Economy of Australia

Infobox Economy
country = Australia

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width = 290
caption = Change in Australian GDP (red) and consumer price index (blue), 1970-2006.
Source Reserve Bank of Australia
currency = Australian Dollar ($A or A$, AU$ or $AU, AUD)
year = 1 July - 30 June
organs = APEC, WTO and OECD
rank = 17th
gdp = around A$1 trillion (2007-2008)
growth = 2.7% (2nd Quarter 2008) [http://www.abc.net.au/news/stories/2008/09/03/2354176.htm]
per capita = $32,900 (2006 est.)
sectors = agriculture: 3.8% industry: 26.2% services: 70% (2005 est.)
inflation = 4.5% (Q4 2007/08) [http://rba.gov.au/Statistics/measures_of_cpi.html]
poverty = NA%
gini = 30.5 (2000) [http://fiordiliji.sourceoecd.org/pdf/fact2006pdf/10-03-02.pdf?OpenDocument]
labor = 10.66 million (2006 est.)
occupations = agriculture (3.6%), mining (1.1%), industry (20.2%), services (75.1%) (May 2005 est.)
unemployment = 4.1% (August 2008) [http://www.abs.gov.au/AUSSTATS/abs@.nsf/mf/6202.0/]
industries = mining, industrial and transportation equipment, food processing, chemicals, steel
exports = A$215.8 billion (2006-2007) [http://www.dfat.gov.au/aib/trade_investment.html]
export-goods = coal, gold, meat, wool, alumina, iron ore, wheat, machinery and transport equipment
export-partners = Japan 20.3%, China 11.5%, South Korea 7.9%, US 6.7%, New Zealand 6.5%, India 5% (2005)
imports = A$227.8 billion (2006-2007) [http://www.dfat.gov.au/aib/trade_investment.html]
import-goods = machinery and transport equipment, computers and office machines, telecommunication equipment and parts; crude oil and petroleum products
import-partners = US 13.9%, China 13.7%, Japan 11%, Singapore 5.6%, Germany 5.6% (2005)
debt = $585.1 billion
revenue = A$319.46 billion (2008-2009)
expenses = A$292.47 billion (2008-2009)
aid = "donor": ODA, $2.5 billion (2005/06 Budget) [http://www.ausaid.gov.au/publications/pdf/summary_2005_2006.pdf]
cianame = as:Throughout this article, the unqualified term "dollar" and the $ symbol refer to the Australian dollar." "However, figures in the sidebar are in US dollars."

The economy of Australia is a prosperous, Western market economy dominated by its services sector (68% of GDP), although the agricultural and mining sectors (10% of GDP combined) [http://www.abs.gov.au/AUSSTATS/abs@.nsf/Latestproducts/5204.0Main%20Features502006-07?opendocument&tabname=Summary&prodno=5204.0&issue=2006-07&num=&view=] account for 57% of the nation's exports. [http://www.rba.gov.au/Statistics/Bulletin/H03hist.xls]

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 and the Sydney Futures Exchange are the largest stock exchanges in Australia.

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 third in the United Nations 2007 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 the start of the century. Australia's balance of payments is more than 7% of GDP negative: Australia has had persistently large current account deficits for more than 50 years. [http://www.economist.com/finance/displaystory.cfm?story_id=8931798 Downwonder] Economist.com, March 29, 2007] Australia has grown at an average annual rate of 3.6% for over 15 years, well above the OECD average of 2.5%.

In January 2007, there were 10,033,480 people employed , with an unemployment rate of 4.6%. [Australian Bureau of Statistics. Labour Force Australia. Cat#6202.0] 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. [Department of Foreign Affairs and Trade (2003). "Advancing the National Interest", [http://www.dfat.gov.au/ani/appendix_one.pdf Appendix 1] ] 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.Australian Bureau of Statistics. [http://www.abs.gov.au/ausstats/abs@.nsf/94713ad445ff1425ca25682000192af2/1a79e7ae231704f8ca256f720082feb9!OpenDocument Year Book Australia 2005] ]

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 form of liqufied natural gas and coal. Although it occupies an area similar in size to the contiguous United States, it has a labour force of only about ten million people. [http://www.dfat.gov.au/facts/snapshot.html]

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. [http://www.abs.gov.au/AUSSTATS/abs@.nsf/Latestproducts/5204.0Main%20Features502006-07?opendocument&tabname=Summary&prodno=5204.0&issue=2006-07&num=&view=]

Australia's emphasis on reforms is often cited as a key factor behind the continuing strength of the economy. In the 1980s, the Australian Labor Party, led by Prime Minister Bob Hawke and Treasurer Paul Keating, commenced the modernisation of the Australian economy by floating the Australian dollar in 1983, leading to full financial deregulation.

Current areas of concern to some economists include Australia's large current account deficit, Australia’s 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

As a federation, political power is spread between the Commonwealth and state governments. As a result, both the Commonwealth and the states have their own taxes. Taxes vary from state to state due to their different needs, populations, economics and budgetary positions. The Commonwealth is the main source of income for state governments, however. The Commonwealth's largest sources of revenue are income tax and business tax. 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.

tate taxation

States also have their own taxes so that they can fund the services they offer. For obvious reasons, tax rates vary from state/territory to state/territory. Certain states and territories may not even levy certain taxes. State taxes commonly include a payroll tax, levied on businesses, a poker machine tax, levied on businesses who offer gambling services, a 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).

The states lost the right to levy income tax during World War II, as per 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 articles 51(ii) (Commonwealth powers) and 109 (Inconsistency of laws) meant that the Commonwealth could legislate to force states to levy or not levy taxes. This was upheld in the Ha vs. New South Wales case of 1987, 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, or, as they are called in Australia, councils, have their own taxes so that they can provide rubbish collection, park maintenance services, libraries and museums, etc. This taxation is commonly referred to as "council rates".

Trade and economic performance

In the second half of the twentieth century, Australian trade shifted decisively away from Europe and North America to Japan and other East Asian markets.

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. The Australian economy has been performing nominally better than other economies of the OECD and has supported economic growth for 16 consecutive years. [ [http://www.economist.com/finance/displaystory.cfm?story_id=8931798 "Downwonder: The “lucky country” may not be so for too much longer"] @ The Economist - Mar 29th 2007] According to the Reserve Bank of Australia, Australian per capita GDP growth is higher than that of New Zealand, US, Canada and The Netherlands. [ [http://www.rba.gov.au/Speeches/2007/sp_ag_160307.html "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] The performance of the Australian economy is heavily dependent on US and Chinese economic growth. [ [http://www.mysharetrading.com/2007/10/18/booming-australian-economy.htm "Booming Australian Economy"] ]

ee also

*Reserve Bank of Australia
*Australia's Balance of Payments
*Economy of Oceania

References

*Macfarlane, I. J. (1998). [http://www.rba.gov.au/PublicationsAndResearch/Bulletin/bu_oct98/bu_1098_2.pdf "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). [http://www.pc.gov.au/research/confproc/mrrag/mrrag.pdf "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) - document not found
*Some statistics on this page have been drawn from publications of the Australian Bureau of Statistics.
*OCED Factbook 2006 (Gini coeffients) [http://fiordiliji.sourceoecd.org/pdf/fact2006pdf/10-03-02.pdf OCED Factbook 2006 pdf]

External links

* [http://www.oecd.org/australia/ Australia page] @ Organisation for Economic Co-Operation & Development (OECD)
* [http://www.oecd.org/eco/surveys/australia/ Economic Survey of Australia] @ OECD
* [http://www.aph.gov.au/library/pubs/mesi/ Monthly Economic and Social Indicators] (Australian Parliamentary Library)
* [http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS/0,,contentMDK:20399244~menuPK:1504474~pagePK:64133150~piPK:64133175~theSitePK:239419,00.html Quick Reference Tables for the World Bank's 2005 data]
*Harcourt, Tim. (2005). [http://www.austrade.gov.au/Introducing-the-twenty-five-billion-dollar-man-how-the-LNG-deal-was-won/default.aspx "Introducing the twenty five billion dollar man: how the LNG deal was won"] . Chief Economist - "Australian Trade Commission" - Sydney - 26 March 2003
*CIA WFB 2005
* [http://www.dfat.gov.au/geo/australia/index.html - "Australian Country Information"] @ the Australian Department of Foreign Affairs & Trade
* [http://australianinvest.com/invest-in-australia/ Invest in Australia]

Notes