Economy of Australia
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| Economy of Australia | |
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| Currency | Australian Dollar ($A or A$, AU$ or $AU, AUD) |
|---|---|
| Fiscal year | 1 July - 30 June |
| Trade organisations | APEC, WTO and OECD |
| Statistics | |
| GDP (PPP) | $773.0 billion (2007) [1] |
| GDP growth | 1.9% (seasonally adjusted)- Q1 2008/09 [2] |
| GDP per capita | $36,226 (2007) |
| GDP by sector | agriculture: 3.8% industry: 26.2% services: 70% (2005 est.) |
| Inflation (CPI) | 5.0% (Q1 2008/09) [3] |
| Population below poverty line |
NA% |
| Gini index | 30.5 (2000) [4] |
| Labour force | 10.66 million (2006 est.) |
| Labour force by occupation |
agriculture (3.6%), mining (1.1%), industry (20.2%), services (75.1%) (May 2005 est.) |
| Unemployment | 4.3% (September 2008) [5] |
| Main industries | mining, industrial and transportation equipment, food processing, chemicals, steel |
| External | |
| Exports | A$215.8 billion (2006-2007) [6] |
| Export goods | coal, gold, meat, wool, alumina, iron ore, wheat, machinery and transport equipment |
| Main 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) [7] |
| Import goods | machinery and transport equipment, computers and office machines, telecommunication equipment and parts; crude oil and petroleum products |
| Main import partners | US 13.9%, China 13.7%, Japan 11%, Singapore 5.6%, Germany 5.6% (2005) |
| Public finances | |
| Public debt | 15.6% of GDP |
| Revenues | A$319.46 billion (2008-2009) |
| Expenses | A$292.47 billion (2008-2009) |
| Economic aid | donor: ODA, $2.5 billion (2005/06 Budget) [8] |
| Main data source: CIA World Factbook All values, unless otherwise stated, are in US dollars |
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- 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)[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 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 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 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.[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]
Australia's emphasis on reforms is often cited as a key factor behind the continuing strength of the economy. From the early 1980s to the current day, both major political parties - the Australian Labor Party and the Liberal Party of Australia - have been instrumental in the modernisation of the Australian economy. 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 Labor 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 regressive 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. This economic strategy - consistent with principles of individual liberty, choice, freedom, initiative and enterprise - has led to an unprecedented period of prosperity with 16 years of continuous economic growth, moderate inflation and low unemployment.
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.
Contents |
[edit] History
[edit] Taxation
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This section may require cleanup to meet Wikipedia's quality standards. Please improve this article if you can. (June 2007) |
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.
[edit] State 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.
[edit] 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".
[edit] 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.[8] According to the Reserve Bank of Australia, Australian per capita GDP growth is higher than that of New Zealand, US, Canada and The Netherlands.[9] The performance of the Australian economy is heavily dependent on US and Chinese economic growth.[10]
[edit] See also
[edit] 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) - document not found
- Some statistics on this page have been drawn from publications of the Australian Bureau of Statistics.
- OCED Factbook 2006 (Gini coeffients) OCED Factbook 2006 pdf
[edit] 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 contains material from the CIA World Factbook (2005 edition) which, as a US government publication, is in the public domain.
- - "Australian Country Information" @ the Australian Department of Foreign Affairs & Trade
- Invest in Australia
[edit] 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
- ^ "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
- ^ "Booming Australian Economy"
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