Economic sustainability involves strategies that see the use of available resource sparingly so as a beneficial, as well as a responsible balance, can be met in the long run (WEDER, pp.34-56). In like manner, these sustainable strategies are set in order to allow a government or nations achieve its economic goals and objectives. For instance, there are three key economic objectives in Australia. The First objective is economic growth. Here that country targets to increase the capacity of its economy so as it can satisfy the needs of a citizen by creating more sustainable jobs through encouraging investments, providing vital infrastructure and facilitating various innovation. The second objective is to achieve price stability and thirdly is to achieve full employment. In order to help the people achieve full employment, the government is utilizing its institutions, for instance, the Australian Government Department of Employment to promote national policies and employment programs that allow Australians keep and find employment. Similarly, helping the people work in a fair, safe and profitable work environment.
The Australian government’s target rates for real Gross Domestic Product (GDP), unemployment and inflation are 3% increase in real GDP to the year 2020, 5.5% unemployment rate by the year 2020 and 2-3% achievement in inflation rate on average in the long run (POKE and WELLS, pp.121-131). According to Australian Bureau of statistics, the gross domestic product for Australia was $1204.62 billion in the year 2016. Similarly, the GDP value of Australia represents 1.94% of the global economy. It is however believed that the unemployment rate increased or the full employment sector increasingly vanished in the same year with jobs such as sales assistances, secretaries, cooperate service managers, textile machine operators and so on disappearing. Also, price stability was affected with basic commodities goods proving to be costly and bank interest rising (Setting a marketing budget, pp.288-230).
The National income measures the financial value of the flow of output of services and goods (Cui, Wu and Chen, pp.34-50). On the other hand, GDP is the value of finished goods and services in a given country. It is important to measure the level and keep track of the growth of the national income in that it helps understand the rate of economic growth, dynamics of life standards, and helps understand the changes to the circulation of income between groups within a population. Differently, GDP will include the output of foreign owned organizations that are established in the nation due to direct investment.
Monetary policy is the actions contributed by the central bank, the currency boards and other money regulatory organizations which regulate the rate and size of money supply which as a result influences the interest rates (Cobham, pp.1-4). The monetary policy is implemented by first, open market operations or trading that is; selling bonds and securities. The second implementation is by offering a discount rate usually through the commercial banks. The third tool of monetary policy implementation is reserve requirements (amount of funds that a bank ought to hold).
The Reserve Bank of Australia used the microeconomic policy to stabilize the Australian economy so as it can provide a sustainable economic growth and similarly concentrated in the non-mining future in employment. In like manner, it was utilized to foster the creation of jobs, improve the living standard of the people and the creation of wealth. Also, this policy aimed to improve four conditions of efficiency in resource distribution. That is; allocative efficiency through supplying the resources in areas that will meet the needs of the society there, productive efficiency through advising business to use the best cheap method of production, dynamic efficiency through encouraging businesses to be creative as well as adaptive to change and intertemporal efficiency through ensuring there is a balance of resources and encouraging savings. A major strength of the policy is that it helps in improving external stability. This policy has helped in making Australian employees and businesses both foreign and local more competitive through reducing the cost of labor. On the other hand, the major weakness of this policy is that productivity proved difficult to measure under a business agreement.
Fiscal policy is the process by which the government regulates its spending levels as well as taxes to observe and impact the economy. Similarly, this kind of policy is used by policy makers when they think the economy needs extensive help from outside in order to adjust at the desired point. In real money terms, the Final Budget Outcome for 2015-16 was a $340 million change contrasted and the basic money shortfall evaluated at the season of the 2016-17 Budget.
Add up to installments were $1.6 billion lower than anticipated and add up to receipts were $1.1 billion lower than anticipated. Net Future Fund profits were $190 million higher than anticipated at the season of the 2016-17 Budget. On the other hand, the fiscal stance balance terms, the Final Budget Outcome for 2015-16 enhanced by $2.0 billion contrasted and the monetary adjust shortfall assessed at the season of the 2016-17 Budget, with income $1.3 billion lower, costs $2.8 billion lower and net capital venture $526 million lower than anticipated at the season of the 2016-17 Budge (Showstack, pp.97-100) t.
The most recent micro policy change is the roll you own tobacco and cigars policy. The government announced that taxation on the roll your own cigar and tobacco will be accommodated so as to spread the comparability of tax treatment. This policy tends to affect the people who roll their own tobacco. Similarly, the government is due to gain $360 million by putting down the rate that will apply to all tobacco consumers. The strength of this policy is that it will help the government gain extra revenue beneficial to the economy. The weakness of this policy is that the tobacco companies will lack sustainability due to a decrease in their productions.
Micro Economic Policy
Micro economic policies are directed to uphold the improvements in the economic productivity through reducing or eliminating distortion in the private sector of the economy by improving economy wide policies, for instance, tax policy as well as competition policy for the aim of economic productivity as opposed to goals like equity or decreasing unemployment (Abaidoo, pp.377-395). The policies initiated are usually directed to achieve various governmental goals. Also, the government tries to utilize tax, interest rates, money supply and so on as a tool to achieve the objectives. Multinational anti avoidance policy is one of the micro economic policies put in place to maximize tax collection in Australia. This policy was put in place to ensure that there is no tax avoidance by the multinational organizations performing in Australia. The strength of this policy is that it will ensure the multinational companies pay equal taxes to the local companies, therefore, maximizing the revenue due to taxation. The weakness and the disadvantage are that it will discourage foreign investors.
Evaluation of Policy Mix
A good and effective policy mix ought to maximize economic growth and equally reducing unemployment. In an extension, it is important to note that both the monetary as well the fiscal policies affect each other (Klassert and Möckel, pp.311-322). The Australian economy expanded by 0.3% from January to March in the year 2017 compared to 1.1% expansion in the December 2016 quarter. To the further note, unemployment fell to 5.6% as at July 2017 from 5.7% in the year 2016. Inflation or consumer prices in Australia rose to 1.9% in the June quarter in the year 2017 from 2.1% in the first quarter the same year (Robinson, Nguyen and Wang, pp.5-20). In recent years Australian government’s policy mix has proved to be helpful in providing economic sustainability. Similarly, the Japanese government has utilized the policy mix process to stabilize its economy and regulate price stability in the Japan deflationary equilibrium in the 1990s. A major opportunity cost the Australian government would forgo in providing economic sustainability is the time resource for implementation and providing the civic education necessary to the people on the new laws and policies.