Australia

Originally published: Dec-14-2005

Government

Democratic, federal-state system with three branches and 8 administration subdivisions including six states and two territories. The branches are:

1. Executive: The head of state is the governor general, who is appointed by the Queen of Australia (the British Monarch).
2. Legislative: Bicameral Parliament (76-member Senate, 150-member House of Representatives). The House of Representatives selects as head of government the Prime Minister, who then appoints his cabinet.
3. Judicial: The High Court of Australia has general appellate jurisdiction over all other federal and state courts and possesses the power of constitutional review. It is made up of the chief justice and six other justices who are appointed by the governor general.

The Commonwealth government was created in 1901 with a Constitution patterned partly on the U.S. Constitution, although it does not include a "bill of rights." The powers of the Commonwealth are specifically defined in the Constitution, and the residual powers remain with the states.

Population

• Population (July, 2005): 20,090,437 est.
• Annual population growth rate: 1.1%
• Literacy: 85%
• Languages: English 79.1%, Chinese 2.1%, Italian 1.9%, other 11.1%, unspecified 5.8% (2001 Census)

Although Australia has scarcely more than two people per square kilometer, it is one of the world's most urbanized countries. Less than 15% of the population lives in rural areas.

Immigration has been a key to Australia's development since the beginning of European settlement in 1788. For generations, most settlers came from the British Isles, and the people of Australia are still predominantly of British or Irish origin. However, since the end of World War II, the population has more than doubled. Non-European immigration, mostly from the Middle East, Asia, and Latin America, has increased significantly since 1960 through an extensive, planned immigration program.

Legal System

Based on English common law; accepts compulsory International Court of Justice (ICJ) jurisdiction, with reservations.

The Australian legal system does not have commercial courts per se. Since February 1, 1977, federal courts have been created in each state capital alongside the state courts. These federal courts have wide powers to hear civil and commercial cases (like company law, winding up proceedings, etc.), in addition to matters concerning fiscal, maritime, intellectual property, and consumer law.

Local courts handle minor commercial disputes for amounts not exceeding AUD 50,000. Claims for up to AUD 750,000 in New South Wales, AUD 250,000 in Queensland and Western Australia, or AUD 200,000 in Victoria are heard either by a county or district court. Claims exceeding the aforementioned amounts are heard by the supreme court in each state. In certain states, like New South Wales, commercial sections of the district or supreme courts offer fast-track proceedings for commercial disputes.

Economy

Currency: Australian Dollar (AUD)

AUD per US dollar: 1.3314 (12/12/05)
AUD per Euro: 1.5724 (12/12/05)

Economic Indicators

(e) estimate (f) forecast

Comparative Economic Indicators (2003)

Source: Economist Intelligence Unit

Leading Markets (2004): Japan (18.9%), ASEAN (11.7%), EU (11.2%), China (9.3%), US (8.1%)

Leading Exports: Metal ores, minerals and metals (20%), coal, coke and petroleum (19%), machinery (12%), gold (6%)

Leading Suppliers (2004): EU (23.7%), ASEAN (16.4%), US (14.5%), China (12.6%), Japan (11.8%)

Leading Imports: Machinery (23%), consumer goods (23%), transport equipment (20%), fuel and lubricants (8%)

Top Industries: mining, industrial and transportation equipment, food processing, chemicals, steel

General Economic Situation

Australia has a capitalist economy that is among the best performing in the industrialized world. Although weakening this year after very strong growth in 2004, it has remained at a good level throughout 2005. Australia’s per capita GDP is on par with the four dominant West European economies. The economy is dominated by the services sector which accounts for 71% of gross domestic product. However, it is the agricultural and mining sectors (8% of GDP combined) that account for the bulk (52%) of Australia’s goods and services exports.

The current strength of the Australian economy is based on rising domestic output, robust business and consumer confidence, and rising exports of raw materials and agricultural products. The country’s comparative advantage in the export of primary products is due to extensive natural wealth and a small domestic market; 20 million people – less than 7% of U.S. population – occupy a continent the size of the contiguous United States. (Estimated U.S. population in July 2005 was close to 296 million.)

The economy has undergone significant reform over the last 20 years. Changes have included deregulation of the financial system, reductions in tariffs and other trade barriers, and removal of most restrictions on foreign investment. These reforms, along with low inflation and growing ties with China, are other factors behind the economy’s strength.

Business Climate

The Australian government generally welcomes foreign investment and has in place regulations, laws and incentives that encourage overseas investors and protect their rights.

Regulatory System: Both Australian law and government practices foster transparency and favor competition. Taxation policy does not impede the efficient mobilization and allocation of investment.

Legal System: Australia has an established legal and court system for the conduct or supervision of litigation and arbitration, as well as alternate dispute processes. Australia is a world leader in the development and provision of non-court dispute resolution mechanisms. It is a signatory to all the major international dispute resolution conventions and has organizations that provide international dispute resolution processes.

Corruption: Australia is perceived internationally as having low corruption levels. Transparency International's Corruption Perception Index 2004 ranked Australia ninth, ahead of the U.K., Canada and the U.S. in terms of nations perceived as having low levels of corruption. Australia maintains a thorough system of laws and regulations designed to counter corruption. In addition, the government procurement system is generally transparent and well regulated.

Currency Conversion: The Australian dollar is fully convertible; the government does not maintain currency controls or limit remittance, loan or lease payments.

Property and Contractual Rights: The court system enforces property and contractual rights. There have been no investment disputes involving foreign companies in recent years. Australia is a member of the International Center for the Settlement of Investment Disputes.

Patents and Trademarks: Australian law protects patents, trademarks, designs, copyrights and integrated circuit layout rights. Australia is a member of the World Intellectual Property Organization (WIPO), the Paris Convention for the Protection of Industrial Property, the Berne Convention for the Protection of Literary and Artistic Works, the Universal Copyright Convention, and several other conventions protecting these rights.

Capital Markets: Australia has a well-developed and sophisticated financial market, regulated in accordance with international norms. The stock and commodities exchanges have corresponding arrangements with other world exchanges. Credit is allocated on market terms.

Credit and Collections

• Collection Experience: Good
• Exchange Delays: 3- months
• Preferred Credit Terms: Sight Draft
• Minimum Credit Terms: Open Account

According to Overseas Press & Consultants, five out of six shipments to Australia are on open account. The others are covered with sight drafts. Most importers pay promptly, but the banks do not transfer foreign exchange until three months later.

SWIFT bank transfers are the most commonly used payment method for international transactions.

Risk Assessment

Coface Country Risk Rating: A1 - The steady political and economic environment has positive effects on an already good payment record of companies. Very weak default probability.

Ducroire Delcredere Political Risk Rating: 1 (very low risk)
Ducroire Delcredere Commercial Risk Rating: B (normal risk)

Sources for further information on doing business in Australia

Doing Business in Australia: US Department of Commerce 2008 Country Commercial Guide

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This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries including Bangladesh. For further information, contact info@abc-amega.com.

This report represents a compilation of information from a wide variety of reputable sources.

Economic Indicators: Variety of sources including the CIA World Factbook, COFACE Country Ratings, Economist Country Briefings, Federation of International Trade Associations (FITA) Country Profiles.

Risk Assessment information: Provided with permission by Coface Country Rating. Also Belgian credit insurance company Ducroire Delcredere

Information on credit terms and the probability of prompt payment are provided, with permission, from Overseas Press and Consultants (OP&C) as published in IOMA's Report on "Managing Credit, Receivables & Collections," December 2007.

Historical Exchange Rates: OANDA.com The Currency Site.