Doing Business in Australia - Overview of Australia

GEOGRAPHY, POPULATION AND CLIMATE

Australia is in one of the world's fastest-growing economic regions: Asia Pacific. Spanning some 7.7 million square kilometres, it is the world's sixth largest country.

The population of nearly 23 million is principally of British, Irish and Scottish descent and has a median age of 36.9 years ¹. Since the mid-20th century, Australia's immigrant intake has substantially come from eastern, central and southern Europe, the Middle East and Asia. Australia's native Aboriginals make up less than 2.5%².

While Australia's national language is English, 25% of its residents were born overseas ³. This multicultural nature commands newspapers, radio stations and television programs that cater for a variety of ethnicities. The country is a federation divided into six states (New South Wales, Queensland, South Australia, Tasmania, Victoria and Western Australia) and two territories (the Australian Capital Territory and Northern Territory).

It is highly urbanised, with most people living in cities and towns. In addition, because of its low inland rainfall, the population is concentrated on the coast and particularly in Australia's southeastern corner. More than a third lives in its two major cities: Sydney and Melbourne.

Largest urban regions

Australia's climate ranges from tropical in the north to temperate in the south. In the southern states, winters are cool to cold. Snow falls only on the mountains. Average temperatures range from 4°C to 28°C⁴ and, being in the southern hemisphere, Australia's seasons are the reverse of those in the north.

GOVERNMENT

The Federal Government participates in governing Australia along with six state, two territory and a number of local governments. Members of federal and state parliaments and local government councils are elected through compulsory voting by everyone over 18.

Australia continues to be a constitutional monarchy with an Australian Governor-General, representing HRM Queen Elizabeth II, appointed by the elected Prime Minister and sanctioned by the Monarch.

Federal Government

Federal Parliament comprises two houses, the Senate and the House of Representatives.

Two main political groupings, comprising three political parties, exist – Labor and the Liberal/National Coalition – both of which are broadly pro-business.

Government is formed by the grouping that wins control of the House of Representatives, which consists of 150 members. Effectively, government is run by the Cabinet, an executive group chosen from ruling party members.

Elected on a state-by-state basis and voted on a proportional basis, the Senate contains representatives from both minor and major parties, and some independents.

Australia's current Prime Minister is Julia Gillard, federal leader of the Australian Labor Party, in office since June 2010.

State governments

All states except Queensland have two houses of parliament. As at the federal level, Labor, Liberal and National parties dominate.

State governments primarily govern the day-to-day lives of most Australians, covering areas including health, education, energy, mineral resources and agriculture, and retain all powers other than those vested by the Constitution to the Federal Government.

State or territory laws apply to people, businesses and events within the state or territory and to its residents. Some state powers, for example corporations law, have been ceded federally.

Local governments

Local governments have limited powers, derived from the states. They govern planning, local environment and other local issues. Elected by the residents of the municipality, local governments are generally less party political than others.

The law and governments

Federal Parliament is constitutionally empowered to make laws in certain areas including foreign affairs, defence, communication, currency, trade and commerce, banking, insurance and taxation.

In some of these, power is shared with state or territory parliaments; while in others, power is held exclusively at federal level. Where both federal and state governments may legislate, and in the case of conflict, Australia's Constitution provides that Commonwealth (federal) law prevails.

Only the Federal Government is empowered to impose customs and excise duties and levy income tax, sharing the proceeds of this tax with states in line with a formula negotiated by both.

SYSTEM OF LAW

Australia's legal system is a common law system, similar to that of Britain. Federal Parliament may pass statutes and make regulations under statutes to deal with specific issues. This is subordinate legislation and must be tabled in parliament. A body of common law is developed and interpreted by a judiciary, which also has the role of interpreting statutes and regulations.

Courts are operated at federal and state levels. Judges are appointed by federal and state governments and serve until retirement age unless removed for misconduct. A comprehensive appeals system exists at both levels.

Australia's legal profession is modelled on the British system and most states distinguish between barristers, who mainly appear in court, and solicitors, who are professionals authorised to practice law, conduct lawsuits and give legal advice to their clients.

CURRENCY

The Australian dollar (AU$) contains 100 cents (c). It comes in denominations of $100, $50, $20, $10 and $5. Coins exist for $2 and $1; and 50c, 20c, 10c and 5c. The currency floats freely and trades internationally.

INTERNATIONAL TIME ZONES

Three time zones exist in Australia.

The eastern zone covers the Australian Capital Territory, Queensland, New South Wales, Tasmania and Victoria and is 10 hours ahead of Greenwich Mean Time (GMT).

The central zone, covering South Australia and the Northern Territory, is nine-and-ahalf hours ahead of GMT.

Western Australia is eight hours ahead of GMT.

Daylight saving time

All states and territories except the Northern Territory, Western Australia and Queensland switch over to daylight saving time from October to March, putting them one hour further ahead of GMT during these months. Daylight saving time in the Australian Capital Territory, New South Wales, South Australia, Tasmania and Victoria finishes on the first Sunday of April.

AUSTRALIA'S ECONOMY

Australia has a prosperous market economy and a Gross Domestic Product (GDP) comparable to industrialised western European countries. With stable economic and political climates, it offers a very low short-term trading risk.

Labour force

In November 2011, there were 11.5 million people in the Australian labour force, of whom a quarter were born overseas. The labour force participation rate of people born overseas was 59.3%, compared with 68.4% for people born in Australia ⁵.

Industries and resources

Australia has a range of natural resources including iron ore, bauxite, coal, gold, uranium, nickel, zinc, oil, natural gas and liquefied petroleum gas. Major agricultural products include beef, wool, wheat, barley, sugar, fruit, cotton, dairy and wine. Major manufacturing industries include machinery and equipment manufacturing and food, beverage and tobacco manufacturing.

Japan, China, Republic of Korea, New Zealand and the US are Australia's principal export markets, consuming 59.9% of Australia's exports ⁶. Most of Australia's imports are sourced from the US, China and Japan.

Historically regarded primarily as a producer of agricultural commodities, minerals and energy, Australia's services sectors now contribute the most to GDP. However while services remain the backbone of Australia's economy, the Australian mining industry has been responsible for much economic growth over the past 10 years.

Role of the private sector

The private sector has become increasingly involved in providing and managing infrastructure, encouraged by federal and state governments. Privatised assets include gas and electricity utilities, telecommunications and road, rail and air transport.

The Federal Government still owns and operates the mail system and many states continue to own gas and electricity assets and health care providers. Many local authorities own and operate water utilities.

A number of federal- and state-owned enterprises operate as if subject to income tax under a regime known as the National Tax Equivalents Regime, a system designed to create a more level playing field.

Structural reform and technology

Non-tariff trade barriers have been removed and tariffs reduced, increasing competition. The 1995 National Competition Policy has also contributed to this.

Reforms have been implemented in many industries, including electricity generation and rail freight, and there has been structural reform on the waterfront to improve efficiency and reduce costs.

Australia's regulatory environment is business-friendly. Of the top 30 Organisation for Economic Cooperation and Development countries, it has the fewest restrictions on product markets, least public ownership of business and least restrictive impact of regulation on economic behaviour ⁷. Australia also ranks highly in terms of facilitating competitive business and for e-readiness, internet use, IT infrastructure and skills.

Footnotes

¹ www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/1301.0Feature+Article7012009%E2%80%9310
² www.abs.gov.au/ausstats/abs@.nsf/PrimaryMainFeatures/4705.0
³ www.abs.gov.au/AUSSTATS/abs@.nsf/mediareleasesbyReleaseDate/35A203AB6DD3CA0BCA257600002314F7?OpenDocument
⁴ www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/A0DFD1E32C0ADFA8CA25773700169C26< ⁵
www.abs.gov.au/AUSSTATS/abs@.nsf/mf/6202.0
⁶ www.dfat.gov.au/aib/trade_investment.html
⁷ www.austrade.gov.au/Invest/Why-Australia/Business-Friendly-Regulatory-Environment/default.aspx