Wikipedia:Economy of Australia
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The following article is a local copy of the Wikipedia article at Economy of Australia. (more info)
| Economy of Australia | |
| Currency | Australian Dollar ($A or A$, AU$ or $AU, AUD) |
|---|---|
| Fiscal year | 1 July - 30 June |
| Trade organisations | APEC, WTO and OECD |
| Statistics | |
| GDP | US$824.9 billion (2008) [1] |
| GDP growth | 0.4% - Q1 2009 [2] |
| GDP per capita | US$36,226 (2007) |
| GDP by sector | agriculture: 3.8% industry: 26.2% services: 70% (2005 est.) |
| Inflation (CPI) | 1.5% (June 2009) [3] |
| Gini index | 0.305 (2006) [4] |
| Labour force | 11.44 million (May 2009)[5] |
| Labour force by occupation |
agriculture (3.6%), mining (1.1%), industry (20.2%), services (75.1%) (May 2005 est.) |
| Unemployment | 5.7% (May 2009) [6] |
| Main industries | mining, industrial and transportation equipment, food processing, chemicals, steel |
| External | |
| Exports | A$215.8 billion (2006-2007) [7] |
| Export goods | coal, gold, meat, wool, alumina, iron ore, wheat, machinery and transport equipment |
| Main export partners | Japan 20.3%, China 11.5%, India 10.8% (2007), South Korea 7.9%, US 6.7%, New Zealand 6.5% (2005) |
| Imports | A$227.8 billion (2006-2007) [8] |
| Import goods | machinery and transport equipment, computers and office machines, telecommunication lasers |
| Main import partners | US 13.9%, China 13.7%, Japan 11%, Singapore 5.6%, Germany 5.6% (2005) |
| Public finances | |
| Public Debt | federal public net debt = 0 (2007-8) |
| Revenues | A$319.46 billion (2008-2009) |
| Expenses | A$292.47 billion (2008-2009) |
| Economic aid | donor: ODA, $2.5 billion (2005/06 Budget) [9] |
| Main data source: CIA World Fact Book All values, unless otherwise stated, are in US dollars |
|
- Throughout this article, the unqualified term "dollar" and the $ symbol refer to the Australian dollar.
The economy of Australia is a prosperous, free market economy dominated by its services sector, representing 68% of Australian GDP. The agricultural and mining sectors (10% of GDP combined)[1] account for 57% of the nation's exports.[2]
The Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos (Keeling) Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu. The Australian Securities Exchange is the largest stock exchange in Australia.
Contents |
Overview
Australia is one of the most laissez-faire capitalist economies according to indices of economic freedom. Australia's per-capita GDP is slightly higher than that of the UK, Germany, and France in terms of purchasing power parity. The country was ranked fourth in the United Nations 2008 Human Development Index and sixth in The Economist worldwide quality-of-life index 2005.
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 more than 7% of GDP negative: Australia has had persistently large current account deficits for more than 50 years.[3] Australia has grown at an average annual rate of 3.6% for over 15 years, well above the OECD average of 2.5%.[3]
In January 2007, there were 10,033,480 people employed, with an unemployment rate of 4.6%.[4] 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.[5]
Although Agriculture and natural resources constitute only 3% and 5% of GDP, respectively, they contribute substantially to export performance. Australia's largest export markets are Japan, China, the US, South Korea and New Zealand.[6]
Rich in natural resources, Australia is a major exporter of agricultural products, particularly wheat and wool, minerals such as iron-ore and gold, and energy in the forms of liqufied natural gas and coal. Australia has a labour force of about ten million people.[7]
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.[1]
Economic liberalisation
From the early 1980s onwards, the Australian economy has undergone a continuing economic liberalisation. In 1983, under Prime Minister Bob Hawke, the Australian dollar was floated and prudent financial deregulation was undertaken. The early 1990s saw the Australian economy fall into recession and government debt soar to $96 Billion under Prime Minister Paul Keating.
The $96 Billion of government debt was successfully paid off in full between 1996 and 2007 by the Liberal Government led by Prime Minister John Howard and Treasurer Peter Costello. During this period of governance, the introduction of a goods and services tax (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 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 industry, a real estate bubble, and high levels of net foreign debt owed by the private sector.
History
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 and business taxes. Other taxes include the goods and services tax (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 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 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 lost the right to levy income tax during the Second World War, following the first Uniform Tax Case (South Australia v Commonwealth) of 1942. While the states retained the ability to operate taxation offices, the Commonwealth successfully argued that the combination of sections 51(ii) of the Constitution (taxation power) and 109 (inconsistency of laws) meant that the Commonwealth could legislate to levy taxes, to the exclusion of states.
This ruling was upheld in the Ha vs. New South Wales case of 1987[citation needed], and has led to 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.
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
In the second half of the twentieth century, Australian trade shifted away from Europe and North America to Japan and other East Asian markets. Regional franchising businesses, now a $128 billion sector, have been operating co-branded sites overseas for years with new investors coming from Western Australia and Queensland.[8]
The Australian economy has been performing nominally better than other economies of the OECD and has supported economic growth for 16 consecutive years.[9] According to the Reserve Bank of Australia, Australian per capita GDP growth is higher than that of New Zealand, US, Canada and The Netherlands.[10] The past performance of the Australian economy has been heavily influenced by US, Japanese and Chinese economic growth.
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 100,000 Chinese students study in Australian schools and universities. China is a major 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.[11]
Australia's balance of payments
In trade terms, the Australian economy has had persistently large current account deficits for more than 50 years.[12] One single factor that undermines balance of payments 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.[13]
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.
See also
- Australian federal budget
- Australian Securities Exchange
- Median household income in Australia and New Zealand
- List of Australian states and territories by gross state product
Federal entities:
Major sectors:
- Agriculture in Australia
- Media of Australia
- Mining in Australia
- National Electricity Market
- Telecommunications in Australia
- Tertiary education exports
- Tourism in Australia
- Transportation in Australia
By state:
Notes
- ^ a b http://www.abs.gov.au/AUSSTATS/abs@.nsf/Latestproducts/5204.0Main%20Features502006-07?opendocument&tabname=Summary&prodno=5204.0&issue=2006-07&num=&view=
- ^ http://www.rba.gov.au/Statistics/Bulletin/H03hist.xls
- ^ a b Downwonder Economist.com, March 29, 2007
- ^ Australian Bureau of Statistics. Labour Force Australia. Cat#6202.0
- ^ Department of Foreign Affairs and Trade (2003). Advancing the National Interest, Appendix 1
- ^ Australian Bureau of Statistics. Year Book Australia 2005
- ^ http://www.dfat.gov.au/facts/snapshot.html
- ^ Blackie, Tony (2008-07-10). "Battle of the Brands". Business Review Weekly 30 (27): pp. 32-35.
- ^ "Downwonder: The “lucky country” may not be so for too much longer" @ The Economist - Mar 29th 2007
- ^ "Australia in the Global Economy" by Malcolm Edey the Assistant Governor (Economic) - Address to the Australia & Japan Economic Outlook Conference 2007 - Sydney - 16 March 2007
- ^ "Australia Feels Chill as China’s Shadow Grows" article by Michael Wines in The New York Times June 2, 2009
- ^ Downwonder Economist.com, March 29, 2007
- ^ Leading Edge, R: "Australia in the Global Economy", Tim Dixon and John O'Mahomy, page 133 .
References
- Macfarlane, I. J. (1998). "Australian Monetary Policy in the Last Quarter of the Twentieth Century". Reserve Bank of Australia Bulletin, October 1998 (Adobe Acrobat *.PDF document)
- Parham, Dean. (2002). "Microeconomic reforms and the revival in Australia’s growth in productivity and living standards". Assistant Commissioner - Productivity Commission, Canberra Conference of Economists Adelaide, 1 October 2002 (Adobe Acrobat *.PDF document)
- Some statistics on this page have been drawn from publications of the Australian Bureau of Statistics.
- OCED Factbook 2006 (Gini coeffcients) OCED Factbook 2006 pdf
External links
- Australia page @ Organisation for Economic Co-Operation & Development (OECD)
- Economic Survey of Australia @ 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". Chief Economist - Australian Trade Commission - Sydney - 26 March 2003
This article incorporates public domain material from the CIA World Factbook document "2005 edition".
- - "Australian Country Information" @ the Australian Department of Foreign Affairs & Trade
- Invest in Australia
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