Early 1990s recession in Australia
The early 1990s recession saw a period of economic downturn affect much of the world in the late 1980s and early 1990s. The economy of Australia suffered its worst recession since the Great Depression.
Financial crises and collapses[edit]
A number of financial institutions failed around Australia, including the State Bank of Victoria, the State Bank of South Australia, the Teachers Credit Union of Western Australia, the Pyramid Building Society as well as several merchant banks, a mortgage trust, and a friendly society.[2]
In 1990, Victoria's Pyramid Building Society collapsed with debts in excess of $2 billion. With Victoria deeply in debt, Labor Premier John Cain resigned and Joan Kirner was elevated to the post of Premier of Victoria. Melbourne businessman Christopher Skase's business empire crashed spectacularly and he fled to Majorca in Spain. The Liberal-National Coalition, led by Jeff Kennett was swept into office in a 1992 landslide victory and commenced a wide-ranging program of expenditure cuts, privatisation of public assets, and economic reform to reduce government debt and rejuvenate the economy.
The State Bank of South Australia, owned by the Government of South Australia, collapsed in 1991. The bank had been a beneficiary of the commercial property boom of the 1980s, but by February 1991 the Bannon Labor government had to launch a $970 million bailout due to its bad debts, and the bank's debts soon reached $3 billion. Premier Bannon resigned after appearing at a Royal Commission into the affair.[12]
With Western Australia suffering at the end of the 1980s boom, the Labor Party replaced Premier Brian Burke firstly with Peter Dowding and then Carmen Lawrence; the subsequent WA Inc investigation saw Burke jailed.[13] West Australian high flying businessman Alan Bond was declared bankrupt in 1992 and jailed in 1997 for corporate fraud.[14]
Aftermath[edit]
Following the early 1990s recession, Australia experienced a record period of economic growth.
Speaking in 2006, former Reserve Bank Governor Ian Macfarlane said that a beneficial legacy of the 1990s recession was a lasting reduction in inflation.[19]
The Liberal-National Coalition government of John Howard was elected in a landslide victory in 1996. It reduced government expenditure, prioritised a return to Budget surplus, and instigated anti-union industrial relations reforms. Following the 1998 Election, introduced a revised Goods and Services Tax. Inflation and interest rates fell. Between 1996 and 2005, unemployment fell from over 8% to 5%.[20] To strengthen the financial reporting framework for the financial sector, the Howard government introduced the Corporations Act 2001 and Corporate Law Economic Reform Program Act 2004, following the recommendations in the Report of the HIH Insurance Royal Commission released in April 2003.[21]