Economy of Australia
From Wikipedia, the free encyclopedia
| Economy of Australia | ||
|---|---|---|
 |
||
| Australian dollar coins | ||
| Currency | Australian Dollar ($A or A$, AU$ or $AU, AUD) | |
| Fiscal year | 1 July - 30 June | |
| Trade organisations | APEC, WTO and OECD | |
| Statistics | ||
| GDP (PPP) | $630.1 billion (2005) (17th [1]) | |
| GDP growth | 2.5% (2005 est.) | |
| GDP per capita | $31,900 (2005 est.) | |
| GDP by sector | agriculture: 3.8%, industry: 26.2%, services: 70% (2004 est.) | |
| Inflation (CPI) | 4.0% (YTD June 2006) [2] | |
| Pop below poverty line | 14.3% (2004 est.) [3] | |
| Gini index | 35.2% (1994) | |
| Labor force | 10.65 million (December 2005 est.) | |
| Labour force by occupation | agriculture (3.6%), mining (1.1%), industry (20.2%), services (75.1%) (May 2005 est.) | |
| Unemployment | 4.9% (August 2006) [4] | |
| Main industries | mining, industrial and transportation equipment, food processing, chemicals, steel | |
| Trading Partners | ||
| Exports | $127.3 billion (2004/05 est.) [5] | |
| Export goods | coal, gold, meat, wool, alumina, iron ore, wheat, machinery and transport equipment | |
| Main export partners | Japan 19.6%, China 10.2%, South Korea 7.7%, US 7.4%, New Zealand 7.2% (2004/05 est.) [6] | |
| Imports | $149.5 billion (2004/05) [7] | |
| Import goods | machinery and transport equipment, computers and office machines, telecommunication equipment and parts; crude oil and petroleum products | |
| Main import partners | US 14.2%, China 13.2%, Japan 11.5%, Germany 5.8% (2004/05) [8] | |
| Public finances | ||
| Public debt | 16% of GDP (2005-2006; net public debt -0.5% GDP [9]; public and private external debt US$323.4 billion, 2005 est.) | |
| Revenues | A$222.9 billion (2005-2006) [10] | |
| Expenses | A$206.0 billion (2005-2006) [11] | |
| Economic aid | donor: ODA, $2.5 billion (2005/06 Budget) [12] | |
| Main source [13] All values, unless otherwise stated, are in US dollars |
||
- Throughout this article, the unqualified term "dollar" and the $ symbol refer to the Australian dollar.
The Economy of Australia is a prosperous, Western-style market economy, with a per capita GDP slightly higher than United Kingdom, France and Germany.
The Australian is dominated by its services sector (68% of GDP), yet it is the agricultural and mining sectors (8% of GDP combined) that account for 65% of its exports. Rich in natural resources, Australia is a major exporter of agricultural products, particularly grains and wool, and minerals, including various metals, coal, and natural gas. A downturn in world commodity prices can thus have a large impact on the economy.
Australia's competitive advantage in primary products is a reflection of the natural wealth of the Australian continent and its small domestic market; 20.6 million people occupy a continent the size of the contiguous United States. Service industries have expanded in recent decades at the expense of the manufacturing sector, which now accounts for just under 12 percent of GDP.
Australia's emphasis on reforms is often cited as a key factor behind the continuing strength of the economy. In the 1980s, the Australian Labor Party, led by Prime Minister Bob Hawke and Treasurer Paul Keating, commenced the modernisation of the Australian economy by floating the Australian dollar in 1983, leading to full financial deregulation.
Current areas of concern to some economists include Australia's large current account deficit, the absence of a successful export-oriented manufacturing industry, a real estate bubble, and high levels of net foreign debt owed by the private sector.
Contents |
[edit] History
- Further information: Economic history of Australia
[edit] Microeconomic reform
Key microeconomic reforms include unilaterally reducing high tariffs and other protective barriers; floating the Australian dollar exchange rate; deregulating the financial services sector-- including a decision in late 1992 to allow liberal access for foreign bank branches; rationalizing and reducing the number of trade unions; efforts to restructure the highly centralized system of industrial relations and labour bargaining; better integrating the State economies into a national federal system; improving and standardizing the national infrastructure; and privatizing much of the government-owned services and public utilities.
Since 1996, the Coalition government, led by Prime Minister John Howard, continued to implement microeconomic reform policies. The microeconomic reforms of the Howard government have focussed on the labour market, and has attempted to reduce union power and involvement in the workplace. The Coalition government deregulated numerous other industries, including the telecommunications sector, and privatised many of the pre-existing monopolies. Since the recession of the early 1990s, the Australian economy has not suffered a recession in over 14 years. As of January 2007, unemployment had fallen to a level of 4.6 per cent, the lowest level since the 1970s. The price of shares listed on the Australian Stock Exchange has also grown significantly since the early 1990s.
Many raw materials (including resources postulated to exist but yet to be discovered) remain mostly unexploited. Economists often refer to Australia as the "world's farm". The agriculture and natural resources sectors contribute significantly to GDP, both directly and indirectly, through associated services like road and rail transport networks, which in some areas exist entirely based on an industrial need, and supporting rural economies. In recent years the Australian government has been focusing on the development of the tourism, education and technology markets. The Australian government funds scientific research and development through universities, the Commonwealth Scientific and Industrial Research Organisation (CSIRO), and through joint ventures between the public and private sectors called Cooperative Research Centres.
[edit] Economic growth
The ultimate goal is for Australia to become a competitive producer and exporter, not just of traditional farm and mineral commodities, but of a diversified mix of value added manufactured products, services, and technologies. While progress has been made on this economic reform agenda – such as in opening the telecommunications market to competition – much remains to be done, particularly in the domestic arena. These values of the share market comprises many different telecommunication companies.
While the near-term outlook is for continued economic expansion, Australia's longer term prospects depend heavily on continued fundamental economic reform. There is a general consensus among the major political parties, management, and labour on the necessary features of this reform but significant divergence of views on the methods, pace, and degree of change required.
The influence of China's economic growth has also fuelled Australia's export growth in mineral and energy resources, with the recent Western Australian Liquified Natural Gas contract worth potentially $25 billion over the life of the project [14]. China's industrialisation has resulted in an export boom for resource corporations, and thus contributed to increasing the Australian Federal Government's revenue stream from increased Company Tax takings. Australia's trade with China is currently the fastest growing in the past decade, to become the third largest trading partner overall.
Recent changes by the Coalition Government on industrial reform, with particular regards to new laws changing the regulation of workplace contracts for small businesses under 100 employees, has resulted in major discontent among union groups and employee advocates. Critics argue that the laws will result in reduced worker entitlements in return for nominal financial compensation, which will thus impact on the social needs of individuals. Furthermore, it is argued that there is no economic evidence to support the government's claims that the changes will stimulate productivity and raise wages. Nevertheless, businesses welcome attempts to improve productivity, and believe such reforms will benefit the Australian economic output as a whole.
The privatisation of Telstra will also be a major agenda for the government, potentially worth AU$30 billion, as it seeks to retire public debt and build upon successive federal surpluses for a future capital reserve. Telstra's privatisation is undergoing numerous consultations with various lobby groups, particularly rural areas which expect funds to be allocated for improving rural telecommunications infrastructure. Various proposals for privatisation to improve competition of Telstra's natural monopoly over fixed lines, including the separation of Telstra's wholesale communications and its retail division, have been seen as unsatisfactory by the current Telstra board for maximising the final share price.
[edit] Taxation
As a Federation, political power is spread between the Commonwealth and State Governments. As a result, both the Commonwealth and the States have their own taxes. Taxes vary from State to State due to their different needs, populations, economics and budgetary position. The Commonwealth is the main source of income for State Governments, however. The Commonwealth's largest sources of revenue are income tax and business tax. As a result of State dependence on Federal taxation revenue to meet decentralised expenditure responsibilities, Australia is said to suffer from a vertical fiscal imbalance.
[edit] Federal taxation
This is the amount of tax that people have to pay on their income from July 1, 2006. Source: click here
| Taxable income | Tax on this income |
|---|---|
| $0 – $6,000 | No tax |
| $6,001 – $25,000 | 15c for each $1 over $6,000 |
| $25,001-$75,000 | $2,849.85 plus 30c for each $1 over $25,000 |
| $75,001 – $150,000 | $17849.85 plus 40c for each $1 over $75,000 |
| Over $150,000 | $47849.85 plus 45c for each $1 over $150,000 |
The Medicare levy applies to certain thresholds.
- GST (Goods and Services Tax)
The Goods and Services Tax, which is the Australian equivalent of the VAT, is a 10% consumption tax imposed on goods which was introduced by the Howard Government in 2000. There are however, products which are GST-free, such as fresh foods. GST was brought in to replace the old Wholesale sale tax which was confusing and consumers didn't know what was taxed and how much the tax was.
The purpose of the GST is to provide the States with enough funds so that they can abolish and/or reduce some of their State taxes and expand the size of their services to the public. In the contract signed between the Commonwealth and the States and Territories in 1999, the distribution of GST revenue is decided by the Federal Government. This has resulted in disputes between the Commonwealth and NSW and Victoria who are aggrieved because they are receiving less GST revenue than the respective State generates; the excess revenue is then transferred to other states such as Queensland. The GST rate cannot be increased or decreased without the unanimous approval of Commonwealth and State Governments.
- Corporate/Company Tax
All businesses pay a company/corporate tax of 30%.
- Social Security Levies (this part needs to be expanded)
All people must pay Social Security levies so as to fund healthcare, retirement programs.
Medicare Levy: 1.5%
- Capital Gains Tax (CGT)
The Federal Government collects Capital Gains Tax on assets acquired on or after 20 September 1985. It has the effect of including the capital gain as part of the individual or corporation's income, thereby subjecting it to income tax at the individual's appropriate tax rate. See Capital gains tax in Australia.
- Excise duty
38.143 cents per litre on petrol and diesel, and 12.5 cents per litre on Autogas (LPG) and ethanol. The Government also taxes alcohol and tobacco under excise duty.
[edit] State taxation
States also have their own taxes so that they can fund the services they offer. For obvious reasons, tax rates vary from State/Territory to State/Territory. Certain States and Territories may not even levy certain taxes that are mentioned below.
- Payroll Tax: tax levied on businesses.
- Pokies Tax: tax levied on businesses who offer gambling services.
- Land Tax: tax levied on people and businesses who own land.
- Capital Gains Tax (CGT): tax levied on people/businesses who sell the assets that have appreciated in value.
- Vendor's Tax: tax which is levied on people/businesses who sell property. It has been labelled as the world's dumbest tax by some economists, since people already pay CGT when selling a property.
[edit] Municipal taxation
Local Governments, or as they are known in Australia, councils, have their own taxes so that they can provide garbage collection, park maintenance services, libraries and museums, etc. This taxation is commonly referred to as "council rates".
[edit] Trade and Economic Performance
Despite high global demand for Australian mineral commodities, export growth has remained flat in comparison to strong import growth. Even though Australia enjoys high commodity price, structural change needs to implemented in order to increase the size of manufacturing sector in Australia. Australian economy has been performing better than other economies of OECD and has supported economic growth for 16 consecutive years.[15]According to Reserve Bank of Australia [16]Australian per capit GDP growth is higher than that of New Zealeland, US, Canada and Netherlands. The performance of the Australian economy is heavily dependent on US and Chinese economic growth.
[edit] Economic indicators
Industrial Production Growth Rate: -3.5% (2006 est.)
Agriculture - Products: wheat, barley, sugarcane, fruits; cattle, sheep, poultry
Exports - Commodities: coal, gold, meat, wool, aluminum, uranium, iron ore, wheat, machinery and transport equipment, liquefied natural gas
Imports - Commodities: crude oil and petroleum products
Imports - Products: machinery and transport equipment, computers and office machines, telecommunication equipment and parts;
Exchange rates:
Australian dollars per US dollar: 1.3285 (2006), 1.3095 (2005), 1.3598 (2004), 1.5419 (2003), 1.8406 (2002), 1.9334 (2001), 1.7248 (2000), 1.55 (1999), 1.5888 (1998), 1.3439 (1997), 1.2773 (1996), 1.3486 (1995)
Electricity:
- production: 237 TWh (2004)
- consumption: 221 TWh (2004)
- exports: 0 kWh (2003)
- imports: 0 kWh (2003)
Electricity - production by source:
- fossil fuel: 90.8%
- hydro: 8.3%
- nuclear: 0%
- other: 0.9% (2001)
[edit] References
- The World Bank-2005 data [17]
- Harcourt, T. (2005). How the LNG deal was won. Australian Trade Commission Website
- Macfarlane, I. J. (1998). Australian Monetary Policy in the Last Quarter of the Twentieth Century. Reserve Bank of Australia Bulletin, October 1998
- Parham, D. (2002). Microeconomic reforms and the revival in Australia’s growth in productivity and living standards. Conference of Economists Adelaide, 1 October 2002
- Some statistics on this page have been drawn from publications of the Australian Bureau of Statistics.
- This article contains material from the CIA World Factbook (2005 edition) which, as a US government publication, is in the public domain.
- Australian Department of Foreign Affairs & Trade (http://www.dfat.gov.au/geo/australia/index.html - Australian Facts).
[edit] See also
- OECD's Australia country Web site and OECD Economic Survey of Australia
- Monthly Economic and Social Indicators (Australian Parliamentary Library)
- Australia
- Reserve Bank of Australia
- Australia's Balance of Payments
- Economy of Oceania
Australia · American Samoa · Cook Islands · Fiji · French Polynesia · Guam · Kiribati · Marshall Islands · Micronesia · Nauru · New Caledonia · New Zealand · Niue · Palau · Papua New Guinea · Samoa · Solomon Islands · Tonga · Tuvalu · Vanuatu
Australia • Austria • Belgium • Canada • Czech Republic • Denmark • Finland • France • Germany • Greece • Hungary • Iceland • Ireland • Italy • Japan • South Korea • Luxembourg • Mexico • Netherlands • New Zealand • Norway • Poland • Portugal • Slovakia • Spain • Sweden • Switzerland • Turkey • United Kingdom • United States
Australia • Brunei Darussalam • Canada • Chile • People's Republic of China • Hong Kong, China • Indonesia • Japan • Republic of Korea • Malaysia • Mexico • New Zealand • Papua New Guinea • Peru • Philippines • Russia • Singapore • Chinese Taipei (Republic of China) • Thailand • United States • Viet Nam
1 All twenty-seven member states of the European Union are also members of the WTO in their own right:
Austria • Belgium • Bulgaria • Cyprus • Czech Republic • Denmark • Estonia • Finland • France • Germany • Greece • Hungary • Ireland • Italy • Latvia • Lithuania • Luxembourg • Malta • Netherlands (— For the Kingdom in Europe and for the Netherlands Antilles) • Poland • Portugal • Romania • Slovakia • Slovenia • Spain • Sweden • United Kingdom
| Australian industry |
|---|
| Economy of Australia: Agriculture in Australia • Communications in Australia • Mining in Australia • Tourism in Australia • Transport in Australia |
