The Boom in Australia

Gathering in Canberra last week to celebrate their tenth year in office, the leaders of Australia's Liberal Party looked upon their nation's economic progress with warm and prideful eye. Said Prime Minister Robert G. Menzies: "The whole face of the land is being changed. No other country of comparable size or population in the world is so busy building its future." On the same day, a crowd of 1,400 in Sydney watched the opening of a $3,300,000 plywood factory spreading over 14 1/2 acres of onetime swampland; McCulloch Motors Corp. of Los Angeles announced that it would start making outboard motors in Australia; the Sydney Stock Exchange noted that share prices had risen to a level 33% higher than a year ago; and the government could say that unemployment was at 49,077, or barely 1% of the 4,000,000-man labor force.

The boom has given the 10 million Australians a standard of living (per capita income: $1,232) that ranks with that of the top nations outside the U.S., and is higher than Great Britain's. Australians eat more meat (nearly 300 Ibs. annually), consume more fruit, cereals and sugar than either Americans or Britons. Except for the U.S. and Canada, they own more motor vehicles (244 for every 1,000 people), enjoy more TV sets (70 for every 1,000) and telephones (200 per 1,000) than almost any other nation. All this Australia gets from a burgeoning industry and agriculture that are racing ahead in seven-league strides.

Some milestones of progress:

P: Gross national product has leaped from $4.9 billion to $13 billion in ten years, with a 6% increase in fiscal 1959 alone.

P: Industrial production has tripled to $10 billion, with a 162% increase in steel (to 3.2 million tons), 133 1/3% jump in electricity, a 100% jump in cement. In washing machines alone, Australia's appliance makers have gone from 6,500 units in 1948 to 181,400 last year.

P: Exports are up to $1.9 billion annually, with a 220% increase in minerals, themselves a $1 billion industry. At the same time, imports have been held to $1.8 billion as Australia supplies more of its own needs.

P:Population has grown at the rate of 2.2% annually, helped by a liberal immigration policy that has brought nearly 1,500,000 new Australians into the land since 1947 (TIME, Nov. 2).

Help for Free Enterprise. A large part of the credit for the growth goes to Prime Minister Menzies' government, which had the great good sense to help private enterprise uncover the riches of the country. A basic move by Menzies' Liberal government was to ensure peace with Australia's strike-inclined unions. Under the Labor government that preceded Menzies' Liberals, Australia's key unions, then mainly Red-dominated, all but paralyzed the nation by strikes. The situation became so bad during a Red-organized coal strike that the government ordered army troops to man the mines.

Menzies strengthened the powers of arbitration courts, also worked hard for better working conditions and labor-management relations. Result: Australia is now enjoying its quietest industrial relations in 24 years with only 185,000 working days lost from strikes in the first six months of 1959 v. 1,100,000 in 1956.

Immigration to crack production bottlenecks and bring new blood to the isolated country was another big factor. A third was a huge public works program that has spent $1.2 billion to standardize the nation's chaotic five-gauge railroad system, build new airports, roads, telephone and telegraph lines, and heavy utilities needed as a foundation for industry. The government's giant $1 billion hydroelectric project in the Snowy Mountains south of Canberra is already producing power, will ultimately generate 3,000,000 kw. and provide 1,800,000 acre feet of irrigation water for the states of Victoria and New South Wales.

The Menzies government wooed both domestic and foreign capital with tax concessions. Overseas capital was lured with such attractions as no capital gains tax, guarantees of repatriation of profits and assurances that the capital itself could be repatriated. Some critics argued that the breaks were too big. Menzies' answer is that the benign investment climate has encouraged so many businessmen to reinvest that 25% of Australia's national income is plowed right back into new expansion.

The Race to Invest. Foreign capital for every sort of enterprise has come in since 1954 at the rate of $225 million annually, some 85% of it from Britain and the U.S. Britain is still Australia's biggest partner, but the U.S. is coming up fast. In 1948 the U.S. had only $115 million invested in Australia; today the kitty amounts to $670 million, and the forecast is for $1 billion in U.S. capital by the end of 1960. All told, 880 U.S. firms now do business in Australia. How well they do is evident from the statistics: a ten-year profit of $477 million, or better than 400% realized on the original 1948 investment.

No fewer than four U.S. automakers, Willys, Ford, Chrysler and General Motors, are scrambling for shares of the growing auto market. G.M.'s Holden subsidiary began in 1948 to produce a small car for Aussie markets, sells 100,000 units annually and posted a profit last year of $34 million. National Dairy Products Corp. this year spent $1,600,000 on new plant, was able to declare a $1,800,000 profit, which covered its entire new investment. The story is the same for Cleveland's Lincoln Electric Co., which has nailed down 50% of the market for heavy electrical welding machinery; last year it gave its 148 employees $117,000 under a profit-sharing plan (Lincoln's employment waiting list: 2,000 people), has just opened a new $2,700,000 plant in Sydney and is working on still more expansion plans.

Handsome Profits. The one complaint that Aussies have about foreign capital is the lack of opportunity for local participation in the new companies. Only about 40 of the U.S. manufacturing subsidiaries are publicly owned, and of these only eleven have some degree of Australian ownership. But the Aussie who invests in a domestic company can make handsome profits on his own. In a land that is turning out its own diesel engines, railroad cars, jet aircraft and transistor radios, stocks are an investor's dream. Ansett Transport Industries, Clyde Industries (engineering), Broken Hill Proprietary Co. Ltd. (steel) are all up 50% in a year, while Colonial Sugar Refining has jumped 70% and Rothmans Ltd. (cigarettes) a whacking 320%.

The breadth and vitality of Australia's growing economy came clear over the past two years when the price of wool, that onetime boom-or-bust commodity, tumbled sharply on world markets. Export income from raw materials fell by 20%. But there was no severe recession, because industry, which now accounts for 38% of Australia's exports (v. 40% for wool), moved steadily ahead. As New York Stock Exchange President Keith Funston said recently after a trip to Australia: "They're more American than Americans. It is very much the way we were in this country about the turn of the century."

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