THE AUSTRALIAN ECONOMY
Australia has a thriving and competitive economy, a high GDP per capita and excellent quality of life. The Australian economy is Western in style and its main industries include mining, industrial and transportation equipment, food processing, chemicals and steel. Australia also has a considerable export market, a low rate of inflation, and low unemployment. Australia’s financial year begins on the 1st of July.
The History of the Australian Economy
Australian economic development is historically linked to the agriculture industry, in particular the production of wool- in fact, it was once said that ‘Australia rides on the sheep’s back’. The gold rush of the 1850s changed the economy slightly, but the influx of immigrants exhausted the supply of gold and Australia reverted to wool again. Wool remained the backbone of the Australian economy until the until the early 1900s. At the beginning of WWII the manufacturing industry began to grow and the standard of living doubled as a result. The economy remained relatively stable well into the 1970’s. In July 2000, the Prime Minister John Howard introduced a Goods and Services Tax (GST) in order to reduce the need for the various state taxes.
The Australian Dollar (AU$)
The Australian dollar is a stable and reasonably strong unit of currency. It has been the official currency of Australia since 1966, replacing the Australian pound (£) and introducing decimal currency. It is the 6th most traded currency in the foreign exchange markets. All Australian coins depict Queen Elizabeth II on one side.
GDP (Gross Domestic Product)
Gross Domestic Product (GDP) refers to the market value of the goods produced in a country over a period of time. Australia’s GDP is very high- higher than that of the UK, Germany and France. In 2005, Australia’s GDP per capita was AU$31,600. Australia’s GDP can also be divided by industry. For example, in 2004, agriculture accounted for 3.8% of the GDP; industry accounted for 26.2%, and services for 70%.
Quality of life
Due to its strong economy, Australia is one of the best places in the world to work and live. The Economist Intelligence Unit Survey ranked Australia as the 6th best place to live world-wide, while the same survey determined that Melbourne was the best city in the world for expatriates. Australia was also ranked third in the United Nations Human Development Index.
Recession
Australia has managed to avoid recession since the early 90s. This stability is one of the reasons that the Australian dollar remains popular as an international currency. The Australian economy has also managed to escape the worst effects of the recent global economic slump.
Services – tourism, education, financial services
The service industry accounts for the majority of the Australian Gross Domestic Product (GDP) – about 69%. Within the service sector, tourism is one of the most important industries in Australia, as it provides employment, contributes $73 billion to the economy each year and accounts for at least 11% of total exports.
Agriculture
Agriculture is yet another significant part of the Australian economy, accounting for about 3% of the GDP, although historically it was far more important, representing 80% of the GDP as recently as the 1950s. At the moment, the agricultural sector is experiencing a lot of difficulty due to the current drought, particularly in NSW.
Exports
Australia’s exports for the financial year 2004/2005 totaled approximately AU$127.3 billion; exports are a significant part of the Australian economy.
Goods
The main goods exported by Australia include coal, gold, meat, wool, alumina, iron ore, wheat, machinery and transport equipment.
Markets
Australia’s most significant export markets are Japan (19.6%), China (10.2%), South Korea (7.7%), the United States (7.4%) and New Zealand (7.2%).
THE AUSTRALIAN GOVERNMENT
Australia’s government (also known as the Commonwealth Government or the Federal Government) is a Constitutional Monarchy, as the powers and procedures of the government are determined by a constitution, but the official Head of State is the British Monarch, Queen Elizabeth II. Australia is a federation, which means that government powers are divided between the central government and the six individual states and territories, and a number of external territories. Australia’s government is based on that of Britain – the Westminster Model – but some people say that it is becoming more and more like the American system of Government – that is, Washington. In 1980, Elaine Thompson (associate professor, school of politics & international relations at the University of New South Wales) referred to the Australian system of government as the ‘Washminster mutation’.
Federal Government
The Federal government is responsible for Australia as a whole, and its main role is in passing laws that affect the whole of Australia, although it does not have complete freedom in deciding which issues to pass laws on. Instead, the issues on which the Federal Government can pass laws are set out in section 51 of the Australian Constitution.
Legislature/Parliament
The Commonwealth Parliament comprises the Queen, the Senate, and the House of Representatives. The Queen is represented by the Governor-General, who usually uses his influence only on the advice of the Prime Minister. This is the part of the federal government that is responsible for voting on laws that affect the whole country, although these laws may cover only those issues that are managed by the Federal Government, not the state or local governments.
Executive
The executive is comprised of various members, most notably the Prime Minister and various Ministers of State. The executive is responsible for maintaining the laws passed by the legislature. Some members of the legislature are also members of the executive, and these members, called ministers, have responsibility for various areas of the law.
After a 11 year liberal government with prime minister John Howard, the current governing federal party is the Labour Party (since Nov 2007) and the prime minister is Kevin Rudd.
Judiciary
The judiciary is made up of the High Court of Australia and various Federal courts. The State courts are independent of the judiciary.
This is the legal division of the Federal Government. The judiciary takes responsibility for enforcing the laws passed and maintained by the other two parts of the Federal Government, although it is independent to them. The judiciary also helps to make sure that the executive and the parliament are acting appropriately.
State and Territory Government
Australia has six states: New South Wales (NSW), Victoria (VIC), Tasmania (TAS), Queensland (QLD), South Australia (SA), and Western Australia (WA). Each of the states has their own constitution, and the government of each state is divided into the same three sections as in the Federal Government- that is, Legislature/Parliament, Executive and Judiciary. Each state may pass their own laws on any issues not covered in section 51 of the Constitution. The head of each state government is known as the Premier. Each state also has a Governor, who exercises the monarch’s power in state matters.
Australia also has two self-governing territories: the Northern Territory (NT) and the Australian Capital Territory (ACT). These territories have been granted the right to self-govern. A parliament is elected locally to deal with a range of government matters.
If ever there is a conflict between state laws and Commonwealth laws, the Commonwealth laws will be followed.
Local Government
Like the State and Federal Governments, local governments have an executive and a parliament, but they have no judiciary. Local governments may also be known as local councils and their powers vary depending on the state or territory in which they are elected, although they tend to mostly deal with community needs such as garbage collection or town planning. There are over 900 local councils in Australia.
Political Parties
The two main political parties in Australia are the Liberal Party, led by Brendan Nelson, and the Labor Party, led by Kevin Rudd, although other parties are also represented in parliament, such as the Greens, the Nationals, and the Australian Democrats. Kevin Rudd, the leader of the Labour Party, has been in power since the 2007 election.