IV.

Economy

Australia is an outstanding producer of primary products. The country is self-sufficient in almost all foodstuffs and is a major exporter of wool, meat, dairy products, and wheat. Wool has been a staple of the economy since the colonial period, and it was important to the development of agriculture as the country’s largest industry. Manufacturing grew rapidly between the 1940s and 1970s, and mining became a leading sector in the economy during the 1960s. In recent decades, the value of exports from the manufacturing and mining sectors has exceeded that of the agricultural sector. This is due in part to increased demand among Australia’s principal trading partners, particularly Japan, for mineral ores, to fluctuating demand on world markets for agricultural products, and to fierce competition from heavily subsidized agricultural producers in the United States and Europe. An increasing focus on services and high-tech industries has also helped to diversify and modernize the Australian economy.

In 2005 the estimated annual federal budget included US$181.8 billion in revenues and US$190.3 billion in expenditures. Gross domestic product (GDP), which measures the value of all goods and services produced, was US$732.5 billion in 2005 services contributed 70.9 percent of the GDP; industry (including mining and manufacturing) contributed 25.7 percent; manufacturing alone contributed 11.91 percent; and agriculture contributed 3.4 percent.

A.

Labor

Under the Australian constitution, government regulates relations between employers and employees. Federal power is confined to disputes extending beyond the limits of any one state, and it is exercised through the Commonwealth Court of Conciliation and through arbitration and conciliation commissioners. Compulsory arbitration exists at both the federal and state level. Arbitration and conciliation courts or boards have the power to make awards binding on employer and employee. Trade unions had nearly 2 million members, representing 26 percent of all employees, in the late 1990s. Although their membership has declined in recent years, the unions are strongly organized at local, state, and federal levels and continue to be an economic and political power.

Workers receive unemployment and sickness benefits, compensation for job-incurred injuries, basic wages and marginal awards, and general social and health benefits. A basic, or minimum, wage was established by law in 1907. Between 1921 and 1953 the basic wage was automatically adjusted to quarterly rises and falls in the cost of living. The commonwealth terminated this automatic adjustment in September 1953, but several states later reintroduced the procedure. In 2005 the labor force in Australia was 10.3 million. The unemployment rate was 5.4 percent.

B.

Agriculture

Despite the great expansion in mining and manufacturing after 1940, the prosperity of much of the country continues to reflect the historical importance of livestock raising and crop farming. Even in the late 1950s agricultural products accounted for some 80 percent of the value of Australia’s exports. This proportion declined markedly thereafter, principally because of the rapid diversification of the national economy. Unlike most of its closest international competitors, Australian agriculture does not rely on government subsidies and protection.

The livestock industry was established in the early days of settlement, when the first Spanish merino sheep were introduced from South Africa. The industry was a significant factor in Australian economic and historical development. The relentless decline since the 1970s has generally been in line with international trends. Nonetheless, Australia remains the world’s largest wool producer and exporter, particularly of fine merino types. Australia usually produces more than 25 percent of the world’s yearly output of wool. Income derived from wool exports has been eclipsed, however, by several other agricultural and nonagricultural products. In 2005 the annual production of wool was 519,660 metric tons. About half the country’s wool is produced in New South Wales and Western Australia.

In many areas, infestation by rabbits has hampered livestock grazing. Although rabbits accompanied the First Fleet that arrived in Australia in 1788, their first significant arrival occurred in 1859 at the behest of a landowner, Thomas Austin. The shipment of two dozen wild rabbits was released on his property near Geelong, Victoria. Within three years the rabbits had assumed the proportions of a potential pest. Subsequently, the rabbit population was estimated to have reached some 500 million, or about 50 times the human population of Australia. The viral disease myxomatosis, which attacks rabbits, was introduced as part of an eradication program in the early 1950s; except for in the drier inland areas, it proved a reasonably effective control for decades. The rabbit population increased markedly beginning in the 1980s and again became an economic and environmental threat. Biological control efforts included the release of the rabbit calicivirus in the mid-1990s.

Queensland is the leading cattle-producing state, containing more than 40 percent of the estimated 28.6 million head of cattle in Australia in 2006. The country produces both beef and dairy cattle. Dairying is now mainly concentrated in Victoria and Tasmania.

Although only 6 percent of the total area of Australia is under crop or fodder production, this acreage is of great economic importance. Wheat crops occupy about 50 percent of cultivated acreage, and barley, grain sorghum, oats, rice, maize, and grain lupines occupy about 27 percent. The bulk of the wheat crop is grown in the southeastern and southwestern regions of the country. Production in 2005 was 24.1 million metric tons. Hay and fodder crops also are important. Rice and cotton are grown in the Murrumbidgee Irrigation Area (in New South Wales) and in the Northern Territory. Sugarcane production is mainly confined to the fertile coastal fringe of Queensland, the Ord River Irrigation Area in northwestern Western Australia, and the Richmond River district of northern New South Wales. Some 38.2 million metric tons of sugarcane were produced in 2005. Many types of fruit are grown, including grapes, oranges, apples, pears, peaches, nectarines, and a wide array of tropical fruits, including bananas and pineapples.

Australia has been an important wine producer for many years, and locally produced wines have captured many prestigious international awards. Major wine-producing areas are found in South Australia, New South Wales, Victoria, and southwestern Western Australia. The Barossa Valley in South Australia and the Hunter Valley in New South Wales have many well-established vineyards and wineries. Special varieties of grapes are grown, especially in the Murray Valley of Victoria, for the production of raisins.

Many of the fruit-growing and dairying regions of Australia rely heavily on irrigation. Over wide areas, the rising incidence of soil salinization threatens production. Experiments with more adaptive farming practices and biotechnologies—including tree plantations to help stabilize water tables, the introduction of salt-tolerant plants, and the extraction of salt from saline water aquifers—may reduce the impact of salinization and the use of expensive water resources.

C.

Forestry and Fishing

Forests cover 21 percent of Australia. The main forest regions, found in the moist coastal and highland belts, consist predominantly of eucalyptus, a hardwood. Eucalyptus wood is widely used in the production of paper and furniture. The jarrah and karri species, which grow in Western Australia, are noted for the durability of their woods. Queensland maple, walnut, and rosewood are prized as cabinet and furniture woods. There are plans to triple the area of hardwood and softwood plantations by 2020 to help supply demands for timber and to reduce exploitation of native forests.

Although Australian waters contain a great variety of fish, the annual catch is relatively small—267,369 metric tons in 2004. Aquaculture, or fish farming, has grown rapidly in every state and territory since 1980, and income from this industry rose more than threefold during the 1990s. In 1998-1999 almost 70 percent of the yearly income from aquaculture came from various crustaceans and mollusks. The export trade is dominated by rock lobsters (called crayfish in Australia); Western Australia, the leading producer of rock lobsters, is the most important exporter overall. Other significant shellfish products include scallops, prawns, spring and green rock lobsters, oysters, and abalone. Marketed marine fish include orange roughy, sharks and rays, skipjack tuna, mullet, southern bluefin tuna, and escolar. Pearls and trochus shells have been harvested off the northern coast since the 1800s. Darwin, Broome, and Thursday Island are the main pearling centers, but cultured pearls are now more significant. The cultured pearl industry is dominated by Japanese-Australian ventures. Australia was a principal whaling nation until the late 1970s, when it agreed to halt most whaling activities in cooperation with an international effort to maintain the whale population.

D.

Mining

The mining industry, long an important factor in the social and economic growth of Australia, continues to hold great promise for the future development of the country. The gold discoveries of the 1850s were responsible for the first big wave of free immigration and for the settlement of some inland areas. The mining sector has expanded significantly since the 1970s, with major discoveries of iron ore, petroleum, coal, and natural gas. Today, Australia is self-sufficient in most minerals of economic significance, and in several cases is among the world’s leading producers. The minerals industry in general is the country’s largest export earner, and the country is a leading supplier of mineral resources to international markets.

Australia boasts the world’s largest known recoverable resources of lead, mineral sands, tantalum, uranium, silver, and zinc. It is ranked in the world’s top six countries for recoverable deposits of black and brown coal, cobalt, copper, diamonds, gold, iron ore, manganese ore, and nickel. This natural bounty reflects both Australia’s geological diversity and its comparatively recent exploitation of these resources. Western Australia traditionally has the largest share by value of total national mineral production, especially of the metallic minerals.

Australia is the world’s largest producer of both gem or near-gem and industrial-grade diamonds, producing about two-fifths of the global total. Production of gem-quality diamonds was 9,279,000 carats in 2004. Much of it came from the giant Argyle Diamond Mine in the Kimberley region of Western Australia. The main export destinations in the late 1990s were Belgium and Luxembourg (which constitute a single trading entity) and the United Kingdom.

Of the metallic minerals, gold and iron ore are the most significant. Australia accounted for some 13 percent of the world’s gold production in 1998, placing it third in the world rankings after South Africa and the United States. About three-fourths of the nation’s output (259,000 kg/571,000 lb in 2004) is mined in Western Australia, notably near Kalgoorlie-Boulder. Most of the gold is exported to Singapore, Japan, Switzerland, and Hong Kong. About 96 percent of Australia’s iron-ore production also takes place in Western Australia, chiefly in the Pilbara region. Iron-ore reserves also exist at Iron Knob in South Australia; on Cockatoo Island in Yampi Sound off Western Australia; in northwestern Tasmania; and in Gippsland, Victoria. Almost all of the iron ore is exported, mainly to Japan; Australia is now Japan’s major supplier of iron ore. Other markets include China, Germany, South Korea, and Taiwan.

In the late 1990s Australia was the world’s largest producer and second largest exporter of bauxite; it was the largest producer and exporter of alumina and the third largest exporter of aluminum. Japan was the main export market for aluminum. The major bauxite mines are located south of Perth in Western Australia and in the Northern Territory on the Gove Peninsula.

Important uranium mines are located in the Northern Territory (Ranger, Jabiluka, and Koongarra mines in the Alligator Rivers Region), Kintyre and Yeelirie in Western Australia, and at Olympic Dam in South Australia. Olympic Dam’s uranium-gold-silver deposit is described as the world’s largest deposit of low-cost uranium. All but a tiny fraction of Australia’s uranium is exported.

In the late 1990s coal was the country’s top export earner. The main market was Japan. Coal mining is heavily concentrated in New South Wales and Queensland. Mostly bituminous coal is mined, but hard, or black, coal (anthracite) is also found. The lignite, or brown coal, industry is located in Victoria, where this lower grade of coal is used to produce electricity. Other major minerals in Australia include nickel, mined near Kalgoorlie-Boulder; copper, mined at Mount Lyell in Tasmania, Mount Isa in Queensland, and Tennant Creek in the Northern Territory; zinc, mined at Broken Hill in New South Wales; and manganese, mined at Groote Eylandt, Northern Territory. Titanium and zircon are recovered from the beach sands of southern Queensland, New South Wales, and Western Australia. Queensland, New South Wales, and Tasmania are the main tin-producing states, and tungsten concentrates are mined on King Island in the Bass Strait. Significant petroleum deposits have been exploited in Bass Strait, Barrow Island, and southern Queensland. Total production of petroleum in 2004 was 187 million barrels. Natural gas is also extracted, with annual production of 35.6 billion cu m (1,257 billion cu ft).

E.

Manufacturing

After World War II ended in 1945, the introduction of new industries and the development of existing ones led to a substantial expansion of manufacturing activity in Australia. In 1950 manufacturing contributed about 30 percent of the country’s GDP. The expansion continued during the 1950s and 1960s, when factory employment rose by 70 percent. But in the 1970s the growth of manufacturing stalled, and the contribution of this sector to the economy, especially in terms of employment, declined substantially. At the same time, economic reforms that ended protectionist policies forced Australian industries to become more competitive. Manufacturing became increasingly export-oriented in the 1980s and 1990s, and by the end of the century the proportion of sales made to overseas markets approached 30 percent of the total. Principal branches of the manufacturing sector by value of production are metals and metal products, food products, transportation equipment, machinery, chemicals and chemical products, textiles and clothing, wood and paper products, and printing, publishing, and recording media. Despite Australia’s wealth of mineral resources, mineral processing is limited.

Manufacturing facilities are concentrated in New South Wales (especially in Sydney and Newcastle), Victoria (primarily in the Melbourne metropolitan area), and secondarily in the state capitals and main provincial centers. New South Wales is noted for the production of iron and steel, jet aircraft, construction equipment, synthetic fibers, electronic equipment, power cables, and petroleum and petrochemical products. In Melbourne, industrial activity includes the manufacture and assembly of machinery and motor vehicles and the production of food and clothing. Geelong, located near Melbourne, is an important industrial center; manufactures include wool, motor vehicles, smelted aluminum, phosphate fertilizers, and petrochemicals. Traditionally a pastoral and agricultural state, South Australia developed several important manufacturing centers after 1950, including Adelaide and Whyalla. Brisbane and Townsville, in Queensland, have significant numbers of factories. Tasmanian industry, assisted by inexpensive hydroelectric power, includes electrolytic zinc mills, paper mills, and a large confectionery factory. Hobart and Launceston are the primary manufacturing centers in Tasmania.

F.

Tourism

Tourism grew rapidly in the late 20th century, and it now represents one of the most dynamic sectors in the Australian economy, accounting for more than 500,000 jobs in the late 1990s. International tourism received a major boost from the highly successful Summer Olympic Games hosted in Sydney in 2000. Australia had 5 million visitors in 2005, and they spent $16.9 billion.

The strong growth in domestic tourism has tapped the expanding range of attractions in each state and territory—amusement and theme parks, zoos, art galleries and museums, certain mines and factories, national parks, historic sites, and wineries. Some of the most popular attractions are Queensland’s spectacular Great Barrier Reef, the Northern Territory’s Kakadu National Park, and the famous beach resorts in the Brisbane, Cairns, and Sydney regions.

G.

Energy

In 2003 some 91 percent of the electricity produced annually in Australia was generated in thermal facilities, the majority of which burned bituminous coal or lignite (brown coal). Perhaps because most of the huge coal reserves are located in or near the most densely populated regions, Australia has a heavy, well-established reliance on coal for energy production. Australia also has several hydroelectric plants, notably the major Snowy Mountains Scheme (primarily serving Canberra, Melbourne, and Sydney) and a number of smaller facilities in Tasmania. Australia’s total annual generation of electricity was 216 billion kilowatt-hours in 2003. Natural gas is commonly used for domestic heating and cooking. Australian researchers are studying the prospects of increased efficiencies in fossil fuel usage and of solar and wind energy uses; several small pilot projects have been in operation for some time in various regions.

H.

Currency and Banking

The unit of currency in Australia is the Australian dollar, divided into 100 cents and coined in 5¢, 10¢, 20¢, 50¢, $1, and $2 pieces (A$1.30 equals U.S.$1; 2005 average). The Australian dollar is freely traded on international currency markets.

The first Australian bank was established in Sydney in 1817. The banking system now includes the Reserve Bank of Australia, established in 1911, which handles the functions of central banking, including note issuance; the components of the Commonwealth Banking Group, including the Commonwealth Development Bank and the Commonwealth Savings Bank; and three other major banks: the Australia and New Zealand Banking Group, Westpac Banking Corporation, and the National Australia Bank. A number of privately owned or state-owned banks operate, as well as many foreign banks. The Australian Stock Exchange conducts trading in six cities: Adelaide, Brisbane, Hobart, Melbourne, Perth, and Sydney.

I.

Foreign Trade

Under older Australian tariff policies, protection was afforded to those Australian industries considered essential, and preferential treatment was granted to imports from certain British Commonwealth countries. After World War II the foreign trade of Australia became primarily focused in Asia. Since the 1970s, economic reforms have reduced tariff protections and increased import quotas, removing many barriers to foreign competition. In the late 1990s, the value of imports regularly exceeded the value of exports. In 2004 imports were valued at $105.5 billion, exports at $97.1 billion.

The leading purchasers of Australia’s exports are Japan, the United States, South Korea, New Zealand, the United Kingdom, Taiwan, China, Singapore, and Hong Kong. These trading partners as well as Germany and Indonesia are also the major suppliers of imports. Principal exports include metal ores, coal, gold, nonferrous metals, meat and meat products, textile fibers (mainly wool), petroleum and petroleum products, and cereals. Leading imports are machinery and transportation equipment (including road vehicles), which together constituted 47 percent of total imports in 1999, as well as office equipment, petroleum and petroleum products, and textiles. Australia is also an important exporter of agricultural and medical research services, especially to the wider Asian and Pacific region. Australia is a member of the World Trade Organization (WTO).

J.

Transportation

Each Australian colony established its own rail network prior to becoming a state within the federation; as a result, the gauge varies from one state to another. A government-sponsored, Australia-wide program to standardize railroad gauges and privatize rail services was under way in the early 2000s. Construction also began on an extensive project to extend the central transcontinental line from Alice Springs to Darwin, thereby linking Adelaide in the far south with Darwin on the northern coast. Railroad lines total about 9,528 km (5,920 mi) of track.

Australia has about 811,601 km (about 504,305 mi) of roads. About 40 percent of the overall length is bitumen- or concrete-paved, including more than 16,000 km (more than 9,900 mi) of state highway. The capital cities are connected by inexpensive bus services. Some 601 motor vehicles are registered for every 1,000 people. A comprehensive network of airline services links major cities and even remote settlements. Domestic lines carry about 25 million passengers yearly. Because of the long distances between cities and the country’s ideal flying conditions, Australians are especially accustomed to air travel. Qantas Airways, Ltd., the country’s largest airline company, provides service to domestic and international locations. International airports are located near each of the mainland capitals and near Cairns and Townsville. Coastal and transoceanic shipping is vital to the Australian economy. Major ports include Melbourne, Sydney, and Fremantle (in Western Australia).

K.

Communications

Australia maintains contact with the rest of the world by such means as satellite, submarine telegraph cable, radio-telephone, and phototelegraph services. Since 1975 the Australian Telecommunications Commission has been responsible for telecommunications services within Australia; the Australian Postal Commission manages the postal services. In 2005 there were 564 telephone mainlines for every 1,000 people. Commercial radio and television stations operate under licenses granted by the Australian Broadcasting Authority (ABA). In 1997 about 260 private broadcasters offered radio services, and there were 48 private television broadcasters; each of these private operators relies on the sale of airtime, chiefly for advertising. The Australian Broadcasting Corporation (ABC) is the country’s only national noncommercial broadcaster. It operates one national television network and six national radio networks, including Radio National, ABC-FM, and the Triple-J youth network. In addition, it operates Radio Australia, an international service broadcast by shortwave radio to Papua New Guinea and the Pacific region, and by satellite to the wider Asia-Pacific region in English and other languages.

Australia has about 650 newspapers, including 65 dailies with a combined daily circulation of 5.4 million. The Australian is a national-circulation daily with simultaneous editions published in several major cities. The state capitals also support their own large-circulation dailies, including the Sydney Morning Herald; The Age and Herald Sun (both published in Melbourne); Courier-Mail (Brisbane); Advertiser (Adelaide); and West Australian (Perth). Local weekly newspapers are more popular in rural areas.