Economy of Australia
Encyclopedia
- Throughout this article, the unqualified term "dollar" and the $ symbol refer to the Australian dollarAustralian dollarThe Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu...
.
The economy
Economy
An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...
of Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
is a developed
Developed country
A developed country is a country that has a high level of development according to some criteria. Which criteria, and which countries are classified as being developed, is a contentious issue...
, modern market economy
Market economy
A market economy is an economy in which the prices of goods and services are determined in a free price system. This is often contrasted with a state-directed or planned economy. Market economies can range from hypothetically pure laissez-faire variants to an assortment of real-world mixed...
with a GDP of approximately US$1.23 trillion. In 2011, it was the 13th largest national economy by nominal GDP and the 17th largest measured by PPP adjusted
Purchasing power parity
In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates...
GDP, representing about 1.7% of the World economy
World economy
The world economy, or global economy, generally refers to the economy, which is based on economies of all of the world's countries, national economies. Also global economy can be seen as the economy of global society and national economies – as economies of local societies, making the global one....
. Australia was also ranked the 19th largest import
Import
The term import is derived from the conceptual meaning as to bring in the goods and services into the port of a country. The buyer of such goods and services is referred to an "importer" who is based in the country of import whereas the overseas based seller is referred to as an "exporter". Thus...
er and 19th largest export
Export
The term export is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to as an "exporter" who is based in the country of export whereas the overseas based buyer is referred to as an "importer"...
er. The average middle aged adult has a yearly worth of over $350 000, making Australians per capita some of the wealthiest people in the world.
Australia is a member of the APEC, G20, OECD and WTO organisations. Australia has also entered into free trade agreements with ASEAN, Chile
Chile
Chile ,officially the Republic of Chile , is a country in South America occupying a long, narrow coastal strip between the Andes mountains to the east and the Pacific Ocean to the west. It borders Peru to the north, Bolivia to the northeast, Argentina to the east, and the Drake Passage in the far...
, New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
, Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
, Thailand
Thailand
Thailand , officially the Kingdom of Thailand , formerly known as Siam , is a country located at the centre of the Indochina peninsula and Southeast Asia. It is bordered to the north by Burma and Laos, to the east by Laos and Cambodia, to the south by the Gulf of Thailand and Malaysia, and to the...
, and the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. The ANZCERTA
Closer Economic Relations
Closer Economic Relations is a free trade agreement between the governments of New Zealand and Australia. It is also known as the Australia New Zealand Closer Economic Relations Trade Agreement and sometimes shortened to...
agreement with New Zealand has greatly increased integration with the New Zealand economy and there are now plans to form an Australasian Single Economic Market by 2015.
The Australian economy is dominated by its service sector, representing 68% of Australian GDP. The agricultural and mining sectors (10% of GDP combined) account for 57% of the nation's exports. The Australian economy is dependent on imported crude oil and petroleum products, the economy’s petroleum import dependency is around 80% - crude oil + petroleum products.
The Australian dollar
Australian dollar
The Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu...
is the currency
Currency
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...
of the Commonwealth of Australia and its territories, including Christmas Island
Christmas Island
The Territory of Christmas Island is a territory of Australia in the Indian Ocean. It is located northwest of the Western Australian city of Perth, south of the Indonesian capital, Jakarta, and ENE of the Cocos Islands....
, Cocos (Keeling) Islands
Cocos (Keeling) Islands
The Territory of the Cocos Islands, also called Cocos Islands and Keeling Islands, is a territory of Australia, located in the Indian Ocean, southwest of Christmas Island and approximately midway between Australia and Sri Lanka....
, and Norfolk Island
Norfolk Island
Norfolk Island is a small island in the Pacific Ocean located between Australia, New Zealand and New Caledonia. The island is part of the Commonwealth of Australia, but it enjoys a large degree of self-governance...
. It is also the official currency of the independent Pacific Island nation
Pacific Islands
The Pacific Islands comprise 20,000 to 30,000 islands in the Pacific Ocean. The islands are also sometimes collectively called Oceania, although Oceania is sometimes defined as also including Australasia and the Malay Archipelago....
s of Kiribati
Kiribati
Kiribati , officially the Republic of Kiribati, is an island nation located in the central tropical Pacific Ocean. The permanent population exceeds just over 100,000 , and is composed of 32 atolls and one raised coral island, dispersed over 3.5 million square kilometres, straddling the...
, Nauru
Nauru
Nauru , officially the Republic of Nauru and formerly known as Pleasant Island, is an island country in Micronesia in the South Pacific. Its nearest neighbour is Banaba Island in Kiribati, to the east. Nauru is the world's smallest republic, covering just...
and Tuvalu
Tuvalu
Tuvalu , formerly known as the Ellice Islands, is a Polynesian island nation located in the Pacific Ocean, midway between Hawaii and Australia. Its nearest neighbours are Kiribati, Nauru, Samoa and Fiji. It comprises four reef islands and five true atolls...
.
The Australian Securities Exchange
Australian Securities Exchange
The Australian Securities Exchange was created by the merger of the Australian Stock Exchange and the Sydney Futures Exchange in July 2006. It is the primary stock exchange group in Australia....
is the largest stock exchange in Australia. Australia is home to some of the largest companies in the world including, BHP Billiton
BHP Billiton
BHP Billiton is a global mining, oil and gas company headquartered in Melbourne, Australia and with a major management office in London, United Kingdom...
and Rio Tinto Group
Rio Tinto Group
The Rio Tinto Group is a diversified, British-Australian, multinational mining and resources group with headquarters in London and Melbourne. The company was founded in 1873, when a multinational consortium of investors purchased a mine complex on the Rio Tinto river, in Huelva, Spain from the...
.
Overview
Australia's per-capita GDPGross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
is slightly higher than that of the UK, Germany, and France in terms of purchasing power parity
Purchasing power parity
In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates...
. The country was ranked second in the United Nations
United Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...
2010 Human Development Index
Human Development Index
The Human Development Index is a composite statistic used to rank countries by level of "human development" and separate "very high human development", "high human development", "medium human development", and "low human development" countries...
and sixth in The Economist
The Economist
The Economist is an English-language weekly news and international affairs publication owned by The Economist Newspaper Ltd. and edited in offices in the City of Westminster, London, England. Continuous publication began under founder James Wilson in September 1843...
worldwide quality-of-life index 2005. Australia's sovereign credit rating is "AAA", higher than the United States of America and the country has four of the World's nine "AAA" rated banks. Australia has highest ratio of assets to population than any country in the World. The country's government debt to GDP is the lowest among OECD countries. The Australian government aims to run surpluses from 2012/13.
The emphasis on exporting commodities rather than manufactures has underpinned a significant increase in Australia's terms of trade during the rise in commodity prices since 2000. Australia's current account is approx. 2.6% of GDP negative: Australia has had persistently large current account deficits for more than 50 years. Australia has grown at an average annual rate of 3.6% for over 15 years, well above the OECD average of 2.5%. Australia's average GDP growth rate for the period 1901-2000 is at 3.4% annually.
As of December 2009, there were approximately 10,844,000 people employed, with an unemployment rate of 5.5%. Over the past decade, inflation has typically been 2–3% and the base interest rate 5–6%. The service sector of the economy, including tourism, education and financial services, constitutes 69% of GDP.
Rich in natural resources, Australia is a major exporter of agricultural products, particularly wheat
Wheat
Wheat is a cereal grain, originally from the Levant region of the Near East, but now cultivated worldwide. In 2007 world production of wheat was 607 million tons, making it the third most-produced cereal after maize and rice...
and wool
Wool
Wool is the textile fiber obtained from sheep and certain other animals, including cashmere from goats, mohair from goats, qiviut from muskoxen, vicuña, alpaca, camel from animals in the camel family, and angora from rabbits....
, mineral
Mineral
A mineral is a naturally occurring solid chemical substance formed through biogeochemical processes, having characteristic chemical composition, highly ordered atomic structure, and specific physical properties. By comparison, a rock is an aggregate of minerals and/or mineraloids and does not...
s such as iron-ore and gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
, and energy
Energy
In physics, energy is an indirectly observed quantity. It is often understood as the ability a physical system has to do work on other physical systems...
in the forms of liquified natural gas and coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
. Although Agriculture
Agriculture in Australia
Australia is a major agricultural producer and exporter. Agriculture and its closely related sectors earn $155 billion-a-year for a 12% share of GDP. Australian farmers and graziers own 135,996 farms, covering 61% of Australia’s landmass. There is a mix of irrigation and dry-land farming...
and natural resources constitute only 3% and 5% of GDP, respectively, they contribute substantially to export performance
Export performance
Export performance is the relative success or failure of the efforts of a firm or nation to sell domestically-produced goods and services in other nations....
. Australia's largest export markets are Japan, China, South Korea, India and the USA.
In the past decade, one of the most significant sectoral trends experienced by the economy has been the growth (in relative terms) of the mining sector (including petroleum). In terms of contribution to GDP, this sector grew from around 4.5% in 1993-94, to almost 8% in 2006-07.
Growth in the services sector has also grown considerably, with property and business services in particular growing from 10% to 14.5% of GDP over the same period, making it the largest single component of GDP (in sectoral terms). This growth has largely been at the expense of the manufacturing sector, which in 2006-07 accounted for around 12% of GDP. A decade earlier, it was the largest sector in the economy, accounting for just over 15% of GDP.
Economic liberalisation
From the early 1980s onwards, the Australian economy has undergone a continuing economic liberalisationEconomic liberalization
Economic liberalization is a very broad term that usually refers to fewer government regulations and restrictions in the economy in exchange for greater participation of private entities; the doctrine is associated with classical liberalism...
. In 1983, under Prime Minister Bob Hawke
Bob Hawke
Robert James Lee "Bob" Hawke AC GCL was the 23rd Prime Minister of Australia from March 1983 to December 1991 and therefore longest serving Australian Labor Party Prime Minister....
, but mainly driven by Treasurer Paul Keating
Paul Keating
Paul John Keating was the 24th Prime Minister of Australia, serving from 1991 to 1996. Keating was elected as the federal Labor member for Blaxland in 1969 and came to prominence as the reformist treasurer of the Hawke Labor government, which came to power at the 1983 election...
, the Australian dollar
Australian dollar
The Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu...
was floated and financial deregulation
Deregulation
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or...
was undertaken.
In 2000, the introduction of a goods and services tax
Goods and Services Tax (Australia)
The GST is a broad sales tax of 10% on most goods and services transactions in Australia. It is a value added tax, not a sales tax, in that it is refunded to all parties in the chain of production other than the final consumer....
(GST) sought to encourage the level of saving amongst lower income earners. To combat the consequential reduction in consumption for low income earners, income taxes were lowered as a trade-off for the introduction of the GST. The overall level of taxation in Australia has since been consistently reduced to encourage private consumption and investment, as opposed to higher government expenditure.
Current areas of concern
Current areas of concern to some economists include Australia's large current account deficit, Australia’s current account deficit for the 2007- 2008 financial year was up 4% to $19.49 billion (according to the Australian Bureau of Statistics), the absence of a successful export-oriented manufacturing industryManufacturing in Australia
Although primary production is the main industry in Australia, manufacturing in Australia is still a significant industry.-History:The contribution of manufacturing to Australia's gross domestic product peaked in the 1960s at 25%, and had dropped to 13% by 2001–2 and 10.5% by 2005–6.In 2004–05, the...
, an Australian property bubble
Australian property bubble
The Australian Property bubble is an observation that real estate prices in Australia are valued at more than they are worth. This is a real estate bubble....
, and high levels of net foreign debt owed by the private sector. Professor Steve Keen
Steve Keen
Steve Keen is a Professor in economics and finance at the University of Western Sydney. He classes himself as a post-Keynesian, criticizing both modern neoclassical economics and Marxian economics as inconsistent, unscientific and empirically unsupported...
has written extensively about consumer/household indebtedness and the level of home prices relative to income. Increasing levels of government debt
Australian national debt
The Australian government had a budget deficit of $54.8 billion in 2009-10. The result was a $2.3 billion improvement on the $57.1 billion deficit estimated at the time of the May budget.-Total debt:...
triggered by Federal government spending are an emerging public policy issue.
The price of housing in terms of median incomes has been highlighted by a recent Demographia survey with Australian capital city residential housing being among the most expensive in the world. A long drought and its impacts on retail food costs and export volumes of crops and meat and the possible impacts of climate change on agriculture has also been of concern.
Mergers and acquisitions
Between 1991 and 2010, 31,131 mergers & acquisitionsMergers and acquisitions
Mergers and acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or...
with a total known value of US$1,811 billion with the involvement of Australian firms have been announced. In the year 2010, 2,326 transactions valued at US$183 billion had been announced which was a slight increase in terms of numbers (+3.8%) and value (+13.6) compared to 2009. The largest takeover or merger transaction involving Australian companies was the 2007 takeover of the Coles Group
Coles Group
Coles Group Limited was an Australian public company that operated numerous retail chains. It was Australia's second-largest retailer, behind Woolworths Limited...
by Wesfarmers
Wesfarmers
Wesfarmers Limited is one of Australia’s largest public companies and one of Australia's largest retailers. Its headquarters are in Perth, Western Australia....
, totaling A$22 billion.
Taxation
Taxation in Australia is levied at the federal, state and local government levels. Taxes vary from state to state due to their different needs, populations, economics and budgetary positions.The Commonwealth raises revenue from personal income taxes
Income tax in Australia
Income tax in Australia is the most important revenue stream within the Australian taxation system.Income tax is levied upon three sources of income for individual taxpayers: personal earnings , business income and capital gains...
and business taxes. Other taxes include the goods and services tax
Goods and Services Tax (Australia)
The GST is a broad sales tax of 10% on most goods and services transactions in Australia. It is a value added tax, not a sales tax, in that it is refunded to all parties in the chain of production other than the final consumer....
(GST), excise and customs duties. The Commonwealth is the main source of income for state governments. As a result of state dependence on federal taxation revenue to meet decentralised expenditure responsibilities, Australia is said to suffer from a vertical fiscal imbalance.
State taxation
Besides receipts of funds from the Commonwealth, states and territories also have their own taxes to enable them to fund the services they provide. The types and tax rates vary from state/territory to state/territory. State taxes commonly include payroll taxPayroll tax
Payroll tax generally refers to two different kinds of similar taxes. The first kind is a tax that employers are required to withhold from employees' wages, also known as withholding tax, pay-as-you-earn tax , or pay-as-you-go tax...
levied on businesses, a poker machine tax levied on businesses who offer gambling services, land tax levied on people and businesses who own land and most significantly, stamp duty
Stamp duty
Stamp duty is a tax that is levied on documents. Historically, this included the majority of legal documents such as cheques, receipts, military commissions, marriage licences and land transactions. A physical stamp had to be attached to or impressed upon the document to denote that stamp duty...
levied on sales of land (in every state) and other items (chattels in some states, unlisted shares in others, and even sales of contracts in some states).
Federal-state financial arrangements
The states effectively lost the ability to raise income tax during the Second World War. In 1942, the Commonwealth invoked its Constitutional taxation power (s.51 (ii)) and enacted the Income Tax Act and three other statutes to levy a uniform income tax across the Commonwealth. These Acts sought to raise the funds necessary to meet burgeoning wartime expenses and reduce the unequal tax burden between the states by replacing state income taxes with a centralised tax system. The legislation could not expressly prohibit state income taxes (s.51(ii) does not curtail the power of states to levy taxes) but the Commonwealth's proposal made localised income tax both practically impossible and politically poisonous. The Commonwealth offered instead compensatory grants authorised by s.96 of the Constitution for the loss of state income (State Grants (Income Tax Reimbursement) Act 1942)).The states rejected the Commonwealth's regime and challenged the legislation's validity in the First Uniform Tax Case (South Australia v Commonwealth
South Australia v Commonwealth
South Australia v Commonwealth 65 CLR 373 is a High Court of Australia case that established the Commonwealth government's ability to impose a scheme of uniform income tax, ultimately arising in a vertical fiscal imbalance in the spending requirements and taxing abilities of the various levels of...
) of 1942. The High Court of Australia held that each of the statutes establishing Commonwealth income tax was a valid use of the s.51(ii) power, with Latham CJ noting that the system did not undermine essential state functions and imposed only economic and political pressure upon them.
The Second Uniform Tax Case (Victoria v Commonwealth (1957)) reaffirmed the Court's earlier decision and confirmed the power of the Commonwealth to make s.96 grants conditionally (in this case, a grant made on the condition that the recipient state does not levy income tax).
Since the Second Uniform Tax Case, a number of other political and legal decisions have centralised fiscal power with the Commonwealth. In Ha vs. New South Wales (1997), the High Court found that the Business Franchise Licences (Tobacco) Act 1987 (NSW) was invalid because it levied a customs duty, a power exercisable only by the Commonwealth (s.90). This decision effectively invalidated state taxes on cigarettes, alcohol and petrol. Similarly, the imposition of a Commonwealth goods and services tax (GST) in 2000 transferred another revenue base to the Commonwealth.
Consequently, Australia has one of the most pronounced vertical fiscal imbalances in the world, with states collecting just 18% of all governmental revenues but responsible for almost 50% of the spending and policy areas. Furthermore, the centralisation of revenue collection has allowed the Commonwealth to force state policy in areas well beyond the scope of its Constitutional powers by using the grants power (s.96) to mandate the terms on which the states spend money in areas over which the Commonwealth has no power (such as spending on education, health and policing).
Municipal taxation
Local governments (called councils in Australia) have their own taxes (called rates) to enable them to provide rubbish collection, park maintenance services, libraries and museums, etc.Trade and economic performance
Co-branding
Co-branding refers to several different marketing arrangements:Co-branding, also called brand partnership, is when two companies form an alliance to work together, creating marketing synergy...
overseas for years with new investors coming from Western Australia and Queensland.
In the late 19th century, Australia's economic strength relative to the rest of the world was reflected in its GDP. In 1870, Australia had the highest GDP per capita in the world due to economic growth fuelled by its natural resources. However, as Australia's population grew rapidly over the 20th century, its GDP per capita dropped relative to countries such as the United States and Norway. However, the Australian economy has been performing nominally better than other economies of the OECD and has supported economic growth for 16 consecutive years. According to the Reserve Bank of Australia
Reserve Bank of Australia
The Reserve Bank of Australia came into being on 14 January 1960 as Australia's central bank and banknote issuing authority, when the Reserve Bank Act 1959 removed the central banking functions from the Commonwealth Bank to it....
, Australian per capita GDP growth is higher than that of New Zealand, US, Canada and The Netherlands. The past performance of the Australian economy has been heavily influenced by US, Japanese and Chinese economic growth.
Australia escaped the global financial crisis relatively unscathed due to high demand from China, stimulus measures by the then Rudd Government
Rudd Government
The Rudd Government refers to the federal Executive Government of Australia of the Australian Labor Party from 2007 to 2010, led by Kevin Rudd as Prime Minister. The Rudd Government commenced on 3 December 2007, when Rudd was sworn in along with his ministry...
, and a buffer of surpluses created by the previous Howard Government
Howard Government
The Howard Government refers to the federal Executive Government of Australia led by Prime Minister John Howard. It was made up of members of the Liberal–National Coalition, which won a majority of seats in the Australian House of Representatives at four successive elections. The Howard Government...
.
Despite high global demand for Australian mineral commodities, export growth has remained flat in comparison to strong import growth. Even though Australia enjoys high commodity prices, economists have warned that structural change is needed in order to increase the size of manufacturing sector.
Chinese investment
There is substantial export to China of iron ore, wool, and other raw materials and over 120,000 Chinese students study in Australian schools and universities. China is the largest purchaser of Australian debt. In 2009, offers were made by state-owned Chinese companies to invest 22 billion dollars in Australia's resource extraction industry.Trade agreements
FTA (Free Trade Agreement) effective
|
FTA (Free Trade Agreement) negotiation
China Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture... (negotiation since 2005) Cooperation Council for the Arab States of the Gulf The Cooperation Council for the Arab States of the Gulf , also known as the Gulf Cooperation Council , is a political and economic union of the Arab states bordering the Persian Gulf and constituting the Arabian Peninsula, namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates... ) (negotiation since 2007) Japan Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south... (negotiation since 2007) South Korea The Republic of Korea , , is a sovereign state in East Asia, located on the southern portion of the Korean Peninsula. It is neighbored by the People's Republic of China to the west, Japan to the east, North Korea to the north, and the East China Sea and Republic of China to the south... (negotiation since 2009) Pacific Agreement on Closer Economic Relations The Pacific Agreement on Closer Economic Relations is an umbrella agreement between members of the Pacific Islands Forum which provides a framework for the future development of trade cooperation.It was first signed at Nauru on 18 August, 2001 and entered into force on the 3rd October 2002... ) (negotiation since 2009) Indonesia Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an... (negotiation since 2010) Trans-Pacific Strategic Economic Partnership The Trans-Pacific Partnership , also known as the Trans-Pacific Strategic Economic Partnership Agreement, is a multilateral free trade agreement that aims to further liberalise the economies of the Asia-Pacific region; specifically, Article 1.1.3 notes: “The Parties seek to support the wider... ) (negotiation since 2010) India India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world... (negotiation since 2011) |
Australia's balance of payments
In trade terms, the Australian economy has had persistently large current account deficits for more than 50 years. One single factor that undermines balance of paymentsBalance of payments
Balance of payments accounts are an accounting record of all monetary transactions between a country and the rest of the world.These transactions include payments for the country's exports and imports of goods, services, financial capital, and financial transfers...
is Australia's narrow export base.
Dependent upon commodities, the Australian government has endeavoured to redevelop the Australian manufacturing sector. This initiative, also known as microeconomic reform, has helped Australian manufacturing to grow from 10.1% in 1983-1984 to 17.8% in 2003-2004.
There are other factors that have contributed to the extremely high current account deficit that Australia has today. Lack of international competitiveness and heavy reliance on capital goods from overseas might increase Australia's current account deficit in the future.
However, as Australia's current account deficit (CAD) are almost entirely generated by the private sector as outlined in Professor John Pitchford's 'Consenting Adults Thesis' in the early 1990s, there is an argument that the CAD is not a significant issue. Historically, Australia has relied on overseas capital to fill the gap between domestic savings and investment, and many of these investment opportunities could not have been pursued if Australia did not have access to foreign savings. This would suggest that Australia's apparently low savings level and CAD are not necessarily a great problem. So long as the investment that is being funded by overseas capital inflow generates sufficient returns to pay for the servicing costs in the future, the increase in foreign liabilities can be viewed as sustainable in the longer term.
See also
- Austrade
- Australian federal budget
- Home ownership in AustraliaHome ownership in AustraliaHome ownership is a key cultural icon in Australia. Australians have traditionally aspired to the modest Great Australian Dream of "owning a detached house on a fenced block of land." Home-ownership has been seen as creating a responsible citizenry; according to a former Premier of Victoria, "The...
- List of Australian states and territories by gross state product
- Median household income in Australia and New ZealandMedian household income in Australia and New ZealandMedian household income is commonly used to measure the relative prosperity of populations in different geographical locations. It divides households into two equal segments with the first half of households earning less than the median household income and the other half earning more.Since 2000...
Major sectors:
- Agriculture in AustraliaAgriculture in AustraliaAustralia is a major agricultural producer and exporter. Agriculture and its closely related sectors earn $155 billion-a-year for a 12% share of GDP. Australian farmers and graziers own 135,996 farms, covering 61% of Australia’s landmass. There is a mix of irrigation and dry-land farming...
- Manufacturing in AustraliaManufacturing in AustraliaAlthough primary production is the main industry in Australia, manufacturing in Australia is still a significant industry.-History:The contribution of manufacturing to Australia's gross domestic product peaked in the 1960s at 25%, and had dropped to 13% by 2001–2 and 10.5% by 2005–6.In 2004–05, the...
- Media of AustraliaMedia of AustraliaMedia in Australia is an important component of the Australian economy. Australian media is widely accessible and caters to a wide variety of audiences...
- Mining in AustraliaMining in AustraliaMining in Australia is a significant primary industry and contributor to the Australian economy. Historically, mining booms have also encouraged immigration to Australia. Many different ores and minerals are mined throughout the country.-History:...
- National Electricity MarketNational Electricity MarketThe National Electricity Market is the name of the Australian wholesale electricity market and the associated synchronous electricity transmission grid....
- Telecommunications in Australia
- Tertiary education in AustraliaTertiary education in AustraliaTertiary education in Australia is primarily study at University or a Technical college in order to receive a qualification or further skills and training....
Tertiary education exports - Tourism in AustraliaTourism in AustraliaTourism is an important industry for the Australian economy. In the financial year 2009/10, the tourism industry represented 2.6% of Australia's GDP at a value of approximately A$34 billion to the national economy. Domestic tourism is a significant part of the tourism industry, and was...
- Transport in AustraliaTransport in Australia-Roads:Australia has the second highest level of car ownership in the world. It has three to four times more road per capita than Europe and seven to nine times more than Asia. Australia also has the third highest per capita rate of fuel consumption in the world. Perth, Adelaide and Brisbane are...
By state:
- Economy of New South WalesEconomy of New South WalesThe economy of New South Wales represents a significant proportion of the Australian economy. The economy was valued at $382 billion in 2008-09, representing about 33% of Australia's total GDP.- Economic history :...
- Economy of QueenslandEconomy of QueenslandThe economy of Queensland was one of the fastest growing economies within Australia, with growth outstripping that of the wider Australian economy in every financial year between 1995–96 and 2007-08. In 2009, the global financial crisis slowed Queensland's economic growth...
- Economy of TasmaniaEconomy of TasmaniaTasmania has been said to be overreliant on revenue from the Government of Australia.Traditionally Tasmania's main industries have been: mining, including copper, zinc, tin, and iron; agriculture; forestry; and tourism. Significantly in the 1940s and 1950s there had been a Hydro-Industrialisation...
- Economy of Western AustraliaEconomy of Western AustraliaThe Western Australian economy is a state economy dominated by its resources and services sector and largely driven by the export of iron-ore, gold, liquefied natural gas and agricultural commodities such as wheat. Covering an area of 2.5 million km2, the state is Australia's largest, accounting...
External links
- Australia Economy
- Australia page at Organisation for Economic Co-Operation & Development (OECD)
- Economic Survey of Australia at OECD
- Monthly Economic and Social Indicators (Australian Parliamentary Library)
- Quick Reference Tables for the World Bank's 2005 data
- Harcourt, Tim. (2005). "Introducing the twenty five billion dollar man: how the LNG deal was won" Austrade March 2003