0
Strength and      ResilienceAustralia and the Global    Financial CrisisGlobal Recovery: Asia and the New Financial Landsc...
• How did Australia fare during thecrisis?• Why did Australia fare so well:  - Concerted fiscal, monetary and     financia...
Global economic environment – worst recession in the postwar periodGlobal GDP growth(Annual average growth)Per cent       ...
The Australian economy grew during the crisis and is stilldoing soGDP growth of IMF advanced economies(Through the year GD...
Australia’s GDP is above pre-crisis levels.Australia, G7 and OECD GDP growth compared to pre-crisis levels(March 2008 to M...
Employment levels in Australia did not fall and ourunemployment rate is lower than nearly all major advancedeconomiesChang...
Employment and hours worked during the GFC                                             7
Consumer and business confidence recovered quicklyAustralian Consumer Sentiment and Business Confidence(May 1998 to May 20...
Fiscal deficits of the major advanced economies andAustralia in 2008-10 and 2014  Per cent                                ...
Australia has lower levels of government debtNet debt levels of the major advanced economies and Australia in 2008-10 and ...
Why Australia did so well
Concerted fiscal, monetary and financial sectorsupport                     12
Fiscal stimulus contribution to growth                                         13
The Reserve Bank of Australia responded quickly – cuttinginterest rates and boosting liquidity                            ...
LIBOR OIS Spreads                                   3 -m o n th L IB O R S p r e a d s                                    ...
Financial sector interventions•Government Guarantee Scheme for Large Deposits and Wholesale Funding  - Commenced 28 Novemb...
Banks’ use of the Government Guarantee                  Australian Banks’ Bond Issuance                                   ...
Trading partner growth                         18
Growth in Australia’s major trading partners this centuryGrowth in Australia’s major trading partners (GDP through the yea...
Australia’s economy has benefited from a resilientexport sector, supported by demand from Asia.Annual growth in the export...
Australia’s terms of trade     Australia’s terms of trade, 1960 to 2012 (forecast)                                        ...
Strong institutions
Regulation of Australia’s financial markets and institutions                                         COUNCIL OF FINANCIAL ...
Total Australian financial institution assets      Source: RBA                                                24
Australian banks had low exposure to sub prime loans,domestically or US     Non-performing housing loans (per cent of loan...
Australian banks are well capitalised Credit rating of the largest 100 banking groups in the worldTotal assets, US$ billio...
Lessons learned and    challenges                      27
Key lessons• Learned from past domestic crises (banking in 1989-91, insurance 2002)   - regulatory model and supervisory p...
Key challenges• Balancing financial stability with banking competition• Balancing global standards with domestic condition...
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Zero Unemployment, Lessons learned from australia

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By connie dello buono motherhealth@gmail.com 8/19/2011
I learned that in Australia, there is:
• Zero Unemployment ; at one time the Australian government has to create jobs by fixing an unbroken road and highways
• The maximum cost of college education is maxed at $7,000/year and you only start paying a small amount when you get a job
• That you must at least be 45 yrs old and with a good education (Engineer or Doctor) to easily migrate
• That 1% of your salary is taken out by the government if you don’t get a private health insurance in addition to the public healthcare provided by the government
• That you are given a monthly allowance for every child in the family, a blessing for those with more children
• That all minerals mined are also processed in Australia for higher income for the government and more jobs
• That the food is highly dense in nutrients that my brother-in law feel more healthy compared to when he was in Singapore
• That you can clearly see the stars at night since there is hardly any smog or pollution

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Transcript of "Zero Unemployment, Lessons learned from australia"

  1. 1. Strength and ResilienceAustralia and the Global Financial CrisisGlobal Recovery: Asia and the New Financial Landscape Federal Reserve Bank of San Francisco 8 June 2010 Dr Gordon de Brouwer Deputy Secretary, EconomicDepartment of the Prime Minister and Cabinet, Australia
  2. 2. • How did Australia fare during thecrisis?• Why did Australia fare so well: - Concerted fiscal, monetary and financial sector support - Trading partner growth - Strong institutions• Lessons learned 2
  3. 3. Global economic environment – worst recession in the postwar periodGlobal GDP growth(Annual average growth)Per cent Per cent FORECASTS Source: International Monetary Fund (IMF) (forecasts from World Economic Outlook (WEO), April 2010). 3
  4. 4. The Australian economy grew during the crisis and is stilldoing soGDP growth of IMF advanced economies(Through the year GDP growth – June 2009) (Through the year GDP growth – March 2010)Per cent Per cent Per cent Per cent …and has continued to grow strongly since then. Australia’s economy grew during the worst of the crisis…Note: The above graph includes 23 of the 33 IMF advanced economies. Those without March 2010 data available and which have been excluded include Finland, Iceland, Ireland, Czech Republic,Luxembourg, Portugal, Belgium, New Zealand, Switzerland and Austria. Source: National Agencies. 4
  5. 5. Australia’s GDP is above pre-crisis levels.Australia, G7 and OECD GDP growth compared to pre-crisis levels(March 2008 to March 2010) Note: Data has been indexed to March 2008. Source: Australian Bureau of Statistics (Cat no. 5206 and Reuters.
  6. 6. Employment levels in Australia did not fall and ourunemployment rate is lower than nearly all major advancedeconomiesChange in employment (Sept 08 to latest) and latest unemployment rates in majoradvanced economies and Australia(latest available data)Per cent Per cent Unemployment rate Change in employment (Sept 08 to latest) Source: National Agencies and Australian Bureau of Statistics, Cat. No. 6202.0. Data is based on latest available at 4 June 2010. 6
  7. 7. Employment and hours worked during the GFC 7
  8. 8. Consumer and business confidence recovered quicklyAustralian Consumer Sentiment and Business Confidence(May 1998 to May 2010)Index Indexpoints Confidence recovered points quickly Source: Westpac-Melbourne Institute Survey of Consumer Sentiment and NAB Business Survey. 8
  9. 9. Fiscal deficits of the major advanced economies andAustralia in 2008-10 and 2014 Per cent Per cent of GDP of GDP Australia has maintained low fiscal deficits through the crisis. 2008 2009 2010 2014 Source: IMF World Economic Outlook – April 2010. No data is available for the 2014 forecast for the G7 . 9
  10. 10. Australia has lower levels of government debtNet debt levels of the major advanced economies and Australia in 2008-10 and 2014Per cent Per cent of GDP of GDP 2008 2009 2010 2014 Source: IMF World Economic Outlook – April 2010 No data is available for the 2014 forecast for the Euro Area . 10
  11. 11. Why Australia did so well
  12. 12. Concerted fiscal, monetary and financial sectorsupport 12
  13. 13. Fiscal stimulus contribution to growth 13
  14. 14. The Reserve Bank of Australia responded quickly – cuttinginterest rates and boosting liquidity 14
  15. 15. LIBOR OIS Spreads 3 -m o n th L IB O R S p r e a d s T o o v e r n ig h t in d e x e d s w a p s Bps Bps US$ 300 300 225 225 UK£ 150 150 E uro 75 75 A$* 0 0 l l l l l l l l l l l l l -7 5 -7 5 M J S D M J S D M J S D M J 2007 2008 2009 2010 * B a n k a c c e p t e d b i lls t o o v e r n i g h t i n d e x e d s w a p s S o u r c e s : B lo o m b e r g ; T h o m s o n R e u t e r s ; T u lle t t P r e b o n ( A u s t r a li a ) P t y L t d As at 3 June 2010 15
  16. 16. Financial sector interventions•Government Guarantee Scheme for Large Deposits and Wholesale Funding - Commenced 28 November 2008. - Closed for new liabilities on 31 March 2010 (this was the date of the last issuance).•Time-limited voluntary guarantee of State Government borrowing. - Commenced March 2009 - Will close to new issuance on 31 December 2010.•Extensions of Reserve Bank of Australia (RBA) market operations•ASIC’s temporary ban on covered short selling of financial and non-financial securities - Commenced on 21 September 2008. - Ban lifted on 25 May 2009 on covered short-selling.•Special purpose vehicle for motor vehicle wholesale financing (OzCar)•$16 billion purchase of residential mortgage-backed securities (RMBS) 16
  17. 17. Banks’ use of the Government Guarantee Australian Banks’ Bond Issuance A$ equivalent, monthly $b $b Onshore (unguaranteed) Offshore (unguaranteed) Onshore (guaranteed) Offshore (guaranteed) 20 20 10 10 0 0 2006 2007 2008 2009 2010 Source: Reserve Bank of Australia 17
  18. 18. Trading partner growth 18
  19. 19. Growth in Australia’s major trading partners this centuryGrowth in Australia’s major trading partners (GDP through the year per cent change, December 2001 to December 2009) Per cent Per cent Source: Australian Bureau of Statistics (Cat No. 1364) and China Statistics Office.
  20. 20. Australia’s economy has benefited from a resilientexport sector, supported by demand from Asia.Annual growth in the export of goods Australia’s major trading partners(in real and nominal terms, financial years) (2008-09 financial year)Real growth Nominal growth (per cent) (per cent) Country Australia’s Per cent of top 10 major total trade Volumes of Australian exports remained resilient… trading partners 1 China 17.0 2 Japan 15.7 Australia’s exports to China 3 United States 8.2 recovered strongly in 2008 (nominal). 4 Korea 5.7 5 United Kingdom 4.6 6 Singapore 4.2 7 India 3.9 …while world export volumes of good collapsed in 2008. 8 Thailand 3.5 9 New Zealand 3.5 10 Germany 3.0 Source: Australian Bureau of Statistics, Australian Treasury. 20
  21. 21. Australia’s terms of trade Australia’s terms of trade, 1960 to 2012 (forecast) Source: ABS and Australian Treasury 21
  22. 22. Strong institutions
  23. 23. Regulation of Australia’s financial markets and institutions COUNCIL OF FINANCIAL REGULATORS (COFR)• Key features: ‘twin peaks’ model of financial supervision and market regulation; central bank has explicit policy responsibility for financial system stability (with the financial supervisor responsible for individual financial institutions); and cooperative model of crisis coordination between responsible agencies (led by central bank).• Regulatory arrangements did not allow non-recourse loans; responsible lending obligations; prudential supervisors increased capital if banks made sub-prime (low doc) loans; ‘four pillars’ banking system (preventing mergers of the biggest four banks) 23
  24. 24. Total Australian financial institution assets Source: RBA 24
  25. 25. Australian banks had low exposure to sub prime loans,domestically or US Non-performing housing loans (per cent of loans*) % % * Per cent of loans by value. Includes ‘impaired loans unless otherwise stated. For Australia, only includes loans 90+ days in arrears prior to September 2003 ** Banks only *** Per cent of loans by number that are 90+ days in arrears Source: APRA, Bank of Spain, Canadian Bankers’ Association, Council of Morgage Lenders, FDIC, RBA 25
  26. 26. Australian banks are well capitalised Credit rating of the largest 100 banking groups in the worldTotal assets, US$ billion, Australia’s four largest log scale bank holding companies Below A- not shown in picture Source: Credit Ratings and Assets: Standard and Poor’s, Bloomberg: The Banker. 26
  27. 27. Lessons learned and challenges 27
  28. 28. Key lessons• Learned from past domestic crises (banking in 1989-91, insurance 2002) - regulatory model and supervisory practices are founded in living memory of past crises - strong financial risk management is widespread in companies and financial institutions - ‘four pillars’ worked• Need strong regulation and effective enforcement - supervisors do not expect to be liked – justified conservative central banking and supervision• Importance of maintaining confidence in financial markets and the economy - fiscal policy can be very important to macroeconomic stability – both expansion in a downturn and consolidation in recovery (moving back to budget surpluses and net financial asset position)• Importance of liquidity in markets and need for strong public institutions• The value of exchange rate flexibility 28
  29. 29. Key challenges• Balancing financial stability with banking competition• Balancing global standards with domestic conditions - liquidity and leverage arrangements• Balancing comparative advantage in financial services (eg., funds management) with exposure to financial sector shocks• How the international debate on macro-prudential objectives and instruments plays out• Sustaining a culture of cooperation between regulators and government and understanding of financial crises in public and private institutions over time 29
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