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Economy of Australia

Australia's economy is dominated by its services sector, yet it is the agricultural and mining sectors that account for the bulk of Australia's exports. Australia's comparative advantage in the export of primary products is a reflection of the natural wealth of the Australian continent and its small domestic market; 22 million people occupy a continent the size of the contiguous United States. The relative size of the manufacturing sector has been declining for several decades, but has now steadied at around 8.5% of GDP. The global recovery is putting upward pressure on prices for Australia's commodity exports, which is expected to cause a substantial rise in the terms of trade in 2010. The terms of trade were expected to rebound by around 25% by mid-2010, injecting $30 billion into the economy and helping to reinvigorate the mining sector and economic activity more generally.

Since the 1980s, Australia has undertaken significant structural reform of its economy and has transformed itself from an inward-looking, highly protected, and regulated marketplace to an open, internationally competitive, export-oriented economy. Key economic reforms included unilaterally reducing high tariffs and other protective barriers to free trade, floating the Australian dollar, deregulating the financial services sector, including liberalizing access for foreign banks, increasing flexibility in the labor market, reducing duplication and increasing efficiency between the federal and state branches of government, privatizing many government-owned monopolies, and reforming the taxation system, including introducing a broad-based Goods and Services Tax (GST) and large reductions in income tax rates.

Australia enjoys one of the highest standards of living in the G7. Australia's economic standing in the world is a result of a commitment to best-practice macroeconomic policy settings, including the delegation of the conduct of monetary policy to the independent Reserve Bank of Australia, and a broad acceptance of prudent fiscal policy where the government aims for fiscal balance over the economic cycle. Economic recovery is strengthening, with GDP forecast to grow by 3.25% in 2010-2011 and 4% in 2011-2012, leading to further reductions in the unemployment rate. The success of monetary and fiscal stimulus will help the budget return to surplus in 2012-2013, 3 years ahead of schedule. Net debt is expected to peak at 6.1% of GDP in 2011-2012, considerably below the previous forecast of 9.6% of GDP.

The unemployment rate was expected to fall from its early-2010 level of 5.3%, down to 5% in late 2010-2011, and 4.75% in late 2011-2012, around levels consistent with full employment. Labor market participation has remained at around 65%. Both the federal and state governments have recognized the need to invest heavily in water, transport, ports, telecommunications, and education infrastructure to expand Australia's supply capacity. The largest river system in Australia, the Murray-Darling, and related coastal lakes and wetlands in South Australia are critically threatened, and the government has developed a plan to improve irrigation infrastructure and efficiency and buy back unused water allocations along the river.

A second significant issue is climate change. A report commissioned by then-Prime Minister John Howard recommended a domestic carbon emissions trading scheme and that Australia take an active role in developing a future global carbon emissions trading system. Prime Minister Kevin Rudd had planned to introduce a domestic carbon trading system by 2011 to reduce emissions by 5% from 2000 levels by 2020. However, the Rudd government later deferred legislation establishing an emissions trading scheme until 2013, at the earliest.

The Australia-U.S. Free Trade Agreement (AUSFTA) entered into force on January 1, 2005. The AUSFTA was the first FTA the United States concluded with a developed economy since the U.S.-Canada FTA in 1988. Australia also has FTAs with New Zealand-ASEAN, Singapore, Thailand, and Chile, and is pursuing other FTAs, including with China, Japan, Malaysia, and South Korea. A burgeoning trade relationship marked by ongoing, multi-billion dollar resource export contracts and rising manufactured imports has driven FTA negotiations with China.


GDP (2009-2010 estimate): A$1.2 trillion (U.S. $1.1 trillion).

Inflation rate (year to March 2010): 2.9% per year.

Reserve Bank official interest rate (May 2010): 4.5%.

Trade: Exports ($176.7 billion, 2009 estimate)--coal, iron ore, gold, meat, wool, alumina, wheat, machinery and transport equipment. Major markets--China, Japan, South Korea, India, U.S. ($8.7 billion), and U.K. Imports ($180.5 billion, 2009 estimate)--machinery and transport equipment, computers and office machines, telecommunication equipment and parts; crude oil and petroleum products. Major suppliers--China, United States ($20.05 billion), Japan, Thailand, and Singapore.

Exchange rate (2010): U.S. $1 = A$1.11 (average for 2010 of A$1 = U.S. $0.90).

Geography of Australia

Location: Oceania, continent between the Indian Ocean and the South Pacific Ocean Geographic coordinates: 27 00 S, 133 00 E Map references: Oceania Area: total: 7,686,850 sq km land: 7,617,930 sq km water: 68,920 sq km note: includes Lord Howe Island and Macquarie Island Area-comparative: slightly smaller than the US Land boundaries: 0 km Coastline: 25,760 km Maritime claims: contiguous zone: 24 nm continental shelf: 200 nm or to the edge of the continental margin exclusive economic zone: 200 nm territorial sea: 12 nm Climate: generally arid to semiarid; temperate in south and east; tropical in north Terrain: mostly low plateau with deserts; fertile plain in southeast Elevation extremes: lowest point: Lake Eyre -15 m highest point: Mount Kosciusko 2,229 m Natural resources: bauxite, coal, iron ore, copper, tin, silver, uranium, nickel, tungsten, mineral sands, lead, zinc, diamonds, natural gas, petroleum Land use: arable land: 6% permanent crops: 0% permanent pastures: 54% forests and woodland: 19% other: 21% (1993 est.) Irrigated land: 21,070 sq km (1993 est.) Natural hazards: cyclones along the coast; severe droughts Environment-current issues: soil erosion from overgrazing, industrial development, urbanization, and poor farming practices; soil salinity rising due to the use of poor quality water; desertification; clearing for agricultural purposes threatens the natural habitat of many unique animal and plant species; the Great Barrier Reef off the northeast coast, the largest coral reef in the world, is threatened by increased shipping and its popularity as a tourist site; limited natural fresh water resources Environment-international agreements: party to: Antarctic-Environmental Protocol, Antarctic Treaty, Biodiversity, Climate Change, Endangered Species, Environmental Modification, Hazardous Wastes, Law of the Sea, Marine Dumping, Marine Life Conservation, Nuclear Test Ban, Ozone Layer Protection, Ship Pollution, Tropical Timber 83, Tropical Timber 94, Wetlands, Whaling signed, but not ratified: Climate Change-Kyoto Protocol, Desertification Geography-note: world's smallest continent but sixth-largest country; population concentrated along the eastern and southeastern coasts; regular, tropical, invigorating, sea breeze known as "the Doctor" occurs along the west coast in the summer

Government of Australia

The Commonwealth government is a constitutional monarchy with a Constitution patterned partly on the U.S. Constitution, although it does not include a "bill of rights." Powers of the Commonwealth are specifically defined in the Constitution, and the residual powers remain with the states. Proposed changes to the Constitution must be approved by the Parliament and the people, via referendum.

Australia is an independent nation within the Commonwealth. Queen Elizabeth II is the head of state and since 1973 has been officially styled "Queen of Australia." The Queen is represented federally by a governor general and in each state by a governor. By convention, the governor general generally acts on the advice of the prime minister and other ministers. However the governor general has "reserve powers," including the power to dismiss ministers, last exercised in 1975.

The federal Parliament is bicameral, consisting of a 76-member Senate and a 150-member House of Representatives. Twelve senators from each state are elected for 6-year terms, with half elected every 3 years. Each territory has two senators who are elected for 3-year terms, concurrent with that of the House. Seats in the House of Representatives are allocated among the states and territories roughly in proportion to population. The two chambers have equal powers, except all proposals for appropriating revenue or imposing taxes must be introduced in the House of Representatives. Under the prevailing Westminster parliamentary system, the leader of the political party or coalition of parties that wins a majority of the seats in the House of Representatives becomes prime minister. The prime minister and the cabinet wield actual power and are responsible to the Parliament, of which they must be elected members. General elections are held at least once every 3 years.

Each state is headed by a premier, who is the leader of the party with a majority or a working minority in the lower house of the state legislature. (Queensland is an exception, with a unicameral parliament.) Australia's two self-governing territories have political systems similar to those of the states, but with unicameral assemblies. Each territory is headed by a chief minister who is the leader of the party with a majority or a working minority in the territory's legislature. More than 670 local councils assist in the delivery of services such as road maintenance, sewage treatment, and the provision of recreational facilities.

At the apex of the court system is the High Court of Australia. It has general appellate jurisdiction over all other federal and state courts and possesses the power of constitutional review.


Three political parties dominate the center of the Australian political spectrum. The Liberal Party (LP), nominally representing urban business interests, and its smaller coalition partner, the Nationals, nominally representing rural interests, are the more conservative parties. The Australian Labor Party nominally represents workers, trade unions, and left-of-center groups. While the Australian Labor Party, founded by labor unions, traditionally had been moderately socialist in its policies and approaches to social issues, today it is best described as a social democratic party. There is strong bipartisan sentiment on many international issues, including Australia's commitment to its alliance with the United States.

Julia Gillard first assumed the office of Prime Minister in June 2010 after Kevin Rudd lost the confidence of the Australian Labor Party because of declining poll numbers and a sense of poor implementation of government programs. Gillard called for an early election after only a month as Prime Minister.

The August 21, 2010, federal election resulted in a hung parliament, with neither the Labor Party, under the leadership of Gillard, nor the Liberal/National Coalition, led by Opposition Leader Tony Abbott, holding enough seats to form a government. The resurgent Coalition gained 8 seats from where it stood after the 2007 election, while the Labor Party lost 11 seats. After the election the Labor Party was able to secure the support of the Greens Party Member of Parliament (MP) and three independent MPs to gain a majority of 76 seats. The composition of the new Senate, to be seated in July 2011, is 34 seats for the coalition, 31 for the ALP, nine for the Greens, one for the Democratic Labor Party, and one independent. By gaining four seats the Greens now hold key swing votes and greater influence in the Senate.

Gillard is expected to pursue her campaign promises to build a national broadband network and make progress in addressing climate change. The Australian Government’s foreign policy shows strong continuity with that of its predecessors. Gillard has consistently stressed the importance of Australia’s relations with the U.S. and U.S. engagement in the Asia-Pacific region. Her government is committed to Australia’s role in Afghanistan, where it currently has about 1,550 troops.

Principal Government Officials

Governor General--Quentin Bryce

Prime Minister--Julia Gillard

Deputy Prime Minister--Wayne Swan

Treasurer--Wayne Swan

Foreign Minister--Kevin Rudd

Defense Minister--Stephen Smith

Trade Minister--Craig Emerson

Ambassador to the United States--Kim Beazley

Ambassador to the United Nations--Gary Quinlan

Australia maintains an embassy in the United States at 1601 Massachusetts Avenue NW, Washington, DC 20036 (tel. 202-797-3000), and consulates general in New York (212-408-8400), San Francisco (415-362-6160), Honolulu (808-524-5050), Los Angeles (310-229-4800) and Atlanta (404-880-1700).

Country name:

conventional long form: Commonwealth of Australia

conventional short form: Australia

Type: Democratic, federal-state system recognizing British monarch as sovereign.

Constitution: July 9, 1900.

Independence (federation): January 1, 1901.

Branches: Head of state is the governor general, who is appointed by the Queen of Australia (the British Monarch). Legislative--bicameral Parliament (76-member Senate, 150-member House of Representatives). The House of Representatives selects as head of government the Prime Minister, who then appoints his cabinet. Judicial--independent judiciary. Administrative subdivisions: Six states and two territories.

Political parties: Liberal, Nationals, Australian Labor, Australian Democrats, Australian Greens, and Family First. The Liberal Party and the Nationals form the governing coalition.

Suffrage: Universal and compulsory over 18.

Central government budget: FY 2003-04--$129.3 billion; FY 2004-05--$138.4 billion.

Defense: 1.9% of GDP for FY 2004-05.

Flag: On a blue field, U.K. Union Jack in the top left corner, a large white star directly beneath symbolizing federation, BR>The Commonwealth government was created with a constitution patterned partly on the U.S. Constitution. The powers of the Commonwealth are specifically defined in the constitution, and the residual powers remain with the states.

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History of Australia

Australia was uninhabited before stone-culture peoples arrived, perhaps by boat across the waters separating the island from the Indonesia archipelago about 40,000 years ago. Portuguese, Spanish, Dutch, and English explorers observed the island before 1770, when Captain Cook explored the east coast and claimed it for Great Britain (three American colonists were crew members aboard Cook's ship, the Endeavor).

On January 26, 1788 (now celebrated as Australia Day), the First Fleet under Capt. Arthur Phillip landed at Sydney, and formal proclamation of the establishment of the Colony of New South Wales followed on February 7. Many but by no means all of the first settlers were convicts, condemned for offenses that today would often be thought trivial. The mid-19th century saw the beginning of government policies to emancipate convicts and assist the immigration of free persons. The discovery of gold in 1851 led to increased population, wealth, and trade.

The six colonies that now constitute the states of the Australian Commonwealth were established in the following order: New South Wales, 1788; Tasmania, 1825; Western Australia, 1830; South Australia, 1836; Victoria, 1851; and Queensland, 1859. Settlement had preceded these dates in most cases. Discussions between Australian and British representatives led to adoption by the British Government of an act to constitute the Commonwealth of Australia in 1900. Since Federation, the Commonwealth Government has established two self-governing territories: the Northern Territory, 1978; and the Australian Capital Territory (where the national capital, Canberra, is located), 1989.

The first federal Parliament was opened at Melbourne in May 1901 by the Duke of York (later King George V). In May 1927, the seat of government was transferred to Canberra, a planned city designed by an American, Walter Burley Griffin. The first session of Parliament in that city was opened by another Duke of York (later King George VI). Australia passed the Statute of Westminster Adoption Act on October 9, 1942, which officially established Australia's complete autonomy in both internal and external affairs. Its passage formalized a situation that had existed for years. The Australia Act (1986) eliminated almost all remaining vestiges of British legal authority.

People of Australia

Australia's indigenous inhabitants, a hunting-gathering people collectively referred to today as Aboriginals and Torres Straits Islanders, arrived more than 40,000 years ago. Although their technical culture remained static--depending on wood, bone, and stone tools and weapons--their spiritual and social life was highly complex. Most spoke several languages, and confederacies sometimes linked widely scattered tribal groups. Indigenous population density ranged from one person per square mile along the coasts to one person per 35 square miles in the arid interior. When Captain James Cook claimed Australia for Great Britain in 1770, the native population may have numbered 300,000 in as many as 500 tribes speaking many different languages. In 2006 the indigenous population was approximately 517,200, representing about 2.5% of the population. Since the end of World War II, the government and the public have made efforts to be more responsive to aboriginal rights and needs, most recently with Prime Minister Kevin Rudd's historic apology to the indigenous people in February 2008 which included a pledge “to close the gap that lies between us in life expectancy, educational achievement and economic opportunity.”

Immigration has been vital to Australia's development since the beginning of European settlement in 1788. For generations, most settlers came from the British Isles, and the people of Australia are still predominantly of British or Irish origin, with a culture and outlook similar to those of Americans. Non-British/Irish immigration has increased significantly since World War II through an extensive, planned immigration program. Since 1945, 7 million migrants have settled in Australia, including 700,000 refugee and humanitarian entrants. About 80% have remained; 24%--almost one in four--of Australians are foreign-born. Britain, Ireland, Italy, Greece, New Zealand, and the former Yugoslavia were the largest sources of post-war immigration. In the year to June 2009, New Zealand was the largest source country for permanent migrants to Australia, with Britain, India, China, and the Philippines making up the rest of the top five. Australia's humanitarian and refugee program of about 13,000 per year is in addition to other immigration programs. In recent years, refugees from Africa, the Middle East, and Southwest Asia have comprised the largest element in Australia's refugee program.

Although Australia has fewer than three people per square kilometer, it is one of the world's most urbanized countries. Less than 2.5% of the population lives in remote or very remote areas.

Cultural Achievements

Much of Australia's culture is derived from European roots, but distinctive Australian features have evolved from the environment, aboriginal culture, and the influence of Australia's neighbors. The vigor and originality of the arts in Australia--film, opera, music, painting, theater, dance, and crafts--have achieved international recognition.

Australian actors and comedians such as Nicole Kidman, Russell Crowe, Rachel Griffiths, Cate Blanchett, Geoffrey Rush, Hugh Jackman, Naomi Watts, the late Heath Ledger, Simon Baker, and Dame Edna Everage (Barry Humphries) have achieved enormous popularity in the United States. Directors such as Peter Weir, Philip Noyes, and Russell Mulcahy, the conductor Sir Charles Mackerras, and singers and musicians such as Olivia Newton-John, The Wiggles, AC/DC, Dame Joan Sutherland, Dame Nellie Melba, and Kylie Minogue are well known.

Australian artists with international reputations include Sidney Nolan, Russell Drysdale, Pro Hart, and Arthur Boyd. Writers who have achieved world recognition include Thomas Keneally, Colleen McCullough, Nevil Shute, Morris West, Jill Ker Conway, Peter Carey, Robert Hughes, Germaine Greer, and Nobel Prize winner Patrick White.

In sports, Australian athletes are internationally renowned, particularly in swimming, diving, cricket, netball, tennis, rugby, rugby league, and golf. Australia's share of Olympic medals and world titles is larger than its share of the world's population.

Nationality: Noun and adjective--Australian(s).

Population (May 2010 est.): 22.3 million.

Annual population growth rate: 2.1%.

Religions (2006 census): Catholic 26%, Anglican 19%, other Christian 19%, other non-Christian 1%, Buddhist 2.1%, Islam 1.7%, no religion 19%, and not stated 12%.

Languages: English.

Education: Years compulsory--to age 16 in all states and territories except New South Wales and the Northern Territory where it is 15, and Western Australia where it is 17. Literacy--over 99%.

Health: Infant mortality rate--4.7/1,000. Life expectancy--males 78.7 yrs., females 83.5 yrs.

Work force (10.8 million): Agriculture, fishing and forestry--3.25%; mining--1.6%; manufacturing--9.1%; retail trade--10.7%; public administration, defense, and safety--6.2%; construction--9%.