major macro economic indicators
|2014||2015||2016 (f)||2017 (f)|
|GDP growth (%)||2.6||2.5||2.6||3.0|
|Inflation (yearly average) (%)||2.5||1.6||1.5||2.1|
|Budget balance (% GDP)||-2.8||-2.7||-2.6||-2.9|
|Current account balance (% GDP)||-3.1||-4.6||-3.9||-3.6|
|Public debt (% GDP)||34.3||37.6||40.1||43.2|
- Geographic proximity to emerging Asia
- Mining resources
- Moderate public debt
- Specific geographic features which favour tourism
- Vulnerable to commodities cycle (specifically iron ore and coal) and Chinese demand
- Substantial household debt (185% of gross disposable income)
- Shortage of skilled labour
- Highly exposed to natural hazards
- Wide disparities between federated States
Transition of the economic model sustained by private consumption
Activity is expected to accelerate slightly in 2017. The transition of the economic model will give an impetus to growth by reducing the impact of the Chinese slowdown and the worsening trade terms which affected it in 2016: following the mining boom, the country has been working to diversify its economy in order to offset the fall in mining income. The services sectors (notably tourism and education), as well as the sectors strong in research and development will experience strong investment growth. Residential investment is also likely to continue, thus stimulating the construction sector.
Meanwhile, slower demand from China for iron ore and coal will be partially offset by more intensive exploitation of other commodities and by expansion of the services sector. Private consumption is expected to continue to sustain activity because of the low unemployment rate and the steady rise in property prices. The central bank's accommodative monetary policy (key rate of 1.5%) will also support private consumption despite and already considerable level of household debt (185% of gross disposable income).
Slightly above the central bank target (2%), inflation is expected to rise gradually insofar as certain factors allowing inflationary tensions to be contained are starting to weaken, in particular slower wage rises, the modest oil price recovery and more intense competition on the distribution market in the past.
The risk of a stronger than expected economic downturn in China (Australia's leading trading partner accounting for one third of exports) could hit activity. Nevertheless, the country has room for manoeuvre on fiscal and monetary policy.
Abandonment of objective to reduce public deficit
The fiscal consolidation sought by the former prime minister is no longer a priority. Indeed, Prime Minister Turnbull wants to adopt a pro-business policy by lowering taxes and allocating AUD 1.1 billion (0.1% of GDP) to innovation and entrepreneurship. Meanwhile, security issues featured strongly in the debates during the last general elections. The government is, accordingly, planning to invest USD 30 billion in defence over the next 10 years. So, the public deficit is expected to continue to rise, while remaining at a relatively low level compared with other OECD countries.
The current account deficit is expected to narrow slightly, taking into account higher exports of copper and liquefied natural gas, which benefited from the previous depreciation of the Australian dollar. Exports of services also contributed to an improvement in the current account deficit, thus offsetting the rise in imports triggered by private consumption.
Australia is still heavily dependent on Chinese demand (notably for iron and coal, the two leading exports) despite starting to adapt its economic model, a change which could, however, benefit from Asian demand to diversify its exports.
Re-elected, Malcolm Turnbull governs with the smallest majority
Following a no-confidence motion passed against former Prime Minister Tony Abbott, current Prime Minister Turnbull called for early elections in July 2016 in order to obtain a bigger majority. Despite being re-elected, this gamble failed, with the (Liberal – National) coalition losing 15 seats compared with the previous parliamentary term (76 seats won of the 150-seat House of Representatives). The political instability which has prevailed since 2010 (five prime ministers in six years) is thus set to continue. New elections before the end of his mandate (2019) cannot be ruled out if Turnbull wants a larger majority or if the more conservative wing of the party (Abbott's supporters) see it as an opportunity to pass a motion of no confidence against Turnbull.
Internationally, Australia's policy is to establish closer economic ties with the Asia-Pacific region (in particular China) while maintaining a special relationship with the United States. However, its membership of the Asian Infrastructure Development Bank (set up by China) could create tensions in its relationship with the United States.
Last update: January 2017
As a former colony of the British crown,Australia’s legal system and legal precepts are broadly inspired by British “common law” and the British court system.
There are 9 separate court systems in Australia, one for each of six States, one for each of two Territories and one Federal system.
Bills of exchange and promissory notes are not widely used inAustralia.
Cheques, defined as “bills of exchange drawn on a bank and payable on presentation”, are used for domestic and even international transactions, but are being overtaken by electronic funds transfers and credit card payments.
SWIFT bank transfers are the most commonly used payment method for international transactions. The majority of Australian banks are connected to the SWIFT electronic network, offering a rapid, reliable and cost-effective means of payment.
The Australian dollar, along with the main foreign currencies, is now also part of the Continuous Linked Settlement System / CLS, a highly automated interbank transfer system for processing international trade settlements.
The collection process starts with an initial phone call and a letter sent reminding the client of his obligation to pay the amount due plus any contractually agreed interest penalties or, lacking such a penalty clause, interest at the legal rate applicable in each State/Territory.
If the debt remains unpaid and the creditor’s claim is due for payment, uncontested, and over 2,000 AU$ (or after a ruling has been made), the creditor may issue a summons demanding payment within 21 days. Unless the debtor settles the claim within the required timeframe, the creditor may lodge a petition for winding-up of the debtor’s company, considered insolvent (statutory demand under section 459E of the Corporations Act 2001).
Under ordinary proceedings, once a statement of claim (summons) has been filed and where debtors have no grounds on which to dispute claims, creditors may solicit a fast-track procedure enabling them to obtain an enforcement order by issuing the debtor with an “application for summary judgement”.
This petition must be accompanied by an affidavit (a sworn statement by the plaintiff attesting to the claim’s validity) along with supporting documents authenticating the unpaid claim.
For more complex or disputed claims, creditors must instigate standard civil proceedings, an arduous, often lengthy process lasting up to two years, given the fact that court systems vary from one State/Territory to the next.
During the preliminary phase, the court examines the case documents attesting to the parties’ respective claims. During the subsequent “discovery phase”, the parties’ lawyers may request their adversaries to submit any proof or witness testimony that is relevant to the matter and duly examine the case documents thus submitted. Before handing down its judgement, the court examines the case and holds an adversarial hearing of the witnesses who may be cross-examined by the parties’ lawyers.
Local Courts or Magistrates Courts (depending on the State/Territory) hear minor disputes involving amounts ranging a up to a maximum of 150,000 AU$ in the State of Queensland.
Beyond these various thresholds, disputes involving financial claims up to 750,000 AU$ in New South Wales, Western Australia, or Queensland, for example, are heard either by the County Court or District Court, depending on the State/Territory.
Claims equal to those threshold amounts or greater are heard by the Supreme Court of each State.
As a general rule, appeals lodged against Supreme Court decisions, are heard by a Court of Appeal in that State/Territory. Any further appeal is heard by the High Court of Australia, located inCanberra, which will decide, with “leave” of the court itself, to only re-examine cases of clear legal merit.
Though the Australian legal system does not have commercial courts per se, in certain States, such asNew South Wales, commercial sections of the District or Supreme Courts offer fast-track proceedings for commercial disputes.
Since 1st February 1977, Federal courts have been created alongside the State/Territory courts and established in each State capital. The federal courts have wide powers to hear civil and commercial cases (like company law, winding up proceedings) as well as fiscal or maritime matters, intellectual property, consumer law, and so on.
In certain cases, the jurisdictional boundaries between State and Federal Courts may be indistinct and this may lead to conflicts depending on the merits of each case.
Arbitration and Alternative Dispute Resolution (ADR) procedures may also be used to resolve disputes more rapidly and obtain out-of-court settlements, often at a lower cost than through the ordinary adversarial procedure.