Economic history of Australia

The United Kingdom claimed all of eastern Australia as its territory on the basis of terra nullius, though the actual landing and consequent settlement was initially confined to the Port Jackson area.

The colony of New South Wales barely survived its first years and was largely neglected for much of the following quarter-century while the British government was preoccupied until 1815 with the Napoleonic Wars.

One very important British oversight was the provision of adequate coinage for the new colony and, because of the shortage of any sort of money, the real means of exchange during the first 25 years of settlement was rum.

During this period the New South Wales Corps, whose officers had benefited most from access to land and imported goods (thus hopelessly entangling public and private interests), defied the authority of the governors.

There was a change of policy under his administration towards the promotion of a private economy to support the penal regime, separate from the activities and interests of the colonial government.

Although economic life depended heavily on the government Commissariat as a supplier of goods, money and foreign exchange, individual rights in property and labour were recognised, and private markets for both started to function.

Agriculture, local manufacturing and construction industries expanded to meet the immediate needs of growing populations, which concentrated increasingly in the main urban centres.

The costs of immigration were subsidized by colonial governments, with settlers coming predominantly from the United Kingdom and bringing skills that contributed enormously to the economy's growth.

In turn, the institutions associated with these – including the rule of law, secure property rights, and stable and democratic political systems – created conditions that, on balance, fostered growth.

In 1831, the principles of systematic colonization popularized by Edward Gibbon Wakefield (1796–1862) were put into practice in New South Wales with the substitution of land sales for grants in order to finance immigration.

This, however, did not affect the continued outward movement of pastoralists who simply occupied land where they could find it beyond the official limits of settlement, usually in disregard for any rights of indigenous peoples.

By 1840, they had claimed a vast swathe of territory two hundred miles in depth running from Moreton Bay in the north (the site of modern Brisbane) to the Port Phillip District (the future colony of Victoria, whose capital Melbourne was marked out in 1837) to Adelaide in South Australia.

The absence of any legal title meant that these intruders became known as 'squatters' and the terms of their tenure were not finally settled until 1846 after a prolonged political struggle with the Governor of New South Wales, Sir George Gipps.

The consequences of squatting after 1820 were equally devastating as the land and natural resources upon which indigenous hunter-gathering activities and environmental management depended were appropriated on a massive scale.

Aboriginal populations collapsed in the face of disease, violence and forced removal until they survived only on the margins of the new pastoral economy, on government reserves, or in the arid parts of the continent least touched by white settlement.

Colonial governments and settlers did not recognise any Aboriginal land rights or sovereignty (arguable under the doctrine of terra nullius) and therefore felt free to expand into their territory with impunity.

By the 1830s, wool had overtaken whale oil as the colony's most important export, and by 1850 New South Wales had displaced Germany as the main overseas supplier to British industry.

Without further geographical expansion, opportunities for high profits were reduced and the flow of British capital dried up, contributing to a wider downturn caused by drought and mercantile failure.

Shortages of labour led to high wages for a prosperous skilled working class, whose unions demanded and got an eight-hour day and other benefits unheard of in Europe.

In 1944, Australia became a part of the Bretton Woods system, with major world currencies maintaining fixed exchange rates relative to each other and with the US dollar being pegged to gold.

[22] This dictated that the government maintain control over the "commanding heights" of the economy in order to continue economic growth, restrain inflation and institute full employment.

The pragmatic approach of the conservative Menzies Government was underlined with the establishment of the Reserve Bank of Australia, the continuance of the mass immigration policy began in 1946, and the signing of a range of new trade agreements with nations outside the British Empire, including West Germany (1955), Japan (1957) and the USSR (1965).

Rising income from taxation receipts eventually allowing the Australian Government to fund a large expansion in higher education, the development of Canberra, the national capital, and host the 1956 Melbourne Olympics.

[26] This was primarily caused by developments in the international economy; the Oil Crisis, Britain's entry into the E.E.C., and growing economic competition in Australia's traditional export markets.

[citation needed] Primary producers of commodities such as beef were caught in a credit squeeze as short-term interest rates rose to extremely high levels.

The global early 1990s recession came swiftly after the Black Monday of October 1987, resulting from a stock collapse of unprecedented size which saw the Dow Jones Industrial Average fall by 22.6%.

Due to the outbreak of COVID-19, trade disputes with China, and the Russian invasion of Ukraine, there has been a significant political shift in focus toward National Security and renewed interest in Australia's manufacturing industry.

The economic reforms implemented since the 1980s have led to a large contraction of the Australian manufacturing sector, along with trade union membership; with the percentage of workforce unionisation dropping from over 50% in the 1970s, to only 14% presently.

[34] The trend of Australia's gross domestic product at market prices estimated by the International Monetary Fund[35] is as follows: For purchasing power parity comparisons, the US$ is exchanged at A$0.98.

Shortages of labour led to high wages for a prosperous skilled working class, whose unions demanded and got an eight-hour day and other benefits unheard of in Europe.