AUSTRALIA’S
ECONOMY
Agron/Econ 496
Sergio Lence
February, 2008
Australian Economy
Prosperous, Western-style market economy
World Bank classification:
Low-income economies
53 countries (e.g., Haiti)
Lower-middle income economies
55 countries (e.g., Guatemala)
Upper-middle income economies
41 countries (e.g., Mexico)
High-income economies
60 countries (e.g., Australia)
Composition of GDP (%)
Australia U.S.
Agriculture 3.7 0.9
Industry 25.6 20.6
Services 70.7 78.5
Composition of Exports (%)
Australia U.S.
Minerals and Metals 60 ?
Rural Goods 17 9
Manufactured Goods 18 82
Australian Economy
Major economic reforms starting in the 1980s
First reform: Labor Party’s floating of AUD in 1983
Free-trade agreements and reduction of trade barriers
Financial sector deregulation, including 1992 access
for foreign bank branches
Rationalization and reduction of trade unions
Restructuring of centralized system of industrial
relations and labor bargaining
Better integration of individual state economies into
federal system
Improvement and standardization of national
infrastructure
Privatization (e.g., Australian Wheat Board)
AUSTRALIA:
Annual Changes in GDP and CPI
CPI
GDP
Australian Economy
Current concerns
Large current account deficit
Absence of export-oriented manufacturing
industry
Real estate bubble
High levels of net foreign debt owed by the
private sector
Pressure on environment
POPULATION, 2004
Australia 20 million
United States 294 million
China 1,300 million
India 1,073 million
World 6,390 million
World Population Density
Population (bottom) and Internet (top) densities
Australian Population Density
0-100 100-200 200-300 >300
R
us
s ia
n
Fe
de
C r
-0.5
0
0.5
1
1.5
2
ze H atio
ch un n
R ga
Sl ep ry
ov ub
ak Po lic
R lan
U.S.
ep d
ub
lic
G Ita
er ly
m
a
Australia
Ja ny
Be p a
U lg n
ni i
te Fi um
d nl
1992-2005
Ki an
ng d
Sw dom
ed
Au en
D str
en ia
m
ar
EU k
Fr 15
an
G ce
re
P e
N or ce
et tu
he ga
rla l
Sw o N nds
i rw
O tze ay
EC rla
D nd
To
t
Ko al
1.12% per year
1.16% per year
re
Sp a
a
C in
hi
Ic na
el
a
Lu Ca nd
Annual Population Growth,
xe na
U m d
ni b a
te o
N d S urg
ew t
Ze ate
a s
Au lan
st d
ra
Ire lia
la
n
Br d
az
Tu il
rk
So M ey
ut i ex
h co
Af
ric
a
In
di
a
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Po
Sl la
ov T nd
ak ur
R key
U.S.
ep
ub
Fi lic
nl
a
H nd
Australia
un
g
D ar
en y
m
C a
ze F rk
ch ra
2000-2005
R nce
N epu
et
he blic
rla
U G nd
ni
te erm s
d
Ki any
ng
do
N m
or
w
Sw ay
ed
G en
O re
EC e
U D ce
ni
Net Immigration Rate,
te Tot
d a
Lu St l
xe ate
m s
bo
u
N Au rg
ew s
Ze tria
Sw ala
itz nd
0.40% of total population
0.58% of total population
er
l
Au and
st
r
Po alia
rtu
C gal
an
ad
a
Ita
Ire ly
la
nd
Sp
ai
n
10
15
20
25
0
5
Po
la
nd
Sl Tu
ov rk
ak ey
R
ep
ub
U.S.
lic
Ita
ly
Fi
Australia
nl
an
d
H
C un
ze ga
ch ry
R
ep
ub
circa 2000
lic
Po
rtu
ga
l
Sp
ai
D n
en
m
11%
23%
ar
k
N
Nationals (citizens)
O or
EC w
D ay
av
er
ag
e
Ire
la
nd
Fr
an
N ce
et
he
rla
nd
s
G
re
ec
e
Be
lg
iu
Foreign-Born Population,
m
Au
U st
Non-nationals (non-citizens)
ni ria
te
d
St
at
es
Sw
ed
en
C
an
Sw ada
itz
er
la
n
Au d
st
ra
lia
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
Lu
Sl xe ISL
ov m
ak bo
R ur
N ep g
U.S.
ew u
b
Ze lic
al
an
Ire d
la
n
Australia
Fi d
nl
a
H nd
un
g
D ary
en
m
C a
ze Po rk
ch rtu
R ga
ep l
ub
N lic
Sw orw
itz ay
er
la
n
Au d
st
Sw ria
700
12,400
ed
e
G n
re
e
Be ce
lg
iu
Po m
la
n
N Tu d
et rke
he y
rla
Au nds
st
ra
lia
Ko
r
C ea
an
Gross Domestic Product,
ad
M a
ex
ic
o
Sp
ai
n
U Ita
ni ly
te Fra
d
K nce
in
gd
2005 (billion U.S. dollars, PPP)
G om
er
m
an
y
Ja
pa
U n
ni EU
te
d 15
S
ta
te
s
World Gross Domestic Product
(1999)
Earth’s Satellite Picture at Night
Tu
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
rk
ey
M
ex
Sl ic
ov P o
U.S.
ol
ak a
R nd
ep
u
H blic
un
ga
Australia
C
ze Po ry
ch rtu
R gal
ep
ub
lic
N
ew Kor
Ze ea
al
an
d
Sp
ai GNP
GDP
n
Ita
G ly
re
ec
Fr e
a
G nce
er
m
an
y
Ja
pa
Fi n
nl
U a
ni Sw nd
te
d ed
41,800 (GDP)
34,200 (GDP)
Ki en
ng
do
Be m
lg
iu
C m
an
D ada
en
2005 (U.S. dollars, PPP)
m
Au ark
st
ra
l
Per Capita GDP and GNP,
Au ia
N st
et
he ria
Sw rlan
itz ds
er
la
n
Ic d
el
an
U Ire d
ni
te lan
d
St d
at
41,700 (GNP)
32,900 (GNP)
es
N
Lu or
xe w a
m y
bo
ur
g
Tu
0
10000
20000
30000
40000
50000
60000
rk
e
M y
ex
S ic
lo o
va Po
k la
U.S.
R nd
ep
ub
H lic
un
ga
C r
Australia
z e Po y
ch rtu
R gal
ep
ub
lic
N K
ew or
Ze ea
al
an
d
S
pa
in
Ita
G ly
re
ec
Gross national income
e
Ja
G pa
er n
m
an
Fr y
an
c
Fi e
nl
a
S nd
w
ed
A en
us
tra
B lia
el
gi
um
Ire
la
U n
ni Ca d
te
2005 (U.S. dollars, PPP)
Per Capita GNI and NNI,
d nad
K
in a
gd
om
A
us
D tria
en
m
41,700 (GNI) 36,400 (NNI)
32,900 (GNI) 27,700 (NNI)
ar
Ic k
N ela
et
he nd
Net national income
r
S lan
w
itz ds
U
ni erla
te
d nd
S
ta
te
N s
Lu or
xe wa
m y
bo
ur
g
Nominal GDP vs. PPP GNP
Australian Dollar (AUD, A$, AU$)
Currency of the Commonwealth of Australia
Includes Australia, Christmas Island, Cocos (Keeling)
Islands, and Norfolk Island, as well as the independent
Pacific Island states of Kiribati, Nauru and Tuvalu.
Introduced in 1966
Not only replacing the Australian pound (distinct from the
pound sterling since 1929) but also introducing a decimal
system.
Sixth-most-traded currency in world foreign exchange
markets (behind U.S. dollar, euro, yen, pound sterling,
and swiss franc)
AUD accounts for 4–5% of worldwide foreign exchange
transactions.
Monetary Conversion Rates
AUD per U.S. dollar
2.5
Exchange Rate
PPP
2
1.5
1
0.5
0
70
72
74
76
78
80
82
84
86
88
90
92
94
96
98
00
02
04
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
20
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2.00
1/2/03
4/2/03
7/2/03
10/2/03
1/2/04
4/2/04
7/2/04
AUD per U.S. dollar
10/2/04
1/2/05
Exchange Rate
4/2/05
7/2/05
10/2/05
AUD per US$
1/2/06
4/2/06
7/2/06
10/2/06
1/2/07
4/2/07
7/2/07
10/2/07
1/2/08
S Ja
0
2
4
6
8
10
w
itz pan
e
G rlan
er d
m
an
y
Ita
Fr ly
a
U.S.
B nce
el
g
P ium
or
tu
g
A al
us
Australia
D tr
N enm ia
et
he ar
rla k
C
ze S nds
ch we
R de
O ep n
1992-2005
E ub
C
D lic
U To
ni
te ta
d Br l
Ki az
n g il
do
S Me m
ou x
3.8%
3.2%
th ico
Af
ric
S a
p
N ain
or
w
U G ay
ni re
te e
d ce
St
a
Fi tes
nl
a
C nd
an
a
N Hu da
ew ng
Ze ary
a
R A lan
us us d
si tr
Real Annual GDP Growth,
an Ic alia
Fe ela
de nd
ra
tio
L T n
S ux urk
l o em e
va b y
k o
R ur
ep g
ub
P lic
ol
an
K d
or
ea
In
d
Ire ia
la
n
C d
hi
na
-3
0
3
6
9
12
15
Sw Jap
itz an
er
G lan
er d
m
a
Au n y
st
r
Fr ia
U.S.
an
Sw ce
ed
Fi en
nl
a
Australia
Be nd
O
EC lgiu
D m
To
Ca tal
n
De a d
Ne n a
1992-2005
w ma
Un Ze rk
ite ala
d nd
S
Eu tate
ro s
ar
e
Ne E a
2.4%
2.1%
th U1
er 5
l
Un A and
ite us s
d tra
K li
Lu ing a
xe do
m m
bo
ur
g
Ita
Ic ly
el
an
d
Sp
ai
Ko n
r
No e a
rw
a
Ire y
la
Po nd
rtu
Cz g
ec Gr al
Sl h R ee
ov ce
ak epu
Re blic
pu
b
Annual Inflation (GDP Deflator),
P o lic
l
Hu and
ng
a
M ry
ex
ic
Tu o
rk
ey
53.5
Long-Term Interest Rates,
1994-2005
Australia 6.6%
U.S. 5.5%
10
9 Australia
8
7 United
6 States
5 Japan
4
3 United
2 Kingdom
1
Euro
0 area
94
96
98
00
02
04
19
19
19
20
20
20
Unemployment Rates, 1994-2005
Australia 6.9%
U.S. 5.1%
20
15
10
5
0
g d a y s a n s k d l d l a ic en ary da um y 5 ly e e d n d ic
ur an ore rwa and stri pa tate ar lan uga dom lan ota rali bl d a i an U1 Ita anc eec lan pai lan ubl
bo zerl K No erl A u Ja S enm ea ort ing Ire D T ust epu we un
g
an elg erm E Fr
G
r
F in S Po ep
em it th te
d D wZ P K EC A R S H C B G R
Lu x Sw Ne ni e ed O ch va
k
U N it e
Un Cz Sl
o
0
3
6
9
12
-9
-6
-3
Ja
pa
G n
re
C e
ze u H ce
ch ng
R ar
U ep y
ni
te ubl
U.S.
d i
St c
a
Po tes
rtu
ga
Australia
l
Ita
Po ly
l
G and
er
m
an
F y
O ra
U EC nce
ni
te D T
Sl d K ota
ov in l
ak gd
R om
ep
u
Eu bli
ro c
N
1.6%
-4.4%
e t a re
he a
rla
nd
Au s
Sw s
itz tria
Lu erl
xe an
m d
bo
u
Be rg
lg
iu
m
Sp
a
C in
an
ad
Ire a
la
n
Ic d
el
a
Government Net Borrowing-
Sw nd
ed
Au en
st
ra
lia
Ko
D rea
en
m
ar
N Fin k
Lending as % of GDP, 2003-2005
ew la
Ze nd
al
an
N d
or
w
ay
Au
100
120
140
160
180
0
20
40
60
80
st
ra
lia
Ko
re
N Ic a
ew ela
n
U.S.
Ze d
al
an
Sl D
ov en d
ak ma
U R r
Australia
ni e k
te p u
d b
Ki lic
ng
do
m
Fi
nl
an
d
1995
Sp
ai
n
Po
la
n
N d
or
Sw w
itz ay
er
la
1.6%
-4.4%
n
Sw d
N e
et de
he n
U r
ni lan
te
d ds
St
at
H es
un
ga
r
Au y
st
r
C ia
an
a
G da
er
m
a
Po ny
rtu
ga
Fr l
O a
EC nc
D e
T
2005
Eu ota
ro l
ar
e
Be a
lg
iu
m
Ita
ly
G
re
Government Debt as % of GDP
ec
e
Ja
pa
n
S
lo
va Me
10
15
20
25
30
0
5
k x
R ico
ep
ub
l
P ic
ol
an
d
K
or
e
U.S.
Tu a
rk
G ey
re
e
P ce
or
Australia
tu
ga
Ja l
p
H an
N ung
et
he ary
rla
C G nd
ze er s
ch m
R any
ep
ub
lic
of GDP, 2004
S
pa
U Fr in
ni a
t e nc
d
S e
ta
11.1%
18.2%
te
Ire s
la
O n
E A d
C us
D t
a ria
Lu ve
xe g ra
m e
S bo
w u
itz rg
er
U la
ni nd
te
d I
K taly
in
gd
om
E
U
C 15
an
ad
Ic a
el
an
Fi d
nl
a
B nd
el
g
A ium
us
tra
S lia
w
ed
N N en
ew orw
Taxes on Income and Profits as %
Ze ay
al
D an
en d
m
ar
k
U
ni
te
d
S
0
5
10
15
20
25
30
ta
te
s
S Ja
w pa
itz n
er
la
U.S.
C nd
an
A ada
us
tra
lia
Australia
K
or
ea
S
G pai
er n
m
a
M ny
ex
ic
o
Ita
Fr ly
an
B ce
el
gi
O um
E
C Ire
D la
a n
8.9%
4.7%
Lu ve d
U xe rag
ni m e
% of GDP, 2004
te b
d ou
K
in rg
gd
C
ze A om
ch us
R tri
N epu a
et
h b
N er lic
ew la
S
lo Z nds
va ea
k l
R and
ep
ub
lic
E
U
1
P 5
ol
a
G nd
re
e
S ce
w
ed
N en
or
w
P ay
or
tu
g
Fi al
nl
an
Tu d
r
Taxes on Goods and Services as
H key
un
ga
Ic ry
e
D lan
en d
m
ar
k
M
0
1
2
3
4
5
6
7
8
9
10
ex
ic
o
Ire
la
nd
Lu Ko
xe re
m a
bo
u
H rg
U.S.
un
ga
Po ry
rtu
ga
l
Australia
Ita
l
Po y
la
Sl nd
ov Bel
ak gi
um
R
ep
N
et ubl
he ic
r
Sw lan
itz ds
er
la
n
G d
re
ec
D
6.4%
7.1%
en e
m
ar
Fr k
an
G ce
er
m
an
Fi y
nl
an
Sw d
ed
e
C n
an
ad
a
Sp
ai
C n
ze No
ch rw
R ay
ep
ub
lic
U Ja
ni
te pa
d n
St
at
e
and Culture as % of GDP, 2004
Ic s
el
an
d
Au
st
A ria
N ust
ew ra
U li
ni Ze a
te al
d a
Ki nd
ng
do
m
Household Expenditures in Recreation
Ic
0
5
10
15
el
an
d
Ja
pa
S
w n
ed
e
N n
or
w
a
U.S.
Fi y
nl
C an
ze d
ch p S
R ai
Australia
ep n
ub
lic
Lu Fra
xe nc
m e
bo
u
P rg
or
tu
G ga
er l
m
an
G y
re
ec
e
N
et Ita
he l y
S rlan
w
itz ds
er
la
B nd
el
g
D ium
en
m
ar
A k
us
A tria
us
tra
U lia
ni
te Ire
d la
Infant Mortality, 2004
K nd
in
gd
o
C m
an
ad
O a
E
C Ko
D r
a e
N ve a
ew ra
Ze ge
al
a
H nd
un
ga
S ry
lo
va Po
6.8 deaths per 1000 live births
4.7 deaths per 1000 live births
k lan
R
U ep d
ni
te ubl
d i
S c
ta
te
M s
ex
ic
Tu o
rk
ey
Tu
60
65
70
75
80
85
90
S rk
lo Hu ey
va n
k ga
R
ep ry
ub
l
P ic
ol
C an
U.S.
ze M d
ch ex
R ico
ep
ub
lic
Australia
K
or
e
U Por a
n i tu
te g
d al
S
ta
D tes
en
Lu m
O xem ark
E
C bo
D u
av rg
er
U ag
ni e
te Ire
d la
K nd
in
gd
G om
er
m
a
B ny
el
gi
u
Fi m
77.5 years
80.6 years
nl
an
G d
N re
et e
h c
N erl e
ew an
Ze d s
al
an
A d
us
tri
a
Ita
C ly
an
ad
N a
or
w
a
Fr y
an
ce
S
p
A ain
us
tra
S lia
w
ed
e
Life Expectancy at Birth, 2004
Ic n
S el
w an
it z d
er
la
nd
Ja
pa
n
Ic
50
100
150
200
250
0
el
a
Ja nd
N pan
or
w
Fi ay
U.S.
D nlan
en d
m
S a
Sw w rk
e
Australia
itz de
er n
l
G and
re
e
Ire ce
Be lan
lg d
i
Fr um
G an
er ce
m
a
Au ny
st
ria
Ita
Tu ly
C rke
a y
Au nad
st a
r
Lu K alia
xe o
N mb rea
et o
he u
O rla rg
EC Po nd
D rtu s
av ga
U er l
ni ag
te
d Sp e
120 per 100,000 people
725 per 100,000 people
Ki a
Sl ng in
ov H do
ak un m
N Re gar
C ew pu y
ze Z b
ch ea lic
Prison Population Rate, 2004
R lan
ep d
u
M blic
e
U P xic
ni o o
te la
d n
St d
at
725
es
GINI Index (higher income inequality,
higher index)
Australia 35
U.S. 45
Sl
ov
1000
1200
1400
1600
1800
0
200
400
600
800
D eni
Lu enm a
C xe ar
ze m k
c b
Sl h R ou
ov e rg
a p
U.S.
U k R ubl
ni
te ep ic
d ub
Ki lic
ng
do
Australia
Po m
la
Sw nd
ed
e
Sw l Ire n
itz and
er
G lan
er d
m
a
Fi n y
Capita, 2004
nl
an
Au d
s
H tria
un
ga
1,739 m3
r
930 m3
Ko y
re
a
N Fra
et n
he ce
rla
n
Ic d s
el
an
Tu d
rk
Be ey
lg
iu
m
Ja
pa
n
Ita
M ly
ex
N ico
or
w
G ay
re
Po ece
O rtu
EC g
D al
to
ta
Annual Water Consumption per
Sp l
A a
N us in
e w tr
a
Ze lia
al
a
U Ca nd
ni
te nad
d
St a
at
es
U
ni
te
d
St
100%
120%
140%
0%
20%
40%
60%
80%
at
e
Ja s
Au pan
st
ra
G lia
re
ec
e
U.S.
Ita
Fr ly
U an
ni ce
te
d Sp
Australia
K a
N ing in
ew d
Ze om
al
an
M d
ex
ic
Tu o
r
Po key
rtu
C gal
an
a
N da
or
w
a
13%
21%
Po y
G la
er nd
m
a
Ic ny
el
a
Fi nd
nl
an
Sw Ko d
itz rea
er
la
O Sw n d
EC
D ede
av n
er
a
EU De ge
15 nm
av ark
er
ag
e
N Aus
et
he tria
Trade-to-GDP Ratio, 2005
rla
C n
ze H ds
ch ung
R ary
ep
ub
Sl
ov l
ak Ire ic
la
R nd
ep
ub
Be lic
lg
Sl ium
ov
en
ia
Billion AUD
50
100
150
200
250
-50
0
1,
99
0
1,
99
1
1,
99
2
1,
99
3
1,
99
4
1,
99
5
1,
99
6
AUSTRALIA
1,
99
7
1,
99
8
1,
99
9
2,
00
0
2,
00
1
2,
00
2
2,
00
3
2,
00
4
2,
00
5
2,
00
6
2,
00
7
Trade in Goods and Services
Imports
Exports
Trade Balance
AUSTRALIA: Exports
STM: Simply-transformed manufactures
ETM: Elaborately-transformed manufactures
AUSTRALIA: Exports
AUSTRALIA: Imports
STM: Simply-transformed manufactures
ETM: Elaborately-transformed manufactures
AUSTRALIA: Imports
Destinations of Exports (%)
AUSTRALIA U.S.
Japan (20%) Canada (22%)
China (12%) Mexico (13%)
South Korea (8%) Japan (6%)
U.S. (6%) China (5%)
India (6%) U.K. (4%)
New Zealand (6%) Germany (4%)
Origins of Imports (%)
AUSTRALIA U.S.
China (14%) Canada (16%)
U.S. (14%) China (16%)
Japan (10%) Mexico (10%)
Singapore (6%) Japan (8%)
Germany (5%) Germany (5%)
Australia: Free Trade Agreements
Free Trade Agreements:
U.S. (AUSFTA, started in 2005)
Singapore (SAFTA, started in 2003)
Thailand (TAFTA, started bin 2005)
Free Trade Agreements under
Negotiation/Consideration
Japan
China
ASEAN (Association of South-East Asian Nations)-New
Zealand
Chile
Gulf Cooperation Council
India
South Korea
Malaysia
Indonesia
AUSTRALIA
Balance of Trade and Current Account
1%
0%
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
-1%
-2%
Trade
% of GDP
Balance
-3%
Current
-4% Account
-5%
-6%
-7%
AUSTRALIA
Major Ag Policy Developments
Reduction of trade-distorting support schemes for
producers
Major reduction in support to dairy producers
Implementation of drought-support measures
Emphasis in policies encouraging drought-
preparedness amongst farmers
More economic-oriented policies for water usage
Expansion and strengthening of natural resource and
environmental policies, mainly aimed at preventing
soil degradation
Streamlining of sanitary measures for imports
Producer Support Estimates
as % of Gross Farm Receipts
Australia Japan United States EU25 OECD Total
70
60
50
40
30
20
10
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
AUSTRALIA
Farm Support Schemes
Tax arrangements and risk-management tools to
manage income fluctuations
Excise tax rebates on diesel used by farmers
Accelerated depreciation for land and water-
conservation investments
Publicly funded research and development
Assistance for exceptional situations (e.g., droughts
and floods)
Import tariffs on certain types of cheese,
unprocessed tobacco, and processed fruits and
vegetables
Australia Wheat Board
Near-monopoly for Australian wheat exports
AWB currently exports 96% of Australian wheat
Created in 1939
Served as model for Canadian Wheat Board
Government-controlled until 1999
Privatized in 1999 (owned by active wheat
growers)
Publicly traded in Australian Stock Exchange
since 2001
THE END