CONFIDENTIAL
There has
now. To correct this situation the Government has embarked on a major programme designed to restructure a traditionally well protected economy to make it more productive and internationally competitive. Fiscal policy has been tight with progressive public expenditure reductions leading to a current budget surplus. Consumer demand has been curbed with high interest rates. been substantial deregulation in the banking and business sector and a programme of progressive reductions in tariffs and other forms of protection. Wage restraint is a key element in the policy and the Government has successfully maintained the support of the trade unions for wage rises which have achieved a fall in real wages of about 7% during the last 4 years. These policies initially achieved considerable success. While GDP growth was maintained at an average level of around 3%, inflation, unemployment and the current account deficit all fell and exports of manufactured goods expanded. signs are more worrying. The annual rate of inflation for 1988 rose to 7.7%. The current account deficit for the first half of the financial year also rose, as did the country's foreign debt.
The Government's this increases the chances of a wages explosion. current battle with the domestic airline pilots, who are demanding a 29% rise, is crucial in preventing a wages explosion and may also be a telling factor in the outcome of the next election.
Recent
All of
FOREIGN POLICY
3.
Australia's primary foreign policy focus is on the Asia-Pacific Region. A leading country, because of size and wealth, in the South Pacific she is also trying to establish her position as an Asia- Pacific centre with natural links to the economically expanding
Her countries of South East Asia and the North West Pacific. relations with the US are of supreme importance and those with Japan
Australia has maintained and strengthened her very close behind. defence links with the US and under the ANZUS treaty since New Zealand's rupture with the US over nuclear ships visits but defence relations with New Zealand are also important. Australia hosts joint early warning and communications facilities for the US. In certain areas of disarmament and in the field of agricultural trade
She has lobbied reform she is a very active and respected advocate. hard to join the GIO (with UK support) but with no success.
She is
CONFIDENTIAL
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