Pestle

COUNTRY ANALYSIS REPORT
Australia
In-depth PESTLE Insights
Publication Date: June 2009
OVERVIEW
Catalyst
This profile analyzes the political, economic, social, technological, legal and environmental structures in Australia. Each of
the PESTLE factors is explored on four parameters: current strengths, current challenges, future prospects and future risks.
Summary
Key findings
Economic conditions bring fresh challenges, but international relations continue to improve
The global economic slowdown has not left the Australian economy unscathed. The industrial slowdown, coupled with
deteriorating terms of trade, has forced the government to introduce a stimulus package designed to encourage
economic revival. While the long-term impact of such measures is yet to be assessed, the government is increasingly
being criticized by the opposition for economic mismanagement. With fears of a recession looming large, the state will
be forced to ease liquidity in the system and increase expenditure. The present government may fail to get enough
public support in the federal elections of 2010 if the economy does not show signs of revival before then.
However, the Australian government has maintained continuity in its foreign policy towards the US, China, Japan and
Indonesia, and has entered into bilateral trade agreements to promote trade liberalization. Prime Minister Rudd is
supportive of US President Obama’s international policies. Under Rudd’s leadership, Australia withdrew troops from
Iraq, although it has pledged to maintain its forces in Afghanistan. Moreover, the country has been working on
improving its ties with countries like Japan, China, Indonesia and Vietnam in the Asian region. The positive relations
between Australia and other nations bring the country many trading benefits.
The economy has entered recession, but the government’s stimulus package promises early revival
Since 2008, there has been a slump in the economic growth of Australia similar to that seen in most other advanced
nations, albeit of a lower magnitude. The GDP attained a growth rate of 1.5% during 2008, compared to 3.9% growth
Australia: Country Analysis Report – In-depth PESTLE Insights Published 06/2009
© Datamonitor. This brief is a licensed product and is not to be photocopied Page 1

Overview
in 2007. It is expected to further decline in 2009 to a negative growth rate of 0.5%. According to the RBA’s Statement
on Monetary Policy in May 2009, GDP declined by 0.5% during the quarter ending in December the previous year.
This was the first time that the country’s economy had shrunk since 2000, when the quarterly fall was more than 0.3%.
According to the report, the slowdown in the domestic economy has been evident across private-sector spending and
in the labor market. As a result of the weaker economic environment, labor market conditions have deteriorated, with
the unemployment rate increasing from a low of around 4% in early 2008 to more than 5% in April 2009.
To help the country to endure the present crisis, the government has announced large-scale spending programs on
health, education and climate change. In February 2009, the government announced a $26 billion stimulus package
aimed at nation-building and supporting up to 90,000 jobs. The initiative includes increased spending on education
and infrastructure, tax breaks for small businesses and cash handouts to eligible workers, farmers and students. Prior
to this, in December 2008, the government had pumped an additional A$10.4 billion (around $8 billion) into the
economy to boost consumer spending. The stimulus package will encourage an early recovery to the current
recession in Australia.
Increasing integration of the healthcare sector; however, aging population will remain a challenge
There has been constant improvement in the healthcare sector, with major companies taking the lead. Sterling
Commerce (a subsidiary of AT&T Inc.) and 4Solutions Enterprises (a company specializing in delivering business
process management and professional services in Australia) have improved the IT integration between wholesalers
and distributors, servicing about 5,500 retail pharmacies across the country. This has allowed the health supply
network to meet its deadlines and reduce warehouse stock, which is critical to achieving economies of scale in a
competitive market.
The population of Australia is ageing, and maintaining high per capita income growth will become harder to achieve.
The proportion of people aged below 55, where labor force participation is normally the highest, is expected to decline
significantly during the next 20 years. Australian government projections foretell a doubling of the number of people
aged over 65 to around 25% of the total population over the next 40 years, while growth in the amount of people at
traditional workforce age is expected to slow to almost nil. As a result, the aggregate labor force participation rate is
predicted to be 9% lower than the current level by the early 2040s. This would reduce the growth in real GDP per
capita to about 1.5% per year from the 2020s onwards.
The country’s budgetary support for the ICT sector will help the market to expand, but the declining number
of patents indicates a requirement for R&D growth
The telecommunications sector has been one of the fastest-growing industries in Australia, demonstrating average
annual growth of around 6.5% during 2000–07. As the government has continued its support for important
communications and IT programs, the segment is expected to grow at an even swifter rate in the coming years.
However, due to many factors, such as low productivity, high wage costs and limited participation in R&D, the country
fares poorly in terms of research patents, obtaining fewer than other developed countries The slow rate of growth in
the number of patents reflects the fact that Australia must do more to encourage R&D growth.

Overview
Liberal business regulations make the country an attractive investment destination; however, tax reforms
have not benefited everyone
The Organisation for Economic Co-operation and Development (OECD) has rated Australia as the most open
economy among its member states. The country follows market-friendly policies and has a very liberal legal regime.
The OECD considers Australia to have the least overall regulation out of all its members. The country was also judged
to have one of the lowest levels of bureaucracy and industry-specific regulation. However, Australia’s tax reforms have
not been able to benefit everyone, and are held to have helped the rich rather than the poor. This issue is yet to be
addressed by the present government, but needs to be rectified.
The government has committed itself to the Kyoto Protocol, but is finding pollution levels difficult to manage
One of the first policy decisions taken by Prime Minister Rudd after assuming office was to sign the Kyoto Protocol. By
ratifying the treaty, Australia committed itself to meeting its Kyoto Protocol target, and has set a goal of reducing
greenhouse gas emissions by 60% from 2000 levels by 2050 and by 5% before the end of 2020. This is considered by
some to be too little, given the high level of pollution in the country. However, the Australian government is prepared to
increase this target if other countries such as China and India make similar commitments.
Rising pollution levels are causing environmental disruption in Australia. The proportion of the country's land that is
hospitable to useful vegetation has fallen to 8%, and wetlands in the Murray-Darling basin have shrunk by 90%. The
coast and ocean life are under increasing pressure in Australia, and it has also been discovered by the forest
department that the water yields from forests for Melbourne’s supply catchments have come down by 50%. Carbon
dioxide emissions have been rising at an increased rate, growing from 381 million metric tons in 2004 to more than
417 million metric tons in 2006. Although there are a number of policies in place, the government is finding it difficult to
control the rising pollution levels. This is largely due to increased dependency on coal for electricity.
PESTLE highlights
Political landscape
• The Labor party, under Kevin Rudd, won the 2007 elections, with 32 seats in the Senate and 83 seats in the House of
Representatives. In the same year, Prime Minister Kevin Rudd ratified the Kyoto Protocol on climate change, reversing
the previous government's policy.
• The present government plans to invest more than $1 billion in e-learning and e-health to boost the digital infrastructure
in both sectors.
Economic landscape
• The nation's current account deficit is expected to widen to around 9% of GDP in 2009–10 due to the global demand for
its export commodities deteriorating without an equivalent fall in imports, as Australian consumption expenditure will
remain healthy compared to that of other advanced economies.

Overview
• Having previously enjoyed a comfortable fiscal position, the Australian government is set to record a large budgetary
deficit of 4.9% in 2009–10. The financial conditions will change, with large-scale government expenditure proposed to
facilitate economic revival.
Social landscape
• Australia's population grew from about 17 million in 1990 to almost 21 million in 2008. The national population growth
rate since 2000 has been around 1%, reducing only marginally to 0.8% in 2006.
• Since 1990, healthcare spending has grown at an annualized average rate of 25%. The rate of growth for 2006 was
13%. Healthcare expenditure was more than 5.5% of GDP in 2008 and is expected to be over 6% by 2012.
Technological landscape
• The business sector is the largest provider of funding for R&D in Australia, and the government encourages corporate
research through a tax concession and subsidies.
• R&D expenditure rose from a level of around 1.5% of GDP in 2002 to around 2% of GDP in 2007. It is expected that it
will reach around $23 billion by 2012.
Legal landscape
• There are two broad levels of courts in Australia: the federal level, and the state or territorial level. The High Court of
Australia and the state supreme courts are requirements of the constitution. The others are inferior courts with limited
powers and authority.
• According to the Doing Business survey by the World Bank, the process of operating a firm in Australia has remained
stable. The 2008 indicator shows that the number of days required to start a company in Australia is just two days,
compared to the OECD average of six days.
Environmental landscape
• The Environment Protection and Biodiversity Conservation (EPBC) Act 1999 is the Australian government’s central
authority on environmental legislation.
• Australia is expected to play an important role in developing a carbon emissions trading system at the global level and to
adopt a domestic trading system by 2012.

Overview
Key fundamentals
Table 1: Australia – key fundamentals
2006 2007 2008 2009 2010 2011 2012
GDP, constant prices ($ billion) 473.53 492.00 499.38 496.88 503.84 511.02 518.54
GDP growth rate (%) 2.95 3.90 1.50 -0.50 1.40 1.42 1.47
GDP, constant 2000 prices, per capita ($) 23,368 24,077 24,241 23,929 24,078 24,237 24,413
Inflation (%) 3.55 2.33 4.48 3.25 2.88 2.64 2.70
Exports, total as % of GDP 20.43 19.44 20.59 21.52 22.35 23.03 23.57
Imports, total as % of GDP 22.43 20.95 21.89 22.65 23.36 23.95 24.44
Mid-year population, (million) 20.49 20.75 21.01 21.26 21.52 21.77 22.02
Unemployment rate (%) 5.25 5.74 5.85 5.93 5.98 6.06 6.16
Doctors per 1000 people 2.44 2.43 2.41 2.40 2.38 2.37 2.36
Mobile penetration per 100 people 98 99 100 100 100 100 100
Source: Datamonitor DAT AMONITOR

Table of Contents
TABLE OF CONTENTS
Overview 1
Catalyst 1
Summary 1
Key facts and geographic location 10
Key facts 10
Geographical location 11
PESTLE analysis 12
Summary 12
Political analysis 13
Economic analysis 16
Social analysis 20
Technology analysis 24
Legal analysis 28
Environmental analysis 31
Political landscape 34
Summary 34
Evolution 34
Structure and policies 37
Performance 41
Outlook 42
Economic landscape 44
Summary 44
Evolution 44
Performance 50
Outlook 63
Social landscape 65
Summary 65
Evolution 65
Performance 69

Table of Contents
Outlook 72
Technological landscape 73
Summary 73
Evolution 73
Performance 74
Outlook 78
Legal landscape 79
Summary 79
Evolution 79
Performance 84
Outlook 85
Environmental landscape 86
Summary 86
Evolution 86
Performance 89
Outlook 89
APPENDIX 91
Ask the analyst 91
Datamonitor consulting 91
Disclaimer 91

Table of Contents
TABLE OF FIGURES
Figure 1: Map of Australia 11
Figure 2: Australia – political events timeline 35
Figure 3: Australia – key political figures 37
Figure 4: Evolution of GDP growth in Australia, 1970–2008 46
Figure 5: Market capitalization of Australian securities exchange, 2001–08 49
Figure 6: GDP and growth rate in Australia, 2002–12 (constant prices) 51
Figure 7: Sector composition of GDP in Australia, 2008 52
Figure 8: Australia’s agricultural output, 2001–08 53
Figure 9: Australia’s industrial output, 2001–08 54
Figure 10: Australia’s services output, 2001–08 55
Figure 11: Australia’s external trade (merchandise), 2004–08 58
Figure 12: Australia – total foreign direct investment inflows, 2001–08 59
Figure 13: Australian dollar to US dollar exchange rate (A$ per $), 2004–08 61
Figure 14: Consumer price index and CPI-based inflation in Australia, 2002–08 62
Figure 15: Major religions in Australia 67
Figure 16: Expenditure on healthcare in Australia, 2002–08 70
Figure 17: Expenditure on education in Australia, 2002–08 71
Figure 17: Telecommunications market growth in Australia, 2002–12 75
Figure 18: Number of internet users in Australia, 2002–12 76
Figure 19: R&D expenditure in Australia, 2000–12 78
Figure 20: Australia – judicial structure 80

Table of Contents
TABLES
Table 1: Australia – key fundamentals 5
Table 2: Australia - key facts 10
Table 3: Analysis of Australia’s political landscape 13
Table 4: Analysis of Australia’s economy 16
Table 5: Analysis of Australia’s social system 20
Table 6: Analysis of Australia’s technology landscape 24
Table 7: Average annual salaries for researchers across countries 26
Table 8: Patents received by USPTO, 2001–07 27
Table 9: Analysis of Australia’s legal landscape 28
Table 10: Analysis of Australia’s environmental landscape 31
Table 11: Mid-year population by age (millions) in 2006 66
Table 12: International environmental treaties signed and ratified by Australia 88

Key facts and geographical location
KEY FACTS AND GEOGRAPHIC LOCATION
Key facts
Table 2: Australia - key facts
Country and capital

Full name Commonwealth of Australia
Capital city Canberra
Government
Government type Federal Parliamentary Democracy
Head of state Queen of Australia, Elizabeth II (since 1952)
Head of government Prime Minister Kevin Rudd
Population 20.43 million
Currency Australian dollar (AUD)
GDP per capita (PPP) $38,100
Internet domain .au
Demographic details
Life expectancy 81.6 years (total population)
79.2 years (men)
84 years (women)
Ethnic composition White 92%, Asian 7%

Aboriginal and others 1%
Major religions Catholic 26.4%, Anglican 20.5%, other Christians 20.5%

Muslims 1.5%, others 15.8% and none 15.3%
Country area 7,686,850 sq km
Major exports Coal, gold, meat, wool, alumina, iron ore, wheat and machinery.
Major imports Computers and office commodities, crude oil and petroleum products
Source: CIA DAT AMONITOR

Key facts and geographical location
Geographical location
Australia is located in Oceania, between the Indian Ocean and the South Pacific Ocean.
Figure 1: Map of Australia
Source: CIA -the World Factbook DAT AMONITOR

PESTLE Analysis
PESTLE ANALYSIS
Summary
Australia is an independent nation in the Commonwealth of Nations with Queen Elizabeth II as its head of state,
represented by Governor General Quentin Bryce. Kevin Rudd, the Labor Party leader, has been the prime minister since
December 2007. For several years, the country has tried to break away from its colonial ties with the UK, but the 1999
referendum seeking to replace Queen Elizabeth as head of state failed. However, with the rising influence of republicans in
Australia, the independent mindset of country looks set to increase. The economy was growing steadily until the global
crisis began in 2008. Although the country is better placed than other advanced nations in terms of economic growth, it
faces challenges such as adverse terms of trade and rising external debt. Moreover, the large-scale government
expenditure programs will also adversely affect the financial health of the state, with a widening budget deficit.
The progressive aging of the population is leading to higher expenditures on health and social security measures. The
welfare system is based on egalitarian principles, but is overly complex and needs further improvement. Technological
advancements are applied in both modern and traditional fields. Businesses and the government work together for the
development of research, wherein the funding is provided by the industry with government collaboration.
The government lays down legal polices in the broad areas of competition, trade practices, infrastructure and energy. The
country was identified as a business-friendly economy by the OECD in 2007. Australia has moved from utilizing a state-
based policy towards taking a more coordinated, market-based approach to solving its environmental problems. It is a
signatory of the Kyoto Protocol and has committed to meet the associated targets by 2010. Australia is also expected to
play an important role in developing a carbon emissions trading system at the global level and to adopt a domestic trading
system by 2012.

PESTLE Analysis
Political analysis
Overview
Australia is a federal parliamentary democracy. The head of state is the Queen of Australia (Elizabeth II, since 1952) and
the head of the government is the prime minister, presently Kevin Rudd, who was elected in November 2007. The country
has strong democratic roots, with a government chosen by the people. Political and governmental power is highly
decentralized in Australia, with authority being distinctly divided between the states. The desire to be a republic is slowly
growing in the nation, as the Australian Republican Movement slowly gains national importance. Though historically the
political landscape of Australia was dominated by only two parties, minority parties are now gaining importance, with
coalition support required from them.
With the economic slowdown, financial policies have come to occupy the center stage, as the government continues to be
blamed for mismanagement. This may become an important issue in the next elections scheduled for 2010; the ruling party
may find its position hard to defend if the economic conditions do not improve soon. Nevertheless, a number of decisions,
such as the ratification of Kyoto Protocol, changes in asylum policy and the re-introduction of collective bargaining have
proved immensely popular among the population.
Table 3: Analysis of Australia’s political landscape
Current strengths Current challenges

▪ Representative government ▪ Economic downturn
▪ Compulsory voting system ▪ Australian pressure groups
Future prospects Future risks

▪ Growing importance of Australian Republican Movement ▪ Increasing number of asylum seekers
▪ Improving international relationships
Current strengths
Representative government
The Australian political system is one of representative government, in that people elect members of parliament to
represent them. Furthermore, acceptance of a democratic government was exceptionally fast in the country, and the
system is uniform at all levels. The country’s political system is referred to as a ‘responsible government’, as the executive
government—the cabinet—is drawn from, and accountable to, the legislative branch. The streamlined government system
in Australia makes policy implementation process faster and more efficient.

PESTLE Analysis
Compulsory voting system
Compulsory voting has been a feature of Australia’s national elections since 1924. The country is one of only 20 in the
world that have this system. The compulsory voting system increases turnout and is held by some to add legitimacy to the
government. Indeed, Australia consistently maintains one of the highest voter turnouts worldwide; there has been an
average turnout of 95% in the 24 elections since 1946. Another contributing factor to this political system's strength is the
familiarity of the voting system among Australians. There is also a high degree of public compliance with the system and its
use creates no administrative problems for the government.
Current challenges
Economic downturn
The global economic slowdown has not left the Australian economy unscathed. The industrial downturn, coupled with the
deteriorating terms of trade, forced the government to come out with stimulus packages for economic revival. While the
long-term impact of such measures is yet to be assessed, the present government is increasingly being criticized by the
opposition for economic mismanagement. With fears of recession looming large, the state will be forced to boost liquidity in
the system and raise expenditure. The government may face mounting opposition in the federal elections of 2010 if the
economy does not show signs of revival.
Australian pressure groups
Pressure groups lobby to influence the policies of the government. In Australia, pressure groups are broadly divided into
two sets: environmental and general groups, and trade unions. The influence of trade unions is very high in the political
arena. Moreover, in the previous government, led by John Howard, almost 70% of the ministers had been trade union
leaders at some point of time in their political careers. Thus, the powerful trade union groups outside of the political frame
get support from those ministers who were formerly a part of these unions. With this internal political support, the trade
unions have taken their protests to the streets on various issues. This has been an unattended problem in Australian
politics.
Future prospects
Growing importance of Australian Republican Movement
There is a section of society in Australia that remains determined that the country should be a republic. This group includes
the Australian Republican Movement (ARM), which is growing in importance and stature in Australia. The main concern of
the ARM is that no Australian can become head of state. In this respect, the Rudd government took a small step in instilling
a sense of sovereignty in the public by implementing a change in the pledge that ministers read out in the swearing-in
ceremony; the text now contains the words ''this land and its people'', rather than ''Queen Elizabeth II, her heirs and
successors''. This can be taken as an indication that it is probable that Australia will become a republic at some point in the
future. This is made especially likely by the ARM slowly increasing awareness among the people.

PESTLE Analysis
Improving international relationships
Australia has been developing its international ties in recent times, emphasizing continuity in foreign policy towards the US
and Asian nations like China, Japan and Indonesia. The country has entered into bilateral trade agreements to promote
trade liberalization. The Australian government is historically known to provide strong support to the US policies due to the
two countries' major trade relations. Prime Minister Rudd is supportive of the US President Obama’s international policies.
Under Rudd’s leadership, Australia withdrew troops from Iraq, although it has pledged to maintain its forces in Afghanistan.
Moreover, after signing the Kyoto Protocol, Australia set a target of reducing its carbon emissions by 60% from 2000 levels
by 2050. This is similar to the US target of reducing emissions by 80% over the same period.
Furthermore, the political and economic relations between Australia and South Africa have been improving in recent years.
In April 2008, the countries agreed to enter into multilateral arrangements in areas such as UN reform, human rights, the
WTO Doha Development Round, climate change and global security. A close relationship with South Africa will provide
Australia not only with a lucrative destination for industrial investments, but also a window to other countries in the African
continent, which generally have abundant natural resources.
Australia favors good relations with China, but is apprehensive of its growing influence in the Asian region. Australia's
relationship with Japan, meanwhile, has been improving, and the nations have signed a joint pledge towards free trade.
Free trade agreements (FTAs) were also signed with Singapore in 2003 and Thailand in 2004, apart from the existing ones
with New Zealand and the US. In the South East Asian region besides Indonesia, Australia is also working on improving its
relations with Vietnam.
Future risks
Increasing number of asylum seekers
Prime Minister Kevin Rudd’s decision to ease policies with respect to asylum seekers may turn into a larger crisis in the
future. The government has done away with the policy of sending people to camps in Pacific island nations until their
asylum status is ascertained, and now grants approved refugees restrictive, three-year visas. Since these changes took
effect, the number of people entering the country are said to have increased. A large number of asylum seekers from
Indonesia enter Australia by boat. While the government promised more humane treatment of illegal migrants in the
election campaign, it may prove to be difficult for the government to continue with a soft policy, as it could lead to an
unmanageable social crisis.

PESTLE Analysis
Economic analysis
Overview
Australia recorded a healthy annual average GDP growth rate of around 3.3% during 2002–07. The economy has been
experiencing a downturn since 2008, however, with a lower GDP growth rate of 1.5%. Nevertheless, its performance is
better than most of the other advanced economies, mainly because its government’s finances are in a better state and its
exports are dominated by commodities. According to Datamonitor estimates, the downturn will be more severe in 2009,
with GDP predicted to record a negative growth of 0.5%. In such a scenario, the government's economic stimulus programs
will be of utmost importance. Nevertheless, these programs will affect the government’s financial health, as revenue income
is set to decline. The country also faces a risk of delayed recovery and an increased tax burden for future tax payers if
these packages fail to stimulate the economy. The government is expected to continue with its policy of monetary easing
along with fiscal stimulus.
Table 4: Analysis of Australia’s economy

▪ Policies towards a digital economy ▪ Deteriorating economic conditions
▪ Robust tourism and mining sectors ▪ An adverse terms of trade and rising external debt
▪ Strong infrastructure industry

▪ Economic stimulus package ▪ Growing budgetary deficit
▪ Improving economic ties with New Zealand
▪ Free trade agreements
Current strengths
Policies towards a digital economy
The Australian government has undertaken various initiatives to make sure there is all-round development in the country,
which could transform the economy. The state has funded various projects supporting telecommunication and IT
infrastructure, broadband services for local and rural areas, the development of green telecommunications, and carbon
trading. The government has also been successful in setting up tele-education in remote areas with the aid of broadband
services. In an effort to lower costs and provide training and education to a wider audience, corporations and universities
are adopting e-learning solutions. The state has installed e-health applications at several hospitals to disseminate
information on various aspects of health, and extended e-government services so that citizens can have easier access to a
range of government agencies. These favorable policies have provided Australia with a firm foundation on which it can
transform itself into a digital economy, enhancing growth in all sectors of the economy.

PESTLE Analysis
Robust tourism and mining sectors
The tourism sector provides employment opportunities to more than 480,000 people in the country, contributing more than
$78.7 billion to the economy and accounting for more than 3.5% of GDP at the end of fiscal year 2007–08. This was a 7.8%
increase from 2006–07, and was also the highest since 1999–2000. Within the industry, air and water transport, eateries
and retail trade are the most important sectors. Increased spending by Australians in their own country drove domestic
tourism to $58 billion in 2007–08, an increase of 6.8% over the previous year. In the same year, international tourists
visiting Australia injected around $20.7 billion into the economy, an increase of 9% over 2006–07. Although the economic
downturn has negatively impacted the industry to some extent, its contribution to GDP remains significant.
The minerals industry in Australia is of considerable economic and social importance, helping its nationals both directly and
indirectly. Indeed, the industry has directly contributed over $400 billion to Australia’s wealth during the past two decades.
During 2006–07, the industry accounted for nearly 8% of the nation’s GDP. Australia ranks among the top five producers of
most of the world’s primary minerals commodities, such as lead, bauxite and alumina, uranium, zinc, nickel and iron ore,
among others. It is expected that the strength in the country's mining sector will provide some respite from the economic
slowdown.
Strong infrastructure industry
The infrastructure industry is one of the major drivers of the Australian economy. It includes the construction of various
residential and non-residential buildings, as well as many other engineering construction projects. It also covers
architectural and engineering services and construction trades such as bricklaying, plumbing and electrician work.
Construction in Australia is primarily focused on the domestic market and is extremely fragmented, with around 200,000
businesses, representing 20% of the total number of companies in Australia. With the government supporting various
infrastructural projects and funding various rural expansion programs, the industry will further expand its activities and
boost its contributions to the economy at large.
Current challenges
Deteriorating economic conditions
Since 2008, there has been a slump in the economic growth of Australia similar to that seen in most other advanced
nations, albeit of a lower magnitude. The country recorded a GDP growth rate of 1.5% during 2008, compared to 3.9%
growth in 2007. It is expected to further decline in 2009 to a negative growth of 0.5%. According to the RBA’s Statement on
Monetary Policy in May 2009, GDP declined by 0.5% during the quarter ending in December the previous year. This report
said that the slowing in the domestic economy had been evident across private-sector spending and in the labor market.
Household consumption has been quite weak since the start of 2008, after having grown strongly over previous years, and
household investment declined in the second half of 2008, with a further decline expected in the first half of 2009. The pace
of growth of business investment slowed in the second half of 2008 from the high rates seen in previous years, and
indicators suggest that it will contract through 2009. Export volumes have been broadly flat recently. As a result of the
weaker economic environment, labor market conditions have deteriorated, with the unemployment rate increasing from a
low of around 4% in early 2008 to more than 5% in April 2009. The economic recovery of the country may be delayed if the
stimulus package fails to encourage private-sector investment.

PESTLE Analysis
An adverse terms of trade and rising external debt
Australia’s export performance was relatively healthy in the recent years, assisted by the strong global economy. However,
import growth was even more robust, resulting in a widening current account deficit of close to 6% of the GDP in 2005–06.
In the last quarter of 2007–08, the current account deficit grew by $2.8 billion to reach $18.28 billion. This was a record
high, with the current account deficit standing at around 7% of the GDP. The deficit is expected to widen further in 2009–10
to around 9% of GDP due to the global demand for the country's export commodities deteriorating without an equivalent fall
in imports, as Australian consumption expenditure will remain healthy compared to that of the other advanced economies.
Furthermore, accumulation of current account deficits coupled with Australian equity investment abroad, which was partly
funded by increased borrowings, has led to growing external debt. In 2008, external debt was at 95% of GDP. Rising debt
poses a challenge for the Australian economy, as this may further delay economic recovery, and debt financing will leave
the country with less funds for other expenditure programs.
Future prospects
Economic stimulus package
The economic downslide has brought economic policies to the forefront. The government has taken a number of bold policy
decisions in the form of fiscal stimulus packages and guarantees of deposits and wholesale borrowing for many financial
institutions to protect the economy from entering a recession. The Australian economy has performed better than that of
other advanced nations in facing the crisis.
In February 2009, the government announced a $26 billion stimulus package aimed at nation-building and supporting up to
90,000 jobs. It includes increased spending on education and infrastructure, tax breaks for small businesses and cash
handouts to eligible workers, farmers and students. Prior to this, in December 2008, the government had pumped an
additional A$10.4 billion (around $8 billion) in the economy to boost consumer spending.
Besides these fiscal stimulus measures, the government continued with its policy of aggressive interest-rate cuts, the latest
being a percentage point cut to reach a 45-year low of 3%. Since September 2008, there has been significant easing of 425
basis points (BPs). Such monetary measures, along with the fiscal stimulus, are expected to ease the effects of the
economic crisis.
Improving economic ties with New Zealand
New Zealand and Australia share a unique economic relationship through their involvement in one of the world's most
successful FTAs: the Australia New Zealand Closer Economic Relations deal (CER). Two-way trade in goods and services
expanded by an average of 9% per year during 2006–08, reaching around $24 billion in the year ending March 2008, the
CER's 25th anniversary year. The countries met to further enhance their relationship in March 2008. Australia and New
Zealand are making efforts to focus on the Single Economic Market program, which complements the CER by seeking
greater harmonization of economic regulation and addressing various other impediments to trade. The countries also
agreed to bring the development and economic integration benefits to all their Pacific island neighbors through ‘PACER
Plus’, the next stage of the Pacific agreement on closer economic relations.

PESTLE Analysis
Free trade agreements
The idea of having an FTA between Australia and China was first proposed in 2005, and negotiations in April 2008 seem to
have been fruitful. Under the current FTA, the Australian government is expecting China to come up with revised tariff
offers on all goods, including agricultural commodities. In their latest round of free-trade talks, the governments discussed
agricultural products affected by tariff-rate quotas (cotton, wheat, rice, sugar, wool and corn). Furthermore, the Australian
government has also emphasized that its producers will not be a threat to China's farmers. The FTA is expected to boost
the GDP of Australia and China by $23.2 billion and $77.2 billion, respectively, during 2006–15.
The Australian government also entered into a pact with South Korea in April 2008 for a long-term free-trade agreement, to
be effective until 2020. According to the Australian government, the Australia-Korea FTA may boost Australia's GDP by up
to $22.7 billion and South Korea's by up to $29.6 billion over the period 2007–20. With these mutually beneficial
agreements, Australia is set to boost its external trade with both countries.
Future risks
Growing budgetary deficit
After maintaining a comfortable fiscal position, the Australian government is set to record a large budgetary deficit of 4.9%
in 2009–10. The government’s responsible fiscal policies enabled it to enjoy a solid fiscal position for nearly 15 years.
However, the financial condition will change with the large-scale state expenditure proposed to facilitate economic revival.
According to the budget unveiled in May 2009, owing to large-scale infrastructure spending the budget deficit will almost
double during 2009–10. According to the 2009–10 budget forecasts, the economy will contract by 0.5% in 2009–10 before
returning back to 2.25% growth in 2010–11. While this is held to be overly optimistic, the economy may suffer if the external
conditions worsen and domestic consumption fails to take off. In such a scenario, future budgets will have to increase
public expenditure. If government borrowing goes up, the state’s fiscal health will deteriorate in the coming years.

PESTLE Analysis
Social analysis
Overview
Australia has an impressive healthcare network, and the government has also taken up tele-education to disseminate
information among the healthcare units. The country has also entered into several healthcare partnerships in Asia Pacific.
Australia has far greater social mobility than countries such as the US. While it has a good healthcare network, the country
is challenged with a weak social security system and professional work pressure leading to high stress levels. Another
problem that is now becoming a worry is the aging population and the corresponding reduction in the labor force. The
country’s booming education industry may also take a hit because of increasing instances of attacks on Indian students,
who constituted a significant 18.7% of total international students in 2008.
Table 5: Analysis of Australia’s social system

▪ Social mobility ▪ Social security system
▪ Increased operational efficiency in healthcare sector ▪ Comparatively poor educational expenditure
▪ Tele-education in health services

▪ Incentives to increase employment opportunities ▪ Aging population
▪ Health partnerships in the Asia Pacific ▪ Lower number of Indian students to opt for Australia
Current strengths
Social mobility
Australia offers good opportunities for social mobility, with chances to rise up the income ladder more frequent than in other
countries, such as the US. In a survey carried out by the Australian National University, the income growth of a sample of
5,000 people born during 1910–80 in Australia was compared directly to that of people born in the US during the same
period. The results showed that people in Australia enjoyed higher income growth than the equivalent group in the US. This
kind of higher social mobility is attracting many foreign nationals to migrate to Australia. Improving avenues for social
mobility bode well for the country.
Increased operational efficiency in the healthcare sector
There has been constant improvement in the healthcare sector, with important companies taking the lead. Sterling
Commerce (a subsidiary of AT&T Inc.) and 4Solutions Enterprises (a company specializing in delivering business process

PESTLE Analysis
management and professional services in Australia) have together improved the IT integration between wholesalers and
distributors, servicing about 5,500 retail pharmacies across Australia. As a result, health supplies have become more
streamlined and better integrated across the nation. The healthcare network handles up to 50,000 transactions each
month, with a large cash inflow. Furthermore, 95% of the stock transacted is common to three main distributors: Australian
Pharmaceutical Industries Limited, Sigma Company Limited and Symbion Pharmacy Services. Due to this IT integration,
the health supply network has met its deadlines and reduced the amount of stock residing in warehouses, which is critical
to achieving economies of scale in a competitive market.
Tele-education in healthcare services
Tele-education is becoming increasingly important to train healthcare professionals in remote areas of Australia. In an effort
to lower costs and provide training and education to a wider audience, corporations and universities are adopting e-learning
solutions. In 2008, the Australian government invested $1 billion in e-learning and e-health, which will further expand the
resources throughout the country. Some of the advantages experienced by the country due to the implementation of tele-
education are:
• Patient and doctor travel is minimized.
• Local medical staff can consult with specialists anywhere in the world.
• Hospital and related travel costs are reduced.
• Students can watch an operation being performed irrespective of distance.
Current challenges
Social security system
The social security system was originally intended to act as a safety net during short spells of unemployment. It worked well
during the 1950s and 1960s, but the increase in unemployment since the 1970s has made the costs of the system more
apparent. Apart from the fiscal expenses, the indirect costs in terms of providing funds to people searching for jobs and the
families that are unemployed for generations are becoming more costly. Long-term unemployment and the growing
phenomenon of jobless families (where two or three generations of a single family may be out of work) are indicative of the
kind of problems faced by the system. The most problematic features of the Australian welfare system are its complexity
and the marginal tax rates applied to people who move out of the welfare bracket and work.
Comparatively poor educational expenditure
Government expenditure on education as a percentage of GDP was nearly 4.5% in 2005, but increased to 5% in 2008.
Despite the increase, Australia’s performance does not compare favorably with other OECD nations. In an OECD report on
education comparing it with other advanced economies, the country’s track record was assessed as "must improve". The
report ranked Australia second-to-last in terms of government funding of public education, as Australia is one of the few
countries where the state pays for less than half of the costs of tertiary education. The report revealed that, by the
standards of developed economies, the most highly paid Australian teachers earned comparatively little. Furthermore,
working hours were longer for teachers in Australia compared to those of its peers, and classes were larger. These

PESTLE Analysis
limitations place the country at a disadvantage compared to other developed nations.
Future prospects
Incentives to increase employment opportunities
To help raise participation rates, the government has undertaken policy initiatives in the form of the Australians Working
Together (AWT) package. The country has also introduced welfare-to-work initiatives, which have proved popular in all
quarters. Under these reforms, the employment prospects for people aged 55 and over are no longer to be taken into
consideration when determining eligibility for the disability support pension. Australia is also taking steps to encourage older
workers to continue working after they become eligible for an old-age pension. This move is to reduce the incentives to
retire early under the superannuation guarantee scheme by aligning the eligibility age of superannuation (currently 55, but
to be increased to 60 by 2025) with the pension age (65) over time. The increased age limit for superannuation will keep
people employed for a longer period of time by acting as a disincentive against retiring early.
Health partnerships in the Asia Pacific
The Australian government is establishing stronger alliances with a range of domestic, regional and international partners
to improve the quality and effectiveness of the healthcare sector in the Asia Pacific region. As part of this program, the
government is investing $24m over four years to establish knowledge hubs in the healthcare sector with various universities
of Australia. This funding is focused on improving the quality and effectiveness of health development assistance, partly
through increased investments in research. These hubs are being built to improve the effectiveness of the Australian
government's development assistance program in health.
Future risks
Aging population
As the large Australian baby boomer generation progressively moves into older age brackets, maintaining high per capita
income growth will become harder to achieve. The proportion of people aged below 55 , where labor force participation is
normally highest, is expected to decline significantly during the next 20 years. Australian government projections foretell a
doubling of the number of people aged over 65 to around 25% of the total population over the next 40 years, while growth
in the population of traditional workforce age is expected to slow to almost nil. Excluding an unprecedented rise in fertility
rates, the age structure of the population is likely to stabilize thereafter with a far higher proportion of older people than
before.
As a result, the aggregate labor force participation rate is predicted to be 9% lower than the current level by the early
2040s. This would reduce the growth in real GDP per capita to about 1.5% per year from the 2020s onwards, under the
assumption of labor productivity growth of 1.75% (the average of the last 30 years). Additionally, increasing age-related
public expenditures would raise budget pressures. Moreover, the government will also face the burden of rising health and
insurance costs.

PESTLE Analysis
Lower number of Indian students to opt for Australia
Australia has emerged as an attractive destination for international students. International education is the third largest
source of overseas earnings, generating around $12 billion in 2008 and supporting more than 125,000 jobs in Australia.
China and India are the largest source of enrolments in Australia with a share of 24.1% and 18.7%, respectively. However,
this booming industry will take a hit in view of the increasing attacks on Indian students. A number of people planning to
study in Australia may reconsider their options and choose the UK or Canada, where the cost of studying in these countries
is also lower than Australia. The lower cost is because the UK and Canada have one-year master’s degrees whereas the
Australian equivalent is of two years' duration.

PESTLE Analysis
Technology analysis
Overview
Historically, the Australian government has supported technological development. This is reflected in the budgetary support
it lent in 2008 to the communications industry, the most important base on which the services sector operates in Australia.
With government investments in the broadband network, the e-commerce market is set to grow further. Additionally, on the
R&D front, the country has entered into scientific pacts with many countries, including India, China and the US. While the
country has a proven record in R&D, however, low levels of productivity and high wage costs have dampened its activity in
this regard. Also, the number of patents being awarded is on a declining trend.
Table 6: Analysis of Australia’s technology landscape

▪ Budgetary support for ICT ▪ Low levels of productivity
▪ High usage of e-commerce ▪ Rural Australians missing out on broadband

▪ International co-operation on science ▪ High wage cost
▪ New broadband network ▪ Declining patents
Current strengths
Budgetary support for ICT
The telecommunications sector has been one of the fastest-growing industries in Australia. The sector demonstrated
average annual growth of around 6.5% during 2000–07. The government has continued its tradition of support for important
communications and IT programs, particularly through the establishment of a framework for digital radio, and has made far-
reaching reforms to strengthen the Australian film and television industry. The government has approved a $10.5m grant to
two of the biggest broadcasting networks, the Australian Broadcasting Corporation and Special Broadcasting Services, to
enhance and extend their services to the world. Other budget announcements within the communication portfolio included
a $360m grant to the Australian Communications and Media Authority until 2012, which includes a package of $13.6m over
four years to help protect Australians from sophisticated online attacks targeting home and small business computers. With
continuous patronage from the government, the communications market is expected to grow at a much faster rate in the
coming years.

PESTLE Analysis
High usage of e-commerce
In Australia, business driven by online shopping and e-commerce is at a high, with more than five million households
having access to internet at their homes. Among the business segments, 60% of small and medium enterprises (SMEs)
use the internet for their transactions and more than 50% of these SMEs use the internet to sell their products and services.
The business segment is estimated to have spent more than $2 billion on online advertising in 2008–09. It is also estimated
that by 2015, e-commerce will contribute more than $20 billion to the economy. With the expansion of broadband
throughout the country, the e-commerce market is set to expand its base and reach many more customers.
Current challenges
Low levels of productivity
Australia’s productivity levels in R&D are still considerably below those of countries like the US, the UK and several other
OECD countries. The government has prioritized policies aimed at maintaining Australia’s recent advances in productivity,
announcing a package of measures in 2001 aimed at encouraging the adoption of new technology to this end. Moreover,
the state has restored tax incentives for R&D expenditure and increased its spending on public research and relevant
university education. However, all of these measures have been ineffective in raising the R&D levels in the country.
Concerns have been raised over the levels of R&D expenditure in recent years. Following the reduction in the favorable tax
treatment of R&D expenditure in 1996, research-related spending fell sharply. During 2000–07, R&D expenditure did not
show any signs of improvement, with the rate hovering around 1.5% of GDP. Low expenditure and an inadequate focus on
R&D are two causes of the low level of productivity.
Rural Australians missing out on broadband
The digital divide between the urban and rural areas in Australia has increased in recent times, with less than a quarter of
rural communities having access to high-speed internet services. According to a study carried out by the Bureau of Rural
Sciences, only 24% of rural communities have access to broadband, compared to 46% of homes in major cities. although
some initiatives have been taken up by the private sector to cover far-flung areas, rural access to broadband is yet to be
addressed by the government. This inequitable access to broadband exists in spite of the Australian Broadband Guarantee.
Future prospects
International co-operation on science
As a part of their international science collaboration, Australia and India set up a joint working group (JWG) to create a
roadmap for strengthening bilateral co-operation in science and technology in April 2008. Prior to this special agreement,
21 projects were already functioning under the India-Australia Strategic Research Fund for advanced scientific
development. The JWG was set up to strengthen bilateral scientific co-operation focusing on industrial research and
development, and high technology areas such as nano-composites, bio-energy, health and agricultural biotechnology,
climate change and renewable energy, particularly photo-voltaic technology. Furthermore, Australia and China work
together via the China-Australia Special Fund for advanced science and technology development. The country has also
entered into scientific bilateral collaborations with the US, Canada, South Korea and Japan. With growing international
science and technology pacts, the country is set to augment its R&D capabilities.

PESTLE Analysis
New broadband network
The Australian government approved a high-speed broadband network in April 2008. This venture was accelerated after
the state cancelled an $890m funding deal for a rural network that overlapped with planned national policy on broadband.
The government also approved a national fiber-optic network and sanctioned around $4 billion as corpus fund for this
purpose. It is expected that 98% of Australian homes will have high-speed internet access in the next four years, compared
with just 64% in 2007. With the boost in investment in broadband, all related ancillary industries will also be on a growth
path.
Future risks
High wage costs
The wage costs in Australia are very high compared to many other countries. The average annual salary paid to a
researcher in Australia is $80,572, compared to $3,956 in China and $11,526 in India. On a comparable basis, the EU and
US also pay lower salaries. This is slowly becoming a growing concern and adding to the already existing low level of
productivity. The high wage costs in Australia are also making the country an unattractive destination for offshore R&D,
especially with countries like China and India providing similar expertise at lower salaries. Furthermore, there is also tough
competition in terms of R&D output.
Table 7: Average annual salaries for researchers across countries
Country Average annual salary ($, 2006) Average annual salary ($, 2006: PPP
adjusted)
India 11,526 56,780
US 75,556 78,868
Japan 86,503 77,861
China 3,956 17,276
EU (average of 25 countries) 47,663 50,398
Australia 80,572 78,302
Declining patents
Due to many factors, like low productivity, high wage costs and reduced participation in R&D, Australia fares poorly in terms
of research patents in comparison to other developed countries. Even though the country is considered a developed nation,
Australia received only 1,546 patents compared to 93,691 in the US and 35,942 recorded by Japan in 2007. The number of
patents received increased by only 61 between 2004 and 2005, demonstrating a very low growth rate. The slow rate of
growth in terms of number of patents reflects that Australia must do more to encourage R&D growth.

PESTLE Analysis
Table 8: Patents received by USPTO, 2001–07
Year Canada France Germany Japan US Australia

2001 4,063 4,456 11,894 34,890 98,655 1032
2002 3,857 4,421 11,957 36,339 97,125 992
2003 3,894 4,126 12,140 37,248 98,590 1049
2004 3,781 3,686 11,367 37,032 94,129 1093
2005 3,177 3,106 9,575 31,834 82,586 1032
2006 4,094 3,856 10,889 39,411 102,267 1538
2007 3,970 3,720 10,012 35,942 93,691 1,546
Source: Datamonitor D AT AM O N IT O R

PESTLE Analysis
Legal analysis
Overview
The Australian judicial system includes a supreme court for each state, the High Court for the whole country and many
district level courts within a state. The nation has specific anti-terrorism laws and supports many countries to fight terrorists.
Although there are distinctive operating bodies in the judicial order, the government needs to ease the rules and regulations
with regard to lawyers migrating between various jurisdictions within the country. Australia is also listed as one of the most
open economies in the world by the OECD.
Table 9: Analysis of Australia’s legal landscape

▪ Liberal business regulations ▪ Investment restrictions in select sectors
▪ Tough laws against terrorism ▪ Tax reforms help the rich instead of the poor

▪ Restructure of competition law ▪ Rigid legal action on corporate sector
Current strengths
Liberal business regulations
The OECD has listed Australia as the most open economy among its member countries. The country follows market-
friendly policies and has a very liberal legal regime. In its annual review of reforms in 30 member countries, Going for
Growth 2008, the OECD stated that Australia has the lowest overall level of regulation out of all its members. However,
Australia ranked in the bottom half on three tests, specifically restrictions on foreign investment, regulation of telecoms, and
legal barriers to market entry. On most tests regarding the level of regulation, Australia was in the top six. It had the second
lowest levels of red tape in terms of business procedures, the third most liberal laws with regard to retail distribution, and
the fourth smallest framework of specific industry regulations. This ranking indicates the scope for further enhancement and
expansion of economic activity in the country.
Tough laws against terrorism
The July 2005 terrorist attacks in London prompted the Australian parliament to implement the Australian Anti-Terrorism
Act 2005, which was revised and passed by the Commonwealth parliament on December 6, 2005. Under this law,
individuals can be held under preventive detention without evidence of criminal activity and can be interrogated by the
Australian Security Intelligence Organization (ASIO). The controversial “shoot to kill” clause allows the police to treat people
wanted for detention in the same manner as the current law treats wanted suspects.

PESTLE Analysis
Furthermore, the Australian government has introduced comprehensive measures to fight the threat of terrorism. Between
9/11 and 2007, the government committed up to $2.3 billion for over 100 new security measures. Finally, the 2004–05
Budget provided additional resources to the attorney general’s office to let it implement a range of new measures.
Current challenges
Investment restrictions in select sectors
Despite a number of liberalization measures, a few restrictions with respect to investment in particular sectors still exist in
Australia. Investment in media, transport and communication has not been fully liberalized. For instance, cross-media
ownership is only allowed subject to conditions that no less than five independent voices remain in metropolitan markets
and four in regional markets. Similarly, foreign investment in airlines is subjected to more stringent requirements than the
standard limit of 49% of the equity in an Australian international airline. Furthermore, foreign investment proposals for
acquisitions of Australian airports are subject to examination in accordance with the standard notification requirements and
prior approval is required for foreign entry into the telecommunications sector. The existence of such pre-conditions
impedes foreign investment in important areas.
Tax reforms help the rich instead of the poor
The previous government, led by John Howard, adopted reforms in which several tax cuts were provided. According to an
OECD study on taxation reforms in different countries, Australia’s tax reforms resulted in helping the rich instead of the
poor. The tax cuts undertaken in the country during 2003–07 helped only those with families, including single parents;
unmarried workers without children did not fare well. Only those earning at least 50% more than the average wage, or
about $78,599, profited from these tax reforms; the people below that range did not see any benefit. This issue needs to be
rectified, but is yet to be addressed by the new government.
Future prospects
Restructure of competition law
The Australian government has revealed that it will take a series of measures targeted at promoting competition and
cracking down on anticompetitive practices by powerful businesses. The planned reforms to the Trade Practices Act (TP
Act) 1974 include moves to further defend small business from predatory pricing and give the sector a permanent voice in
the Australian Competition and Consumer Commission (ACCC), the trade regulator.
These moves are intended to ensure genuine competition for the benefit of both consumers and small businesses.
Furthermore, it is hoped that the new rules will pave the way for indicting businesses that engage in anticompetitive
practices. The package will also give small businesses cheaper and more efficient judicial access, and permit cases
involving a misuse of market power to be heard in the federal magistrate’s court rather than in the federal court.

PESTLE Analysis
Future risks
Rigid legal action on corporate sector
The Australian Securities and Investment Commission (ASIC), the regulatory authority for financial institutions, follows the
corporate laws very strictly and reviews corporate actions with great diligence. In fact, the implementation of laws is so
tough that the ASIC is almost considered to be major impediment for conducting free business. As a result, some of the
nation's most talented businesspeople are shunning directorships, as they are afraid of being sued for any purported
negligence or mistake. This reluctance to become directors is mainly due to the ASIC laying personal liability upon
business personnel. Furthermore, some of the risks taken by companies are strategic but, due to rigid laws, firms now tend
to be conservative. This kind of rigid law may send a negative signal to business houses and hamper the normal
functioning of these companies.

PESTLE Analysis
Environmental analysis
Overview
The Australian government has comprehensive policies in place to protect the environment. Moreover, the government
encourages all of the citizens to participate in saving and protecting the environment through various schemes. The
government has also been active in developing various technologies that are environmentally friendly. Australia has already
started to witness the effects of global warming, with the country frequently experiencing the effects of climate change. One
of the most severe effects of rising pollution levels has been the decreasing area of the Great Barrier Reef. Australia is also
facing pollution due to forest fires in South America that produced excessive amounts of carbon monoxide.
Table 10: Analysis of Australia’s environmental landscape

▪ Tight environmental policies ▪ Rising pollution levels
▪ Environmental research ▪ Pollution from South America

▪ Kyoto Protocol ▪ Pollution affecting the Great Barrier Reef
▪ Environmental co-operation ▪ Effects of global warming
▪ Green energy scheme
Current strengths
Tight environmental policies
Environmental administration and regulation is taken very seriously in Australia. In mid-2007, for example, the Department
of Environment and Conservation suspended lead shipments from Esperance, a private shipping port in Australia, due to
pollution of the seas with lead that killed thousands of birds in the area. An investigation also found higher lead and nickel
levels in rainwater tanks in the area, and some instances of high lead levels in the blood of a number of residents,
prompting a parliamentary inquiry. The port company was charged with unreasonable emissions and was handed a penalty
of nearly $1m. In November 2008, the Australian government also announced the creation of the Green Car Innovation
Fund as part of the new car plan for a greener future. These kinds of positive actions against any kind of environmental
pollution have put all of the corporate houses on alert in the country.
Environmental research
Environmental research in Australia has taken a very optimal and sustainable route. Many environmental research
programs now adopt community-based philosophies and designs, although there are few applications in Australian
indigenous communities. Many environmental scientists endorse the participation of indigenous (and non-indigenous)
stakeholders in research. Agenda 21 and the Convention on Biological Diversity were outcomes of the 1992 United Nations
(UN) Conference on Environment and Development and were reaffirmed by most countries at the World Summit on
Sustainable Development in 2002. Agenda 21 is a global action plan that promotes the environment and the development

PESTLE Analysis
of partnerships, and is supported by international agreements on the conservation and sustainable use of environmental
resources. These policy tools support initiatives that concurrently deal with environmental degradation. Signatory nations to
the Convention on Biological Diversity make efforts towards a reasonable sharing of technologies, and project resources
and benefits, with indigenous people and developing nations. Australia is a signatory nation to both Agenda 21 and the
convention, and has taken steps to uphold its commitment under both treaties.
Current challenges
Rising pollution levels
The rising pollution levels are causing environmental disruption in Australia, and are only getting worse. The proportion of
the country's land that is hospitable to useful vegetation has now fallen to 8%, and wetlands in the Murray-Darling basin
have come down by 90%. Even the coast and ocean life are under increasing pressure in Australia; it has also been
discovered by the forest department that the water yields from woodland to the Melbourne’s supply catchments have come
down by 50%. Carbon dioxide emissions have also been rising at an increased rate, growing from 381 million metric tons in
2004 to more than 417 million metric tons in 2006. Although there are number of policies in place, the government is finding
it difficult to control the mounting pollution levels. This is largely due to increased dependency on coal for electricity.
Pollution from South America
Envisat, the European Space Agency’s environmental satellite, has discovered that some carbon monoxide in Australian air
during 2004, originally blamed on local bushfires, in fact came mainly from South America forest fires. Scientists estimated
that almost one third of the extra carbon monoxide in North Australia was from South America. This is becoming a worrying
factor for the authorities in the country.
Future prospects
Kyoto Protocol
One of the first policy decisions taken by Prime Minister Rudd after assuming office was to sign the Kyoto Protocol. In doing
so, Australia committed itself to meeting its Kyoto Protocol target, and has set a goal of reducing greenhouse gas
emissions by 60% on 2000 levels by 2050 and by 5% before the end of 2020. This is considered by some to be too little
given the high level of pollution in the country. However, the Australian government is prepared to increase this target if
other countries such as China and India make similar commitments.
The new government also issued draft legislation in December 2008 for the creation of the carbon trading system known as
the Carbon Pollution Reduction Scheme, scheduled to be launched in 2010. The government hopes that this scheme will
become the bedrock upon which Australia will reduce its greenhouse gas levels by making the creation of carbon pollution
expensive to encourage major polluters to reduce emissions.
Environmental co-operation
Australia has entered into several international agreements, enabling the country and others to fight pollution with collective
strength. In October 2007, Australia and India entered into an environmental pact to monitor pollution in the groundwater.
The Cooperative Research Centre for Contamination Assessment and Remediation of the Environment (CRC-CARE) and

PESTLE Analysis
the Indian Institute of Technology, Kanpur have signed a memorandum of understanding to work together on research
projects and the training of experts in contamination risk assessment and clean-up. CRC-CARE is a partnership of five
Australian universities and more than 20 companies and government agencies from Australia. The agreement entails the
exchange of staff and students from both organizations as well as joint workshops. This collaboration will enhance the
development of environmental protection and also widen the environmental knowledge base of both countries. Moreover,
Australia has environmental pacts with Association of Southeast Asian Nations (ASEAN) members, the US and also
several neighboring countries. Environmental pollution can be dealt with in an effective way through the collective efforts of
these nations. Furthermore, co-operation with various countries will support the conservation and protection of the
environment.
Green energy scheme
The Australian Capital Territory's green energy scheme encourages citizens to use renewable sources of power. Under
electricity feed-in laws, households are paid a tariff 3.88 times the retail cost of electricity for the clean energy produced
from rooftop solar panels or other renewable sources that they feed into the grid. According to the laws, the grid operator
must connect home producers and purchase their electricity. Generators of renewable energy will be paid the tariff for 20
years from the date they connected to the grid. Other states and territories have implemented or are considering similar
schemes. In this way, Australia is introducing innovative plans to tap renewable energy sources.
Future risks
Pollution affecting the Great Barrier Reef
The Great Barrier Reef is home to 400 species of coral and supports over 2,000 different types of fish and 4,000 species of
mollusks, as well as countless other invertebrates. It is the world's largest coral system and stretches over 2,300 kilometers
along Australia's northeast coast, covering an area bigger than Britain. The reef is one of Australia's most important tourist
destinations, contributing an estimated $5 billion to the economy. Scientific research in Australia has proved that the Great
Barrier Reef is being threatened by agricultural activities: more than 90% of its pollution comes from soil, pesticides and
other chemicals that have washed off farms and sugarcane plantations into rivers. The situation is becoming alarming and
is adding to the government's existing environmental problems.
Effects of global warming
Australia is vulnerable to the changes in temperature and rainfall projected for the next 50 years, because it already has
extensive dry and semi-dry regions and existing pressure on the water supply in many areas. Climate change will bring
about more problems for the country. Australia has a highly concentrated population in the coastal areas, which are now
affected by high pollution levels. Moreover, tourism is dependent on the health of the Great Barrier Reef and other fragile
ecosystems. According to research conducted by the inter-governmental panel on climate change, it is expected that global
greenhouse-gas emissions will almost double by 2030. The Australian government is pursuing a 60% decrease in
emissions by 2050. However, these targets do not meet the urgency of the situation, which is presently causing
consternation among the authorities.

Political landscape
POLITICAL LANDSCAPE
Summary
Australia is an independent nation within the Commonwealth of Nations, established on January 1, 1901. Queen Elizabeth
II has been the head of state since 1952 and has been represented by Governor General Quentin Bryce since 2008. It is a
democratic, federal state and has a bicameral parliament. The Labor Party, led by the Prime Minister Kevin Rudd, has been
in power since it won the 2007 elections.
Three parties dominate the political scenario: the Liberal Party, representing urban business interests; the National Party,
representing rural interests; and the Australian Labor Party, representing the trade unions and left-of-center groups. A
Liberal/National coalition came to power in 1996 after 13 years of Labor rule. However, in the recent 2007 elections, the
Labor Party came back to power with a landslide victory of 32 seats in the Senate and 83 seats in the House of
Representatives. The first policy that the government implemented after coming to power was to ratify the Kyoto Protocol.
This was a shrewd move by the government and won it international applause. In another major policy shift, the
government apologized for the past wrongs committed against the indigenous population. Furthermore, it eased its asylum
policy by abandoning the practice of holding all asylum seekers in detention centers until their cases are heard.
Evolution
Pre-1950s
Australia is a democratic, federal state, recognizing the British monarch as its sovereign. The Commonwealth of Australia
was formed on January 1, 1901, converting six colonies into a federation. Until this time, the country had been under the
direct rule of the UK. Australia was on Britain’s side in both world wars, during which the country sent its troops to fight.
Australia also maintained close relations with the US by providing air support in the fight against Japan during 1941. In
1948, Australia began an immigration scheme for Europeans. This resulted in the migration of more than two million people
into Australia over the next 30 years, one third of which were from Britain.

Political landscape
Figure 2: Australia – political events timeline
Pre –1950 1950–90 1990–2000 2000–04 2005 Onwards
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1950–90
Following World War II, Australia’s foreign policy became more closely aligned with the US than with Britain. Another
foreign policy theme has been collective security. Australian forces participated in the Korean War (1950–53) in support of
the UN-backed campaign. In 1951, the country signed the Australia-New Zealand-US (ANZUS) security treaty, which
committed the three nations to mutual defense. In 1954, Australia helped to found the Southeast Asian Treaty
Organization, the region's equivalent of the North Atlantic Treaty Organization (NATO). From 1965 to 1971, Australia sent
troops to Vietnam in support of the US efforts in the country.
1990–2000
In 1990, Australia deployed three ships to support the US-led naval blockade of Iraq following Iraq’s invasion of Kuwait. In
1992, the long practiced Citizenship Act was amended to remove the oath of allegiance to the British Crown. The then
Prime Minister Paul Keating's Labor government pledged to make Australia a republic and concentrated on improving ties
with Asia. The promises made by Paul Keating resulted in the Labor party winning the elections in 1993, and he was
appointed prime minister. Paul Keating lost the prime ministerial race in 1996 to John Howard. In 1998, there was a vote to
replace Queen Elizabeth II as head of state with a president chosen by parliament. This issue was put to a referendum in
1999, but the proposal was defeated, with 55% voting to retain the status quo.

Political landscape
2000–04
After the September 11, 2001 terrorist attacks on the US, Australia invoked the ANZUS treaty and dispatched troops to
Afghanistan. In 2003, the country also sent troops to participate in the Iraq War. Australia was rewarded for its strong
political ties with the US when the two nations instigated a bilateral free-trade agreement in January 2005. During the same
period, Australia also headed various peacekeeping forces in the Solomon Islands and Iraq. This period ended with John
Howard winning his fourth term as prime minister, and the Liberal Party gaining complete control of the Senate.
2005 onwards
This period began with Australia sending special forces to Afghanistan to support the US campaign. During the year, there
was racially motivated violence in Sydney, as large numbers of youths protested against racial discrimination. In 2006, the
parliament scrapped the legislation that had prompted the protests, which stipulated that future asylum seekers were to be
taken to offshore detention camps. In the 2007 general elections, the Labor party, under Kevin Rudd, won the elections,
with 32 seats in the Senate and 83 seats in the House of Representatives. In the same year, Prime Minister Kevin Rudd
ratified the Kyoto Protocol on climate change, reversing the previous government's policy. In another major policy shift, the
government apologized for the past wrongs committed against the indigenous population. Furthermore, it eased its asylum
policy by abandoning the practice of holding all asylum seekers in detention centers until their cases are heard.

Political landscape
Structure and policies

Key political figures
Key political figures in Australia are:
• Chief of State: Queen Elizabeth II
• Governor General: Quentin Bryce
• Prime Minister: Kevin Rudd
Figure 3: Australia – key political figures
Queen Elizabeth II has been the UK’s reigning monarch since 1952. She was proclaimed queen in 1952
following the death of her father, George VI. She is Australia's sovereign and is officially called Queen of
Australia. The monarch is represented at the federal level by the governor general. The governor general is
appointed by the monarch on the advice of the prime minister. The powers that belong to the crown are
collectively known as the royal prerogative, which includes many powers such as the ability to make treaties or
send ambassadors, as well as certain duties such as defending the realm. Parliamentary approval is not required
for the exercise of the royal prerogative.
Quentin Bryce, was sworn in as the governor general of Australia in September 2008, becoming the first woman
to hold the position. Prior to this, she was the governor of Queensland. After completing her degree in Law, she
had the distinction of becoming one of the first women to be accepted to the Queensland bar. In the past, she
had held various responsible positions including the faculty member of the Law school and director of the
Queensland Women's Information Service. She also worked as the the Queensland director of the Human
Rights and Equal Opportunity Commission and the Federal Sex Discrimination Commissioner.
The prime minister is the head of the government and holds, in practice, the most powerful political office in
Australia. Barring exceptional circumstances, the prime minister is always the leader of the political party, with
majority support in the House of Representatives. The present prime minister of Australia is Kevin Michael Rudd.
He is the leader of the Australian Labor Party (ALP). Under Rudd's leadership, the Labor Party won the 2007
federal election against the incumbent Liberal/National coalition government led by John Howard. Before
becoming the PM, he served as Australia’s minister for foreign affairs.
Structure of government
Australia uses a federal system, implying the division of powers between the national government (also known as the
Commonwealth parliament) and the states. The bicameral parliament consists of the Queen and two houses: the Senate
and the House of Representatives. The constitution provides for the Commonwealth government's legislative powers and
allocates certain powers and responsibilities (known as 'heads of power') to the Commonwealth government. All remaining
responsibilities are retained by the six colonies, which under the constitution became states of the Commonwealth of
Australia.

Political landscape
The House of Representatives is elected on a basis of the differing populations of the states. The majority party in the
house forms the government and appoints its leader as prime minister. The prime minister selects cabinet ministers from
both houses.
The role of head of state in Australia is divided between the Queen and the governor general, who is appointed by the
Queen on the advice of the prime minister. In many respects, however, the governor general is the Queen's representative,
and exercises various constitutional powers in her name. She is also independently vested with many important
constitutional powers.
The Federal Executive Council is the formal body that holds executive authority. The council consists of the governor
general, the prime minister and other ministers. The main function of the council is to advise the governor general in the
administration of the government. Most of the powers vested in the governor general, such as appointments and the
authorization of budgets, are exercised after consulting the Federal Executive Council. The council acts as a formal
ratification body for the decisions of the cabinet.
Provincial setup
The third level of government after the parliament and the states is local government, in the form of shire, town or city
councils. These bodies administer the provision of services such as local roads, sanitation and libraries. Councils comprise
elected representatives, usually serving on a part-time basis. Under the federal system, the parliament shares power with
the states and the financial relationship between these two levels of government is a key challenge. The federal
government collects 70–80% of taxes, but the responsibility for spending is more evenly shared between the parliament
and the states. A premier heads each of the six states, and a chief minister heads each of the two territories.
Structure of legislature
The legislature is the Commonwealth parliament, comprising the Queen, the Senate (76 members), and the House of
Representatives (150 members). The Queen is represented by the governor general, whose powers are limited to
assenting to laws. The members of the House of Representatives are elected by preferential voting from single-member
constituencies allocated among the states and territories roughly in proportion to population. Under the prevailing system,
the leader of the political party or coalition of parties that wins a majority of the seats in the House of Representatives is
named prime minister. The prime minister and the cabinet are responsible to parliament, of which they must be elected
members. The Commonwealth parliament and all the state and territory legislatures operate within the conventions of the
Westminster system, with a recognized leader of the opposition, usually the head of the largest party outside the
government. The current leader of the opposition is Brendan Nelson of the Liberal Party.
Key political parties/figures
There are three major political parties: the Australian Labor Party, the Liberal Party and the National Party of Australia. The
other minor parties that have achieved representation in the Australian Parliament are the Greens and the Australian
Democrats.

Political landscape
The Australian Labor Party
The Australian Labor Party is the center-left social democratic party of Australia. It is the oldest party in the country, having
been founded in 1891 by the trade union movement. It is the main opposition party when the Liberal/National coalition is in
power. The party’s leader is Kevin Rudd, the deputy leader is Julia Gillard, and the national president is Michael
Williamson.
The Labor Party has always been controlled to various extents by trade unionists, and its policy at any given time has been
the policy of the broader labor movement. While in office from 1983 to 1996, the party pursued many economic policies
such as privatization, tariff reductions and deregulation of the financial system. Thus, it is difficult to say that the party
strictly follows the normal ideologies of socialist parties. When the coalition government came into power in 1996, the party
responded by moving back to a more traditional labor stance, emphasizing 'fairness' in the economy, education system,
health system and industrial relations system.
The Liberal Party
The Liberal Party is a center-right party and advocates economic liberalism and free markets. Socially, the party is
conservative. It was established in 1934, a year after the federal election of 1933, to replace the United Australia Party. The
current leader of the party is Brendan Nelson and the national president is Alan Stockdale. The party was in opposition
since 1983 until it came to power in 1996, in coalition with the National Party. The party has taken a tough stand on
unauthorized immigration. However, its policies relating to this have faced condemnation from the UN's high commissioner
for refugees and remain a controversial aspect of the historic immigration policy of the country. The party has also strongly
supported Australia's traditional alliances with the US and the UK, including the Iraq war.
The National Party of Australia
The National Party of Australia is a conservative party, and represents the rural population. It was founded in 1922 as the
Country Party and assumed its present name in 1982. The current leader is Warren Truss. The National Party's support
base and membership are closely associated with the agricultural community. It follows an anti-union ideology and has
argued for state support for primary industries and free agricultural trade. Its main polices are pro-mining and pro-
development. The party has also opposed tariff protection for Australia’s manufacturing and services industries.
Key policies
Since the 1980s, Australia has transformed itself from an inward-looking, highly protected and regulated economy to an
open and export-oriented economy through significant structural reforms. Australia is a member of various international
organizations including the Asia Pacific Economic Cooperation (APEC), the Common Wealth Cairns Group, the
International Monetary Fund (IMF) and the OECD.
After assuming office, Prime Minister Kevin Rudd made a number of decisions that proved immensely popular, such as the
ratification of the Kyoto Protocol, the issuing of an official apology to Australian aboriginals and the reintroduction of
collective bargaining in the workplace. These decisions helped Rudd to maintain high approval ratings. However, the
economic downslide of the country has made his government vulnerable to the opposition’s criticism.

Political landscape
Economic
The economic downslide has brought financial policies to the forefront. The government has taken a number of bold policy
decisions in the form of fiscal stimulus packages and guarantees of deposits and wholesale borrowing for many financial
institutions to prevent the economy from entering a recession. The Australian economy has performed better than other
advanced economies in facing the crisis.
In February 2009, the government announced a $26 billion stimulus package aimed at nation-building and supporting up to
90,000 jobs. It includes increased spending on education and infrastructure, tax breaks for small businesses and cash
handouts to eligible workers, farmers and students. Prior to this, in December 2008, the government had pumped an
additional A$10.4 billion (around $8 billion) in the economy to boost consumer spending.
Besides these fiscal stimuli, the Australian government continued with its policy of aggressive interest rate cuts, the latest
being a percentage point cut to reach a 45-year low of 3.25%. Since September 2008, there has been significant easing of
425 BPs.
From an historical perspective, the 1980s brought about a huge change for the Australian economy. The government
undertook structural reforms, which included reducing tariff barriers, floating the Australian dollar, liberalizing the banking
sector and deregulating the financial sector. The government also initiated steps towards improving the labor markets,
privatizing government-owned companies and increasing the efficiency of the branches of the government. The reforms
brought in significant changes towards reducing federal government debt and the federal budget deficit and also decreased
the influence of organized labor. The administration has also accelerated the pace of privatization. The present
government, led by Kevin Rudd, is focused on improving growth and addressing the developmental issues of the country.
The two main challenges facing the Australian government are infrastructure and climate change. To address these
concerns, Australia’s government has recognized the need to invest heavily in infrastructure to expand the supply capacity.
Furthermore, the country is expected to play an active role in developing a global carbon trading system and has committed
to adopt such a system by 2010.
Social
Australia has an impressive welfare system, which includes income support programs funded by the government. The
Welfare to Work reform package was announced in 2005, and included a combination of changes to payments and work
incentives, work participation requirements and employment units. Other social welfare programs are designed to address
the issues of health, housing and education. The programs also include family assistance, student support and child care
support.
Australia has maintained a restrictive immigration policy, favoring the skilled labor from the Asian communities and barring
the entry of poor refugees. From 1901 to 1973, Australia followed the White Australia Policy, which favored immigrants
from the British Isles and Eastern Europe over Asians. Though this policy was abandoned in 1965, the country's
immigration policy continues to be restrictive and is heavily criticized. The UN Human Rights Commission has censured the
Australian policies on asylum and the treatment of aborigines, although the US State Department has recognized Australia
for its respect for human rights.

Political landscape
Foreign
Australia has been an active player in international affairs since World War I. Since World War II, Australia has built close
ties with the US. It signed its only formal security treaty with New Zealand and the US, popularly known as ANZUS, in
1951. Australia was also one of the founding members of the UN.
Australia has shown active interest in relations between the developed and developing nations and has emphasized
continuity in its foreign policy towards the US and Asian nations such as China, Japan and Indonesia. The country
generally enters into bilateral trade agreements to promote trade liberalization. The Australian government has historically
provided strong support to US policies due to the two countries' major trade relations. Prime Minister Rudd is supportive of
US President Obama’s international policies. Under Rudd’s leadership, Australia withdrew troops from Iraq, although it has
pledged to maintain its troops in Afghanistan.
Moreover, after signing the Kyoto Protocol, Australia set the target of reducing its carbon emissions by 60% from 2000
levels by 2050. This is similar to the US target of reducing emissions by 80% over the same period.
Australia favors good relations with China but is apprehensive of its growing influence in the Asian region. Furthermore,
Australia's relationship with Japan has been improving, and the nations have signed a joint pledge towards free trade. FTAs
were also signed with Singapore in 2003 and Thailand in 2004, joining the existing ones with New Zealand and the US.
Defense
Australia’s key foreign military relationship is with the US. This relationship is formalized through the ANZUS security treaty.
Al Qaeda’s attack on the US on September 11, 2001, triggered the mutual-defense commitment, and Australia participated
in the subsequent US-led military interventions in Afghanistan and Iraq.
The US and Australia signed a Defense Cooperation Treaty in 2007, which is yet to be ratified by the US Senate. If
implemented, the treaty will facilitate the trade of defense equipment and technology between the countries.
Australia also has a military alliance with Malaysia, Singapore, New Zealand and the UK under the Five-Power Defense
Arrangements. In addition, the ASEAN's regional forum involves the discussion of regional security issues. In July 2005,
Australia’s foreign minister announced that the country would sign an agreement with ASEAN to renounce the use of force
to settle regional disputes or intervene in the affairs of other member states. This step was a concession—long resisted by
Australia—that paved the way for Australia to participate in an East Asian summit later in the year.
Performance
Governance indicators
The World Bank report on governance uses voice and accountability, political stability and absence of violence,
government effectiveness, regulatory quality, rule of law, and control of corruption as indicators for 212 countries and
territories over the period 1996–2007. The study was conducted by Daniel Kaufmann and Massimo Mastruzzi of the World
Bank Institute, and Aart Kraay of the World Bank Development Economics Research Group. For any country, a percentile
rank of 0 corresponds to the lowest and 100 corresponds to the highest.

Political landscape
In 2007, Australia was ranked in the 92.8 percentile in the voice and accountability parameter, created to measure the
extent to which citizens can participate in selecting their government. It also measures freedom of expression, freedom of
association and the freedom given to the media. Australia has one of the highest ranks in this criterion due to deep-rooted
democratic principles and a highly decentralized political set-up. New Zealand, a peer nation, has a higher percentile rank
at 97.1 due to its small size, which allows greater interaction between citizens and the government.
Australia ranks in the 78.8 percentile on political stability and absence of violence parameter. The political stability and
absence of violence indicator measures perceptions of the likelihood that the government will be destabilized or overthrown
by unconstitutional or violent means, including domestic violence and terrorism. With a score above 70, Australia is ranked
well, with the political situation being fairly under control in the country. In comparison, New Zealand ranks 94.2 in this
parameter.
Australia ranks in the 97.2 percentile on the government effectiveness parameter. The government effectiveness indicator
measures the quality of public services, the civil service and the degree of its independence; the quality of policy
formulation and implementation; and the credibility of the government's commitment to such policies. In comparison, New
Zealand ranks 95.7 under this parameter. This is due to the continuation of policies in spite of changes of government.
Australia ranks in the 96.1 percentile on the parameter of regulatory quality. The regulatory quality indicator measures the
ability of the government to formulate and implement sound policies and regulations that permit and promote private-sector
development. Australia's high score indicates that the country has been successful in its implementation of policies and
regulations for the private sector. Australia follows a liberalized regulatory environment, which allows the private sector to
compete with the public sector on an equal basis. In comparison, New Zealand ranks 96.6 in this parameter.
Australia ranks in the 95.2 percentile on the rule of law parameter. Rule of law measures the extent to which agents have
confidence in the rules of the society. It particularly looks at the quality of contract enforcement, the police and the courts,
as well as the likelihood of crime and violence. In comparison, New Zealand ranks 98.1 under this parameter.
Australia ranks in the 94.7 percentile in the control of corruption parameter. The control of corruption indicator measures
the extent to which public power is exercised for private gain, especially corruption, as well as the private and elite influence
over the state. In comparison, New Zealand ranks 98.1 under this parameter.
Outlook
In November 2007, John Howard, the leader of the government at the time, resigned after the Labor Party won the
elections. The new prime minister, Kevin Rudd, gave the assurance that he would change the political scenario, which was
previously dominated by trade union leaders at the highest ministerial levels, and also take the course of liberalization from
a ‘tax and spend’ policy of previous government. Kevin Rudd called himself a ‘fiscal conservative’ and has promised the
nation that he will increase the funding available for education, renewable energy and the national broadband network. The
main reason behind Rudd’s victory was his affirmation that the legislation on ‘work choices’ and industrial relations between
labor and management will be reformed, and he also promised to limit trade union power. Another issue that brought
support to the Labor Party in the elections was the promise to withdraw Australian troops from Iraq in 2008. The first official
assignment that the new government successfully completed was ratifying the Kyoto Protocol in January 2008.

Political landscape
Prime Minister Rudd’s policies continue to receive tremendous popular support, especially the public apology to Aborigines
and the reintroduction of collective bargaining in the workplace. However, the economic downslide of the country poses
fresh challenges for the present government. Rudd’s administration has had to defend its economic policies, which are
being widely criticized by the opposition. Although the government has put forward its argument that the country’s
economic performance is better than other advanced economies, the electorate may nonetheless hold the party
responsible for the effects of the economic crisis in the federal elections, which is due in 2010.

Economic landscape
ECONOMIC LANDSCAPE
Summary
Australia has transformed itself from an inward-looking economy to an export-oriented economy. In the process, the
government has initiated reforms for reducing tariff rates, removing the barriers to trade, and facilitating privatization of
government enterprises. These reforms, combined with the high and rising per capita GDP, low unemployment and low
inflation rates, have led to consistent economic growth. Australia is largely a services-driven economy: indeed, the sector
contributes 74% to its GDP. The industry and agriculture sectors account for about 23.5% and 2.5%, respectively. The
main exports are agricultural commodities: almost 80% are exported. Other important exports are coal, iron ore, gold and
aluminum. Currently, the problem of an aging population is slowly increasing in the country, with a corresponding rise in
social expenditure. The Australian government needs to initiate reforms to increase the supply of labor.
The economy has been facing a downturn since 2008, yet its performance is better than most of the other advanced
economies, mainly because its government finances are in a better state and its exports are dominated by commodities.
The government has announced expenditure programs to revive the economy, which will lead to a budgetary deficit.
Evolution
Pre-1940
Until the early 1880s, the economic activity of Australia was dominated by the production of wool. Gradually, the country
became a major minerals exporter, with abundant coal, iron ore and gold reserves. Immigration to Australia began
increasing during 1850–90. Eventually, the Australian government adopted a development strategy in which it sold bonds
to the London market, and used the funds to build infrastructure in the country. During 1880–90, Australia experienced an
investment boom, with foreign investors trying various modes of business in the country. However, the returns on
investment were very low, which resulted in withdrawal of funds and led the country into a depression in 1890. The then
government of Victoria took several fiscal measures, and the country recovered in 1894. After 1900, investment in Australia
picked up and there was increased agricultural activity and infrastructural development. However, the return on investment
was still a worry, with many countries falling into a depression in 1920. The demand for Australian exports fell globally, and
the country entered a recession again in 1931. Increased manufacturing activities and production nullified the recessional
effect in Australia during this period.
1940–75
The period after World War II (until 1974, at least) is referred to as the ‘long boom’ time in Australia. During this period, the
country experienced continuous economic expansion, with its per capita GDP being one of the highest in the world. This
continuous expansion was largely due to increased manufacturing and mining activities, along with a high inflow of foreign
investment. During the period, the Australian government implemented import restrictions, which led to increased profits for
the manufacturing industry. These restrictions encompassed a variety of industries including automobiles, metal
processing, textiles, clothing, footwear and chemicals. The biggest investor in Australia during this period was the US.

Economic landscape
1975–2008
The GDP growth was recorded between 3% and 4% during 1970–80. In 1983, the Australian dollar was floated and it was
allowed to fluctuate according to the foreign exchange market. Since then, the Australian dollar has reflected the credits
and debits in the balance of payments.
Deregulation came into focus under the labor government led by Bob Hawke. In 1987, the Australian Stock Exchange
(ASX) was formed. The formation of the ASX was a result of the amalgamation of six stock exchanges of different states in
Australia. As a result of deregulation, the GDP growth rate increased from an average of around 3.3% during 1980s to
around 3.8% in the 1990s. The Australian economy continued to grow steadily, with a rate of growth of around 3% during
1991–2003 (except for 2000, when the growth rate was 2.29%). The strong consumption demand helped maintain the
growth rates in the wake of the Asian crisis of the late 1990s, offsetting the deterioration of regional export demand for
Australian products.
The economy did not suffer from the global slowdown in 2002 and grew at a much higher rate of 3.41%. Furthermore, in
2003, the economic growth still did not decline even though the country was hit by the worst drought in its history. The
buoyant growth is the result of good macro-economic policies and the fiscal prudence of the government. The economy
grew consistently between the years 2004 and 2006, with a growth rate averaging 2.85% for the period. In 2007, the GDP
growth rate was around 3.9% but declined to 1.5% in 2008 as the global economic crisis deepened.

Economic landscape
Figure 4: Evolution of GDP growth in Australia, 1970–2008
4.50
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Growth rate (%)
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1970 1980 1990 2000 2002 2004 2005 2006 2007 2008
Year

Overview
In 1911, government legislation established the Commonwealth Bank of Australia. Originally a corporate body, it was
upgraded to become the Reserve Bank of Australia (RBA) in 1959. The bank was entrusted with the responsibility of
carrying out central banking functions. Its commercial and savings banking operations were transferred to a new institution,
which carried on with the old name of Commonwealth Bank of Australia. The Reserve Bank Act of 1959 took effect from 14
January, 1960. There were no major changes in the functions of the RBA until the abolition of exchange control following
the shift to a floating system in 1983. The shift to market-oriented methods of implementing monetary policy was gradual.
Furthermore, the Australian financial landscape was transformed into a fully deregulated system. At the same time, the
RBA gradually built up a specialized banking supervision function.

Economic landscape
Financial authorities/regulators
Reserve Bank of Australia (RBA)
The RBA is the central bank of Australia and, according to the RBA Act of 1959, is the highest authority in the financial
system. The prime objectives of the RBA are to regulate the exchange rate, maintain full employment and increase the
economic prosperity and welfare of the citizens of Australia. In 1993, the maintenance of price stability was also introduced
as one of the objectives of the RBA. The RBA issues a statement on monetary policy four times a year. These statements
assess current economic conditions and the prospects for inflation and output growth.
Australia Securities and Investment Commission (ASIC)
The ASIC was established under the Australia Securities and Investment Commission Act 2001. The ASIC is an
independent body of the government and operates under the guidelines of the Corporations Act. It regulates Australian
companies, financial markets, financial services organizations and professionals who deal and advise in investments,
superannuation, insurance, deposit-taking and credit. As the market regulator, ASIC makes assessments about how
effectively authorized financial markets are complying with their legal obligations and whether they are operating in a fair,
orderly and transparent way. ASIC is also the financial services regulator in Australia. Thus, it approves licenses and
monitors financial services businesses to ensure that they operate efficiently, honestly and fairly. These businesses
typically deal in superannuation, managed funds, shares and company securities, derivatives, and insurance.
Other regulatory authorities
In Australia, there are several other regulatory bodies that facilitate the smooth functioning of the financial system. The
Auditing and Assurance Standards Board is one such independent statutory body, developing high quality standards and
related guidance for auditors and providers of other assurance services. The other regulatory authorities include the
Australian Accounting Standards Board, Australian Prudential Regulation Authority (APRA), and Financial Reporting Panel.
Banking sector
Australia’s banking sector is rated as one of the best in the world, and enjoys an international reputation for excellence in
financial market regulation and supervision. In the Global Competitiveness Report 2006–07 by the World Economic Forum,
Australia was ranked eighth among 125 countries. As of March 2007, there were 54 authorized banks in Australia, of which
40 were foreign-owned. The Australia and New Zealand Banking Group, Commonwealth Bank of Australia, National
Australia Bank, and Westpac Banking Corporation are the four major banking houses in the country. There are also a
number of regional banks and important European, US and Asian investment banks. The banking system is regulated by
the APRA, which enforces capital adequacy requirements consistent with other developed countries.
The Australian banking industry is dominated by four publicly owned and nationally operated commercial banks. The
Australian government has renewed an 18-year-old policy banning Australia’s four banks, namely National Australian Bank,
Commonwealth Bank, ANZ and Westpac, from merging with each other, in the name of preserving competition. Recently,
larger banks have sought to increase their presence in more than one state. There are also regional/domestic banks
operating in the country. Emerging competitors to the 'big four' banks are St.George Bank, Bendigo Bank, BankWest,

Economic landscape
Suncorp-Metway and the Bank of Queensland. There are several small regional banks that have had a traditional regional
base in one state, although most of the banks are expanding in Australia. There are a growing number of foreign subsidiary
banks, although only a few have a retail banking presence. One of the most significant is HBOS of the UK, which owns
BankWest. HSBC, Bank of Cyprus Australia Limited, Laiki Bank (Australia) Ltd and Citibank Australia have a small number
of branches. Foreign banks have a more significant presence in the Australian merchant banking sector.
Australian Securities Exchange (ASX)
The ASX is one of the top 10 listed stock exchanges in the world, measured by market capitalization. The ASX was formed
through the merger of the ASX and the Sydney Futures Exchange in December 2006. The scope and authority of the ASX
extends from corporate control and capital formation in primary markets and secondary markets to capital allocation in
secondary markets, price discovery and risk transfers. It also functions as a market operator, supervisor, central
counterparty clearer and payments system facilitator. The diverse domestic and international customer base of ASX
includes issuers of a variety of listed securities (such as corporations and trusts), investment and trading banks, fund
managers, hedge funds, commodity trading advisers, and proprietary and retail traders.
Like most of the leading stock exchanges, ASX witnessed a decline in the market capitalization in 2008, albeit to a lesser
extent. Market capitalization declined by around 18% in 2008 to reach $1.06 trillion by the end of the year.

Economic landscape
Figure 5: Market capitalization of Australian securities exchange, 2001–08
1,400.00
1,200.00
1,000.00
800.00
$ billion
600.00
400.00
200.00
0.00
2001 2002 2003 2004 2005 2006 2007 2008
Year

Economic landscape
Insurance
The ASIC is the regulatory authority of insurance market in Australia. It administers the regulatory system of consumer
protection for deposit-taking activities, general insurance, life insurance, superannuation and retirement savings accounts.
The Insurance Council of Australia is the top body for general insurance companies in Australia licensed under the
Insurance Act 1973. The Insurance Council represents its members, handles issues and puts across the points of view of
the industry to the government, while also handling public affairs, industry forums, issues management and consumer
services, all of which are backed up by technical research and resources. The Insurance Australia Group and QBE
Insurance Group are two major players in the Australian insurance market.
The Australian insurance market experienced uneven but notable growth between 2003 and 2007; however, this is
expected to slow in the years through to 2012. Gross written premiums in the Australian insurance market generated a total
value of $73.2 billion in 2007, representing a compound annual growth rate of 8.8% for the period spanning 2003–07.
The life insurance segment proved the most lucrative for the market in 2007, generating total premium income of $45.9
billion, equivalent to 62.5% of the market's overall value. In comparison, non-life insurance premiums generated $27.5
billion in 2007, equating to 37.5% of the market's aggregate value.
Performance
GDP and growth rate
Overview
The Australian economy grew at more than 3% a year during 1991–2003, except for 2000, when it grew at 2.29%. The
medium-term outlook of the economy is positive, as it is expected to grow between 2% and 2.7% until 2012. Strong
consumption demand has helped maintain the growth rates in the wake of the Asian crisis of the late 1990s, offsetting the
deterioration of regional export demand for Australian products.
The economy was unaffected by the global slowdown in 2001 and grew at a significant rate of 3.36%. The economic
growth rate did not decline even when the country was hit by the worst drought in its history in 2003; in fact, the growth rate
rose to 3.79% that year, compared to 3.41% in 2002. The buoyant growth was driven by sound macro-economic policies
and fiscal prudence. The growth rate increased to 3.9% in 2007 from 2.95% in 2006. However, the growth momentum
declined in 2008 because of the global slowdown. The GDP attained a growth rate of 1.5% during the year but is expected
to further decline to record a negative growth of 0.5% in 2009. According to the RBA’s Statement on Monetary Policy in
May 2009, GDP declined by 0.5% during the December 2008 quarter: the first quarterly fall since 2008. According to the
report, the slowing in the domestic economy has been evident across private-sector spending and in the labor market.
Household consumption has been quite weak since the start of 2008 after growing strongly over the previous years, and
dwelling investment declined in the second half of 2008, with a further decline expected in the first half of 2009. The pace of
growth of business investment slowed in the second half of 2008 from the high rates seen in previous years, and indicators
suggest that investment will contract through 2009. Export volumes have been broadly flat recently. As a result of the
weaker economic environment, labor market conditions have deteriorated, with the unemployment rate increasing from its
trough of around 4% in early 2008 to more than 5% in April 2009.

Economic landscape
Figure 6: GDP and growth rate in Australia, 2002–12 (constant prices)
550 5.00
500 4.00
3.00
450
Growth rate (%)

2.00
400
$ billion
1.00
350
0.00
300
-1.00
250 -2.00
200 -3.00
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Year
GDP Real GDP growth rate
GDP composition by sector
In Australia, the service sector is one of the biggest contributors to the overall GDP, contributing 74%. This sector is
followed by the manufacturing industry, which constitutes 23.5% of the GDP, followed by the agricultural sector with a
negligible 2.5%.

Economic landscape
Figure 7: Sector composition of GDP in Australia, 2008
Agriculture, 2.5%
Industry, 23.5%
Services, 74%
Agriculture
The agricultural sector contributes a very negligible share of 2.5% to the GDP in Australia. Until the late 1980s, agriculture
accounted for 80% of the country's exports, but this fell to 40% by the late 1990s and 29% by 2006. The main agricultural
products of Australia are wheat, barley, sugarcane, fruits, cattle, sheep and poultry. Of these, wheat is the most important
agricultural export commodity of the country.
Agriculture sector has posted a comparatively better performance in 2008–09, reflecting a stronger cereal harvest.
According to the RBA’s forecasts, the outlook for the 2009 cereal crop is mixed, with substantial rainfall required in the
coming months to improve soil moisture levels. Inflows into the Murray-Darling river system were at a record low between
January and March 2009, suggesting that water availability for irrigated crops is likely to remain constrained.

Economic landscape
Figure 8: Australia’s agricultural output, 2001–08
30.00 15.0
10.0
25.00
5.0
20.00
Growth rate (%)

AUD billion
0.0
15.00
-5.0
10.00
-10.0
5.00
-15.0
0.00 -20.0
2001 2002 2003 2004 2005 2006 2007 2008
Year
Agriculture output Growth rate
Industry
The structural shift from industry to services in Australia has mainly been due to the fast growth of some industries within
the services sector and the slowdown in the growth of the manufacturing sector. This is a long-term trend, as
manufacturing’s share of output peaked in 1960 and has been falling since. There are growing investments in the mining
and manufacturing sectors, although investment in the services sector has also increased marginally. In 2006, the industrial
sector contributed around 25% of the GDP. Concrete, automotive gasoline, automotive diesel fuel, raw steel and cement
are some of the more important sectors in the manufacturing sector. The Australian industrial sector is mostly dominated by
small enterprises. The industrial output was on the rise from 2002, clocking an average annual growth of 4.7% during
2001–07. However, industrial activities declined in 2008 to a much lower growth rate of 1.8%. According to the Monetary
Policy Report of the RBA in May 2009, machinery and equipment imports have fallen sharply since late 2008 and the trend
is likely to continue during 2009. There has been a fall in machinery and equipment spending over the first half of 2009.
Furthermore, construction activities have also been weak. In addition, a number of large mining firms have announced
reductions to capital expenditure plans for 2009, although the high level of commencements of engineering projects in the
second half of 2008 suggests that this spending may remain firm in the near term.

Economic landscape
Figure 9: Australia’s industrial output, 2001–08
280.00 9.0
260.00 8.0
240.00 7.0
220.00 6.0
Growth rate (%)

AUD billion
200.00 5.0
180.00 4.0
160.00 3.0
140.00 2.0
120.00 1.0
100.00 0.0
2001 2002 2003 2004 2005 2006 2007 2008
Year
Industry output Growth rate
Services
The service sector was an important contributor to Australia's economic activity throughout the 20th century, especially
since the 1980s. The growth in the sector’s share of employment has been even stronger. The average annual growth of
employment in the service sector has also been higher than that of the economy during 1990–2006, with an average
annual growth of 2.3% for services compared with 1.8% for the overall economy. The communications sector was the
fastest growing service industry during 1990–2006.
The service sector’s biggest export earner is travel services (including business, education and tourism-related travel
services). It reflects the attractiveness of Australia as a tourist destination and the strong demand for Australia’s education
services. The remaining service exports (which have displayed strong export growth in recent years, although their overall
value remains relatively small) comprise business-related services, including finance and insurance, IT, and professional
and technical services.
The services industries tend to be less capital-intensive than other sectors. There has also been a transfer of certain
industrial sector operations to the services sector, including finance, auditing and legal aspects. Their inclusion in the
services sector has pushed its share in GDP even further. After attaining an annual average growth of around 8% during

Economic landscape
2001–07, the services sector recorded a comparatively low growth rate of 5% in 2008. Deterioration in the global economic
conditions has impacted Australia’s earnings from tourism and financial services.
Figure 10: Australia’s services output, 2001–08
900.00 10.0
800.00 9.0
8.0
700.00
7.0
600.00
Growth rate (%)

6.0
AUD billion
500.00
5.0
400.00
4.0
300.00
3.0
200.00
2.0
100.00 1.0
0.00 0.0
2001 2002 2003 2004 2005 2006 2007 2008
Year
Services output Growth rate
Fiscal situation
Fiscal deficit/surplus situation
The accumulation of surpluses allowed the authorities to pay off a significant portion of the national debt, reducing the
outstanding commonwealth government net debt stock from almost 20% of GDP in 1995 to 8% of GDP in 2000. The
decline continued in 2004–05, when the net debt was at its lowest (just over 2% of GDP) in the last 24 years. Australia is
now one of the few OECD countries in which the government’s net debt has been eliminated. The government’s sound
fiscal management saw the elimination of net debt but also the prospect of positive net worth in 2008–09.
The Australian government is set to record a deficit in 2009. According to the budget unveiled in May 2009, the budget
deficit will almost double during 2009–10 due to large-scale infrastructure spending.

Economic landscape
Latest budget
The Australian budget for the financial year 2009–10 was released in late May 2009. According to the budget proposals,
the government plans to raise infrastructure spending by A$22 billion (around $16.9 billion). The government also intends
to increase pension payments, boost spending on education and employment-oriented training and lower taxes for small
enterprises. The financial year is expected to see lower revenue by 1.8% because of rising unemployment and falling trade
activities.
The government projects that net debt will go up from -0.4% of GDP in 2008–09 to 13.8% in 2013–14, but will come back to
3.7% in 2019–20. These targets may not be achieved if the economy fails to revive post-2010.
Current account
Australia’s export performance has been relatively healthy in the recent years, assisted by the strong global economy
during 1970–2000. However, import growth was even more robust, resulting in a widening current account deficit of close
to 6% of the GDP in 2000. The deficit narrowed to less than 3% of GDP in 2001, as the softening in the Australian dollar
reduced the trade gap. However, with the strengthening of the currency in 2002–03, the gap increased considerably, and it
was once again recorded at around 6% of the GDP in 2003. In 2004, Australia’s current account balance was negative
$39.6 billion, which was 6.2% of the GDP. The current account deficit was nullified by a similar surplus in the capital
account. In particular, the inflow of portfolio investment was abnormally high. The current account deficit narrowed
marginally to around 6% of the GDP in 2005–06. In the last quarter of 2007–08, the current account deficit grew by $2.8
billion to reach $18.28 billion. This was a record high, with the deficit standing around 7% of GDP. The deficit is expected to
further widen in 2009–10 to around 9% of GDP due to the global demand for Australia's export commodities deteriorating
without an equivalent fall in imports, as Australian consumption expenditure will remain healthy compared to other
advanced economies.
Exports and imports
The Australian economy has been driven by both exports and imports, which are increasing as a proportion of GDP. The
balance of trade as a percentage of GDP shows a negative trend, indicating a much larger increase in imports than
exports. One of the main driving forces of economic activity is the global boom in mining commodities, of which Australia is
a major exporter. Business investment, especially in mining and associated infrastructure, is growing at a high rate.
Australia’s trade in services is relatively concentrated among a few major markets. The top five export markets (the US,
Japan, the UK, New Zealand and Singapore) account for the largest share of total services exports and imports.
Australia's prime exports are coal, iron ore, non-monetary gold, crude petroleum and beef. Its main imports are passenger
cars, crude oil, computers, medicines and telecommunications equipments. The largest contributors to total exports are
minerals and exports from the services sector. The recent fall in exports may be the result of firms trying to satisfy strong
demand in the domestic market, rather than a failure to exploit export opportunities. Over the last few years, China has
become Australia’s second largest merchandise export market after Japan, while India’s recent strong economic growth
has also led to a surge in exports from Australia.
Capital goods imports increased at the highest rate, reflecting strong investment in the Australian economy. Imports of
consumption goods showed the second highest growth, demonstrating domestic demand, while services imports increased

Economic landscape
at the third highest rate. The US is the largest source of imports, followed by China, Japan, Singapore, Germany and the
UK.
Despite lower global demand in 2008, exports from Australia have remained robust compared to other advanced
economies. One of the main factors for this, according to the RBA’s Monetary Policy Report (May 2009), is the composition
of Australia’s exports. Slower industrial activities have caused sharp fall in manufactured exports, such as machinery, motor
vehicles and other transport equipment, both from Australia and abroad. However, manufactured goods account for only
around 20% of the value of Australia’s total merchandise exports, compared with over 90% for countries such as Japan,
Korea and China.
Nevertheless, weak global demand conditions have had a much more pronounced effect on resource commodity prices
than on Australia’s export volumes. Moreover, the lower exchange rate has moderated the decline in demand for
Australia’s other exports, including tourism and education exports. Rural exports have also picked up in recent quarters, as
the large 2008 wheat crop has been shipped.
Imports in Australia have declined considerably more than exports, a trend similar to those observed in other advanced
economies.

Economic landscape
Figure 11: Australia’s external trade (merchandise), 2004–08
450
398
400
363
350 327
292
300
251
$ billion
250
205
175 188 193
200 156 171
137 137 155
150 115
100
50
0
2004 2005 2006 2007 2008
Year
Exports Imports Total trade
External debt
Australia’s external debt has grown sharply since the late 1990s. By 1987, foreign debt as a percentage of GDP stood at
44% of GDP. It reached 56% of GDP by 1997 and by June 2008 was at 95% of GDP. The accumulation of current account
deficits coupled with Australian equity investment abroad, which was partly funded by increased borrowings, has led to this
trend of growing debt. At the end of 2008, external debt was $1,032 billion.
International investment position
Foreign direct and portfolio investments
A feature of globalization is the increasing volume and velocity of international capital flows. Like exports, Australia’s FDI
has not been severely affected by the global slowdown in 2008. It registered a marginal increase in 2008 to reach $44
billion from $43 billion in 2007. According to the UN Conference on Trade and Development Survey (2008), Australia ranks
ninth in the list of the most attractive locations for FDI in the next three years. The US is Australia’s single largest source of
inward foreign direct investment (FDI) and the most important destination for Australian FDI abroad.

Economic landscape
Growth in outward FDI has also increased significantly in recent years, reflecting the increasing integration of Australian
businesses into the global economy. According to the foreign ministry of Australia’s report on FDI, Australian outward FDI
stocks have grown more strongly than inward FDI stocks over the past decade. This trend of Australian firms increasingly
investing overseas has added another dimension to the contribution that FDI makes to Australia’s economic growth.
Outward FDI enables Australian firms to expand their business beyond the potential constraints imposed by the limited size
of the domestic market. By extending their market presence and access to resources, expertise and technology in other
markets, Australian firms are able to become more efficient and competitive in global markets.
Figure 12: Australia – total foreign direct investment inflows, 2001–08
50
43.06 44.00
40 37.34
30 27.08
20 17.00
8.30 7.97
$ billion
10
0
2001 2002 2003 2004 2005 2006 2007 2008
-10
-20
-30
-33.21
-40
Year

Economic landscape
Foreign exchange position and exchange rate
Australia's foreign exchange reserves have been growing on a regular basis, with exports becoming important stimulants.
At the end of May 2009, total official reserves stood at $41.3 billion, which includes $37.2 billion of foreign exchange. In
May 2008, official reserves were at $33.7 billion.
The Australian dollar has been constantly appreciating against the US dollar since 2006. At the end of 2008, the US dollar
to Australian dollar exchange rate was at 1:1.20, but it rose to 1:1.24 in June 2009. This was caused by recovery in global
commodity prices. An adverse balance of payments situation will cause depreciation of the Australian currency during
2009, but the country’s positive interest rate differential with other advanced nations will have the opposite effect. The
demand for Australian dollars, nevertheless, will remain volatile due to fluctuating commodity prices.

Economic landscape
Figure 13: Australian dollar to US dollar exchange rate (A$ per $), 2004–08
1.400
1.350
Exchange rate, AUD-$
1.300
1.250
1.200
1.150
1.100
2004 2005 2006 2007 2008
Year
Credit rating
Australia has an AAA stable and A-1 short-term foreign currency sovereignty credit rating from Standard & Poor's. The
rating agency did not alter its rating for Australia despite that fact the latest budget (2009) has projected for a deficit in the
next six years. S&P notes that its highest rating for Australia's sovereign credit is not threatened due to the strong public-
sector finances. However, there is a risk in terms of a weakening of the credit quality of the country's banking sector.

Economic landscape
Monetary
Key monetary indicators
Inflation
The government is following a restrictive monetary policy to cut inflation to 2–3%. The inflation rate crossed the 4% mark in
2008 to reach 4.5%. However, since the beginning of 2009, inflationary pressure has begun to ease in line with the
weakening in the economy. The RBA’s report notes that inflation expectations have fallen since mid-2008 to quite low
levels, and growth in labor costs appears to be slowing, as are upstream producer price pressures. Although it will take
some time for these factors to fully flow through to consumer prices, The CPI increased by 0.1% in the quarter ending
March 2009, which was higher by 2.5% than the corresponding period of 2008.
Figure 14: Consumer price index and CPI-based inflation in Australia, 2002–08
135.00 5.00
4.50
130.00
4.00
125.00
Consumer price index
3.50
120.00
Inflation (%)
3.00
115.00 2.50
2.00
110.00
1.50
105.00
1.00
100.00
0.50
95.00 0.00
2002 2003 2004 2005 2006 2007 2008
Year
Consumer price index Inflation

Economic landscape
Money supply and interest rate
The RBA had left interest rates unchanged at their 12-year high of 7.25% in the first quarter of 2008–09. However,
deteriorating economic conditions have forced the RBA to undertake rate cuts to increase liquidity in the system, the latest
one being a 0.25 percentage point cut to reach a 45-year low of 3% in April 2009. Since September 2008, there has been
significant easing by 425 BPs.
Moreover, the money supply has also been increased in recent months to boost liquidity in the system. By the end of April
2009, M3 increased by 1.1% and broad money increased by 0.7%. Compared to the corresponding period of last year,
broad money grew by 11.8%.
Employment
The labor force participation rate measures the proportion of the working age population that is economically active. The
rate for Australia increased from 74.05% in 2002 to 75% in 2008. The increase had been marginal over the period of five
years, leaving a scope for improvement and catching up with other advanced nations. The size of the Australian labor force
is around 10 million at present. It increased from 7.6 million to 10 million during 1990–2008, growing at an average annual
rate of 1.5%. With a labor force participation rate of 75%, the Australian economy is dominated by its services sector; 75%
of its workforce is employed in this sector, particularly in the finance, property and business services. The proportion of
employment in the agricultural, fishing, mining and industry sectors has been declining, which is consistent with the trends
of their shares in total output. The secondary sector employs 21% of the total labor force, while the primary sector employs
4%.
During 2000–07, the employment growth rate stayed consistently above 1.5%. However, labor conditions have deteriorated
since 2007, resulting in lower number of jobs added. The unemployment rate stood at 5.4% in April 2009, up from around
4% in early 2008. The majority of the contraction in employment came from the full-time component, which has been
coming down since August 2009. According to RBA’s estimates, full-time employment has contracted by over 1% since
mid-2008, while part-time employment has continued to move upward. This reflects the shift of full-time workers to part-
time, as employers attempt to rein in labor costs while avoiding lay-offs.
Outlook
The Australian economy, though better placed than other advanced economies, is facing a downturn. The RBA specifies
that there will be a less severe recession in Australia than in many other countries. The factors working in favor of Australia
are a bigger decline in interest rates, the healthier state of the financial sector, Australia’s export mix (a relatively low share
of exports of capital goods and high-value manufactures, where global trade has fallen most), the recent recovery in the
Chinese economy, and the exchange rate depreciation in the second half of 2008.
According to Datamonitor estimates, the downturn will be more severe in 2009, with GDP recording negative growth of
0.5%. In such a scenario, the economic stimulus programs of the government will be of utmost importance. Nevertheless,
these programs will affect the government’s financial health, as revenue income is set to decline. The economy also poses
a risk of delayed recovery and increased tax burden for future tax payers if these packages fail to stimulate the economy.
The government is expected to continue with its policy of monetary easing along with fiscal stimulus measures.

Economic landscape
As far as other components of GDP are concerned, Australia’s terms of trade has fallen sharply, thus lowering the
contribution of trade to GDP. Domestic spending will also remain subdued because of a deterioration of the labor market
and a large decline in household net worth over the past year. Moreover, business investment is forecast to fall significantly
during 2009, according to the RBA. However, government’s public investment plans for education, rail, road and
communications infrastructure spending are likely to provide significant support during the year.

Social landscape
SOCIAL LANDSCAPE
Summary
Australia has a high literacy rate and a relatively small population. In 1990, the population of Australia was 17 million, which
rose to around 19 million in 2003 and to 21 million in 2008. The national population growth rate since 2000 on an average
has been around 1%. The overall decreasing population coupled with the increase in the aging population is now a
challenge for the government. Nevertheless, Australia is one of the most urbanized countries in the world: less than 15% of
the population lives in rural areas. The educational and health sectors are well developed, reflected in a high literacy rate of
99% and a low death rate of 6.7 deaths per 1000 people. The country also has a strong social welfare network, providing
various facilities for the disabled, unemployed and pensioners.
Evolution
A very important and significant feature of Australian society since the beginning of European settlement in 1788 has been
foreign immigration. For many centuries, most immigrants came from the British Isles, bringing with them a distinctively
Western culture. This Western mindset made many impressions on Australian society in terms of culture, lifestyles and
standard of living. Soon, the country was flooded with people from the Middle East, Asia, and Latin America due to a
governmental initiative that gave immigrants access through a planned program introduced in 1960. By 2000, about 5.9
million immigrants had settled in Australia, with nearly three out of every 10 Australians being foreign-born.
Furthermore, the country’s social development policies have been reformulated to meet the new challenges faced by the
country. There has also been a stronger policy focus by the government on social welfare issues. The country is historically
known for contributing huge funds to enhance its healthcare network and education system.

Demographic composition
Composition by age and gender
Australia's population has grown from about 17 million in 1990 to almost 21 million in 2008. The national population growth
rate since 2000 has been around 1%. The sex ratio in Australia is balanced, with 1.06 males being born for every female.
Life expectancy is also high at 81.6 years for the total population, with females living for more than 84 years compared to
males who live for around 79 years. With more than 13.5% of the population being above 65 years of age, Australia's aging
population will continue to increase in the coming years.

Social landscape
Table 11: Mid-year population by age (millions) in 2006
Mid-year population by age Female Male
0–4 0.61 0.64

5–9 0.64 0.67
10–14 0.68 0.71
15–19 0.69 0.72
20–24 0.68 0.71
25–29 0.66 0.68
30–34 0.72 0.74
35–39 0.76 0.77
40–44 0.75 0.76
45–49 0.74 0.74
50–54 0.68 0.67
55–59 0.64 0.64
60–64 0.51 0.51
65–69 0.41 0.38
70–74 0.33 0.29
75–79 0.30 0.24
80+ 0.47 0.28
Urban/rural composition and migration
Despite its large geographical size, Australia has a relatively small population that is highly urbanized and concentrated in
certain regions of the country. Sydney and Melbourne are the two biggest cities in Australia, with populations of more than
four million and 3.5 million, respectively. The low population density in the country impedes the authorities from providing
services such as higher education to rural and isolated communities.
Religious composition
In Australia, about 25% of the population are Catholic, 21% belong to other Christian groups, 21% are Anglican and 2% are
Muslim. People following other religions constitute about 16%, leaving 15% who do not follow any organized religion.

Social landscape
Figure 15: Major religions in Australia
None
15%
Catholics
25%
Others
16%
Muslims
2%
Anglicans
21%
Other Christians
21%

Social landscape
Education
Education is compulsory from six to 16 years of age in the states of South Australia and Tasmania and up to age 15
elsewhere in Australia. The curriculum varies between states, although measures have been taken to standardize core
educational areas and the age at which education begins. These changes have allowed students to have access to 13
years of schooling on a comparable basis anywhere in Australia.
The education system in Australia consists of a total of 15 years. There are many types of education for children up to five
years of age, but the main ones are the child care regulated centers or families in registered residences who take care of
preschoolers in a system called 'family day care'. Up to age 12, students are considered to be part of the primary and
secondary educational system. This is followed by high school, where the students study different courses up to age 17
and, after completion, receive a high school diploma. The options after the completion of education at the high school level
include obtaining an apprenticeship, entering the workforce or studying any vocational course.
After high school education, students can enter university. University education within Australia is provided by both the
government and the private universities. The courses offered are referred to as ‘undergraduate’ programs, followed by
‘graduate or postgraduate programs.’ The duration of university study is generally very short: the minimum duration is six
months for graduate programs, one year for a masters, 1.5 years for a master honors and two years for a doctorate.
Healthcare
Healthcare services
The healthcare services in Australia are handled and managed by the Department of Health and Aging. The department
focuses on establishing healthy lifestyles, and preventing and adopting best practices for handling chronic diseases. It also
works to improve the transparency, accessibility, accountability and quality of public and private health and aged care
service provision through financing and agreements with stakeholders, industry and state and territory governments.
The central government takes the lead in terms of development of national health policies, regulation and funding, while
states and territories are responsible for the implementation of healthcare services and regulation of healthcare providers. It
is estimated that around 70% of Australia’s healthcare expenditure is funded by the government. The government provides
the services through subsidized schemes such as Medicare and the Pharmaceutical Benefits Scheme. The rest of the
contribution comes from the Private Health Insurance Rebate.
Social welfare
Social welfare policies
An important challenge for Australia is to sustain the growth in living standards, particularly in the face of an aging
population. This entails additional expenditure on the exchequer of the government and calls for fiscal prudence. The main
areas to be considered are labor, health and education. The recent reform focuses on reducing the dependency of income
support through increasing the access of the individuals to the labor market. Under the Welfare to Work reform package
announced in the 2005 budget, various incentives were provided. The initiative's goals include an increase in workforce
participation and employment among four priority clusters: people with a disability, principal career parents, older people

Social landscape
and the very long-term unemployed. The new arrangements include stricter rules for eligibility and participation
requirements for new disability support pension applicants with working capacity above 15 hours per week. Furthermore,
the primary objective of the reforms is to improve the skill sets of the workforce for industry and promote necessary
workplace re-organization, thereby increasing productivity.
On the other hand, public spending on various welfare activities in the country is rising. To face this challenge, the
government has been taking active steps such as paying off the pension debt, and increasing the efficiency of different
levels of the government.
Performance
Healthcare
Healthcare expenditure of Australia stood at around $50 billion in 2008, representing 5.3% of GDP. In fact, healthcare
spending has remained at similar levels since 2002, which was lower than most of the other developed OECD nations.
According to the OECD Health Data 2008 report, there are fewer physicians per capita in Australia than in most other
OECD countries. In 2005, Australia had 2.8 practicing physicians per 1,000 people, below the OECD average of 3.1. There
were 9.7 nurses per 1,000 people in Australia that year, a similar figure to the average in OECD countries. Furthermore, the
number of acute care hospital beds in Australia was 3.5 per 1,000 people in 2005, slightly below the OECD average of 3.9
beds per 1,000 population. As in most OECD countries, the number of hospital beds per capita in Australia has fallen over
time.
Health and aged care spending is projected to grow at an average rate of 7% during 2008–12. Consequently, the
government projects that the federal government’s budget surplus will deteriorate to a deficit of 5% of GDP in the early
2040s. It has been predicted that there will be a long-term rise in government spending on aged care.
An increased focus is required on preventive measures to minimize future growth in healthcare costs and reduce long-term
financial pressure. The challenges lie in reducing the disparities in efficiency across jurisdictions in a range of healthcare
services, reinforcement of prevention, and allowing private insurance to cover a more comprehensive range of mainstream
health services, including non-hospital treatment.

Social landscape
Figure 16: Expenditure on healthcare in Australia, 2002–08
60.0 6.0
50.0 5.0
40.0 4.0
Percentage (%)
$ billion
30.0 3.0
20.0 2.0
10.0 1.0
0.0 0.0
2002 2003 2004 2005 2006 2007 2008
Year
Healthcare expenditure Healthcare expenditure as % of GDP
Income distribution
Standard of living
Over the period 1990 to 2008, there was an increase in the standard of living in Australia. The percentage of the population
living below $1 a day declined from 1.8% to 0.8%. The percentage of the population living below $2 a day has also
declined, from 3.6% to 1.7%. Living standards have steadily improved since the beginning of the 1990s, and the Gini index
has also improved. More than 60% of population was in the higher income bracket of higher than $2000 in 2007. This
indicates that Australia has achieved a certain success in reducing poverty. The unemployment rate also declined during
2001–07, which also contributed to the decline in poverty levels (the unemployment rate decreased from 7% in 1999 to
5.4% in 2008).
Education
The literacy rate in Australia is 99% for both males and females: one of the highest literacy rates in the world. This is mainly
because of easy access to education and government support for learning. The government expenditure on education as a
percentage of GDP was nearly 4.5% in 2005 but has increased to 5% in 2008. Despite the increase, Australia’s
performance does not compare favorably with other OECD nations. In an OECD report card on education comparing it with

Social landscape
other advanced economies, the country’s track record was assessed as '"must improve". The report ranked Australia
second-to-last in terms of government funding of public education, as Australia is one of the few countries where the state
pays for less than half of the costs of tertiary education. The report revealed that, by the standards of developed
economies, the most highly paid Australian teachers earned comparatively little. Furthermore, working hours were longer
for teachers in Australia compared to those of its peers, and classes were larger.
To enhance the education infrastructure of the country, the government initiated the Building the Education Revolution
(BER) program in 2009. This program proposes to provide infrastructure funding worth $14.7 billion to Australia’s 9,540
schools to enable them to meet the changing educational requirements.
Figure 17: Expenditure on education in Australia, 2002–08
60.0 7.0
6.0
50.0
5.0
40.0
Percentage
4.0
$ billion
30.0
3.0
20.0
2.0
10.0
1.0
0.0 0.0
2002 2003 2004 2005 2006 2007 2008
Year
Expenditure on education Expenditure as % of GDP
Nevertheless, Australian students perform better than students of other OECD nations. Australia has emerged as an
attractive destination for international students. International education is the third largest source of overseas earnings,
generating around $12 billion in 2008 and supporting more than 125,000 jobs in Australia. China and India are the largest
sources of enrolments in Australia, with shares of 24.1% and 18.7%, respectively. The booming industry will take a hit in
view of the increasing instances of attacks on Indian students, however. A number of students planning to study in Australia
may opt not to and choose the UK or Canada instead, especially considering that studying in these countries is cheaper
than in Australia. The lower cost is because the UK and Canada have one-year master’s degrees whereas the Australian
degree is of two years duration.

Social landscape
Outlook
The key issue of the social landscape of Australia is its aging population. As the Australian population progressively moves
into older age brackets, maintaining high per capita income growth will become harder to achieve. The under 55-year-old
age group, among whom labor force participation is normally highest, is expected to decline significantly during the next 20
years. Australian government projections indicate a doubling of the number of people over 65 to around 25% of the total
population over the next 40 years, while growth in the population of traditional workforce age is expected to slow to almost
zero. Excluding an unprecedented rise in fertility rates, the age structure of the population is likely to stabilize thereafter
with a far higher proportion of older people. The Australian government expects that the greatest pressures on public
finances will come from spending on public health and long-term care. Across the Australian health and aged care services,
average annual expenditure per person on those aged 65 is over four times the average for those under 65, and rises to
between six to nine times for the oldest groups. In addition, the demand for health services for all ages is likely to rise,
induced by new medical technologies. On the whole, the government is facing a daunting task as it faces the issue of an
elderly population. The government also needs to pay increasing attention to the educational needs of the country, which is
lagging behind those of other developed nations. Similarly the number of healthcare providers is also at a lower level. The
government’s stimulus package announced in 2009 includes provisions for improving the educational infrastructure of the
country; however, effective implementation remains critical.

TECHNOLOGICAL LANDSCAPE
Summary
The Australian government plays a very active role in the development of technological policies. The most recent effort is
the launch of the Backing Australia’s Ability program to achieve excellence in research and technology. The technological
advancements not only belong to high-technology industries but also to traditional sectors such as agriculture,
manufacturing and mining. Backing Australia's Ability also supports R&D in information and communication technology
(ICT) to augment the country’s competitive advantage.
Evolution
The government initiative on the technology and innovation in Australia exists in the form of the 'Backing Australia’s Ability'
program. It entails an investment totaling $5.3 billion over a period of seven years from 2004–05. This package was
announced by the prime minister on May 6, 2004 to build on the initial investment of $3 billion during 2001–06. Now, it
constitutes an $8.3 billion funding commitment stretching from 2001–02 to 2010–11. This investment reflects a commitment
of the Australian government to pursue excellence in research, science and technology through three key themes: the
generation of new ideas, the commercial application of ideas and developing and retaining skills.
Innovation in Australia is not the exclusive domain of the high-technology industries: it is also important for the traditional
sectors such as agriculture, manufacturing and mining. In 2003, the government set up four national research priorities to
provide significant long-term benefits to Australia by increasing research efforts in key areas. These are: an
environmentally sustainable Australia; promoting and maintaining good health; frontier technologies for building and
transforming Australian industries; and safeguarding Australia.
ICT plays an important role not only in the growth of the economy but also in the capacity to carry out research and explore
new frontiers of science and technology. One of the key aims of Backing Australia’s Ability is to strengthen Australia’s
research capability by building a competitive advantage in ICT. The government aims to achieve this through the ICT
center of excellence, National ICT Australia. It was established in October 2002 to be a world-class, world-scale institute in
the areas of ICT research, research training and commercialization.

Intellectual property
The number of patents granted increased from 517 in 1990 to 1,538 in 2006. During 2006, Australia experienced
remarkable year-on-year growth in patents awarded at 50%, compared to the average growth rate of about 5% during the
15 years previous. IP Australia is the Australian government agency that administers the patents, trademarks, designs and
rights systems within the country.
Australian patent law prohibits double patenting. It does not, however, prohibit having concurrent applications for the same
invention, or indeed two patents for the same invention but of differing claim scope. Australia introduced the second-tier
innovation patent system in 2001. The key to the Australian innovation patent system is that the standard level of utility for
which a patent may validly be granted to a product is significantly lower when compared to that required for the grant of a

standard patent globally. This encourages many researchers to become involved in R&D activity. Both the tests for
infringement of an innovation patent and the available remedies are identical to those for standard patents. This led to
unsatisfactory responses from the innovators with higher utility products. However, the situation is now changing and it is
expected that the use of two forms of patenting—patents for inventions and standard patenting—will have commercial
viability for the country.
Research and development
The Australian government encourages funding for business R&D through a tax concession and subsidies. The research
funding schemes are administered by a number of bodies, the largest of which are the Australian Research Council (ARC)
and the National Health and Medical Research Council (NHMRC). The ARC is an independent statutory agency within the
education, science and training portfolio of the Australian government. The ARC plays a key role in the Australian
government‘s investment in research and innovation.
Performance-based block research funding schemes are appropriated through the Higher Education Support Act 2003. The
main schemes are the Research Training Scheme (RTS), the Institutional Grants Scheme (IGS) and the Research
Infrastructure Block Grants (RIBG) Scheme. The RTS and IGS offer research funding, on a yearly basis, to qualified higher
education institutions to enhance training for students undertaking doctoral programs.
The RIBG Scheme, meanwhile, provides funding for research on an annual basis to qualified higher education
organizations to improve the maintenance of research infrastructure. The funds are allocated based on their relative share
of Australian competitive grant income.
Technology agreements and pacts
The Australian government has signed a number of international agreements with various countries for co-operation in
science and technology. The country collaborates with the Chinese government specifically in science and technology, to
the extent of sharing a special fund. As part of the two countries' agreement, Australian researchers are encouraged to co-
operate with their Chinese counterparts in different fields of science and technology.
The Australian government signed a science and technology agreement with the US in 2005, which is now being pursued
by both governments to extend it to create a FTA for technological products. The country also has agreements with India,
Canada, China, Japan and South Korea to develop technologies for a cleaner environment and climate control.
Researcher-to-researcher collaboration is the main international activity supported by the Australian government.
Furthermore, its international collaborations also include facilitating access to overseas equipment and expertise, bilateral
agreements, exchanges and fellowships.
Performance
The most lucrative sectors in Australia in which to conduct research and development are information and communication
services, manufacturing, mining and energy, and construction.

Telecommunications, broadband and internet
Australia has a strong and innovative ICT industry. Australia's ICT market is characterized by rapid growth and high
adoption by both business and consumers. Australia's mainline telephony network relies primarily on optical fiber networks,
with copper lines connecting households to local exchanges. For mobile telephony, the country relies mainly on a dominant
Global System for Mobile Communications (GSM) network. In Australia, more than nine million people had access to fixed
line telephones and over 20 million people had access to mobile phones in 2007. During 2002–07, the subscriptions for
mobile phones grew at an average rate of 11% annually, but the growth rate has declined since 2004. Fixed line
subscriptions, meanwhile, have fallen since 2005. It is expected that the fixed line subscription rate is going to further
decrease to seven million by 2012.
Figure 17: Telecommunications market growth in Australia, 2002–12
30.00
25.00
20.00
15.00
Growth rate (%)
10.00
5.00
0.00
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
-5.00
-10.00
-15.00
-20.00
Year
Mobile phones Fixed lines
Broadband and internet
Access to the internet in Australia is characterized by differences between urban and rural areas. In March 2007, a
broadband guarantee program was unveiled to replace the existing broadband connect program in an effort to provide
internet access in rural areas. Residential broadband internet access is available in Australia using ADSL, ISDN, cable,
satellite and wireless technologies. There were about 16 million broadband subscribers in 2007. Furthermore, there was an
average annual growth rate of over 12% during 2002–07. It is expected that by 2012, the number of people using the
internet will reach 20 million.

Figure 18: Number of internet users in Australia, 2002–12
25 20.00
15.00
20
Number of users (millions)
10.00
Growth rate (%)

15
5.00
10
0.00
5
-5.00
0 -10.00
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Year
Internet users Growth rate
E-commerce
According to the National Office for the Information Economy, Australia is one of the most connected nations in the
world, with 46% of the population and more than 37% of households having internet access. The estimated revenues of
business-to-business e-commerce in Australia in 2000 were over $2.3 billion, ranking higher than other Asia Pacific
countries like Taiwan, South Korea, Hong Kong and Singapore. Small businesses are also adopting the e-commerce
route at an increasing rate. Between June 1998 and June 2000, the percentage of small businesses with e-commerce
and online selling presence increased from 32% to 65%. According to the Australian Bureau of Statistics' quarterly
survey of internet activity in March 2001, there were close to four million internet subscribers in Australia, downloading
more than one billion megabytes of data. Of these subscribers, 482,000 are registered as business or government
subscribers and account for 41% of the total data downloaded. It is expected that the e-commerce market will generate
revenues up to $20 billion by 2015.
Research and development
Australia has many initiatives in place to enhance the R&D activities in the country. Among others, the National Research
Priorities initiative, an important element of the Australian government‘s Backing Australia’s Ability project, was established
as a new national research priority-setting mechanism to complement existing R&D processes in 2006. Under these priority

listings, industry R&D programs and university block grants are not included. The main goal of this initiative is to develop
research throughout the country without excluding any particular sector. The government is also making efforts to increase
the level of inter-institutional and inter-disciplinary collaboration by fostering networks of research activities.
Furthermore, there has been a conscious push by the Australian government to encourage universities to work in closer
collaboration with industry and business in order to foster innovation. This includes collaboration with other research
organizations conducting health and medical research. The Australian government‘s Backing Australia’s Ability program
was introduced in 2001 to promote science, technology and innovation.
R&D expenditure
The Australian government’s expenditure on R&D has been on a constant rise since 2002. In 2002, R&D expenditure was
just $7 billion, compared to $16 billion in 2007. It rose from around 1.5% of GDP to about 2% over the same period. It is
expected that it will reach around $23 billion by 2012. The largest contributors to R&D expenditure in 2007 were
manufacturing (38.6%), property and business services (17%) and mining (16.7%). The Australian government's policies—
such as its $8.3 billion innovation program, Backing Australia’s Ability—are said to have encouraged business R&D
investment in Australia.
Knowledge base
Through its 'Backing Australia’s Ability' program, the Australian government has introduced many scientific educational
initiatives such as smart moves program for students in the 15–18 group, science connections program, national
biotechnology strategies and various other programs. Since the start of all these initiatives there has been a constant
increase in the knowledge base of Australia. The number of R&D personnel in the country increased from around 105,000
in 1995 to more than 149,000 in 2006.

Figure 19: R&D expenditure in Australia, 2000–12
25 2.50
20 2.00
Percentage (%)
15 1.50
$ billion
10 1.00
5 0.50
0 0.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Year
R&D expenditure R&D expenditure as a % of GDP
Outlook
Since 2002, the communications sector has been one of the fastest growing service industries in Australia, with an average
annual growth of over 6%. In 2007, the government invested heavily in the development of technologies such as digital
radio and television broadcasting. The 2008–09 budget of the Australian government showed strong commitment to ICT.
The government has continued its support of important communications and IT programs, particularly with the investment
of $241m during 2008–13, for the establishment of Enterprise Connect Innovation Centers. These centers will enhance
technologies and connect businesses with new ideas. The government will also invest $40m to provide advisory services to
small businesses utilizing these centers. Apart from the ICT allocations, the government has also prioritized funding to
research programs and R&D on technologies for climate change. The government is to allocate about $313m for fellowship
programs and $480m for technologies to create low emission vehicles. The government expenditure on R&D is set to move
higher and constitute around 2.1% of GDP by 2012. The country is also collaborating with Asian giants like India and China
to develop advanced technologies.

Legal landscape
LEGAL LANDSCAPE
Summary
The legal scenario in Australia is characterized by the hierarchical system of judiciary, with the High Court as its supreme
body. This is followed by the state-level supreme courts, the Family Court and the tribunals for administrative appeals.
The government lays down its legal polices in the broad areas of competition, trade practices, infrastructure, energy and all
other sectors of the economy. The important legal bodies regulating the corporate sector are the ACCC, the Australian
Energy Regulator, the Australian Energy Market Commission and the ARC. These bodies frame the nation's policies and
acts, and provide the guidelines for implementation.
Evolution
Australia has an independent judiciary. The legal system is based on English common law, including the principle of judicial
precedent. The High Court of Australia was established in 1901 by Section 71 of the constitution, although the appointment
of the first bench had to await the passage of the Judiciary Act in 1903. In their first judgments, the justices stamped the
authority of the High Court over the state supreme courts. The High Court was developed into a powerful and necessary
arm of the Commonwealth of Australia. In 1979, the High Court was given the power to administer its own affairs by the
passage of the High Court of Australia Act 1979. Other lower courts, including the Federal Court, Family Court and Federal
Magistrates’ Court, came into being during 1975–76. These courts have specific defined jurisdictions.

Judicial system
Structure of the system
There are two broad levels of courts in Australia: the federal level and the state and territory level. The High Court of
Australia and the state courts are part of the constitution. The others are inferior courts with limited powers and authority.
Each state has a court hierarchy of its own, with the jurisdictions of each court varying from state to state. However, all
states have a state supreme court, which is the highest court within the state.

Legal landscape
Figure 20: Australia – judicial structure
High Court of Australia
State/Territorial Stream Federal Stream
Federal court of Australia

Supreme courts
Family court of Australia

District courts
Federal magistrates’ court
High Court
The High Court has appellate jurisdiction over all other courts. It also has original jurisdiction, and the power of
constitutional review. The main functions of the High Court involve interpreting and applying the law of Australia and
arriving at decisions on cases with federal significance. This includes addressing cases confronting the constitutional
validity of laws. Furthermore, the High Court is also able to hear appeals, by special leave, from federal, state and territory
courts.
Federal Court of Australia
The Federal Court of Australia has various functions, including addressing various issues relating to corporations, trade
practices, industrial relations, bankruptcy, customs, immigration and other areas of federal law. The court has complete
authority in the above areas, and also wields the authority to hear appeals from various tribunals and other legal bodies.
Family Court of Australia
The Family Court presides over issues relating to the family and implements family law. The court was established by the
Family Law Act of the parliament in 1975. This court handles various cases pertaining to parental disputes, matrimonial
property, child support and other family-related issues.
Federal Magistrates' Court
The Federal Magistrates’ Court of Australia was established in 1999 to reduce the heavy case burden from other courts like
the Federal and Family Courts. The court comes under the same category or hierarchical level as the Federal and Family
Courts.

Legal landscape
State supreme courts
The state supreme courts are the highest courts in the states and territories of Australia and their jurisdiction is limited to
that particular state or territory, with responsibility for both criminal and civil matters. They are also the main appeal courts
of states. Each state supreme court is divided into two divisions: the general division and the court of appeal.
Business legislation
Industrial acts, legislations and regulations
The Australian government has consistently developed new legal policies and acts for the various aspects of the economy.
It focused on introducing three major bills into parliament in 2006. These bills involved amendments to the existing
competition provisions of the Trade Practices Act 1974 (TP Act) and their administration, amendments to the national
access regime and the introduction of criminal penalties for serious cartel conduct.
The TP Act prohibits a wide range of anti-competitive practices, including cartel conduct, arrangements that substantially
lessen competition, secondary boycotts, misuse of substantial market power and mergers or acquisitions that may
substantially lessen competition. The act also contains telecommunication-specific competition rules. In 2003, a review that
assessed the competition provisions of the TP Act took place, popularly known as the Dawson Review. The Dawson
Review concluded that, while the competition provisions of the TP Act have served Australia well, the TP Act should be
amended to improve its operation by providing for greater accountability, transparency, and timeliness in decision-making
by the Australian Competition and Consumer Commission (ACCC) and reducing the regulatory burden on business. A bill
was subsequently introduced in the parliament in 2004. However, this bill lapsed due to the federal election in October
2004. It was re-introduced with minor amendments to enhance and clarify its operation, but is still awaiting consideration in
the Senate.
Under the National Competition Policy (NCP), all Australian governments must legislate to establish a right for third parties
to negotiate access to services provided by essential infrastructure facilities. In particular, the NCP’s obligations on
electricity aim to facilitate trade across and within state boundaries, and offer third parties access to transmission and
distribution infrastructure. Furthermore, the new Australian Energy Regulator (AER) and the Australian Energy Market
Commission began operations in July 2005. They assumed functions that had been previously performed by the National
Electricity Code Administrator and the ACCC. The AER is a new legal entity with independent decision-making powers, but
remains a constituent part of the ACCC.
Australia protects intellectual property (IP) including patents, plant breeder‘s rights, copyright, trademarks and designs. IP
Australia is the Australian government agency responsible for granting IP rights. In 2001, the ARC, the NHMRC, the
Australian Vice-Chancellors’ Committee and a number of other government agencies jointly issued national principles of IP
management for publicly funded research guidelines. These guidelines assert that the rights of all IP generated by NHMRC
and ARC supported research will initially be vested in the research institutions administering the grants.
Furthermore, the country aims to remove barriers to competition. The Australian government is attempting to complete all
outstanding NCP electricity reforms, lift price regulations for households and foster strong competition in the electricity
generation sector. The major challenge here is to improve pricing and regulatory arrangements, rather than increasing the
total volume of infrastructure.

Legal landscape
Establishing business operations in Australia
The Corporation Act of Australia permits a liability corporation to take one of two main forms: that of a private company or a
public company. A foreign company can operate in Australia by incorporating an Australian subsidiary or registering as a
foreign corporation and operating as a branch office.
Subsidiaries
A foreign corporation can form an Australian incorporated subsidiary, which may be a proprietary or public company. A
company can be established in the form of a subsidiary either by incorporating a new company or by acquiring an
Australian company. The company to be acquired domestically can also be a company that has been incorporated but has
not yet traded.
Establishing a branch
Within one month of starting a business, a branch must be registered as a foreign company with the ASIC. To register, the
company should provide all relevant home country documents along with the memorandum of understanding and articles of
association. A branch of a foreign company has to provide the parent company’s balance sheets and other reports to the
ASIC. It should also submit all the bills and letterheads mentioning the new premises in Australia.
Representative office
Establishing a representative office can be another route to starting a business. A representative office engages in activities
that do not resemble any regular business in Australia. The activities may include anything other than sales, such as having
a nominated person employed by a local associate to handle enquiries. Special rules apply to banks wanting to set up a
representative office.
Tax regulations
Companies and corporations pay tax on profits in Australia. Unlike personal income taxes, which are progressive in nature,
corporate taxes in Australia are imposed at a flat 30% rate. Tax is paid on corporate income at the corporate level before it
is distributed to individual shareholders as dividends.
The federal government levies a multi-stage tax of 10% on the supply of most goods and services by entities registered for
goods and services tax (GST). Basic foodstuffs, medical and educational services, and exports are GST-free, while
earnings from residential accommodation and financial services are taxed. The revenue from this tax is distributed to the
states.
The Australian government’s taskforce report Rethinking Regulation appealed for simplification of the tax system and a
reduction of compliance costs. Many measures were announced in the 2006/07 Budget that reduced the complexity of the
tax laws and compliance costs for taxpayers.

Legal landscape
Individual income tax
Income tax is the main source of income for the Australian government. It is only imposed by the federal government. The
tax structure is progressive, with higher income earners paying a higher proportion of tax than lower income earners. The
income tax rate structure is divided into five tiers, with tax rates ranging from 0% to 45%.
Withholding tax
In Australia, the dividends paid by resident companies out of profits already taxed carry franking credits on the tax paid.
Franking credits are benefits given in the form of credits on various financial transactions. Dividends are referred to as fully
franked, partially franked or un-franked, depending on the extent to which the company has chosen to use its franking
credits. To the extent that distributions to non-residents are un-franked distributions, they are subject to withholding tax at a
statutory rate of 30%. Australia’s double tax treaties generally provide for a 15% withholding tax rate on dividends paid to
nonresident shareholders.
Other local taxes
The other taxes in Australia include GST, which is similar to VAT, luxury car tax, wine equalization tax and excise duties.
Other than these, employers are required to pay fringe benefits tax and a petroleum resource rent tax, which is levied on
income from the recovery of all petroleum products from offshore areas. The states impose payroll taxes at rates of up to
6.85% on wages and salaries. Stamp duties are also imposed on any property-related transactions.
Labor law
In Australia, the employment system is a mixture of legislation, common law, legally binding awards and agreements. A
syndicate of federal and state laws addresses various issues, including maximum working hours, working conditions such
as occupational health and safety, annual leave, workers compensation and industrial action. According to state legislation,
working hours are restricted to 40 hours per week. There is also a weekly cap that employers must set in the case of extra
work, forcing employers to compensate employees for extra hours of work accordingly. Overtime compensation is generally
one and a half times normal pay for the first two to three hours and double thereafter. The Australian Fair Pay Commission
sets and reviews the federal minimum wage. The minimum wage in Australia is A$13.47 per hour. As a part of the
termination process, the employer must give notice or the equivalent pay. The Workplace Relations Act provides for
minimum notice of one to five weeks.
Social security charges
In Australia, the pension guarantee is a compulsory, tax-deductible employer contribution to employee’s individual
occupational pension funds. This particular arrangement is valid for people aged 18–70, and paid above A$450 per month.
The government also provides social security payments for family tax benefits, disability pensioners, parents on low
incomes and unemployed adults.
Corporate governance
In the corporate governance statement of 2005–06, the Australian stock exchange outlined 10 broad principles that are to
be adhered to by the corporate sector. They are:

Legal landscape
• Lay solid foundations for management and oversight.
• Have a board of an effective composition, size and commitment to adequately discharge its responsibilities and duties.
• Promote ethical and responsible decision-making.
• Safeguard integrity in financial reporting.
• Make timely and balanced disclosures.
• Respect the rights of shareholders.
• Establish a sound system of risk oversight and management and internal control.
• Fairly review and actively encourage enhanced board and management effectiveness.
• Remunerate people fairly and responsibly.
• Recognize the legitimate interests of stakeholders.
Performance
Effectiveness of the legal system
The Australian constitution established the High Court of Australia and empowered the Commonwealth parliament to create
other federal courts. The parliament also has the power to vest judicial authority in state and territory courts. The
government appoints federal judges and magistrates on the basis of merit. The Australian constitution does not set out
specific qualifications required by federal judges and magistrates. However, according to laws made by the Commonwealth
parliament, to be appointed as a federal judge, a person must have been a legal practitioner for at least five years or be a
judge of another court. To be appointed as a federal magistrate, meanwhile, a person must have been a legal practitioner
for at least five years. To be appointed as a judge of the family court of Australia, a person must also be suitable to deal
with family law by reason of training, experience and personality.
Federal judges and magistrates must be under 70 years of age when appointed. The Australian constitution stipulates that
a federal judge or magistrate can only be removed from office on the ground of proven misbehavior or incapacity, and with
consent from both the House of Representatives and the Senate. The constitution also specifies that the remuneration of a
federal judge or magistrate cannot be reduced while the person holds office. These guarantees of tenure and remuneration
assist in securing judicial independence.
The independence of the courts, and their separation from the legislative and executive arms of government, is regarded as
being of great importance in Australia. Indeed, it is taken for granted that judges, in interpreting and applying the law, act
independently of the government.

Legal landscape
Legal indicators
According to the Doing Business survey of the World Bank, the process of operating a firm in Australia has remained
stable. The 2008 indicator shows that the number of days required to start a company in Australia is just two, compared to
the OECD average of six. The starting business indicator also indicates efficiency and highlights the hassle-free business
environment.
With regard to acquiring or dealing with licenses, there has been no improvement in 2008, as Australia remained at the 52nd
rank. Employing workers remains easy, and the country continues to be in the eighth position in 2008. There was no
change in registration of property, indicating a large amount of stability, as the country remained at the 27th position in 2008.
Credit procedures have also remained stable at third place, indicating efficiency in production and overall management of
resources. The country's investment protection environment rank has come down slightly, from 49th in 2007 to 51st in 2008.
The Index of Economic Freedom ranks Australia as the third freest economy in 2009, with an economic freedom score of
82.6. Australia rates high in almost all of the 10 economic freedoms. According to the index, monetary stability and
openness to global commerce support an internationally competitive financial and investment environment based on
market principles. A strong rule of law protects property rights and tolerates virtually no corruption. Both foreign and
domestically owned businesses enjoy considerable flexibility in their licensing, regulation and employment practices. The
Australian labor market is also highly flexible, with regulations aimed at employment creation and productivity growth. The
country has also taken steps to restrict corruption, which is perceived as minimal. Australia ranks 11th out of 179 countries
in Transparency International's Corruption Perceptions Index for 2007.
Outlook
Australia is one of the most lucrative destinations for foreign investments in the world. The country is ranked ninth globally
in the Doing Business indicators of the World Bank, and is ranked first among the OECD countries. However, restrictions to
competition still remain in the agricultural marketing, postal services, liquor licensing and compulsory insurance schemes
sectors. Furthermore, there are restrictions on foreign investment in some sectors, like the media, transport and real estate.
Although changes were made to foreign investment screening arrangements for acquisitions of residential real estate by
foreign persons in December 2008, no such changes have been introduced in the media.
The country is now focusing on the regulatory inconsistency arising due to the co-existence of state and national regulators
in both the electricity and gas sectors. Although there have been significant improvements in urban water reforms, the pace
of rural water reform has been slow. The National Reform Agenda was adopted in 2006 and forms the basis to promote
competition in the energy and transport sectors. Furthermore, in April 2008, the Australian government unveiled a series of
measures aimed at promoting competition and cracking down on anticompetitive behavior by powerful businesses. The
planned changes are to take effect through the TP Act, and include moves to further defend small business from predatory
pricing and give the sector a permanent voice in the ACCC. Furthermore, the role of the ACCC is also to be strengthened
in terms of supporting small businesses. These measures will ensure fair competition for the benefit of consumers and
small businesses.

ENVIRONMENTAL LANDSCAPE
Summary
Australia is diverse in its natural resources. The main environmental concerns are regarding the dry land salinity and scarce
water resources. The country has also ratified the Kyoto Protocol and is committed to meeting the targets by 2010. Another
challenge the country faces is climate change. Australia is expected to play an important role in developing a carbon
emissions trading system at a global level, and is expected to adopt a domestic trading system by 2012.
Evolution
The Australian government has been playing an important role in the protection of the national environment and the
implementation of international environmental treaties dealing with climate change, destruction of the ozone layer and
protection of biodiversity. The government has framed certain landmark strategies, including: Australia’s Oceans Policy, the
National Forests Policy, the National Greenhouse Strategy, the National Strategy for Ecologically Sustainable
Development, the National Strategy for the Conservation of Australia’s Biological Diversity, and the National Action Plan for
Salinity and Water Quality. All of these policies have been enforced by the authorities, which has helped the country to
preserve its environment.

Environmental regulations
Policy
The country has moved from a state-based policy to a more coordinated, market-based approach towards solving its
environmental problems. Water management is one of the prime examples of this. It was formerly a subsidized sector,
leading to inefficient allocation funds. However, increasing scarcity has spurred significant changes in water policy since the
1980s and, in 1994–95, the National Agenda for Water Reform was adopted, whereby all jurisdictions committed
themselves to implementing a range of market-based measures. This included the agenda for the specific provision of
water for the environment, making water services providers operate on a commercial basis and limiting new investment in
the rural water supply to economically viable and ecologically sustainable projects.
Environmental actions
Environmental Protection and Biodiversity Act
The Environment Protection and Biodiversity Conservation Act 1999 (the EPBC Act) is the Australian government’s central
authority of environmental legislation. It provides a legal framework to protect and manage important flora, fauna, ecological
communities and heritage places.
The objectives of the EPBC Act are to:
• Provide for the protection of the environment, especially on matters of national environmental significance.
• Conserve Australian biodiversity.

• Provide a streamlined national environmental assessment and approvals process.
• Enhance the protection and management of important natural and cultural places.
• Control the international movement of plants and animals (wildlife), wildlife specimens and products made or derived
from wildlife.
• Promote ecologically sustainable development through the conservation and ecologically sustainable use of natural
resources.
Water management
Australia is a comparatively dry continent. Water shortages are aggravated by climate change, including intermittent
drought conditions. Water is state property in Australia, and the right to use it is granted according to land owned.
Furthermore, access to water is granted as a statutory right under state legislation. The rapid growth of population in urban
areas has increased the water usage in Australia, which, in turn, has augmented competition for water resources.
Furthermore, this led to increased pressure on the environment, caused by reduced water levels in rivers and irrigation-
induced salinity. The National Agenda for Water Reform implemented new pricing practices, which reflected the full
economic cost of resources. As a part of the reform process, cross-subsidies were abolished and other subsidies were
made transparent. Furthermore, allocative efficiency was attained by trading in water rights. The reforms also incorporated
the statutory provision of water for the environment. Ultimately, they have increased efficiency in water allocation and
usage, and brought in a better balance between consumption and environmental needs.
Salinity mitigation
Australia is biologically and climatically influenced by concentration of salt in the land. This is result of the combination of a
generally flat terrain with low rainfall, high evaporation, and very limited sub-surface drainage to the sea. Three measures
have been applied in Australia for salinity mitigation. These constitute changes in land and water use and management
practices, engineering salt-interception schemes (these pump saline groundwater and collect the salt through evaporation),
and river flow management. Currently, the measures to alleviate salinity have been implemented in the Murray-Darling
Basin, as most of the salinity effects were initially felt in this area. This region is home to a large amount of agricultural
activities.
Participation in global efforts/agreements/pacts
Green region environment pact
In the East Asian summit held in 2007, attended by the 10 ASEAN countries and Australia, a consensus was reached on
collectively solving the issues of climate change and forest cover, and promoting the usage of nuclear energy. The pact
also brought the development of alternative energy sources and cleaner fossil-fuel technologies into focus, as well as
upgraded energy efficiency and conservation.

Kokoda preservation pact
The Kokoda trail is one of the most well-known historical war grounds in the world, where the Japanese and Australian
armies engaged in a fierce battle during World War II. This track, which is in Papua New Guinea, is considered to be of
high ecological and environmental importance. In April 2008, the Australian and Papua New Guinean governments signed
the Kokoda preservation pact to protect the environmental heritage of the track. The Australian government has provided
the Papua New Guinea government with an initial investment of $15m for the management and monitoring of the agreed
environmental norms.
US-Australia bilateral environmental co-operation
The US and Australia have a long and productive history of co-operation on environmental issues. The significant
environmental program that the countries created bilaterally is the US-Australia Climate Action Partnership. This
partnership focuses on botanical gardens, endangered and migratory species, meteorological and oceanographic research
and management, and whale and ozone protection. To further enhance the collaboration and co-operation between the US
and Australia, the respective governments are making efforts to regularly review ongoing co-operative activities and identify
priority areas for cooperation in the future. In particular, the governments intend to consider bilateral collaborative efforts to
help other countries to carry out environmental capacity building.
Table 12: International environmental treaties signed and ratified by Australia
International treaty Year of ratification
Vienna Convention for the Protection of the Ozone Layer, 1988 1987
Montreal Protocol on Substances that Deplete the Ozone Layer 1989
Framework Convention on Climate Change 1992
Convention on Biological Diversity 1993
UN Law of the Sea 1994
UN Convention to Combat Desertification in those Countries Experiencing Serious Drought and/or Desertification, 2000
Particularly in Africa
Kyoto Protocol to the Framework Convention on Climate Change (year of ratification/signature) 2008
Cartagena Protocol on Biosafety NA
Stockholm Convention on Persistent Organic Pollutants, 2001 2004

Performance
Environmental impacts
Australia ratified the Convention on Biological Diversity in 1993 and undertook a major initiative in the form of the National
Strategy for the Conservation of Australia’s Biological Diversity in 1996. Also, the EPBC Act 1999 has been in force since
July 2000. Under the EPBC, actions that are likely to have a significant impact on matters of national environmental
significance are subject to a rigorous assessment and approval process.
With respect to global warming, the Australian Greenhouse Office was established for greenhouse gas policy. Climate
change is a challenging issue for Australia. One of the first policy decisions taken by Prime Minister Rudd after assuming
office was to sign the Kyoto Protocol. Following the ratification, Australia committed itself to meeting its Kyoto Protocol
target, and has set a target to reduce greenhouse gas emissions by 60% on 2000 levels by 2050 and by 5% before the end
of 2020. This is considered by some to be too little given the high level of pollution in the country. However, the Australian
government is ready to increase this target if other countries like China and India also make similar commitments.
The new government also issued draft legislation in December 2008 for the carbon trading system known as the Carbon
Pollution Reduction Scheme, scheduled to be launched in 2010. The government hopes that this scheme will become the
bedrock upon which Australia will reduce its greenhouse gas levels by making the creation of carbon pollution expensive to
encourage major polluters to reduce emissions.
Furthermore, measures have also been implemented to support the production and use of renewable energy. This initiative
began in 1997 and seeks to increase the share of renewable electricity by 2% by 2010. The trading mechanism will also
provide flexibility in meeting the target.
A risk to future growth is environmental degradation, as the interests of the federal government and the state governments
differ depending on energy production patterns, biodiversity concerns and water use. Furthermore, there is a requirement
for increased coordination between regional and national efforts, in particular, to deal with cross-state spillovers and the
need to enforce agreements under international treaties.
Outlook
Under the Environmental Performance Index (EPI) study carried out by Yale and Columbia University, Australia received a
low global ranking for its environmental performance, mainly because of its non-supportive assessment of climate change.
The country is ranked 46th out of 149 countries on the 2008 EPI with a score of 79.8, which is behind countries like the US
and Brazil. In the category of climate change (measure for ecosystem vitality), Australia was rated at 42.5. By comparison,
China had a climate change score of 52.7, India 57.9 and the US 56.1. Australia's greenhouse gas emission per capita and
emissions per kilowatt-hour received a score of 45.4 and 5.9, respectively. Water stress was 49.6.
The Australian government has made various policy improvements and has implemented several policy measures to
enhance environmental conservation. The government is estimated to have spent 50 million in 2008, employing indigenous
Australians to deliver environmental services in remote and regional areas. This program builds on Community
Development Employment Projects and offers the prospect for some indigenous Australians to get better jobs. This
program is set to run from 2008–12. Australia is also joining with India and South Africa to develop technologies to fight
pollution. The government has also joined hands with APEC to address some of the key environmental issues.

Furthermore, the Australian corporate sector has come forward to participate in developing technologies for reducing
environmental degradation. In February 2008, an Australia-based company acquired the rights to HTC Purenergy's carbon
capture management product for the Australian region. The system, called the Purenergy CO2 Capture System, is the
world's first pre-engineered, modular carbon capture system, and can be retrofitted onto existing power plants or any large
industrial greenhouse gas emitter.
Furthermore, Australian companies are also making efforts to build the biggest solar power station in the country. The
Australian government has agreed to fund more than $370m in this venture. The government is also investing $7.2 billion to
increase the production of renewable energy. In spite of its low EPI ranking, Australia is making efforts to reduce its
greenhouse gas emissions, employ indigenous people to deliver environmental services and encourage the augmentation
of solar energy. Hopefully, these initiatives will increase the country’s performance in terms of environmental indicators.
With the ratification of the Kyoto Protocol, Australia is expected to further gear up to meet the targets under the Kyoto
Protocol.

Appendix
APPENDIX
Ask the analyst

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in their given fields. For any questions or comments about this report you can contact the author directly.
countryanalysis@datamonitor.com
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COUNTRY ANALYSIS REPORT

Publication Date: June 2009

Australia: Country Analysis Report – In-depth PESTLE Insights Published 06/2009

© Datamonitor. This brief is a licensed product and is not to be photocopied Page 1

Australia: Country Analysis Report – In-depth PESTLE Insights Published 06/2009

© Datamonitor. This brief is a licensed product and is not to be photocopied Page 2

Australia: Country Analysis Report – In-depth PESTLE Insights Published 06/2009

© Datamonitor. This brief is a licensed product and is not to be photocopied Page 3

Australia: Country Analysis Report – In-depth PESTLE Insights Published 06/2009

© Datamonitor. This brief is a licensed product and is not to be photocopied Page 4

Table 1: Australia – key fundamentals

2006 2007 2008 2009 2010 2011 2012

Source: Datamonitor DAT AMONITOR

Australia: Country Analysis Report – In-depth PESTLE Insights Published 06/2009

© Datamonitor. This brief is a licensed product and is not to be photocopied Page 5

Key facts and geographic location 10

Structure and policies 37

Structure and policies 46

Structure and policies 65

Australia: Country Analysis Report – In-depth PESTLE Insights Published 06/2009

© Datamonitor. This brief is a licensed product and is not to be photocopied Page 6

Structure and policies 73

Structure and policies 79

Structure and policies 86

Ask the analyst 91

Australia: Country Analysis Report – In-depth PESTLE Insights Published 06/2009

© Datamonitor. This brief is a licensed product and is not to be photocopied Page 7

Figure 2: Australia – political events timeline 35

Figure 3: Australia – key political figures 37

Figure 4: Evolution of GDP growth in Australia, 1970–2008 46

Figure 5: Market capitalization of Australian securities exchange, 2001–08 49

Figure 6: GDP and growth rate in Australia, 2002–12 (constant prices) 51

Figure 7: Sector composition of GDP in Australia, 2008 52

Figure 8: Australia’s agricultural output, 2001–08 53

Figure 9: Australia’s industrial output, 2001–08 54

Figure 10: Australia’s services output, 2001–08 55

Figure 11: Australia’s external trade (merchandise), 2004–08 58

Figure 12: Australia – total foreign direct investment inflows, 2001–08 59

Figure 15: Major religions in Australia 67

Figure 16: Expenditure on healthcare in Australia, 2002–08 70

Figure 17: Expenditure on education in Australia, 2002–08 71

Figure 17: Telecommunications market growth in Australia, 2002–12 75

Figure 18: Number of internet users in Australia, 2002–12 76

Figure 19: R&D expenditure in Australia, 2000–12 78

Figure 20: Australia – judicial structure 80

Australia: Country Analysis Report – In-depth PESTLE Insights Published 06/2009

© Datamonitor. This brief is a licensed product and is not to be photocopied Page 8

Table 2: Australia - key facts 10

Table 3: Analysis of Australia’s political landscape 13

Table 4: Analysis of Australia’s economy 16

Table 5: Analysis of Australia’s social system 20

Table 6: Analysis of Australia’s technology landscape 24

Table 7: Average annual salaries for researchers across countries 26

Table 8: Patents received by USPTO, 2001–07 27

Table 9: Analysis of Australia’s legal landscape 28

Table 10: Analysis of Australia’s environmental landscape 31

Table 11: Mid-year population by age (millions) in 2006 66

Table 12: International environmental treaties signed and ratified by Australia 88

Australia: Country Analysis Report – In-depth PESTLE Insights Published 06/2009

© Datamonitor. This brief is a licensed product and is not to be photocopied Page 9

KEY FACTS AND GEOGRAPHIC LOCATION

Table 2: Australia - key facts