Achieving and Maintaining Full Employment

In 1951, the year Sir Roland Wilson became Secretary to the Treasury, the terms of trade rose to their highest level on record. While the terms of trade fell back in the following year, they did not fully retrace their rise for a number of years. Around this time, Australia entered a long period of sustained economic growth, with the unemployment rate rarely rising above 3 per cent. Today the Australian economy is growing strongly, supported by the highest terms of trade since Sir Roland was Treasury Secretary, and the unemployment rate is at a level many thought could not be achieved unless accompanied by rampant growth in wages and prices. In the 2007 Sir Roland Wilson Foundation Lecture, Ken Henry compares the structure of the Australian economy in the 1950s and 1960s with that of today, and discusses the reasons for the changing focus of economic policy.