Australia monthly review: Quarter spent dealing with financial crisis

Australia’s last quarter was dominated by the global economic crisis. Three sharp drops in interest rates and plans to reduce the number of immigrant workers are some of the related headlines we will review below.

Politics: breaking with tradition

The quarter began with an Australian political milestone. For the first time in history, a woman was elected Governor General of Australia. Quentin Bryce, who is an attorney, was previously appointed governor of Queensland. Ms Bryce is also a proponent of Australian nationhood, as is Prime Minister Kevin Rudd.

In other news, an Australian politician was forced to resign on Sept 11, after having danced in his underwear at a party with workmates. Matt Brown, a state minister from New South Wales, admitted "having made a mistake" and that he was "embarrassed". The incident occurred at a celebration following a budget increase.

Australia’s center-right Liberal Party elected a new leader in mid-September, in response to the rising popularity of Labor Prime Minister Kevin Rudd. Malcolm Turnbull is a millionaire attorney famous for winning a case against the government of Margaret Thatcher, which included a former official of the British intelligence service. The new Opposition leader is also known for having been head of the Australian Republican Movement, which lost its 1999 fight for Australian nationhood. According to analysts, the latter may play against him, whereas the conservative wing has closest ties to the monarchy.

In October, the issue of reducing the number of immigrant workers entered the national debate. Given economic conditions facing the country, Australian Immigration Minister, Chris Evans, said the issue should be decided upon. The current program for skilled workers was established on the basis of a positive economic growth of the country and a lack of skilled workers. However, in proposing a review of the program, the minister stated that it is a complicated decision, considering the contribution of immigrants to the economy. "We know that they consume, buy properties and are a net positive for the budget." It is estimated that about 190,300 immigrants arrive to Australia between 2008 and 2009.

November marked the first anniversary of Kevin Rudd’s victory over the Liberal Party. During the past twelve months, the new PM has grown in popularity and is now known as "Kevin 24/7", for his relentless pace. His penchant for foreign travel has led others to call him "Kevin 747". Admiration for the PM’s work is largely reflected in a 68% approval rating, a number that exceeds even those taken near Election Day last year.

In foreign policy news, the Australian Parliament decided on Sept 18 to cancel a proposed sale of uranium to Russia. The decision came after suspicions that the material was to be used for military purposes by the Russians. The $800 million deal was brokered by former Prime Minister John Howard and Vladimir Putin in 2007. The majority Labour party in the Australian parliament had misgivings about Russia's commitment to the Nuclear Non-Proliferation Treaty. In a report issued by Labour, MPs felt that the deal should have been studied more closely before putting anything in writing.

During the APEC Summit this November in Lima, Australia and Peru requested Chilean support for their membership bid in the Transpacific Strategic Economic Partnership, better known as the P4. Chile, New Zealand, Singapore and Brunei currently make up the P4. The P4 is also negotiating with the United States, which has also expressed interest in being a member.

Economy: aggressive action

Economic stagnation marked the economic quarter in Australia. This is evidenced by the Reserve Bank of Australia’s decision to lower interest rates for the first time in 7 years. The rate dropped to 7%, from 7.25%, in order to promote trade and bolster financial confidence.

Later, on Sept. 24, the US Federal Reserve decided to make $30 billion available to central banks in several countries, including Australia. Australia, Denmark, Sweden and Norway benefited from the initiative aimed at strengthening money markets. Only a week prior to Sept 24, the Federal Reserve had arranged a similar measure for Canada, Japan, the United Kingdom and the European Central Bank, making $180 billion available. In this way, commercial banks in each country were given access to $30 billion, in the form of loans to increase the requirements for short-term financing.

But this was not the only measure of its kind. Nearly a month after the first cut, the Reserve Bank of Australian was again lowering interest rates, which were set at a surprisingly low 6%. This is the biggest cut made by the bank since May 1992. The move was supported by Prime Minister Rudd, who said that the measure would help maintain financial stability. This provision was taken despite the fact that Australian inflation reached 4.5%, a level much higher than the 2-3% expected by the government.

And the story does not end there. Four weeks later, the Reserve Bank lowered the rate for a third time, given the critical economic condition of the country. Thus, interest rates dropped to 5.25% on Nov 4. Finance Minister Wayne Swan stated: "This is the additional needed rate relief that Australian families and businesses need, given the current global financial crisis. It will strengthen our economy during this critical moment."

To this is added the $6.9 billion package that the Australian government allocated primarily to retirees, families with low and middle income and new home buyers. One of the hardest hit by the economic crisis has been the Australian dollar. Once one of the most traded currencies in the world, it depreciated 37% against the US dollar during the period late September to October 28. The Australian currency has also lost ground against the European currencies and the yen. It has been said that this is due in part to intervention by the Reserve Bank, but mainly to decreased demand for Australian commodities.

As regards news related to Chile, an important story ran Sept 3, when CODELCO signed a second joint exploration agreement with the Anglo-Australian firm, Rio Tinto. The agreement covers exploration for new resources in northern Chile, and studies conducted at the Estela and Paloma copper mines, where Rio Tinto owns 55% of the property with individual exploitation investments of $20 million in each mine. Under the agreement with state-run CODELCO, it is estimated that Rio Tinto could raise its participation to 60%.

Culture: controversy and terrorism

On Sept. 3, Australians awoke to a strange new story. A book for girls included didgeridoo lessons, the instrument of indigenous Australians. The publication caused anger among several indigenous leaders because tradition states that the instrument can only be played by males. The publisher, Harper Collins Australia, replied that it was unaware of the taboo and apologized for causing any offense. It added, however, that even within the Aboriginal community there were discrepancies regarding the issue.

On Oct. 7, about fifteen people were injured when a Qantas A-330 suffered a sudden change of altitude and had to make an emergency landing in north-western Australia. The plane had 313 on board and was in flight from Singapore to Perth. The police said that the most likely cause of the accident was severe turbulence. Technical failures were not ruled out, however.

The most important terrorism trial in the history of Australia ended September 15 with the conviction of seven Islamic men. The accused were found guilty of belonging to an extremist organization that planned a violent religious war. Among their targets was former Prime Minister John Howard. They group planned further attacks at major sporting events.

The jury also ruled that Abdul Nacer Benbrika, a cleric of Algerian origin, was the brain behind one of the plots aimed at forcing the Australian government to withdraw its troops from Iraq. Through the work of undercover police officers and recordings of telephone conversations, the 48-year-old cleric and his six followers were convicted of planning several terrorist attacks.

Just two months after the trial, another trial began involving five other Islamic citizens accused of plotting a terrorist attack. The prosecutors alleged that the defendants downloaded Internet information on how to build bombs and were in possession of several lethal chemicals to make explosives. The five men pleaded not guilty and it is believed that this trial may last up to a year.

On Nov 18 the epic film "Australia" was premiered. The film, directed by Baz Luhmann (Moulin Rouge) and starring Nicole Kidman and Hugh Jackman, became the most expensive production filmed on the continent. The story is about the Japanese bombing of the city of Darwin in 1942 and includes topics such as "the Stolen Generations", which refers to a government policy which sanctioned Aboriginal children being taken from their families and raised by adoptive parents.

In final news, a tragedy shocked Tasmania. 150 whales beached themselves along the coastline of the island. The Finned Pilot Whale is the name of the species. The whales were discovered on the beach with serious wounds caused by pointy stones. These whales pass through Tasmania in their migration from the Antarctic, so this type of incident is not entirely unprecedented. Despite the tragedy, nearly 30 whales were moved back into the water.