VII. Compare the capital of Australia with that of your country

VIII. ECONOMY

1.Basic Economy.

After forty years of settlement, when there was little scope for industrial or commercial enterprises, the pastoral industry became a key force in economic development. In particular, the growth in the wool industry was associated with advances in the rest of the economy. Gold surpassed wool as the nation’s major export in the 1850s and 1860s, resulting in a rapid expansion of banking and commerce.

From federation until 1930 there was some expansion in manufacturing industries, and with the onset of World War II, the manufacturing sector was developed to respond to the demand for war materials and equipment. Some industries expanded and new ones developed rapidly to produce munitions, ships, aircraft, machinery, chemicals, and textiles.

After the war exports consisted mainly of primary commodities such as wool, wheat, coal, and metals. High tariffs and other controls were imposed on most imported goods. Although many of those controls were lifted in the 1960s, effective rates of protection remained high. The government continues to be involved in the operation of some public enterprises, including railways, electricity, post offices and telecommunications. There remains a government interest in the Commonwealth Bank.

A move toward privatization at the state and commonwealth levels of government has been gaining momentum since the early 1980s. Some states, such as Victoria, have embraced this move much more than the others. Australia is highly integrated into the global capitalist economy. Since World War II, much trade has been redirected from Britain and Europe to the Asia-Pacific region, especially Japan. A related trend has been the growth of mineral exports since the mid–1960s.

Australia has a developed modern market economy and has had one of the most outstanding economies in the world in recent years with high-growth, low-inflation and low interest rates. Over the past decade, inflation has typically been 2–3% and the base interest rate - 5–6%. There is an efficient government sector, a flexible labour market and a very competitive business sector.

Since 1992 Australia has averaged greater than 3 per cent economic growth and recorded over 17 consecutive years. This economic stability places Australia in the top echelon of developed countries in terms of sustained rates of growth.

The Australian economy is dominated by its service sector, representing 68% of Australian GDP. The agricultural and mining sectors account for 57% of the nation’s exports.

The unemployment rate is very low in Australia: 5.1% in July 2010, with a continuous decrease since June 2009. The Australian market is known to be very flexible. The government has been following a “laissez-faire” policy that seems to have served the Australian economy.

Australia has a 1.8 percent average tariff rate. The government has reduced tariff and non-tariff barriers both unilaterally and through negotiated trade agreements. Foreign investment in a few “sensitive sectors” is limited. The open financial sector is highly competitive and well-developed. All banks are privately owned, and prudent regulations have allowed them to withstand the global financial turmoil with little disruption

For instance, according to the World Bank, a new business can be established in Australia within two days compared with an OECS average of 20 days. There is a minimum wage in Australia, which is determined by the category of job you fall into (executive, engineer, employee etc.). The federal minimum wage has been $14.31 per hour and $543 per week (before tax) since October 2008. The legal working week time is set at 38 hours and 4 weeks of paid holiday are granted per year. However, each Australian state has its own legislation.

Australia’s economic freedom score is 82, making its economy the 3rd freest in the 2014 Index. Its overall score is 0.6 point lower than last year, with a gain in investment freedom outweighed by declines in monetary freedom and labor freedom. Australia is ranked 3rd out of 42 countries in the Asia–Pacific region.

Over the 20-year history of the Index, Australia has advanced its economic freedom score by 7.9 points, one of the 10 biggest improvements among developed economies. Substantial score increases in six of the 10 economic freedoms, including business freedom, investment freedom, and freedom from corruption, have enabled Australia to achieve and sustain its economically “free” status in the Index.

With an economy that benefits from sound fundamentals including monetary stability, low public debt, and a vibrant employment market, Australia has weathered the global economic uncertainty well. Openness to global trade and investment is firmly institutionalized, supported by a relatively efficient entrepreneurial framework and a well-functioning independent judiciary. Australia has a strong tradition of reliable property rights protection, and the legal system is transparent and evenly applied. Effective anti-corruption measures are in force.

The Australian multiculturalism seems to be a strength in the workforce, as it is an opportunity to have ‘the best out of everyone’ approach, and also because it favors international commerce.

With its abundant physical resources, Australia has enjoyed a high standard of living since the nineteenth century. 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 natural gas and coal. It has made a comparatively large investment in social infrastructure, including education, training, health and transport.

According to the Reserve Bank of Australia, Australian per capita GDP growth is higher than that of New Zealand, the US, Canada and the Netherlands. The past performance of the Australian economy has been heavily influenced by the US, Japanese and Chinese economic growth.

Anti-corruption measures generally discourage bribery of public officials. In 2013, however, a special Independent Commission Against Corruption investigated two former state ministers in New South Wales on allegations of a conspiracy to profit from mining leases. Australia’s judicial system operates independently and impartially. Property rights are secure, and enforcement of contracts is reliable. Expropriation is highly unusual.

2. Land Tenure and Property.

When the British took control of the continent in 1788, they deemed it terra nullius (land that was not owned). According to the British law all Australian land was the property of the Crown. In the last two decades of the eighteenth century, land grants were made to emancipated convicts, free settlers, marines, and officers. Land was available to anyone prepared to employ and feed the convicts who were assigned to it as servants. In 1825 sale of land by private tender was introduced.

Land is held as freehold (privately owned through purchase), leasehold (pastoralists and others are given special usage rights for a specified numbers of years), national parks, and Crown Land, which effectively remains under the control of the government. In 1992 a new form of rights in land was legally recognized—‘‘native title’’—as a form of continuing Aboriginal and islander connection with the land. To the extent that a system of indigenous customary law can be shown to have continued from the time of European establishment of sovereignty, these groups can make claims to their traditional lands.

Public land belongs to the Crown and includes land which is reserved, owned for public purposes, or vacant. It typically includes reserves for nature conservation, forestry, marine conservation, water conservation, mining and defence as well as vacant and other Crown land.

Murrumbidgee Irrigation Area farming blocks.

The first park managed by the colonial administration to be dedicated for public use in Australia was Kings Park in Perth in 1872. However, other areas such as recreation grounds managed by a board of trustees were set aside for public use prior to the declaration of Kings Park. Among these was the dedication in 1855 of 640 acres for a public recreation ground in Nowra, New South Wales and for the Prince Alfred (1865) and Macquarie Place (1866) parks in Sydney. The oldest national park in Australia, Royal National Park, at Port Hacking in New South Wales, was established in 1879. It was not until the 1950s that conservation reserves began to be systematically created in Australia.

Private land makes up the largest part of Australia and can be freehold land or Crown leasehold land, the latter normally being held on long term lease or licence.

Aboriginal land may be freehold, leasehold or Crown reserve, and made up of areas available for the use, benefit and residence by the Aboriginal and Torres Strait Islander people.

Of all the states and territories, South Australia has the most land dedicated to nature conservation reserves, with more than 203 700km², or more than 20 per cent of the State.

3.Commercial Activities.

Australia is a world-class provider of a range of services, such as telecommunications, travel, banking and insurance. The services sector is a significant part of the economy and represents about 70 per cent of Australia's gross domestic product (GDP) and employs four out of five Australians.

Service industries include distribution industries (wholesale trade, retail trade, accommodation, cafe´s and restaurants, and transport and storage) and communication and business services (communications, finance and insurance, and property services). Other service industries are government administration and defence, education, health and community services, and cultural and recreational

services.

Services also play an increasingly important role in international trade, with services exports growing by an average of 4 per cent per annum over the last decade. In 2012-13, total trade in services accounted for 18.7 per cent of Australia's total trade in goods and services, and services exports accounted for 17.4 per cent of Australia's total exports. The value of Australia's services exports is even greater once they take into account the export role of intermediate services inputs ('embodied services').

Australia's priority sectors for market opening in global services trade reform efforts include financial services, telecommunications, professional services, education, mining-related and environmental services.

In 2013-14, Australia's five largest services exports were:

- Education-related travel services - $14.5. billion

- Recreational travel services - $12.6 billion

- Business travel services $4.2 billion

- Professional services - $4.1 billion

- Technical and other business services (including architectural, engineering, surveying and scientific services) - $3.5 billion

4. Trade

Former Australian Prime Minister Kevin Rudd once described Australia to be a nation whose origins lie firmly in the west, “but whose geo-political and geo-economic circumstances are shaped in large part by the location in the east… this is the inescapable expression of the Australian condition.”

Today, Australia’s economy has truly reflected this “condition”. Prior to the 1970s much of Australia’s trade was held with the European and North American markets. During this period, Australia was also considered as a relatively closed and protectionist economy. However, as key economic reforms were gradually being introduced by the Australian government, the Australian economy also started to turn its attention away from trade with the Western markets to trade within the Asia Pacific region.

This shift has turned Australia into one of the fastest growing advanced economies in the world. Australia is the 13^th largest economy in the world according to nominal GDP (current prices) and the 17^th largest according to GDP (PPP). In 2010, Australia’s GDP (PPP) was US$882.344 billion – a 3.94 percent increase from 2009. Australia’s nominal GDP (current prices, US dollars) growth during the same period was even more amazing – GDP (current prices, US dollars) grew from US$994.25 billion in 2009 to US$1.219 trillion, a 22.68 percent increase.

In the past two decades, Australia has enjoyed a period of uninterrupted economic growth – an average of 3.3 percent in real GDP growth annually. Australia possesses a well-diversified economy boosted by the strength of its services and resources industries.

5. Australia’s Economic Structure

This has been obtained through a stable and modern institutional and regulatory structure. Australia was ranked third in the 2011 Economic Freedom Index behind Hong Kong and Singapore and continues to provide an ideal environment for business and environment.

Domestically, Australia’s economy can also be characterized by an east/west divide. The eastern part of Australia is home to the majority of Australia’s service and financial industries. It also contains Australia’s capital city Canberra, the heart of Australia’s political and economic policies. Western Australia, on the other hand, controls the majority of Australia’s natural resources, including iron ore, gold, oil and natural gas.

The contrast between these two regions has often led to disagreements within the Australian government over developmental plans. Although Australia’s GDP is still dominated by its service and financial industries, these industries have been struggling in recent years. On the other hand, Australia’s resources and commodities industries are currently experiencing a boom period. According to Canberra-based Access Economics, growth in regions endowed with minerals and oil and gas will far outstrip growth in the country’s more populous states next year. However, concerns have also been raised on whether the resource and commodities industries are too reliant on exports to China.

In 2009, China became Australia's largest export market, surpassing Japan.

Resources continue to underpin Australia’s exports to China. Australia exported 266.2 million tons of iron ore to China in 2009, an increase of 45.2 per cent over the same period.

China is also Australia’s largest source of imports. Major imports from China include clothing, communications equipment, computers, prams, toys, games and sporting goods, furniture and televisions.

The vast scale of trade with China has seen massive investments by the Chinese companies in Australia. From 2007 to 2010, Chinese investment in Australia amounted to nearly US$60 billion. Australia’s mineral exports also grew by 55 percent to US$139 billion in 2010 and are projected to reach US$180 billion in 2011, thanks to China’s strong economic performance. Chinese companies have also started to lease land from the Australian government to mine resources on their own.

Along with their relationship with China, Australia holds multiple free trade agreements with numerous other countries such as the US, Singapore, Chile and Thailand. Australia is also a member of numerous organizations such as APEC, the G20, WTO and OECD.

However, Australia’s most notable trade partner is New Zealand. The Australia New Zealand Closer Economic Relations Trade Agreement (ANZCERTA) was enforced in 1983, building upon the 1965 New Zealand Australia Free Trade Agreement (NAFTA, not to be mistaken for the North American Free Trade Agreement). The ANZCERTA has greatly integrated both economies and there are now plans to create a single Australasian economic market by 2015.

In order of economic significance, Australia’s current major trading partners include the United States, Japan, China, United Kingdom, Republic of Korea, and New Zealand. Australia is one of the world’s largest exporters of wool, meat, and wheat and a major supplier of sugar, dairy products, fruits, cotton, and rice.

Major imports include passenger motor vehicles, telecommunications equipment, and crude petroleum oils.

6. Australia's 2015 Economic Outlook and Economic Forecast

Spurred by robust business and consumer confidence, Australia’s economy is expected to grow even quicker in the next five years. 2011 to 2015 should see Australia’s GDP (PPP) grow by 4.81 to 5.09 percent annually. By the end of 2015, Australia’s GDP (PPP) is expected to be US$1.122 trillion.

Likewise, Australia’s GDP (PPP) per capita is expected to experience healthy growth. In 2010, Australia’s GDP (PPP) per capita was the tenth highest in the world – growing from US$38,633.17 in 2009 to US$39,692.06. In 2011, Australia’s GDP (PPP) per capita will increase by 3.52 percent to US$41,089.17. The following four years should see fairly consistent growth in Australia’s GDP (PPP) per capita, resulting in a GDP (PPP) per capita of US$47,445.58 by the end of 2015.

However, despite Australia’s strong economic growth, Australia’s unemployment rate has been relatively high. In 2010, Australia’s unemployment rate was 5.192 percent – 0.22 percent more than the world’s average of 4.97 percent.

In an interview given before the May 2011 budget, Australia’s Treasurer and Deputy Prime Minister, Wayne Swan, acknowledged that unemployment was unacceptably high in certain parts of Australia and the government was looking to create new incentives for more jobs. The May 2011 budget created 500,000 jobs in two years and was aimed at bringing unemployment rates down to 4.5 percent.

According to the unemployment rate forecast provided by the IMF, unemployment was expected to see a marginal decrease to 5.025 percent by the end of 2012. After which, the unemployment rate from 2013 to 2015 should remain constant at 4.8 percent.

Currency

Australia was the first country in the world to have a complete system of bank notes made from plastic (polymer). These notes provide much greater security against counterfeiting. They also last four times as long as conventional paper (fibrous) notes. The innovative technology with which Australian bank notes are produced - developed entirely in Australia - offers artists brilliant scope for the creation of images that reflect the history and natural environment of Australia. At the same time, the polymer notes are cleaner than paper notes and easily recyclable. Australia’s currency comprises coins of 5, 10, 20 and 50 cent and one and two dollar denominations; and notes of 5, 10, 20, 50 and 100 dollar denominations.

Australia’s currency heritage

Many forms of currency were used in the Australian colonies after the arrival of the first European settlers in 1788. In the rough early conditions barter was necessary, and payment in commodities like rum sometimes replaced money in transactions. Some of the first official notes used in Australia were Police Fund Notes, issued by the Bank of New South Wales in 1816.

After federation in 1901, when Australia became an independent nation, the federal government became responsible for the currency. The Australian Notes Act was passed in 1910. In 1913 the first series of Australian notes was issued, based on the old British system of 12 pence to a shilling, 20shillings to a pound.

Date: 2016-03-03; view: 939