TOPIC 6 ECO (chapter 14-16) Flashcards
1
Q
industrialised countries type of eco today
A
dominated by clash of **capitalism & communism (US vs Soviet Union) **diff approaches to solving eco problem
common ground between nations today abt solving, approach based on operation of markets
-choices of individuals determine what g&s produced
-business determine **how **to produce g&s
2
Q
completely free market eco (laissez-faire system) disadvantages
why would they all happen?
A
-some unsafe g&s (neg ext, undesirable)
-environment suffers irreversible harm
-some community wants & needs unsatisfied
-some ppl wont earn enough money to live
-inequalities within eco may worsen
-markets can be unstable & inefficient
markets pay attention to PRIV ECO INTERESTS, not broader social interests (market failure)
3
Q
market failure
A
price mechanism takes account PRIVATE benefits & costs of production to consumers & producers, faiL TO ACCOUNT indirect costs (damage to enviro)
4
Q
how can market failure arise
A
provision of g&s and income distribution
-negative externalities
-abuse of market power
-eco instability
need interests of society as WHOLE
5
Q
why do gvts intervene in markets?
A
address market failures to achieve better aollocation of resources, more equitable distribution of income & greater eco stability
6
Q
challenge for GVTs in too much market intervention
A
**find right balance
too much intervention stifles innovation, efficiency & growth
7
Q
2 characteristics of public goods
A
- NON EXCLUDABLE
- NON-RIVAL
8
Q
public good
A
good private firms dont want to supply bc cant restrict usage and benefits to those willing to pay (free riders) (clean air, street lighting public parks)
9
Q
free riders
A
groups/individuals benefit from g/s without contributing to cost of supplying g/s.
-g/s likely under-supplied in relation to total demand
10
Q
why would a free market undersupply a public good relative to demand for it/not supply
A
they’re non-excludable/non rival and attract free riders
-no incentive for firms to produce if consumers wont pay for them
SO GVT DOES!
11
Q
what does it mean when a good is NON RIVAL
A
a person’s enjoyment of public good doesnt restrict others enjoymentof good
-if GVT spends money on pollution controls & enviro policies to improve air quality, valuable to everyone’s enjoyment
12
Q
what other goods does gvt provide? examples
A
merit goods
high quality healthcare system(directly) or financial support for communities (indirectly)
13
Q
demerit goods
A
bring harm to community eg. drugs, gambling, tobacco
gvt places restrictions
14
Q
not all colelctive goods provided by gvt are public goods give example
A
public transport service NOT public good cause ppl gotta pay, EXCLUDABLE
15
Q
Natural monopoly
A
market structure where goods efficiently provided by only 1 supplier bc enromous investment required to supply it
-occurs when comp creates inefficiency
-rail networks, water distribution
-gvts operate these try set fair price , not exploited
16
Q
why do inequalities in income distribution from free markets widen over time?
A
wealth generates more wealth
-own land & assets, earn rent & interest from FOP & growht in value of investments
-greater opps developing skills & finding employment
17
Q
relative poverty
A
those whose SOL substantially lower than average for eco, lvl income <30% of average earnings
18
Q
australias most common form of poverty
A
relativce poverty
few in absolute poverty
19
Q
absolute poverty
A
individuals only just enough income to enable survival (relative is compared to rest of pop)
20
Q
history of welfare state
A
-during 20th century
from industrialised countries after depression and ww2
-grew 2nd half of century due to ageing pop, high unemployment & increase students in tertiary education
-1980s, some argued too generous, costly & created incentives to drop out of workforce
-GVTs reduce welfare benefits, obligations eg applying for jobs for incmome support, welfare benefits ofr unemployed limited, support for disabilities increase
21
Q
what is the largest expense to AUS budget
A
redistribution of income
22
Q
externalities
A
-form of market failure, occur when price mechanism fails to represent true social costs/benefits of production and consumption (private firms/ind)
-airlines dont consider aircraft noise when negotiating airfares
not directly affected in price mechanism
23
Q
examples of negative externalities in australia
A
-increased carbon dioxide, contribution to global warming from burning fossil fuels
-biodiversity loss (land clearing from agriculture, mining operations)
-soil erosion & increased soil salinity (farming)
-water pollution (mining, chemicals in river systems)
24
Q
climate change (negative externality)
A
human activities result in emission of GH gases eg. carbon dioxide lead to increases in global temperatures
-burning fossil fuels (coal, gas, oil) for electricity & transport
-sometimes agricultural, deforestation practices
while ind&bus pay market price of energy production produces carbon dioxide, only reflects private costs faced by companies in producing
-ind & bus dont pay long term cost of energy use (climate change), unlikely change consumption habits
-GVT policies eg carbon taxes ensures price mechanism reflects costs of carbon emissions
25
MPEC ways firms in highly concentrated industries possess substantial market power to exploit customers?
1. monopolisation
2. price discrimination
3. exclusive dealing
4. collusion & market sharing
26
how can firms exploit their customers through monopolisation
firm uses dominant market position to **eliminate existing compeition/prevent new firms entering market**
-eg, **temporary price cutting** than benefiting consumer
27
how do firms use price discrimination to exploit customers
**sells same type of g/s in diff markets at diff prices**
-charge **higher prices** to consumers believes have **higher willingness & ability to pay**
-***greater degree of market power*** greater ability for firm to do this
-eg. **charge higher for tourist** places
28
how do firms use exclusive dealing to exploit customers
firm sets **conditions for supply & exclude retailers from dealing with other compeitotrs**
-**larger retailers** develop **complex arrangements** that **bypas**s exclusive dealing laws
-eg bunnings warehouse **low price bc agreements prevent stock anywhere else**
29
how does collusion & market sharing enable firms to exploit consumers
firms get together and **agree on price & market-sharing arrangement (cartel) reduces** effective **competition** between them, **inhibiting entry** of new competition into **market**
eg. **price fixing** competitors agree on price instead of competing
common in **OLIGOPOLIES**
30
severe fluctuations in lvl eco activity makes it diff for gvts to sustain eco growth. market forces can bring on boom periods, which lead to what?
**boom** periods: **excess demand** for g&s causes **inflation** (demand-pul), **distort** business **decision making**, **reduce** consumer **purchasing power** & force **increase in interest rates** --> **RECESSION**
recessions increase **unemployment**, business failures, etc
31
how does gvt intervene to minimise harmful effects unstable eco growth?
economic stabilisation policies (**macroeco policies)
-fiscal & monetary policy**
32
what do macroeconomic policies influence? give examples
entire economy eg. fiscal & monetary policy
33
who do microeconomic policies influence? give 2 examples
individual firms & industries
competition policy, trade policy
34
aim of macroeconomic policy & what gvt does to reduce problems of excessive/insufficient eco activity
**counterbalance business cycle** to **stabilise** lvl of eco **growth.**
**-excessive**, risk **inflation** & **gvt** tries **spending less, increasing taxation/raising interest rates** to keep economy **growing longer**
**recession, gvt** tries stimulate growth **increasing gvt spending, tax cuts & low IRs**
35
what are microeconomic reform policies for
**improve work practices & productivity levels** with structural adjustment of individual firms & industries
36
AUS 3 tiered structure of GVT
1. Commonwealth/ FEDERAL GVT
-**overall** responsibility for **eco,** most influence on its **performance**
2. STATE (**6 state & 2 self governing territories NT ACT)**
-develop **infrastructure,** deliver **GVT services (health, edu)**, foster **regional development**
3. LOCAL (537)
-local planning, **community facilities & roads**
37
under the AUS ____, the central COMM GVT and state gvts are _____ and have diff roles, although they work together
Constitution
independent of each other
38
AUS Constitution
**document** provides overall **framework** for AUS **system of democratic GVT & relationship betw Federal and state gvts**
-sets **law-making powers of Comm and state** gvts
-abs **limits** on gvts abilities
-**state covers powers not in constitution for comm**
-both **share responsibility** for eco matters **(bus regulation, taxation, health & edu)**
39
main constitutional constraints for COMM GVT
**forced to negotiate with (State** gvts) 6 state gvts when implementing **major eco reforms, need support**
40
state governments role
**limited** role in **national eco management** but **extensive** responsibilities for **delivery of GVT services**
-operate **health system** (but **COMM** major role **funding healthcare through medicare** system)
-school **edu**
-**infrastructure (transport system, electricity)**
41
largest source of revenue for state governments
**GST, collected by COMM, then distributed** to states through ....
42
AUS has 'vertical fiscal imbalance" wth does this mean
**difference** between the **shares of revenue collection** and of **expenditure** among various **tiers of government**s is called the 'vertical fiscal gap
**fed** has **most taxation** powers while **states** have many **expenditure responsibilities**
43
what does the NSW GVT spend on the msot & least
health, edu, general public services
recreation, culture and religion
44
national cabinet
**comm** negotiates role in **formerly traditional responsibilities of states** (funding services) and **brings together comm, state & territory gvts**
45
local gvts responsibility
**local planning & development** decisions
-local services, eg. road building, **community facilities (parks, libraries)**
46
main source of revenue for local gvts
***rates levied on local property owners***
1/4 funding from comm & state grants
some from **fees, fines imposed by councils**
47
public sector
parts of eco owned/controlled by gvt (all tiers, including gvt enterprises)
48
2 important indicators of how public sector changed over time
spending as **% GDP**
public sector**(public sector outlays)**
-expenditure of all gvt compared with exp for eco as whole
**public sector employment as % total employment**
-prop of employees working in public sector
49
public sector outlay as % GDP trends in AUS
increasaed 2nd half of 20th century
-public sector grew sig in decades after WW2,
-stabilised past 20 yrs
-**smaller than many industrialised countries,** esp Europe
50
trends in changes to composition of GVT spending
spend **less on infrastructure**
-spend **more on SWP** and **community services**
-**transfer payments largest** (1/3 of Comm expenditure) (funds transferred back to households as SWP than directly on g&s)
51
trends in prop workers in public sector
**declined** 1985-2000 during period of **privitisation** of most gvt businesses
-since **stabilised** 16%
-reduction reflects **GVTs contracting out many activities in private sector**
-many ppl performing GVT services (road building, IT services) now doing as **private sector contractors to GVT, not as public sector employees**
52
gvts expanded role after WW2
-in **industrialised countries, gvts** adopted more **active** role influencing **eco's performance,** **spending** would accelerate eco activity to achieve **full employment levels** (Keynesian theory)
1980S, GVTS **reduced spending to curb lvls of taxation & borrowing from private sector**, budget **defecit --> excessive borrowing from private sector
-privitised** gvt enterprises!
KT returned after GFC and COVID left **aus with persistent budget deficits & ^ debt levels**
53
provision of GVT services from the public sector
as eco grows, **LS improve**, public **expectations** of gvt grows in standards of healthcare, edu
-expects **community services (polic,** recreational facilities)
-expects **ability to interact with gvt agencies through individualised, online services**
-expected to **address problems created by eco growth (Pollution, depletion of natural resources**)
54
before growth of social welfare in public sector and why it did
before development of SWP, **relied on charity** to survive
-as **life expectancy grew, unemployment rates increased, pop aged, cost** of these programs **increased**
55
how does gvt affect allocation of resources 2
1. influencing way **bus & consumers behave** in **market** through **taxation/spending** measures
2. producing g&s itself **(public goods)**
also regulatory policies eg **prohibiting sale of undesired goods**
56
purposes of taxation
**raise revenue** to allow **gvt spending**
influence **price of g&s --> consumer demand & production**
-**divert resources** away from certain types of eco activity
-sreduced rate of tax **(tax concessions) attract resources towards specific sector
-mostly indirect taxes**
57
gvt direct taxation to achieve resource allocation goals
direct taxes are **paid by individuals/firms where levied (cannot pass to someone else)**
-personal income tax, must be paid by person on whom it is levied/company/capital gains tax
58
gvt indirect taxation to achieve resource allocation goals
indirect tax levied on ind & bus firms but can pass to someone else
-attached to g/s than ind/company
-GST **levied on seller but passed to consumer**
-can **divert resources away from production of undesirable goods**
59
how does **government spending directly reallocate resources** to a particular **sector** of the economy/**influence decisions of consumers & businesses**
attempt to redress **market failure** to provide allocation of resources fits with **community needs and wants**
60
what type of spending can a government do for commuity FGSC
1. **FUNDING** for AUS film productions, otherwise unprofitable
2. **GRANTS**
-**start-ups/new growth industries** (without proven track record, **lack access to finance**)
3. **SUBSIDIES**
-for telecommunications companies (Telstra) to **provide** broadband services in regional areas where services **unprofitable**
4. **CASH PAYMENTS**
-to **private employment** search businesses which find jobs for unemployed ppl
61
limit of gvt spending to address market failure
by themselves **not sufficient enough** to substantially **change the allocation of resources** in the economy
62
what caused attitudes to shift, widely feeling gvts inefficient in operating their enterprises in late 1900s? what has been done since?
**GVT enterprises dont have strong incentives to make profit
-privatisation** & reduced direct involvement in provision og g&s
63
when did globalisation era begin, causing gvt to what
1980s, reduction in gvt intervention in eco
64
how did globalisation affect AUS income inequality
increased, concerned undermine equality of aussies
65
TS main ways gvt redistributes income
TAXATION
SOCIAL WELFARE PAYMENTS
66
average annual income vs lowest --> highest quintiles (20%) affect on income ineq
- as **income RISES,** so does **TAX lvls** (before vs after tax disposable income)
-**all quintiles receive SOME benefits but LOWEST 2 receive much more**
-**income inequality reduced** through **GVT intervention in taxes** & benefits
67
how does gvt use PI taxation
tool to **redistribute income** by **progressively taxing** individuals at **diff rates**
68
tax base
**taxed** items
-3 main bases for imposition of taxes
1. **income
2. welath
3. consumption**
-AUS, **income is main tax base**
69
ART average rate of tax
prop of TOTAL income earned paid in tax
70
MRT marginal rate of tax
**prop of any INCREASE IN INCOME** must be **paid as tax**
-how many **cents in every EXTRA dollar earned** must be paid for gvt
71
how average rate of tax changes as one's income increases indicates whether tax is PRP:
PROGRESSIVE
-**higher income earners pay greater prop of income **
-**ART rises as income increases**
-AUS Personal Income tax
REGRESSIVE
PROPORTIONAL
72
REGRESSIVE tax
**higher income earners pay SMALLER prop income as tax < lower income
-ART falls as income increases**
-CST
73
PROPORTIONAL taz
**all income earners pay SAME prop income as tax
-ART constant as income increases
-COMPANY tax in AUS (except bus with low annual turnovers)**
74
what is AUS progressive PI tax system known as
**PAYG** (pay as you go)
-main instrument of taxation to redistribute income
-**tax payments regularly deducted from employee wage**s
-immediate tax payments from self-employed & ind who derive large prop income from investment
75
why is GST regressive tax
charged as % of price of g/s sold, irrespective of one's income
-but 10%, so if % of income, avg rate of tax falls as income rises
76
what does it mean when payments are MEANS TESTED
ppl on **high incomes/large no. assets** may be **INELIGIBLE to receive** some **benefits (to reduce income inequality!)**
-eg. **unemployment benefits**, aged pensions, etc
77
largest single area of SWP
age pension
-financial security in retirement, long life expectancy!
78
macroeconomic policies
designed to **smooth fluctuations** in business cycle for **sustained eco growth**
79
2 types of macroeco policies
MONETARY (main **stabilisation** policy)
-***higher interest rates*** can stimulate **excessive growth** (**supply of money** to verall **inflation, unemployment, growth**)
-**low IRs encourage C&I, ^ growth rate
-actions from **RBA
6-18 MONTHS for effect** on eco
FISCAL POLICY
-direct effect of **gvt's overall spending, taxing, borrowing yrly**
80
main instrument of monetary policy
use DMOs (domestic market operations)
CASH RATE TARGET
81
Domestic market operations DMO
buying & selling **GVT SECURITIES** by RBA to affect **cash rate** in **SHORT term money market** & influence lvl **IRs** in eco
82
IMPACT of TIGHT monetary policy
1. wanna **slow down** lvl eco activity, TIGHTEN, put **upward pressure on INTEREST RATES**
2. IRs ^, **REDUCE demand for money & dampen consumer C&I**
3. **lower eco activity**
4. **drop in aggregate demand reduce inflation**ary pressures MAY lead to **RISE in CYCLICAL unemployment**
83
impacts of LOOSE monetary policy
1. INCREASE lvl eco acitivty
2. PUT DOWNWARD pressure on INTEREST RATES
3. IRs increase demand for money & boost C&I
4. higher lvl eco activity
5. rise in aggregate demand reduces cyclical employment but MIGHT rise inflation
84
CORPORATISATION
**gvt** encourages **GBE** to **operate independently** from GVT as if they're **private** businesses to improve **effiency & profitability**
85
public trading enterprises are aka
government (business) enterprises
86
privitisation simple terms
(GBEs) sold off to private sector
87
most GVT enterprises not privatised have undergone process of ____
corporatisation
-public enterprises **act as private** business enterprises with ***independent managers accountable for performance & limited GVT involvement in business operations***
88
# EFFECTS
reforms to GBEs over last 30 yrs
sig improvements in **prices & productivity in no. industries**
-**increased competition from opening new markets --> prices fall** significantly
-same as **gvt ownership reduced/elimated**
-not always reduce prices (water supply, gas)
89
gvts 3 smaller functions in eco to make markets produce better outcomes in long term
ensure **workable lvl of competition** in eco
**protecting consumers** from **unfair business conduct**
**protecting** natural **environment**
90
goal of increasing competition (for eg) must be balanced against achieving ___
-efficicient resource use
-lower prod costs
-product innovation
-lower prices for consumers
economis of scale
91
workable competition policies attempt to achieve
contestable markets
**minimum barriers to entry in industries** by **elimnating business practices restrict potential comp (anti-comp)**
92
ACCC
aus competition watchdog ensures businesses dont engage in anti-competitive behaviour
93
most of reponsibility for consumer protection lies with ___ governmetn
commonwealth
94
aim of consumer protection legislation
ensure fair business conduct by **prohibiting practices** that **restrict competition & impose penalties on firms** breach guidelines
-eg. **price fixing** betw **competitors**, misleading ads, price discrimination
95
ACCC 3 roles
1. promote comp
* prevent anti comp behaviour (bus) cartels, price-fixing, monopoly
2. protect consumers
* laws (prevent misleading/deceptive conduct, product safety
3. legal action against bus who breach comp & consumer laws
* fines, penalties
96
wider issues of land management in AUS
FARMING ACTIVITIES
water shortages
soil erosion
rising salinity levels
97
2 underlying issues in enviro debate (enviro policy concern)
1. use of non/renewable resources
2. extent which price mechanism doesnt reflect EXTERNALITIES involved in production
-external costs & benefits ofp roduction not reflected on firm's balance sheet
98
renewable resources
**inputs in PP reproduce themselves,** ensuring **present consumption** of resources doesnt reduce ability of **future generations** to consume them
**(timber, fish)**
99
non-renewable resources
inputs to production where **STOCK of resources PERMANENTLY DEPLETED** in process of product & consumption **(petroleum,coal)**
100
concerns of useing non/renewable resources
industrialised & developing countries **rapidly depleting world's stocks of non-R resources** (eg **fossil fuel)** impact on **climate change**
-**more concerned for climate than exhaustion of non-renewable resources**
-**gvt policies** to encourage **renewable energy**
101
price mechanism not reflecting (enviro) externalities in production
using energy resources (coal, oil) --> huge emissions of CO2 --> **climate change
-greatest environmetnal threat** in world, devastating consequences for **future generation**
-**pollution** through **industrial output, toxic waste, chemical spills & untreated sewage threatens WATER** (most valuable)
-WORLD experiences impact of **deterioration of global enviro**
102
AUS response to climate change
**emission reduction target of 43% by 2030,** achieving **'net zero' emissions by 2050**
-expected **82% of electricity produced from renewable sources by 2030**
103
The (Commonwealth) Budget
official document tool of **GVT for implementing fiscal policy**
-shows gvt's **planned expenditure & expected revenue for next financial yr**
-**early May**
104
fiscal policy
**maroe**conomic policy influences
-**resource allocation
-redistribute income
-reduce fluctuations** of **business cycle**
through
-**gvt spending
-txaxation**
-the **budget outcome**
to
-**stabilise** lvl **eco activity**
-maintain **low inflation**
-reduce lvl **unemployment**
-achieve goals relating to **distribution of income**
105
income tax (to individuals & companies + super)
Personal Income Tax
(46% of Comm GVT tax revenue)
-under **PAYG system
-deducted regularly** from pay cheques of **wage & salary earners**
-**self employed** & those **derive large prop income** from ***investments*** also
-PROGRESSIVE nature **(higher income tax prop more than lower income)**
106
Company tax
19% GVT revenue
-**flat rate** 30% on **net profit private & public corporations before distribution to shareholders**
-bus with **<$50 mill turnover** pay **REDUCED** to 25%)
-pay **fringe benefits tax** (<1% gvt revenue) for **non-cash benefits** provided for **employees** (company cars)
107
superannuation tax collection
3% gvt revenue from super ontributions
-grown recent yrs
108
GST
all items sold except basic food
-13% of total tax collection, **allocated to STATE & territory gvts**
109
excise & customs duties
imposed on **producers of certain goods**
-**based on QUANTITY** of product
-8% of gvt revenue mainly from **petrol, tobacco, alcohol**
-good **relatively inelastic demand**
-allows GVT apply duty/excise knowing **increase in price onyl cause SMALL CONTRACTION in demand**
110
other tax revenue
~1% of gvt revenue
miscellaneous taxes, charges, fees, fines imposed by gvt (parking tickets)
111
non-tax gvt revenue
8% total gvt rev
-**profits from GVT enterprises
-interest, dividends**, royalties paid to gvt
112
key responsibilities of Comm GVT (major expenses) SEHIE
**SOCIAL** **WELFARE**
-**largest** comm gvt **outlay**
-transfer payments (**redistribute income from taxpayers to welfare recipients**)
**EDU**
-funds to **unis, training** providers, vocational edu, **gvt & non-gvt primary & secondary schools**
**HEALTH**
-primarily responsibility of **STATE & territor**y gvts, still funds **medicare & PBS (pharmeceutical benefits scheme) & public hospitals**
**INFRASTRICTURE**/social overhead capital
-roads, rails, communication networks
**ENVIRO PROTECTION** & ECOLOGICALLY **SUSTAINABLE DEVELOPMENT**
**-small** area of **expenditure**
-**investment in clean energy & low carbon emission tech**, energy efficiency measures & better **management of water resources**
113
budget/fiscal outcome
overall outcome of budget, gives indication of **overall impect of fiscal policy on state of eco**
114
3 possible budget outcomes
1. BALANCED budget
**expected gvt revenue (PGR) = planned government expenditure** (PGE)
2. budget SURPLUS
PGR > PGE
3. DEFECIT
PGR < PGE
115
3 possible STANCES for change in budget outcome (n)
1. **CONTRACTIONARY** fiscal policy stance
2. EXPANSIONARY fiscal policy stance
3. **NEUTRAL** fiscal policy stance
-gvt **doenst change budget outcome from previous yr's lvl**
-budget has **NO overall effect on lvl aggregate demand & eco activity**
116
contractionary fiscal policy stance
gvt **planning to INCREASE TAX rev/DECREASE GVT EXP/combo**
-**smaller deficit/larger surplus** than previous
-**decrease lvl eco activity by dampening aggregate demand**
-**reduce inflation** but risks **increasing unemployment** if demand reduces too much
117
EXPANSIONARY fiscal policy stance
reduce tax rev/increase gvt exp/combo
-**SMALLER SURPLUS/BIGGER DEFECIT** than previous
-increase eco activity lvl by **stimulating aggregate demand**
-reduce unemployment (to **increase prod, firms mut employ extra resources)**
-eco grows **too quick inflation rises**
118
examples of stances from diff outcomes circumstances
always from **previous year to present yr**
-**surplus --> balanced, EXPANSIONARY** (**exp risen in relation to rev)** (left over to none left over)
-**defecit --> balanced, CONTRACTIONARY**
119
automatic stabilisers
**instruments** inherent in **GVT's budget that COUNTERBALANCE eco activity**
-boom, decrease eco activity
-eg **transfer payments & progressive tax system**
120
2 main automatic stabilisers
progressive PI tax system
unemployment benefits
121
2 situations where 2 main automatic stabilisers operating
INCREASE in lvl eco activity
-grows, **income ^, --> rise tax rev** for gvt
-**unemployment falls --> reduce** gvt **expenditure on unemployment benefits**
-budget outcome **smaller defecit/bigger surplus** (expansionary)
-AS's --> **auto contraction in AD** --> stabilises without gvt action
DECREASAE in lvl eco activity
-recession, income falls --> fall in tax rev --> unemp rises --> ^ gvt exp unemployment benefits
-budget outcome ***smaller surplus/bigger defecit** *contractionary)
-**stim AD** w/o gvt policy
122
changes in actual budget outcome are result of 2 coponents
**automatic changes** to gvt revenue + expenditure brought by **changes in lvl eco activity** ***(cyclical*** component of budget)
**deliberate rev & exp changes** initiated by gvt (structural component of budget --> key driver of gvt's **fiscal policy stance)**
**CYCLICAL & STRUCTURAL**
123
changes to eco policy must be advanced first by gvt in power, hence must be approved by___
**Cabinet**
-committee of **senior gvt ministers**
124
most major policy changes muct be authorised throught
Act of Parliament
125
for proposed law (Bill) passed through parliament, must be supported by majorinty in Lower(?) and Upper(?) house.
lower: House of Representatives
upper: the Senate
126
how many seats in AUS House of Representatives (lower) & the Senate (upper)
151
76
127
gvts usually have ____ support in HoR, but rare for gvt to enjoy ____ in THE Senate. what does this mean for elections?
majority, majority
**AUS voters** support role of Senate as **balance against power of gvt**
-**slows process of developing legislation but more detailed review of policies**, curb excess major parties
128
structure of political parties and gvts
**political parties form gvts**, key role in **process** of making **eco policy**
-**fed & state** gvts **formed by SINGLE** political party (**AUS Labor Party)/coalition of 2 CONSERVATIVE** parties (**Liberal & National party)** 'Coalition Parties'
129
most policy decisions are made by
elected political representatives
130
process of **decision making in gvts** tended become more ____ in PM/**Premier's Office** recent decades. what does this mean?
**centralised**
**power hands of small no. senior gvt ministers** & senior public servants
131
why do business groups have sig voice in gvt policy decisions?
in **market eco**, successful & growing businesses **crucial for nation's prosperity**
-public influence in public debates
-**financial influence over political parties**
can offer **large donates to political parties** to **fund campaigns (receive limited public funding** to conduct **election campaigns)**
132
what are businesses involved in (gvt stuff)
-contribute **policymaking** across issues **affect activities**
-dedicate sig **resources to lobbying gvts**
133
aus 3 peak business groups
1. **Business Council of Australia**
-represents **chief executives ~100 largest** AUS **companies**
2. **AUS Industry Group**
-represents businesses from **range industry sectors**
3. **AUS Chamber of Commerce & Industry**
-represents chambers of commerce across AUS **(inc smaller bus)**
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lobbyists representation and context
rep **individual companies** & **advocate for interests of specific firms** on issues **(tax, regulation, privatisation, outsourcing** gvt services)
often **former Members of Parliament**/former **staff of gvt ministers understand policymaking** process & **how to influence** it
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unions representation in politics (trend, represent, to gvt, what issues)
**fallen** as **membership declined**
-rep **interests of their members in individual workplaces**
-involved in **consultations w/ gvts on policy issues**
-participate in public debates
-focus on **industrial relations issues**
-interests in **labour market policies**, certain industry policies & measures **affects ppl lower incomes**
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unions relationship with gvts (party)
**greater input** into **policy of Labor gvts > Coalition** gvts
-close historic relationship betw unions & Labor party
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climare & enviro groups
advocate action for **climate change & enviro protection**
-conduct **research**, provide **edu info & lobby gvts & companies** on enviro at **local, national & global lvls**
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environmental concerns influence in politics
-enviro movement increased profile of **enviro issues for eco policymakers**
-high **priority** by **AUS Greens Party**, sig influence esp in **Senate as 3rd largest party** in **AUS**
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welfare agencies
rep msot **disadv ppl in community** (aged, disabled, carers, unemployed, low income)
-**ACOSS (Aus council of social services**) operates as **peak welfare lobby group**
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how do welfare agencies participate in public policy process?
participating in gvt inquiries & **lobbying gvt ministers**
-influence process by using **media to bring attention** to their message & **pressure gvt**
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media role in policymaking
main: **report news**
-changes w/ rise of social media platforms
-inf operates at many lvls (determine **which issues receive coverage to how issues presented** in public)
-**political leaders** try **anticipate how media report policies**, think policies face **heavy criticism, change plans**, want win ***positive media coverage even if limited benefit***
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interest groups
**ppl** w/ concerns/**expertise relating** to **specific issues form orgs work** towards **common ends**
-some have **strong local focus** eg. raise concern to local community
-some formed **around specific issues**
-others rep **particular group in community**
-some **broader role across multiple issues**
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international influences on policy making
since **80s, FEM** emerged as sig influence on eco policy
-**gvts wary** of making **policy decision unpopular** with **international financial markets**
-if FMs **lose confidence in gvt's eco management,** could face **fall in exchange rate, higher IRs on gvt borrowing & neg media coverage**
-eco policy **constant scrutiny from FMs, --> lower budget deficits & stronger commitment to microeco reform**
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itnernational influences besides FMs
-AUS **more integrated with global eco recent decades, weakened power of national gvts**
-AUS policy options to assist local indutries limited (eg **membership in WTO**)
-influenced by **overseas policy trends**, esp *wealthy nations members of OECD* (Org for Eco Coop & Dev)
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policymaking is influenced by interest groups such as BUEWM
businesses
unions
enviro groups
welfare agencies
also media
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what does it mean when gvt cant pass legislation in the Senate w/o support from other senators (how will they pass legislation?)
GVT must negotiate policy details to get legislation passed
