The lucky country

Australia’s reputation as the lucky country has taken a beating this year with widespread bushfires and floods.

The news it’s beating the recession has helped to counter that, but is it luck?

The Age puts it down to two factors:

One is the economic story . . . Stunningly high coal and iron ore prices, a decent wheat harvest and the Federal Government’s rapid-fire stimulus have all done their bit to shield Australia from the worst of the crisis.

Yet only partially: output per head, the economy’s real bottom line, fell 1.6 per cent in the year to March. Unemployment has already surged by 175,000. We are part of the global recession.

But in one important way, we are not part of the global financial crisis. Our financial system has not collapsed. The Government has had to offer guarantees for bank debt . . . but unlike other governments, it has not had to provide capital to prop up the banks. The smaller banks are experiencing turbulence, some of it heavy. But the Big Four remain AA rated and highly profitable — a reminder to banks in other Western countries of how good life used to be.

Given most of our banks are Australian owned there’s some reassurance for New Zealand in this too.

Through the crisis, Australia has maintained a kind of normality. When the storm came, our house was found to be built on rock, not sand. . .

In other countries, the global financial crisis left the financial system broken: not here. Why not?

There is a broad consensus on what went right. Insiders and onlookers agree that a range of factors lay behind this success story. Some of it was luck. Some of it was good management. Some of it was good regulation. And some was due to all of these interacting in an environment that sustained traditional banking and made it profitable.

The article is worth reading in full so I’ll leave it there and finish with three questions:

* Do most of the factors which have kept Australia’s financial system fairly stable apply here?

* If our largest trading partner is growing, albeit by a very small amount, is it good for us too?

*We don’t have Australia’s mineral resources but we do have water to grow grass to feed a hungry world which our neighbour doesn’t. What’s stopping us from being a lucky country too?