LL:ART: GOVERNMENT FIDDLES WHILE DOLLAR MELTS

[Communist Party of Australia]

The following articles were published in "The Guardian", newspaper
of the Communist Party of Australia in its issue of Wednesday,
March 21st, 2001. Contact address: 65 Campbell Street, Surry Hills.
Sydney. 2010 Australia. Phone: (612) 9212 6855 Fax: (612) 9281 5795.
CPA Central Committee: <[EMAIL PROTECTED]>
"The Guardian": <[EMAIL PROTECTED]>
Webpage: http://www.cpa.org.au>
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  NOSEDIVE:  Govt fiddles while dollar melts

Australia's foreign debt has skyrocketed to more than $300
billion -- a record 46 percent of Gross Domestic Product. The Australian
dollar is at a record low, unemployment remains high, investment is
slack, enterprises are closing down, there is a crisis of
overproduction, consumer and business confidence are low. The economy
contracted in the last three months of 2000. This situation will be
worsened by corporate mergers and takeovers, but Prime Minister Howard
simply oozed enthusiasm at this week's announcement of the $57 billion
merger of BHP and the British resources giant Billiton.

by Anna Pha

So what is the Government doing about the economic situation? Howard
describes the growing crisis as it being only natural that currency
speculators should rush to the US dollar, because he says, "America
has the strongest economy in the world".

And the Billiton-BHP mega merger? "This is a great resource opportunity
for Australia", he said. "We are going to have centred in
Melbourne the largest resource company in the world."

On the contrary, the merger will be a massive profit opportunity for
the new giant entity's major shareholders. And its odds on that its
headquarters will, in the not-too-distant future, be moved to Britain.

Furthermore, the merger deal, which took place with the Government's
blessing, has put thousands more BHP jobs on the chopping block.

The headline on the front page of "The Australian" newspaper
got the gist of it: "Mining giant quits steel-making to invest
offshore".

So, no matter how hard Howard talks up the economy, it will not prevent
the looming recession -- or more likely depression.

Privatisation, tax cuts for the rich, real wage reductions, employer
theft of workers' entitlements, cuts to government spending, rising
unemployment and the GST have all contributed to the present crisis.

The GST, in particular, has significantly reduced the capacity of
people to purchase goods and services.

As a result of these policies, the anarchy of the "free markets"
now determines the value of our currency and capital flows in and
out of Australia. They decide what industries Australia will have,
what we import and what we export.

Governments, including Australia's, have conceded the key economic
levers to the transnational corporations. The Australian dollar has
fallen against the yen, the euro and the pound, not just the US dollar.
The dollar has fallen by around 20 percent against major currencies
since early 2000.

While exports such as wheat, wool, coal, meat, and gold become cheaper
on international markets, imports will be more expensive.

Australia is heavily reliant on imports, spending $27 billion in 2000
on imports for capital equipment (computers, telecommunication
equipment, cars and trucks, etc) and $57 billion for production inputs
such as parts, fuel, chemicals and paper.

Consumer imports - clothes, books, electrical goods, food, etc - cost
another $34 billion.

Many of these products were once manufactured in Australia, but economic
rationalist policies and lack of government planning has left Australia
dependent on imports and heavily exposed to international developments.

The world is awash with commodities amidst a crisis of "overproduction"
-- there are not the consumers with the means to buy what is produced.
Globally, manufacturing is operating at around 60 percent of capacity,
enterprises are being closed and workers laid off.

The US economy lost around 142,000 jobs in January on top of 133,000
last December.

Its stock market is already faltering. The Nasdaq Index -- an indicator
of the high tech sector of the economy -- has shrunk by more than
50 percent in the last 12 months.

Business, the financial sector and household debt have rocketed. The
US's foreign debt and balance of payments are also at record levels,
and accelerating.

The big question is: what will happen when investor confidence subsides,
when the stock market falls further?

Australia is not going to be able to rely on trade with the US
to stave off recession or depression. It is far more likely that when
the US economy takes a nosedive, which is appears to be poised to
do, then Australia will be underneath when it lands.
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