Overseas Business Risk – Australia
Political and Economic
Australia has a system of Government based on liberal democratic values of religious tolerance, freedom of speech and association, and the rule of law. Australia has similar political, legal and regulatory practices to the UK, the USA and other liberal democracies.
The Australian Constitution of 1901 established a federal system of government. Under this system, powers are distributed between a federal government (the Commonwealth) and the six States. Two Territories – the Australian Capital Territory and the Northern Territory – have more limited powers; there are also a number of offshore territories, of which the most significant are Norfolk Island and the Australian Antarctic Territory. The Parliament is at the heart of the Australian government. The Parliament consists of The Queen (represented by the Governor-General) and two Houses: the Senate and the House of Representatives. Australia is thus a constitutional monarchy, a federation and a parliamentary democracy.
The 43rd Australian Parliament was sworn in by the Governor-General on 28 September 2010, after a general election was held on 21 August resulting in a hung Parliament. The Australian Labor Party (ALP), led by Julia Gillard, formed a minority government, with the support of three independent MPs and the one Green party MP. The 43rd Australian Parliament has introduced a number of Parliamentary reforms and includes the first Indigenous Member of Parliament.
Members of the House of Representatives (Lower House) serve three-year terms. Senators serve fixed six-year terms (from 1 July). It is usual to hold a full House of Representatives and a half-Senate election simultaneously every three years.
It is important to note that laws and regulatory practices can change between Australia states, so businesses looking to operate in multiple Australian states should check the regulations in each state.
Australia has had one of the best-performing economies in the industrialised world in recent decades. It has not suffered a recession for the past 19 years. This success reflects many factors, including sound economic management, strong population growth, a rich endowment of natural resources (particularly mining) and close ties to the boom economies of Asia.
But the country faces a number of challenges. The economy is already hitting capacity limits – particularly labour shortages – and these are expected to worsen due to the mining boom. And due to its carbon intensive economy, Australia is the largest per capita emitter of greenhouses gases in the developed world.
Australia has recently introduced a comprehensive Clean Energy Legislation including a carbon price which is due to start in July 2012. In general the carbon price is only going to affect the top 400 biggest emitters in the economy but it will have modest flow on affects to the rest of the economy and some households and businesses will be compensated. The carbon price is opposed by the federal opposition who have threatened to repeal it if they gain power.
Australia’s economic prospects appear strong, thanks in large part to the mining boom. Soaring prices for iron ore, coal, gold and liquefied natural gas (LNG) have provided a significant income injection into the economy. A mining investment boom is underway in resource-rich states like Western Australia and Queensland.
Unemployment is low and labour is in short supply in the mining industries and regions. The mining boom is expected to fuel these inflationary pressures. The boom has pushed the Australian dollar to record highs. The high dollar is hurting trade-exposed sectors like manufacturing and tourism.
Australia’s trade is increasingly directed towards Asia. The country’s biggest two-way trading partner is China, followed by Japan, the US, Republic of Korea, Singapore and the UK. Biggest exports are coal and iron ore, followed by education services and gold. The terms of trade are near a record high due to surging commodities prices.
Australia is a strong proponent of trade liberalisation. But with progress in the Doha round of trade talks slow, it has entered free trade agreements with New Zealand, Singapore, Thailand, Chile, Malaysia, the US and (with New Zealand) the Association of South East Asian Nations (ASEAN). It is also negotiating FTAs with China, , Japan and the Republic of Korea as well as five other regional deals. Although agricultural tariffs are very low compared to other developed countries, Australia is sometimes accused of using its strict quarantine regime as a trade barrier.
For more information about Australia’s economic prospects look at the economic overview on the UK in Australia website or find out more Australia’s business culture and import and export practices in the handy Doing Business in Australia Guide on the UK Trade & Investment website.
The Australian Government has acknowledged the importance of promoting and protecting human rights standards by ratifying a number of international instruments including the Universal Declaration of Human Rights, as well as conventions on anti-discrimination and international labour standards.
A national Occupational Health and Safety (OHS) harmonisation initiative between the Commonwealth of Australia and each of its States and Territories came into effect in 2011 and 2012 to allow for national OHS regulations in Australia. As part of this, all employers are required to create a workplace that is free from sex, racial, age, and disability discrimination in addition to harassment.
It is important to be aware of Fair Work Australia as the national workplace relations tribunal. It is an independent body providing a safety net of minimum conditions, including minimum wages and working ages, as well as a mechanism for resolving a range of collective and individual workplace disputes. Workers’ rights extend to freedom of association in terms of the right to form trade unions. For industrial action to be lawful in Australia it must be protected industrial action and can take a variety of forms, including employee strikes.
The non-discriminatory protection of native title for Aboriginal and Torres Strait Islanders is recognised under domestic legislation, namely the Native Title Act 1993. British businesses and developers involved in land transactions must respect the rights of traditional landowners and custodians to negotiate agreements and to veto development proposals. Multiple employment programs and graduate entry streams exist to facilitate indigenous employment opportunities in Australia, both in public and private service. The Australian Government has taken actions to ensure ethnic minorities do not face disproportionate barriers to employment, most recently in Australia’s Multicultural Policy in 2011.
Bribery and Corruption
Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.
In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.
According to Transparency International’s Corruption Perception Index Australia was the 8th least corrupt country in 2011, the same score as in 2010. This means the perceived level of corruption in Australia is comparable to Switzerland and The Netherlands and less than the UK.
Read the information provided on our Bribery and corruption page.
There is an underlying threat from terrorism in Australia. Attacks could be indiscriminate including in places frequented by expatriates and foreign travellers.
Read the information provided on our Terrorism threat page
Protective Security Advice
Like in any country it is important to take precautions for individual and business security when doing business in Australia. However, on the whole the threat in Australia is no greater than in the UK.
Read the information provided on our Protective security advice page
IP protection in Australia is strong and an important consideration for UK businesses looking to do business in Australia. Under common law the principal forms of intellectual property protection available in Australia are trade marks, designs, patents and copyright. All of these forms of protection are governed by legislation. The common law also provides remedies against a person passing off goods or services as those of another, as well as protection for confidential information or trade secrets.
Read the information provided on our Intellectual Property page.
As in many other major countries, international organised criminal activity takes place in parts of Australia, in particular linked to drugs, people smuggling and people trafficking.
Read the information provided on our Organised crime page.