Australia: Executive Summary

Australia Executive Summary

Australia is the world’s smallest continent, but also its sixth-largest country, lying between the Pacific and Indian Oceans in the Southern Hemisphere. Covering over 7.5m square kilometres of land, it consists of the continental mainland plus the island of Tasmania and numerous other smaller islands.

Australia’s population is over 21.5m and, while around 90% of Australia’s population is of European ancestry, there has been significant immigration from Asia. English is the national language and, while over 60% of Australians are Christian, it has no state religion.

Two mainland territories and six states compose the federated Commonwealth of Australia. The chief of state is the British Monarch. Elections for the Senate and House of Representatives are normally held every three years, simultaneously. The political party with majority support in the House forms the government and its leader becomes Prime Minister. Kevin Rudd was Prime Minister from the November 2007 election until his resignation in July 2010 when he was replaced by Australia's first female Prime Minister, Julia Gillard.

In recent decades, Australia has transformed itself into an internationally competitive, advanced market economy. 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. The currency is the Australian dollar (AUD).

Telecommunications is an important aspect of the Australian economy, as is road and rail transportation, since distances are large and the country has a low population density. 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.

The rate of company tax in Australia for 2009 is 30%, while the top personal income tax rate is 45%. There is no separate capital gains tax – capital gains are included in general income for taxation purposes. There are no incentives for particular sectors, although various tax breaks, grants and other assistance exist for small business and venture capital.

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