This started the gradual takeoff of Australia’s export economy according to Evan Jones from the department of political economy of the University of Sydney.  The next important discovery for Australia came in the form of gold deposits.  This was after the gold rush in California, and like the one in California, it caused huge population growth, urbanization, mining expansion and immigration.  During this time and extremely surprisingly to this day, Australia is still very much a commodity-based export economy.  It focuses on mineral material to export.  Most of this mineral comes in the form of iron ore, coal, and in the past wool, gold, and silver. 

After 1850, Australia starts gaining capitalistic production.  This means that the country is starting to focus of becoming more efficient and savvy with its materials to export.  This includes “an expansion and diversification in commodity production and circulation” says Wells.  The periods that come after this are more commercial agriculture and further increased mining expansion.  All of the developments in Australia’s primary production have been lucky discoveries of minerals.  In the 1990/2000’s, there was a overall boom of resources to Japan.

To this day, Australia two main exports are coal and iron ore, which account for around $53.5 million (Austalia) exports in 2009-2010.  The majority of these exports are going to Japan, South Korea, China, and India, because of the their huge growing economies and because of their geographic location to Australia.  This information was gathered through Evan Jones’ statistics. 

When a country goes and picks up other entities and territories to increase their trade power, it is imperialism.  Britain, in the late eighteenth century used the imperialistic mentality to gain the territories of South Africa, and Australia to protect their interests and trade in other parts of the world.

blog #5

Port Waratah is one of the worlds largest coal handling operations.  Port Waratah, the MacQuarie Power Plant and the mine that Nigel Worton took us to operate 24 hours a day, 365 days a year.  Because we live in a culture that uses massive amounts of energy, ports, mines, and power plants need to operate efficiently and effectively to maximize their potential profits.  The supply chain of coal, which includes the mining process, the transportation, the distribution and the utilization of the coal into energy has been dominated lately by countries such as China, South Korea, India and Japan that are buying massive amounts of Australian coal.  Not only does Port Waratah and the power plant handle huge amounts of coal and connects it to the worldwide supply chain of coal, it also stimulates the Australian economy by utilizing Australia’s railway system and providing high paying jobs.  The Australian mining industries, Port Waratah in particular use, sell and export different grades of coal to countries.  There is high and low quality coal, steaming coal and coking coal, and according to Brian McMahon they have up to 80 different types and combinations of coal.  Australia also purchases extremely expensive equipment, such as Caterpillar trucks from the United States, with names such as extruders, reclaimers, shiploaders, and stackers.  These factors connect Australia to the global economy and are the beginning point in the coal supply chain. 

An example of the remarkable and extremely expensive equipment that Australia imports for the coal mining industry.

A medium sized (PANAMIZE) vessal that was being loaded by Port Waratah.

The towers that let off mostly water vapor from the MacQuarie Power Plant.  

            Australia is a country that has been very adversely affected by climate change.  Unfortunately, the ozone layer over Australia is very thin.  It contributes greatly to the epidemic proportion of Australian’s that are developing skin cancer.  Also, 80% of Australia’s population lives in cities, with 40% living in just two cities.  That means that urbanization is a huge part of the Australian culture and markets.  With growing energy need, cities require more and more energy.  The power plants are fueling whole cities and burning huge amounts of coal.  According to the Macquarie Power plant, there is no longer high and lows points during the day of energy use, it plateau at its peak and does not drop until after 8:30 pm.  This is causing the power plant to burn 300 tons/hour, around 40,000 tons/day because they fuel 40% of New South Wales and 15% of the rest of the country!