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Australia Political and Economic Outlook for 2012 and Beyond

Updated on March 9, 2012

This article takes a short look at the socio-political and econimic outlook of Australia. Australia is both a continent and a large island nation located in the Southern and Eastern Hemispheres between the India and Pacific Oceans and counted within the Oceania region of the world. Even though Australia is located in the Eastern Hemisphere it is primarily considered a Western culture, due to its colonization by the British Empire and subsequent migration of British civilians and prisoners to the island. Today, Australia enjoys a relatively stable political condition. Moreover, in comparison to other Western cultures, the country boasts a relatively stable economy with a projected 3.3% GDP growth in 2012 and 5.1% unemployment rate. The main intelligence for this article came from reports filed by the Economist Intelligence Unit, Euromonitor - Passport, Country Watch, and CultureGrams.

Australia's Political Outlook for 2012 and Beyond

Currently, the Australian Labour Party led by Julia Gillard leads the large island nation through a minority coalition of independents and the one member of the Greens. In its bid for a second term in 2010, the ALP's won only 72 seats in the House of Representatives compared to 73 won by a coaliton of Liberal-Nationals. According to the EIU reporters, the lack of an outright majority left the Labour Party weakened which caused it to endure tough opposition in its attempts to push through its legislative agenda.

Even as the majority coalition has struggled in the past two years, Prime Minister Gillard received a shot in the arm February 27, 2012, when she withstood a challenge by the previous prime minister Kevin Rudd. Gillard won the contest soundly taking 71 votes to Rudd's 31. The EIU projects that Gillard's resounding victory should translate to political stability at least in the short-term.

Still, with the next general election set for 2013, Gillard has much to accomplish in a short time if she wants to retain her seat at the head of the table. The EIU projects that if Gillard cannot turn her most recent decisive vote of confidence into much needed improvements in the most pressing issues, then she may be in danger of being relegated to the backbenches.

Pressing Political Issues

According to the EIU investigators, the most pressing political issues in the Australian political landscape will be the government's tax on carbon emissions. This tax was passed by the Senate in November 2011. PM Gillard campaigned in opposition to the tax, but the Green Party joined her coalition upon the promise that she would enact the measure. Consequently, a watered down measure was passed, but remains a political hot topic that could spell danger for Gillard's future political aspirations.

How to deal with Aboriginal relations is another contentious matter facing Australia's political landscape. According to PassPort observers, the Aussie government spends an estimated $3 billion on aboriginal welfare each year. Huge parcels of land are currently under the management of aboriginal communal councils but the Australian government has imposed ever-increasing financial controls over the lands. Human-rights activists have grown more and more critical of the governments actions.

Australia Economic Outlook 2012 and Beyond

According to the Passport reporting service (a country monitoring company from Euromonitor), Australia is forecasted to post moderately strong growth in 2012 with an estimated GDP rise of 3.3%. This growth will be propelled by exports of iron ore, coal, and natural gas. The retail, manufacturing, and tourism industries, however, are projected to turn in weak results for the same period.

In 2012-16, the Economist Intelligence Unit (March 2012) estimates Australia's real GDP growth and public financial picture to remain healthy, realtive to other developed nations. EIU experts forecast real GDP growth over the next five years to clip along at a steady annual rate of 2.9% in 2012-16. Moreover, the government’s plan to cut spending means that it is likely to achieve its target of a balanced budget in fiscal year 2012/13 (July-June). The same EIU forecasters see some possible trouble ahead due to Australia's link to the euro zone; and yet, they expect the Reserve Bank of Australia (RBA, the central bank) to fend off the threat by making another interest rate cut in the first half of 2012.

Australia Vital Signs

According to CountryWatch and CultureGrams, Australia regional and demographic vital signs include the following:

Region: Pacific Ocean

Total Area: 7,686,850 Sq. Km.; Total Land: 7,617,930 Sq. Km.; Coastline: 25,760 km

Climate: Generally arid to semiarid; temperate in south and east; tropicalin north.

Average Daily Temperature: January: 20.2C / 68.4; July: 5.3C / 41.5; Annual Rainfall: 630.7mm / 24.8

Population: 20,638,212 as of 2010

Capital City: Canberra

Largest Cities: Sydney - Population: 3,749,902; Melbourne - Population: 3,551,659; and Canberra - Population: 334,276

Ethnic Groups: Caucasian - 92%; Asian - 7%; Aboriginal -1%

Religions: Anglican - 26%; Roman Catholic - 26%; other Christian affiliation - 24%; other - 13%; major non-Christian religious affiliation -11%

Languages: English; Indigenous languages; various languages spoken by immigrant communities

Currency: 1 Australian Dollar (A$) = 100 cents

National Holiday: Australia Day is 26 January (1788); ANZAC Day is 25 April; Queen's Birthday is 13 June

Australia Historical Sketch

According to researchers from Country Watch, it is not clearly known when the Australian territory was first inhabited. Some scholars speculate that the island had been uninhabited before stone-culture peoples arrived which some believe may have been by boat that made their way across the waters separating the island from the Indonesian archipelago. Some estimate that this event took place about 40,000 years ago. Due to the distance of Australia from all major civilizations, it is thought that the Aborigines continued to thrive in the land without much contact with the outside world, not counting the neighboring islands surrounding it. According to those at Country Watch, this continued to be the case until the early 17th century. In the late 18th century C.E., the Aboriginal population numbered an estimated 300,000 divided among in as many as 500 tribes with many different languages.

In 1601 Portuguese sailors became the first European explorers to sight Australia, but in 1770 Captain James Cook claimed it for the United Kingdom. At that time, the Australian government instituted a mass immigration policy which combined with the subsequent exploitation of the Aboriginal population led the number of Aborigines to decline sharply until present day. In the present day, Aborigines account for less than two percent of the total Australian population.

On Jan. 26, 1788, Capt. Arthur Phillip led the First Fleet to port at Sydney. On February 7, 1788 the British proclaimed the official establishment of the Colony of New South Wales. In the mid-19th century a combination of the discovery of gold along with government policies to emancipate convicts and assist the immigration of free people led to increased population, wealth and trade. Continued migration to the various regions of the island led to the eventual establishment of six colonies that in the present day constitute the states of the Australian Commonwealth. Those six colonies (or states) include New South Wales, established in1788; Tasmania, established in 1825; Western Australia, established in1830; South Australia, set up in 1836; Victoria, founded in 1851; and Queensland, established in 1859.

In 1900, the Commonwealth of Australia was fully recognized by the British government. In 1901, Australia’s first federal parliament was inaugurated in Melbourne. In 1927, the government capital was moved to Canberra. On Oct. 9, 1942, Australia gained full autonomy as an independent nation upon passage of the Statute of Westminster Adoption Act. In 1986, the country’s parliament eliminated all remaining ties of British legal authority with the passage of the Australia Act.

Presently, Australia is a federation of six states and two territories. The country’s central affairs are executed by a Cabinet which reports to a 150-member House of Representatives, elected to three year terms. Australia also has an upper house called the Senate which currently includes 76 members elected by way of a preferential system by representatives of 12-seat state constituencies and two territorial constituencies. Each of the six states and two territories enjoys virtual autonomy over their respective affairs.


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      Shayne Powell 4 years ago

      Some great points in there from an outside commentator... although the political landscape during that the time of the Rudd/Gillard/(and back to Rudd in 2013) government was of nothing but instability. Rudd led a tumultuous government and was reluctant to take advice from his caucus. Many described his leadership as chaotic. This is partly why Gillard overthrow an elected Prime Minister yet to complete his first term. From then on sentiment throughout the entire public was low, especially in terms of economic management with the inclusion of a 'carbon tax' which had no mandate at the 2010 election. The preceding Howard Government inherited $90 billion in debt and left office in 2007 having consecutive budget surpluses of $20 billion. The Rudd/Gillard/Rudd governments never handed down a budget surplus and left office in 2013 with a debt tipped to reach $300 billion by 2016. After six long years of labor failure the conservative Abbott Government is what Australia needs to control the unnecessary and wasteful spending of Rudd and Gillard.

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      Karolina 5 years ago

      Fantastic hub, looking forward to come back and see your new posts. Thank you.

      My art gallery

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      Dianna Mendez 5 years ago

      A moderate slow growth is a good report for any country. It seems that the exports are minimal compared to other countries of similar size. Will tourist industry in Australia drop off over the next few years due to economic structure of countries such as the US? I have heard and seen from photos that this is a beautiful country and hope to some day visit there.

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      ecoggins 5 years ago from Corona, California

      Charmike4, Thank you for the positive feedback. I hope to visit your Lucky Country in June. It depends if a submitted proposal is accepted or not.

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      Michael Kromwyk 5 years ago from Adelaide, South Australia

      You can still see why we are living in the Lucky Country ecoggins! A change of Government is on the horizon which should enable Australia to focus on business & industry again rather than social equality and green issues.

      Enjoyed your analysis. Cheers Michael

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      ecoggins 5 years ago from Corona, California

      Thank you, JSChams, I hear they're hiring in New Zealand.