Event
The prime minister, Julia Gillard, has conducted a cabinet reshuffle, the fifth in the current parliamentary term, following the failed attempt to replace her as leader of the Labor Party on March 21st.
Analysis
Although Ms Gillard's authority was undermined by the desire of a proportion of the Labor caucus to have her replaced as party leader, the non-appearance of her supposed challenger, her predecessor, Kevin Rudd, and her subsequent unanimous re-election, have actually strengthened her hold on the party, even if its standing with the public has taken another hit. She has also used the latest outbreak of disloyalty to purge almost all remaining Rudd sympathisers from her front bench, and has reinforced it with new figures who owe their promotions to the prime minister.
Senior Labor figures that have stood by Ms Gillard have also been rewarded with greater responsibility. The trade minister, Craig Emerson, has seen his portfolio swell to include tertiary education, skills, science and research, while the climate change minister, Greg Combet, now also looks after industry and innovation in a beefed-up ministry. Communities, environment and water minister, Tony Burke, has been given the Arts role vacated by Simon Crean, the former Labor leader who instigated the failed challenge to Ms Gillard. The sole surviving Rudd supporter is Anthony Albanese, who adds regional development and local government to his existing role as transport and infrastructure minister.
New faces include a Labor MP for Western Australia (WA), Gary Gray, who becomes the new resources minister. His appointment has been applauded by many in the WA-focused mining sector, who were keen to see one of their own tasked with policymaking for the sector. The home affairs minister, Jason Clare, is promoted to the full cabinet, while there was also an enhanced role for the attorney-general, Mark Dreyfus.
March 25, 2013
Kevin Rudd
The prime minister and leader of the Labor Party, Mr Rudd, is former diplomat who came to the House of Representatives (the lower house of parliament) from state politics in Queensland. He wrested the national Labor leadership from Kim Beazley in 2006. He has reinvigorated the party and struck a chord with an electorate that had grown weary of a coalition government that had been in power for 11 years. More recently, his appeal has begun to fade, as the public has become frustrated with his ‘everyman' persona and the growing gap between his rhetoric and his actions.
Wayne Swan
The treasurer, Wayne Swan, is a former university lecturer and was a political advisor to the previous Labor leader, Kim Beazley. He was the shadow treasurer during 2004-07. Having lifted spending and increased debt in 2009, he now faces the challenge of rebuilding the public finances. Although that task has been made simpler by continued economic growth at home and a renewed wave of demand for Australia's resources from Asia (especially from China and India), the looming federal election is constraining his ability to make politically unpopular changes to taxation and spending.
Tony Abbott
Mr Abbott became leader of the Liberal Party in December 2009, defeating the former leader, Malcolm Turnbull. Mr Abbott is renowned for his conservative social views and tends to rate poorly with female voters. His tendency to make policy announcements without prior agreement with coalition frontbenchers has caused internal friction. Nonetheless, he is likely to remain as leader unless the coalition performs poorly at the next election.
Joe Hockey
Mr Hockey has been the shadow treasurer since February 2009, and is a potential future Liberal Party leader. However, a question mark hangs over his appetite for the role. Prior to entering parliament in 1996, Mr Hockey was a banking and finance lawyer. He is a formidable parliamentary performer, but has an affable and personable manner that appeals to voters.
Bob Brown
Mr Brown is the leader of the Greens, which have five seats in the Senate (the upper house). Together with two independents, they hold the balance of power in the Senate and have the opportunity to work with the Labor government to further their aims in relation to environmental issues. However, their ability to influence policy in these areas is limited by the generally more conservative stance taken by the independents and the electorate's focus on economic issues. Mr Brown has a reputation for leading vocal protest campaigns. He was suspended from parliament in 2003 for interjecting during an address by a former US president, George W Bush.
May 14, 2010
Official name
Commonwealth of Australia
Form of state
Federal democracy
Legal system
Based on the constitution of 1901
National legislature
Bicameral: the 150-member House of Representatives (the lower house) is directly elected by a preferential voting system for a three-year term; the 76 members of the Senate (the upper house) are directly elected by proportional representation for six-year terms, with one-half of the chamber's members retiring every three years, usually to coincide with elections for the House of Representatives. The Senate may not initiate or amend money bills, and in certain circumstances the governor-general may dissolve it
Electoral system
Compulsory universal direct suffrage over the age of 18
National elections
An election for the lower house and one-half of the seats in the upper house was held in August 2010. The next election (for the lower house and the other one-half of the seats in the upper house) is due in 2013
Head of state
Queen Elizabeth II, represented in Australia by a governor-general; Quentin Bryce was appointed to the post in 2008
State legislatures
Five of the six states have bicameral legislatures; that of Queensland is unicameral
National government
A cabinet, presided over by the prime minister, is appointed by the governor-general on the basis of party strength in the House of Representatives. The Labor Party is currently in power, backed by three independents and one member of the Greens
Main political parties
Labor Party; Liberal Party and National Party (in long-term coalition)
Prime minister: Julia Gillard
Deputy prime minister & treasurer: Wayne Swan
Cabinet ministers
Agriculture, fisheries & forestry: Joe Ludwig
Attorney-general & emergency management: Nicola Roxon
Broadband communications & the digital economy: Stephen Conroy
Climate change & energy efficiency, industry & innovation: Greg Combet
Defence: Stephen Smith
Families, communities & indigenous affairs: Jenny Macklin
Finance & deregulation: Penny Wong
Foreign affairs: Bob Carr
Health: Tanya Plibersek
Immigration & citizenship: Chris Bowen
Infrastructure & transport: Anthony Albanese
Mental health & ageing: Mark Butler
Regional Australia, local government & the arts: Simon Crean
Resources, energy & tourism: Martin Ferguson
Schools, early childhood & youth: Peter Garrett
Sustainable population, environment & water: Tony Burke
Tertiary education, skills, science & research: Chris Evans
Trade & competitiveness: Craig Emerson
Workplace relations, financial services & superannuation: Bill Shorten
Central bank governor
Glenn Stevens
January 01, 2013
Outlook for 2013-17
Review
January 01, 2013
Fact sheet
| Annual data | 2011 | Historical averages (%) | 2007-11 |
| Population (m) | 22.5 | Population growth | 1.5 |
| GDP (US$ bn; market exchange rate) | 1,490.4 | Real GDP growth | 2.8 |
| GDP (US$ bn; purchasing power parity) | 926.2 | Real domestic demand growth | 3.7 |
| GDP per head (US$; market exchange rate) | 66,282 | Inflation | 2.9 |
| GDP per head (US$; purchasing power parity) | 41,191 | Current-account balance (% of GDP) | -4.0 |
| Exchange rate (av) A$:US$ | 0.97 | FDI inflows (% of GDP) | 3.3 |
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Background: The Commonwealth of Australia was established in 1901. Since the end of the second world war the US has replaced the UK as Australia's main defence ally. A mass-immigration programme that began in 1947 has resulted in sweeping demographic, cultural and social change and stronger ties with Asian countries. Australia is a resource-rich country, and booming commodity exports to China have made that country Australia's largest trade partner since 2009.
Political structure: The Commonwealth of Australia is a democratic federal state within the Commonwealth of Nations. Formally, executive power is vested in the governor-general (who represents Queen Elizabeth II). The legislature consists of a federal parliament comprising a 76-member Senate (the upper house) and a 150-member House of Representatives (the lower house). Elections are held at maximum intervals of three years, when one-half of the senators (who serve six-year terms) and all the representatives are elected by compulsory ballot. Each of the six states in the federation has its own government, with a governor and a bicameral legislature, apart from Queensland, which has a unicameral legislature.
Policy issues: The government is launching a series of new policies in traditional areas of strength for the Labor Party, such as education and health, and is attempting to neutralise areas where it may be vulnerable to attacks by the opposition ahead of the next election, such as the public finances and the processing of asylum-seekers. Businesses are growing restless at the lack of clarity on the tax regime, against the background of a last-minute reversal of a planned cut in the corporation tax rate. Increasing attention will be paid to the operating environment for the mining sector, which is undergoing a huge expansion that will entail a restructuring of the national economy. Various free-trade agreements are being pursued.
Taxation: The corporation tax rate of 30% is applied both to retained earnings and to dividends. Shareholders receive credits for corporation tax already paid on dividends. Personal income tax is progressive, with the top marginal rate of 45% levied on earnings over A$150,000 (US$155,000). In addition, the federal government collects a levy of 1.5% of personal taxable income as a contribution towards healthcare.
Foreign trade: Following a contraction of 18.1% in exports of goods in 2009 (IMF data, on a balance-of-payments basis) as a consequence of the 2008-09 global financial crisis, growth picked up again in 2010. Exports increased by 37.5% in 2010, while imports rose by 22.4%.
| Main exports 2011 | % of total | Major imports 2011 | % of total |
| Metalliferous ores | 29.4 | Machinery & equipment manufacturing | 27.8 |
| Coal | 17.9 | Transport equipment | 12.7 |
| Manufactured metals | 13.3 | Oil & gas extraction | 10.2 |
| Oil & gas extraction | 9.0 | Chemicals | 9.9 |
| Leading markets 2011 | % of total | Leading suppliers 2011 | % of total |
| China | 27.4 | China | 20.4 |
| Japan | 19.3 | US | 12.6 |
| South Korea | 8.9 | Japan | 8.7 |
| India | 5.8 | Singapore | 6.9 |
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January 09, 2013
Data and charts: Annual trends charts
January 01, 2013
Australia: Country outlook
FROM THE ECONOMIST INTELLIGENCE UNIT
POLITICAL STABILITY: The Labor Party government, led by the prime minister, Julia Gillard, has endured a difficult time in office since it was re-elected in 2010. Labor performed disappointingly in that year's general election, winning 72 seats in the House of Representatives (the lower house of parliament), compared with 73 for the opposition Liberal-National coalition. This has meant that it is dependent on the support of independents and the Greens' sole member of the lower house to advance its legislative agenda. However, as these alliances do not extend beyond confidence motions and supply bills, Labor will have to continue to negotiate hard and offer policy concessions to ensure parliamentary support. Furthermore, the government's wafer-thin majority means that it is vulnerable to indiscretions and defections by its members of parliament.
ELECTION WATCH: The next general election, for the House of Representatives and one-half of the Senate (the upper house), is due in late 2013, although the fragile balance of power in the lower house means there is a small chance that a poll could be held sooner. If Labor were to replace Ms Gillard with a new leader of whom its independent allies disapproved, the withdrawal of their support would trigger an early poll. However, an election in the next few months would not suit Labor, the coalition or several independents, all of whom are struggling to build momentum in opinion polls.
INTERNATIONAL RELATIONS: Ms Gillard is attempting the delicate balancing act of maintaining a close political relationship with the US (reconfirmed during a visit to Australia by the US president, Barack Obama, in late 2011) while strengthening economic ties with China (which became Australia's largest trading partner in 2009). In 2013-17 she will be hoping to demonstrate that the two relationships are not incompatible. Australia will hold a seat on the UN Security Council in 2013-14-a role that will raise the country's profile but also potentially complicate its efforts to balance US and China ties. The government will also be an advocate of free trade on the global stage. Negotiations on free-trade agreements with Japan, China, India, Malaysia and South Korea are under way, and Australia is participating in discussions on the expansion of a pan-Pacific free-trade bloc, the Trans-Pacific Partnership.
POLICY TRENDS: With one eye on the next general election, the government has begun to make a string of big-ticket policy announcements. They include plans for a National Disability Insurance Scheme, a revamp of dental funding for the less well-off and increased education spending. The government is also trying to neutralise any policy areas where it feels that it is vulnerable to pre-election attacks. In August 2012 it abandoned its commitment to a three-year carbon-price floor of A$15 (US$16) per tonne that would have come into effect after the planned shift from the carbon tax to an emissions trading scheme in mid-2015. Instead, pricing will be linked to the cost of carbon permits in the EU.
ECONOMIC GROWTH: At 3.1%, the Economist Intelligence Unit's forecast for GDP growth in 2013 is moderate. This partly reflects base effects from 2012, when the economy is expected to have grown at the rapid rate of 3.5%, which would be the strongest performance since 2007. The continued development of the mining sector will ensure that gross fixed investment makes the greatest contribution to growth in 2013. Demand for capital imports for construction projects in the sector, combined with a boost to consumer goods imports provided by the high Australian dollar, will mask a strong export performance, ensuring that the external sector detracts from expansion again. Heavily indebted Australian consumers responded to the 2008­09 global financial crisis by increasing the rate of household saving, which stood at 10.3% on a seasonally adjusted basis in January-September 2012, compared with an annual average of 3.3% in 2004-08. This conservatism, combined with the expected raising of interest rates in the second half of 2013, will keep private consumption growth to 2.7% next year.
INFLATION: Consumer price inflation is forecast to average 2.8% in 2013, up from an estimated 1.9% in 2012. The introduction of the carbon tax in mid-2012 pushed up consumer prices in the third quarter and will continue to generate inflationary pressures. Government modelling suggests that the tax will add 0.7 percentage points to consumer price inflation in fiscal year 2012/13 (July-June), which explains our relatively rapid forecast that otherwise appears at odds with the slowdown in GDP growth in 2013. Our inflation forecast of 2.7% on average in 2014­17 is subject to equal degrees of upside and downside risk. It is possible that interest rate rises could take some of the inflationary pressure out of the economy, but a revival of the housing market and even faster growth than we are forecasting in the mining sector could cause inflation to pick up quickly. The Reserve Bank of Australia (the central bank) is also concerned that skill shortages in some areas of the economy could lead to demands for higher wages that push up the cost of living unless commensurate increases in productivity occur.
EXCHANGE RATES: Buoyed by high prices for commodity exports and the substantial interest-rate differential with other developed economies, the local currency has performed strongly against the US dollar in recent years, reaching a 29-year high of A$0.89:US$1 in July 2011. But the country's onerous foreign debt-servicing obligations make the Australian dollar a risky currency to hold, and it is therefore exposed to any rise in investor risk aversion. This vulnerability can be seen when changes in the currency's value are tracked against developments in the euro zone debt crisis. The Australian dollar is also often viewed by investors as a proxy for the performance of China's economy, which suggests that Chinese data releases will exert a greater effect on the behaviour of the local currency in 2013-17. We expect the Australian dollar to remain above parity with the US dollar on an annual average basis for the third consecutive year in 2013. The eventual revival of the US economy in 2014-15 will cause a very slight depreciation of the Australian dollar in those years, but it will subsequently rally modestly, in line with a revival of global prices for exported commodities, to reach A$1.02:US$1 by 2017.
EXTERNAL SECTOR: We have revised our estimate for merchandise trade and now expect the account to have returned to deficit in 2012, following a year defined by weather-related supply disruptions and weak global demand. As a result, we have also pushed out our estimate for the current-account deficit to the equivalent of 3.7% of GDP, from 2.9% previously. However, increasing mining capacity will facilitate continued strong growth in overseas sales in 2013-17, so that we expect the value of merchandise exports to be over 40% higher in local-currency terms in 2017 than in 2012. The income deficit will remain the largest area of weakness, reflecting the cost of servicing foreign debt. The strong local currency will impede growth in services exports, as Australia will prove prohibitively expensive for some potential students and tourists. We expect the current-account deficit to average 3.7% of GDP in 2014-17.
January 01, 2013
Country forecast overview: Highlights
Country forecast overview: Key indicators
| Key indicators | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 |
| Real GDP growth (%) | 3.5 | 3.1 | 3.5 | 3.4 | 3.3 | 3.5 |
| Consumer price inflation (av; %) | 1.9 | 2.8 | 3.0 | 2.6 | 2.5 | 2.6 |
| Budget balance (% of GDP) | -1.0 | -0.4 | -0.6 | -0.7 | -1.1 | -1.6 |
| Current-account balance (% of GDP) | -3.6 | -3.6 | -3.6 | -3.1 | -3.7 | -4.2 |
| Deposit rate (av; %) | 4.0 | 3.9 | 4.4 | 4.9 | 5.1 | 5.1 |
| Exchange rate A$:US$ (av) | 0.97 | 0.97 | 1.00 | 1.04 | 1.03 | 1.02 |
| Exchange rate A$:¥100 (av) | 1.21 | 1.18 | 1.16 | 1.17 | 1.12 | 1.12 |
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January 09, 2013
Land area
7,682,400 sq km (61% agricultural, 5% forest)
Population
22,696,000 (September 2011)
Main towns
Population in '000 (June 2006):
Sydney: 4,284
Melbourne: 3,471
Brisbane: 1,629
Perth: 1,393
Adelaide: 1,108
Canberra (capital): 319
Climate
Temperate in the south; subtropical or tropical in the north; hot and dry inland
Weather in Canberra (altitude 560 metres)
Hottest months, January and February, 13-28°C; coldest month, July, 0-11°C (average daily minimum and maximum); driest month, June, 37 mm average rainfall; wettest month, October, 69 mm average rainfall
Language
English
Measures
Metric system
Currency
Australian dollar (A$); A$1 = 100 cents. Average exchange rate in 2011: A$0.97:US$1
Time
Hours ahead of GMT (summer time in brackets):
New South Wales, Tasmania, Victoria & the Australian Capital Territory: 10 (11)
Queensland: 10
Northern Territory: 9.5
South Australia: 9.5 (10.5)
Western Australia: 8
Fiscal year
July 1st-June 30th. Most Australian statistics are reported on a fiscal-year basis
Public holidays
January 1st (New Year's Day); January 28th (Australia Day); March 29th-April 1st (Easter); April 25th (Anzac Day); June 10th (Queen's Birthday, except in Western Australia); December 25th (Christmas Day); December 26th (Boxing Day); plus other days at state level
January 01, 2013