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The sugar hit from the Rudd government's $10 billion stimulus package should provide a timely jolt to an economy running low on energy, The Australian said in its early Thursday morning edition. P

The sugar hit from the Rudd government's $10 billion stimulus package should provide a timely jolt to an economy running low on energy, The Australian said in its early Thursday morning edition.

Beyond that, Australia's chances of surviving the international downturn have been considerably enhanced by the structural reforms introduced by the Hawke, Keating and Howard governments. The same policies that helped accelerate the upside will now help cushion the downside.

John Howard's biggest contribution to this task is likely to be the policy that contributed to his downfall - workplace reform. His legacy is an industrial system that built on the reforms of the Hawke and Keating years to bury centralised wage fixing, and created flexible individual employment contracts.

The reforms of the 1996 Workplace Relations Act, enhanced a decade later by Work Choices, passed their first test during the boom years when unemployment was reduced to 30-year lows. The next test of Mr Howard's workplace reforms is about to begin as the economy and labour demand slow.

Unemployment is forecast to increase to about 6 per cent in the short to medium term. But workplace agreements unshackled from the rigidity of awards should make falling employment less painful than in the last major slowdown in the early 1990s, when it hit 10.8 per cent.

Employers and workers will have the flexibility to negotiate reduced hours and pay in straitened circumstances. That at least is the theory. The Australian said its bet was that it will work.

The Daily Telegraph said that when bad news happened overseas during previous eras, it would take the time of a ship's journey to reach Australia. "Once here, the news would make its way around the colony only as fast as a horse's gallop."

A market collapse in New York City might then have taken months to become widely known in Australia's emergent business community.

Now, bad news happens in real time, no matter where you are. Interlinked economies rise and fall as one. Collapses (and recoveries) on Wall Street are mirrored on the local stock market.

Likewise, we are now quickly feeling the material effects of those collapses.

In an odd historical twist, schools run by the Catholic Church - not an institution many would think of as ultra-modern - are among those which have moved quickest to counter this very modern crisis.

This should also serve as a wake-up call to many who imagine this downturn will quickly pass. The Catholic school system is not prone to acting in panic or haste.

All signs point to a struggle of some serious duration.


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