During the last thirty years the economic system which was constructed by Australians at the time of federation became untenable. That model had two essential ingredients and has therefore been described as a dual economy. On the external account, and at first within the British imperial system, Australia exported primary products and imported manufactured goods and capital equipment. It borrowed external funds to develop an appropriate infrastructure. It was able to do this because world demand for its primary products was buoyant during the late nineteenth and much of the first three-quarters of the twentieth century. In addition, changes in technology allowed it to add progressively to the catalogue of primary products – at first wool and gold – which it sold on the world market as refrigeration added meat, canning added fruit, and steamships cheapened the cost of transporting much more. After 1945 new mineral products and then energy sources were added to these categories.

The other side of this dual economy was the domestic market. The internal distribution of the economic surplus generated externally was determined by protection of domestic industry, state determination of wage rates, and the regulation of economic activity. The resulting high standard of living was achieved from the external surplus and despite domestic regulation. The regulation of the internal economy may well have achieved a more egalitarian society, a more widely settled population and other nation-building objectives, and an economy which was more broadly based and self-sufficient. But it did so at the cost of a lower level of national efficiency and economic growth.