Expansionary Policies in Australia and Their Effects


There are various kinds of one- off payments which are paid in families, businesses and so on. In 2010 there was an agreement made on one off payments to salaried workers under clause 7of Australian wages Act. According to this clause all white collar workers had a right to on- off payment as soon as they were approved the concerned body. This payment was to be paid after working for a period of more than a year. Payments made were not to be on a permanent basis but a temporary basis. An employee working more than two jobs would be eligible to get two one-off payments totaling six hundred dollars. The eligibility for one-off payments would be based on one’s application as from the 24th of December 2009 with approval from 14th of January 2010 as stipulated by the responsible body ( South Australian Government Wages parity (Salaried) Enterprise Agreement, 2010).

One-off Payments

One-off payments are made in families, and it is money given to families to act as security that caters to their needs (Australia, CCH Australia Limited, 1979). Most of the families receiving one-off payments support this move as it will help them cater to their needs.

One-off payments in the education sector

Implementation of one-off payments was made in the education sector by the Australian government in February 2009 and this was meant to sustain employment as well as ensure a secured economy in the long run. In this case, post-graduate students were awarded a scholarship for the 2009 educational time which was inclusive of an additional benefit for tuition. The qualified students included those students who receive various scholarships from Australian bodies offering a scholarship. The suitable candidate also had to be an Australian citizen, a full-time student as of the year 2009 as well as have no doctorate in research (Australian government: Department of Education, Employment and Workplace Relations, 2009).

Effects of implementing one off Payments

The government of Australia has been criticized for its policy of one- off payments by the opposition. According to the opposition the one off payment could be likened with authoritarianism in Africa where African leaders accepted three hundred and fifty dollars as payment by foreign mining companies in the iron ore mines. Recently Australia’s government made a decision to allow the continuation of a combined project between itself and Pilbara. The said company was expected to pay more than three hundred and forty million, to be spent at a hospital in Perth. According to the Prime Minister this was a type of reimbursement which would alleviate the burden of conforming to the old economic policies. The opposition leader criticised this as a form of bad practice which is similar to bribery to the government for business owners to conduct business. A wrong message would therefore be sent to the International community that one has to pay money to the Australia government for one to conduct business in Australia (G20 Country briefs, 2010).

It is assumed that one of the effects of one- off payments implemented by the Rudd’s government would be to improve the living standard of Australia. This would be made possible through noticeable changes in the decrease of unemployment plus the economy would grow considerably. This proved to be correct when Australia’s economy improved by almost two percent in the year 2009 despite the fact global economic recession was present throughout the world this can be seen in the graph below

Monthly unemployment rate and quarterly real GDP growth rate
Figure 1. Source: G20 Country briefs (2010)


The Australian government uses various expansionary policies in order to stabilize its economy. These policies include: monetary policies which are basically meant to regulate the sequence of commerce as well as inflation through altering the way money flows in the exchange rates. This is mainly done by the Reserve Bank of Australia to ensure that the demand is at a cumulative level, while the prices and the GDP at a balance (McTaggart et al, 1999).

Monetary policies refer to the administration of short- term interests in order to achieve domestic policy objectives. These policy objectives in Australia include maintaining the steadiness of currency in Australia, maintaining jobs as well as ensuring that the economy is stable. Australia implements the monetary policies in various ways which includes an interest rate that is short term and closely regulated by the central bank. The Reserve Bank on the other hand controls the currency rates in the course of its operations in the fiscal- market as a guiding principle. This is adjusted after a period of time with the announcement of steps to be taken through open declaration (Reserve Bank of Australia, 2010).

Initially the Reserve Bank did not play a part in the regulation of currency rates as it was controlled by a number of financial institutions. Changes in policies therefore had to be implemented by the combined efforts of these financial institutions. A change was realised through the introduction of Reserve Bank whose role was to formulate and implement monetary policies rendering this process as transparent. The Reserve Bank is therefore in charge of controlling the interest rates without interference from the Australian Government and thus ensuring it’s duties are performed as expected by the general public. The association between the Government and the Reserve Bank is one of consultation where none of the parties its ideas on the other but instead come to an agreement free of any ill motives.

Effects of Monetary Policies to the Australian Economy

Their have been important changes noted in interest rates an example of this is the increasing interest rates in the years 1981- 1989, which were meant to control the inflation explosion. However the increase in interest rates was followed by the decrease in demand. Increase in the interest rates put pressure on a country’s financial expenses. For one people will hardly save as the benefits are not promising, investments will be reduced and the only thing individuals will think of acquiring is a house. However the increase in mortgage value will contribute to prospective house buyers to postpone this idea. High mortgage values will lead to a reduction in the number of houses being constructed and vice- versa. Any effect on the real estate industry will affect the employment of various workers in this industry.

Housting - Mortgage rate and activity
Figure 2. Source: Reserve Bank of Australia (2009)

Another effect of the monetary policies is inflation, when there is a huge demand as opposed to low production, pressure is put on inflation and employees will demand higher pays. In the event of increasing prices as well as wages, this process does not stop and thus requiring immediate action once the inflation pressure develops. Increased production leads to a decrease in demand. In a bid to assess the inflation rates one has to look at the current state of a country’s economy. A good analysis of the inflation rates will ensure that a country is not greatly affected this can be seen in the graph below.

Economic indicators
Figure 3. Source: Reserve Bank of Australia (2009)


The implementation of one- off payments was a good idea for the temporary aim of resolving the problems of global recession. However it had it’s flip side in that it did not guarantee the long term benefit of it’s implementation. On the other hand it is important for Australia as a country to have Reserve Bank that is not influenced by the government. This ensures that the best decisions are made independently. Nevertheless the implementation of expansionary policies by the Reserve Bank had its dark side as they did not solve the economic problems as expected. This is evidenced by the fact that a decrease in production was experienced while the demand was high. Housing costs were also high contributing to the postponing of potential home owners from buying homes due to the high housing costs. On the other hand inflation also resulted which led to the Reserve Bank to look for ways to solve this problem. It is therefore imperative for a good survey to be made by the government of Australia as well as the Reserve Bank to ensure the implementation of proper economic policies.


Australian Government: Department of Education, Employment and Workplace Relations, (2009). Fact Sheet: One- off $ 950 Training and learning bonus payment for eligible postgraduate students. Web.

Australian income tax legislation (1979). Australia income tax legislation, Australia: CCH Australia Limited.

G20 Country briefs (2010). Australia’s response to the crisis. Web.

McTaggart et al, (1999). Introduction to Microeconomics, 3rd Edition, Melbourne: Addison- Wesley.

Reserve Bank of Australia, (2009). Monetary Policy. Web.

South Australian Government Wages Parity (Salaries) Enterprise Agreement (2010). Clause 7. One – Off Payment. Web.

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