Australia: Country and Foreign Investment

Australia History, Population, Language and Culture

Although the continent was discovered by Dutch explorers in the early 17th century, no formal territorial claims were made until 1770, when the eastern side of Australia was claimed by the British. It was originally settled by penal transportation.

Following further exploration and the beginning of the exploitation of its natural resources, six colonies were created. They then became the states that federated into the Commonwealth of Australia in 1901.

Britain’s defeat in Asia in World War II caused Australia to turn to the US as a new ally and, since 1951, Australia has been a formal military ally of the US, under the ANZUS Treaty.

Some constitutional ties between Australia and the UK were severed with the passing of the Australia Act of 1986. However, in a 1999 referendum, a slim majority of Australian voters rejected a proposal to become a republic, and the British monarch remains Head of State, represented by a Governor-General.

Australia’s population is over 21.5m, mainly found along the eastern and south-eastern coasts. About 60% of the people are concentrated in and around the mainland state capitals of Sydney, Melbourne, Brisbane, Perth and Adelaide.

Although around 90% of Australia’s population are of European ancestry, there has been significant immigration from Asia, particularly China, Vietnam and the Philippines.

English is the national language. While over 60% of Australians are Christian, there is no state religion.

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Australia Government

Two mainland territories and six states compose the federated Commonwealth of Australia. The territories are the Australian Capital Territory and the Northern Territory. The states are New South Wales, Victoria, Queensland, South Australia, Western Australia and Tasmania.

The Commonwealth of Australia is a parliamentary state (formerly a constitutional monarchy) based on a federal division of powers.

The bicameral Commonwealth Parliament consists of the Senate (the upper house) of 76 senators, and a House of Representatives (the lower house) of 150 members. Elections for both chambers are normally held every three years, simultaneously. The party with majority support in the House of Representatives forms the government and its leader becomes Prime Minister. Voting is compulsory.

Politics has generally been a contest between the Australian Labor Party (ALP) and other non-labour parties. The ALP has been in power since the November 2007 election, with Kevin Rudd as Prime Minister until his resignation in July 2010 and was replaced by Australia's first female Prime Minister, Julia Gillard.

The legal system is based on English common law. The administration of the law is largely in the hands of the states, each with a series of courts, culminating in a supreme court. The High Court of Australia, the federal supreme court, has general appellate jurisdiction over the state courts; its justices are appointed by the Governor-General.

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Australia Economy and Currency

In recent decades, Australia has transformed itself into an internationally competitive, advanced market economy. It has boasted one of the OECD's fastest growing economies, with a per capita GDP of USD40,000 (2009 est).

Australia’s economy is dominated by its services sector, representing 70% of GDP, but the agricultural and mining sectors (10% of GDP combined) account for more than 60% of its exports. The narrow export base has, however, undermined its balance of payments, and Australia has had persistently large current account deficits. For that reason, the government has attempted to develop the country’s manufacturing sector.

High export prices for raw materials and agricultural products have boosted the economy in recent years, particularly in mining states. GDP growth was 2.8% in 2006, 4% in 2007, 2.4% in 2008 and 1.3% in 2009.

While the economy has been affected by the global economic recession, Australia has re-emerged earlier than most advanced economies, outperforming them with stronger growth, lower debt and lower deficits.

Australian trade has shifted away from Europe and North America towards Japan and other East Asian markets. For example, there are substantial exports to China of iron ore, wool and other raw materials, and that country has a great interest in investing in Australia's resource extraction industry.

Australia’s currency is the Australian dollar (AUD).

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Australia Entry and Residence

After World War II, Australia encouraged immigration from Europe. Since the 1970s, immigration from Asia and elsewhere has also been encouraged.

The current migration programme allows people from any country to apply to migrate to Australia, regardless of their ethnicity, culture, religion or language, provided that they meet the criteria set out in the regulations regarding, for example, employer-sponsored workers and professional and other skilled workers.

Generally, an individual is Australian resident for tax purposes if he or she has always lived in Australia; has moved to Australia and now lives there permanently; or has been in Australia continuously for 183 days or more in a fiscal year and for most of the time has been in the one job and living in the same place, unless his or her usual home is overseas and he or she does not intend to live in Australia.

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Australia Business Environment

Telecommunications is an important aspect of the Australian economy. The sector is currently dominated by Telstra, which was formerly controlled by the Postmaster-General but is now fully privatised. Other telecommunications providers are in the market and, at over 24m in 2009, there are now more mobile phones in Australia than people.

Road and rail transportation in Australia is a highly significant part of the infrastructure of the Australian economy, since the distances are large and the country has a low population density. Distances travelled by car are the highest in the world outside of North America.

There are seven designated international airports – Adelaide, Brisbane, Cairns, Darwin, Melbourne, Perth and Sydney. Ports serving international commercial traffic are also concentrated around the main cities, but there are additional specialised ports serving mineral resources, such as iron ore.

Australia’s commercial property market has, in 2008-09, had to withstand its worst environment since the early 1990s. Banking and financial services are extremely well developed in Australia, and the government is attempting to make the country a financial hub for the region.

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Australia Investment Incentives

There are generally no tax breaks for companies investing in Australia but, in the context of the 2008-09 global economic recession, and government policy to encourage the corporate sector, measures have been introduced to support small businesses.

Limited tax credits covering the cost of eligible fixed assets have been made available, and there is a range of measures that have been introduced to make tax administration simpler for small businesses.

A capital gains tax concession is given to facilitate non-resident investment in the Australian venture capital industry, in order to provide a source of equity capital for relatively high-risk start-up and expanding businesses.

In addition, there is a research and development tax credit system.

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