Today we took the train to Martins Place which is one of the most iconic public places in Australia. It is Sydney’s largest pedestrian area in the heart of the business district. We made our way to the American Consulate where we had to go through security similar to an airport. We entered a room on the 59th floor which had an amazing view of the harbor. Then we were introduced to Chris Corkey who is an economic officer for the United States who was prepared to talk to us about what the consulate does and current relations in Australia. He explained that the American Consulate handles many things including voting for American who are abroad, pregnant Americans wanting their child to be born as an American citizen when abroad, passports, visas, Americans in danger, as well as other things. He mentioned that they pretty much were the “eyes and ears for America”. It represents American interests and assists U.S. citizens in the Australian states of New South Wales and Queensland. He also talked highly about the relationship between the U.S. and Australia, saying that the relationship is so good that the U.S. tries to model their other relations from Australia. He talked about how the U.S. and Australia have the Free Trade Agreement of 2005 which, according to the article from the office of the United States Trade Representative website, stresses that this is significant because 99 % of U.S. manufactured exports to Australia will become duty-free immediately upon entry. This is the most significant immediate reduction of industrial tariffs ever achieved in a U.S. FTA and will provide benefits for Americas manufacturing workers and companies. This also helps the wine industry specifically because, according to wine to the USA, tariff reductions through the FTA are important in price competitiveness.
At the Reserve Bank of Australia we heard Richard Finlay, senior economist, talk about monetary policy, the global crisis and what the bank does with inflation and interest rates. Monetary policy, as defined by the Reserve Bank of Australia, involves setting the interest rate on overnight loans in the money market. The global financial crisis has been less severe on Australia. According to our reading, Australia has been dealing with the crisis by using a sustained effort at promotes regulatory reform. This regulation has been improved by getting transportation, energy, water and infrastructure to establish robust and competitive markets. Australia’s monetary and fiscal policy has shielded businesses and citizens by rebounding Asian economies. This is not at odds with the banks goal of reducing inflation because Australia still has a strong economy. From Richard Finlay’s presentation he talked about the strength of the Australian economy and how that makes the interest rates higher which pushes down inflation. The interest rates are different between the U.S. and Australia because of the strength of their economy.
According to the Reserve bank of Australia there have been some significant changes in Australian exports in the past couple of years. From 2000 to 2007 coal has risen from 16.2% to 26.7%. Education also rose from 2.9% to 5.9%. Tourism has gone down from 7.2% to 5.4%. These are huge differences in a span of 7 years and poses new opportunities and threats to the Australian economy. There are some significant differences between the Australian Central Bank and the U.S. Federal Reserve. Their economy is smaller, the treasury and the Federal Reserve have a closer relationship, Australia’s firm has more economists, Australia has one of the highest retirement funds and it’s easier for the U.S. to run big deficits because that economy is so large.
For the afternoon we got lunch at Martins Place and then headed back to the apartment to take naps before having a grill out with the entire group. After grilling the group went to HOM the largest club in Sydney which was a blast!
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