1. Introduction to International Marketing.

This global marketplace consists of a population of 6.6 billion people which is expected to
reach 10 billion by 2050 according to the latest projections prepared by the United Nations.
Global wealth is increasing and this is reflected in higher demand. Increasing affluence and
commercial dynamism has seen nations across Asia, Central and Eastern Europe emerge as
high growth economies. Increasing affluence and demand simply means that consumers will
actively seek choice, with the result that globally competition is intensifying as companies
compete to win the battle for disposable income.

The global marketplace is no longer the summation of a large number of independent country
markets but much more multilateral and interdependent, economically, culturally and
technically. Information moves anywhere in the world at the speed of light, the ease of
transmission being facilitated by the convergence of long distance telecoms, cuts in the cost
of electronic processing and the exponential growth in Internet access. The combination of all
these forces has meant that all companies need to develop a marketing orientation which is
international in nature and that companies need managers who have the skills to analyse, plan
and implement strategies across the globe. It is for these reasons that international marketing
has become such a critical area of study for managers.

International marketing (IM) or global marketing refers to marketing carried out by

companies overseas or across national borderlines. This strategy uses an extension of the
techniques used in the home country of a firm. It refers to the firm-level marketing practices
across the border including market identification and targeting, entry mode selection,
marketing mix, and strategic decisions to compete in international markets. According to the
American Marketing Association (AMA) “International marketing is the multinational
process of planning and executing the conception, pricing, promotion and distribution
of ideas, goods, and services to create exchanges that satisfy individual and
organizational objectives.” In contrast to the definition of marketing only the word
multinational has been added. In simple words international marketing is the application of
marketing principles to across national boundaries.
At its simplest level, international marketing involves the firm in making one or more
marketing mix decisions across national boundaries. At it is most complex, it involves the
firm in establishing manufacturing/processing facilities around the world and coordinating
marketing strategies across the globe. At one extreme there are firms that opt for
‘international marketing’ simply by signing a distribution agreement with a foreign agent
who then takes on the responsibility for pricing, promotion, distribution and market
development. At the other extreme, there are huge global companies such as Ford with an
integrated network of manufacturing plants worldwide and who operate in some 150 country
markets. Thus, at it is most complex, international marketing becomes a process of managing
on a global scale. These different levels of marketing can be expressed in the following
terms:

Domestic marketing, which involves the company manipulating a series of controllable

variables such as price, advertising, distribution and the product/service attributes in a largely
uncontrollable external environment that is made up of different economic structures,
competitors, cultural values and legal infrastructure within specific political or geographic
country boundaries.

International marketing, which involves operating across a number of foreign country

markets in which not only do the uncontrollable variables differ significantly between one
market and another, but the controllable factors in the form of cost and price structures,
opportunities for advertising and distributive infrastructure are also likely to differ
significantly. It is these sorts of differences that lead to the complexities of international
marketing.

Global marketing, which is a larger and more complex international operation. Here a
company coordinates, integrates and controls a whole series of marketing programmes into a
substantial global effort. Here the primary objective of the company is to achieve a degree of
synergy in the overall operation so that by taking advantage of different exchange rates, tax
rates, labour rates, skill levels and market opportunities, the organisation as a whole will be
greater than the sum of its parts.
The key difference between domestic marketing and marketing on an international scale is
the multidimensionality and complexity of the many foreign country markets a company may
operate in. An international manager needs a knowledge and awareness of these complexities
and the implications they have for international marketing management.

Major differences from Domestic Marketing:

1 Culture: often diverse and multicultural markets

2 Markets: widespread and sometimes fragmented

3 Data: difficult to obtain and often expensive

4 Politics: regimes vary in stability – political risk becomes an important variable

5 Governments: can be a strong influence in regulating importers and foreign business

ventures

6 Economies: varying levels of development and varying and sometimes unstable currencies

7 Finance: many differing finance systems and regulatory bodies

8 Stakeholders: commercial, home country and host country

9 Business: diverse rules, culturally influenced

10 Control: difficult to control and coordinate across markets.

Various factors like Political Economic Social Technological Legal Environmental affect the
functioning of International business.
 2. Australia: Key Facts and Geographical Location

Country and capital

Full name Commonwealth of Australia

Capital city Canberra

Government

Government type Federal Parliamentary Democracy

Head of state Queen of Australia, Elizabeth II (since 1952)

Head of government Prime Minister Julia Gillard

Population

2011 estimate 22,560,515 (52nd)

- 2006 census 19,855,288

- Density 2.833/km2 (232nd)

Currency

Australian dollar (AUD)

GDP per capita (PPP)

Total $994.246 billion

Per capita $45,285

Internet domain

.au

Demographic details Life expectancy

81.6 years (total population)

79.2 years (men)

84 years (women)
Ethnic composition

White 92%, Asian 7%

Aboriginal and others 1%

Major religions

Catholic 26.4%, Anglican 20.5%, other Christians 20.5%

Muslims 1.5%, others 15.8% and none 15.3%

Country area

7,686,850 sq km

Major exports

Coal, gold, meat, wool, alumina, iron ore, wheat and machinery.

Major imports

Computers and office commodities, crude oil and petroleum products.

Geographic Location
Australia is located in Oceania, between the Indian Ocean and the South Pacific Ocean.
 3. PESTLE Analysis
Political Environment
 Julia Gillard
Prime Minister, Leader of the Australian Labour Party

Tony Abbott
Leader of the Opposition and Liberal Party Leader

Warren Truss
Leader of The Nationals

Bob Brown
Leader of The Greens

Steve Fielding
Family First Leader

The Politics of Australia take place within the framework of a parliamentary democracy, with
electoral procedures appropriate to a two-party system. Australia is governed as a federation
and as a constitutional monarchy, with an adversarial legislature based upon the Westminster
system. Australians elect parliamentarians to the Parliament of Australia, a bicameral body
which is a hybrid of the parliamentary mechanisms carried over from the United Kingdom
with the uniquely federalist element of the Australian Senate. Australia operates a system of
compulsory voting.

The Parliament of the Commonwealth of Australia consists of two chambers:

The Australian House of Representatives has 150 members, each elected for a three-year term
of office to represent a single-seat constituency. Voting within these constituencies takes
place using a system of alternative voting known as full preferential voting.

The Australian Senate has 76 members. The six states return twelve members each, elected
through a preferential system of voting. In addition, the two territorial constituencies, the
Northern Territory and the Australian Capital Territory (ACT), return two representatives
each, through a system of single transferable voting. Electors choose the state senators for a
six-year term, with half of the seats renewed every three years. The territory senators serve
for a term that is determined by the life of the House of Representatives. The term political
donations refer to gifts to a politician, a political party, or an election campaign.

In Australia, the majority of political donations come in the form of financial gifts from
corporations, which go towards the funding of the parties' election advertising campaigns.
Donations from trade unions also play a big role, and to a lesser extent donations from
individuals. Donations occasionally take the form of non-cash donations, referred to as gifts-
in-kind.

Australian national politics 2010

Due to the falling popularity of Labour leader Kevin Rudd as Prime Minister, the party
replaced him in 2010 with the former deputy leader Julia Gillard. The Australian Labour
Party had come to power in November 2007, ending John Howard's 11 years in office as
Prime Minister and head of a Liberal/National coalition government. Soon after Julia
Gillard's appointment as Prime Minister, she called an election. As a result of this election,
Labour lost its majority in the House of Representatives, although neither Labour nor the
Coalition had enough members to call a government. By means of a deal which the Labour
party was able to strike with three of the four independent members and the single Green
Party member in the House, Labour was able to claim a slim working majority and form a
new government.

Elections

At a national level, elections are held at least once every three years. The Prime Minister can
advise the Governor-General to call an election for the House of Representatives at any time,
but Senate elections can only be held within certain periods prescribed in the Australian
Constitution. Australian federal elections have taken place in November 2007 and again
in August 2010.

The voting system for the Senate underwent a significant change in 1948. Prior to this, Senate
elections had been conducted using a 'first past the post' voting system, where all seats went
to the party that had achieved the highest vote in that state. This could result in landslide
victories for one political party or other following relatively small changes in the popular
vote, as well as periodically resulting in a Senate with a large majority of opposition senators.
A change to a preferential system of voting resulted in the numbers of senators from each
party more closely reflecting the numbers of votes that the party had received, and therefore a
more balanced Senate. For the last twenty-five years a balance of power has existed, whereby
neither government nor opposition has had overall control of the Senate. This has required
governments to seek the support of minor parties or independents in order to secure their
legislative agenda.

The ease with which minor parties can secure representation in the Senate compared to the
House of Representatives has meant that these parties have often focused their efforts on
securing representation in the upper house. This is true also at state level (only the two
territories and Queensland are unicameral). Minor parties have usually been unable to win
seats in the House of Representatives. The Greens, for example, won a House seat at the
2002 Cunningham by-election, but lost it again in the 2004 general election. Adam
Bandt won the Greens' first seat at a general election in August, 2010. Minor parties do,
however, affect lower house politics through their recommendations to voters regarding
which of the main parties they choose to favour, a strategy regarded as decisive in the
outcome of the 1990 federal election.[2] This focus on the upper house, though, has molded
the platforms and politics of minor parties, when an upper house brokering role is seen as the
best opportunity to affect legislative outcomes. The demands placed on parties by this role
can cause internal tensions within them and exert external pressure upon them – as
demonstrated, for example, by internal splits that contributed to the political decline of
the Australian Democrats.

Because legislation must pass successfully through both houses in order to become law, it is
possible for disagreements between the House of Representatives and the Senate to hold up
the progress of government bills indefinitely. Such deadlocks are resolved under section 57 of
the Constitution, under a procedure called a double dissolution election. Such elections are
rare, not because the conditions for holding them are seldom met, but because they can pose a
significant political risk to any government that chooses to call one. Of the six double
dissolution elections that have been held since federation, half have resulted in the fall of a
government. Only once, in 1974, has the full procedure for resolving a deadlock been
followed, with a joint sitting of the two houses being held to deliberate upon the bills that had
originally led to the deadlock.

Major parties

The Australian Labor Party (ALP) is a social democratic party founded by the Australian

labour movement and it broadly represents the urban working class, although it increasingly
has a base of sympathetic middle class support as well. As of November 2010, the Australian
Labor Party has formed a minority government with the support of four cross-benchers.

The Liberal Party of Australia is a party of the centre-right which broadly represents

business, the suburban middle classes and many rural people. Its junior coalition partner at
national level is the National Party of Australia, formerly the Country Party and widely
known as "The Nationals"; a conservative party which represents rural interests. These two
parties are collectively known as the Liberal/National coalition.

The counterpart of the National Party in the Northern Territory is the Country Liberal Party.

Minor parties

Minor parties in Australian politics include a green party, the Australian Greens, a social

progressive party and a social conservative party, the Family First Party. Formerly significant
parties in a list of political parties in Australia would include the nationalist One Nation party
and the social liberal Australian Democrats.

Current strengths

▪ Representative government

▪ Compulsory voting system

Current challenges

▪ Economic downturn

▪ Australian pressure groups

Future prospects

▪ Growing importance of Australian Republican Movement

▪ Improving international relationships

Future risks

▪ Increasing number of asylum seekers

Economic Environment
Economy

GDP (2009-2010 estimate): A$1.2 trillion (U.S. $1.1 trillion).

Inflation rate (year to March 2010): 2.9% per year.

Reserve Bank official interest rate (May 2010): 4.5%.

Trade: Exports ($176.7 billion, 2009 estimate)--coal, iron ore, gold, meat, wool, alumina,
wheat, machinery and transport equipment. Major markets--China, Japan, South Korea, India,
U.S. ($8.7 billion), and U.K. Imports ($180.5 billion, 2009 estimate)--machinery and
transport equipment, computers and office machines, telecommunication equipment and
parts; crude oil and petroleum products. Major suppliers--China, United States ($20.05
billion), Japan, Thailand, and Singapore.

Exchange rate (2010): U.S. $1 = A$1.11 (average for 2010 of A$1 = U.S. $0.90).

A strong economy

Australia has one of the most stable economic, political and social environments in the
region, which has led to increased investment from overseas in recent years. As a result of
major diversification in Australia's export base, Australia is now not only a commodity
exporter, it also has sophisticated manufacturing and service industries.

Australia has one of the world's most open and innovative economies and the Australian
Government is committed to maintaining this direction. Strong growth over the past decade
has been accompanied by low inflation and interest rates, and a strong productivity
performance.

The Australian economy performed solidly in 2002-03. In contrast with weaker global
conditions, Australia's economy was one of the strongest in the developed world, recording
2.7 per cent growth. The outlook remains positive for increased growth in future.
Although trade in commodities remains strong, new services and sophisticated manufacturing
export markets have emerged. The value of Australia's exports in goods and services reached
A$151 billion in 2002, with service exports comprising A$31 billion of that figure – 21 per
cent of total exports. Japan (A$22.1 billion) remains our largest export market, followed by
the United States (A$11.5 billion) and the Republic of Korea (A$10 billion).

Australia's strengths are not only in its traditional commodities sectors - a r ecent OECD
(Organisation for Economic Co-operation and Development) study suggests that Australia is
ranked as one of the six fastest-growing successful new economy traders – meaning that
Australia is strong in information and communications technology (ICT) infrastructure,
innovation systems, business environment and human resource development.

Australian investment in ICT as a percentage of Gross Domestic Product (GDP) is the third
highest of OECD countries. The Reserve Bank of Australia has found a direct link between
expenditure on ICT and the Australia's strong productivity growth. The take-up of e-
commerce is projected to add 2.7 per cent to Australian GDP growth over the next ten years.

Investment Climate

 Openness to Foreign Investment

 Conversion and Transfer Policies
 Expropriation and Compensation
 Dispute Settlement
 Performance Requirements and Incentives
 Right to Private Ownership and Establishment
 Protection of Property Rights
 Transparency of Regulatory System
 Efficient Capital Markets and Portfolio Investment
 Political Violence
 Corruption
 Bilateral Investment Agreements
 OPIC and Other Investment Insurance Programs
 Labor
  Foreign-Trade Zones/Free Ports
 Foreign Direct Investment Statistics
 Web Resources

ECONOMY

Australia's economy is dominated by its services sector, yet it is the agricultural and mining
sectors that account for the bulk of Australia's exports. Australia's comparative advantage in
the export of primary products is a reflection of the natural wealth of the Australian continent
and its small domestic market; 22 million people occupy a continent the size of the
contiguous United States. The relative size of the manufacturing sector has been declining for
several decades, but has now steadied at around 8.5% of GDP. The global recovery is putting
upward pressure on prices for Australia's commodity exports, which is expected to cause a
substantial rise in the terms of trade in 2010. The terms of trade were expected to rebound by
around 25% by mid-2010, injecting $30 billion into the economy and helping to reinvigorate
the mining sector and economic activity more generally.

Since the 1980s, Australia has undertaken significant structural reform of its economy and
has transformed itself from an inward-looking, highly protected, and regulated marketplace to
an open, internationally competitive, export-oriented economy. Key economic reforms
included unilaterally reducing high tariffs and other protective barriers to free trade, floating
the Australian dollar, deregulating the financial services sector, including liberalizing access
for foreign banks, increasing flexibility in the labor market, reducing duplication and
increasing efficiency between the federal and state branches of government, privatizing many
government-owned monopolies, and reforming the taxation system, including introducing a
broad-based Goods and Services Tax (GST) and large reductions in income tax rates.

Australia enjoys one of the highest standards of living in the G7. Australia's economic
standing in the world is a result of a commitment to best-practice macroeconomic policy
settings, including the delegation of the conduct of monetary policy to the independent
Reserve Bank of Australia, and a broad acceptance of prudent fiscal policy where the
government aims for fiscal balance over the economic cycle. Economic recovery is
strengthening, with GDP forecast to grow by 3.25% in 2010-2011 and 4% in 2011-2012,
leading to further reductions in the unemployment rate. The success of monetary and fiscal
stimulus will help the budget return to surplus in 2012-2013, 3 years ahead of schedule. Net
debt is expected to peak at 6.1% of GDP in 2011-2012, considerably below the previous
forecast of 9.6% of GDP.

The unemployment rate was expected to fall from its early-2010 level of 5.3%, down to 5%
in late 2010-2011, and 4.75% in late 2011-2012, around levels consistent with full
employment. Labor market participation has remained at around 65%. Both the federal and
state governments have recognized the need to invest heavily in water, transport, ports,
telecommunications, and education infrastructure to expand Australia's supply capacity. The
largest river system in Australia, the Murray-Darling, and related coastal lakes and wetlands
in South Australia are critically threatened, and the government has developed a plan to
improve irrigation infrastructure and efficiency and buy back unused water allocations along
the river.

A second significant issue is climate change. A report commissioned by then-Prime Minister

John Howard recommended a domestic carbon emissions trading scheme and that Australia
take an active role in developing a future global carbon emissions trading system. Prime
Minister Kevin Rudd had planned to introduce a domestic carbon trading system by 2011 to
reduce emissions by 5% from 2000 levels by 2020. However, the Rudd government later
deferred legislation establishing an emissions trading scheme until 2013, at the earliest.

The Australia-U.S. Free Trade Agreement (AUSFTA) entered into force on January 1, 2005.
The AUSFTA was the first FTA the United States concluded with a developed economy
since the U.S.-Canada FTA in 1988. Australia also has FTAs with New Zealand-ASEAN,
Singapore, Thailand, and Chile, and is pursuing other FTAs, including with China, Japan,
Malaysia, and South Korea. A burgeoning trade relationship marked by ongoing, multi-
billion dollar resource export contracts and rising manufactured imports has driven FTA
negotiations with China.
Current strengths

Policies towards a digital economy

The Australian government has undertaken various initiatives to make sure there is all-round
development in the country, which could transform the economy. The state has funded
various projects supporting telecommunication and IT infrastructure, broadband services for
local and rural areas, the development of green telecommunications, and carbon trading. The
government has also been successful in setting up tele-education in remote areas with the aid
of broadband services. In an effort to lower costs and provide training and education to a
wider audience, corporations and universities are adopting e-learning solutions. The state has
installed e-health applications at several hospitals to disseminate information on various
aspects of health, and extended e-government services so that citizens can have easier access
to a range of government agencies. These favorable policies have provided Australia with a
firm foundation on which it can transform itself into a digital economy, enhancing growth in
all sectors of the economy.

Robust tourism and mining sectors

The tourism sector provides employment opportunities to more than 480,000 people in the
country, contributing more than $78.7 billion to the economy and accounting for more than
3.5% of GDP at the end of fiscal year 2007–08. This was a 7.8% increase from 2006–07, and
was also the highest since 1999–2000. Within the industry, air and water transport, eateries
and retail trade are the most important sectors. Increased spending by Australians in their
own country drove domestic tourism to $58 billion in 2007–08, an increase of 6.8% over the
previous year. In the same year, international tourists visiting Australia injected around $20.7
billion into the economy, an increase of 9% over 2006–07. Although the economic downturn
has negatively impacted the industry to some extent, its contribution to GDP remains
significant. The minerals industry in Australia is of considerable economic and social
importance, helping its nationals both directly and indirectly. Indeed, the industry has directly
contributed over $400 billion to Australia’s wealth during the past two decades. During
2006–07, the industry accounted for nearly 8% of the nation’s GDP. Australia ranks among
the top five producers of most of the world’s primary minerals commodities, such as lead,
bauxite and alumina, uranium, zinc, nickel and iron ore, among others. It is expected that the
strength in the country's mining sector will provide some respite from the economic
slowdown.

Strong infrastructure industry

The infrastructure industry is one of the major drivers of the Australian economy. It includes
the construction of various residential and non-residential buildings, as well as many other
engineering construction projects. It also covers architectural and engineering services and
construction trades such as bricklaying, plumbing and electrician work.

Construction in Australia is primarily focused on the domestic market and is extremely

fragmented, with around 200,000 businesses, representing 20% of the total number of
companies in Australia. With the government supporting various infrastructural projects and
funding various rural expansion programs, the industry will further expand its activities and

boost its contributions to the economy at large.

Current challenges

Deteriorating economic conditions Since 2008, there has been a slump in the economic
growth of Australia similar to that seen in most other advanced nations, albeit of a lower
magnitude. The country recorded a GDP growth rate of 1.5% during 2008, compared to 3.9%
growth in 2007. It is expected to further decline in 2009 to a negative growth of 0.5%.
According to the RBA’s Statement on Monetary Policy in May 2009, GDP declined by 0.5%
during the quarter ending in December the previous year. This report said that the slowing in
the domestic economy had been evident across private-sector spending and in the labor
market. Household consumption has been quite weak since the start of 2008, after having
grown strongly over previous years, and household investment declined in the second half of
2008, with a further decline expected in the first half of 2009. The pace of growth of business
investment slowed in the second half of 2008 from the high rates seen in previous years, and
indicators suggest that it will contract through 2009. Export volumes have been broadly flat
recently. As a result of the weaker economic environment, labor market conditions have
deteriorated, with the unemployment rate increasing from a low of around 4% in early 2008
to more than 5% in April 2009. The economic recovery of the country may be delayed if the
stimulus package fails to encourage private-sector investment.

An adverse terms of trade and rising external debt Australia’s export performance was
relatively healthy in the recent years, assisted by the strong global economy. However, import
growth was even more robust, resulting in a widening current account deficit of close to 6%
of the GDP in 2005–06. In the last quarter of 2007–08, the current account deficit grew by
$2.8 billion to reach $18.28 billion. This was a record high, with the current account deficit
standing at around 7% of the GDP. The deficit is expected to widen further in 2009–10 to
around 9% of GDP due to the global demand for the country's export commodities
deteriorating without an equivalent fall in imports, as Australian consumption expenditure
will remain healthy compared to that of the other advanced economies. Furthermore,
accumulation of current account deficits coupled with Australian equity investment abroad,
which was partly funded by increased borrowings, has led to growing external debt. In 2008,
external debt was at 95% of GDP. Rising debt poses a challenge for the Australian economy,
as this may further delay economic recovery, and debt financing will leave the country with
less funds for other expenditure programs.

Future prospects

Economic stimulus package

The economic downslide has brought economic policies to the forefront. The government has
taken a number of bold policy decisions in the form of fiscal stimulus packages and
guarantees of deposits and wholesale borrowing for many financial institutions to protect the
economy from entering a recession. The Australian economy has performed better than that
of other advanced nations in facing the crisis. In February 2009, the government announced a
$26 billion stimulus package aimed at nation-building and supporting up to 90,000 jobs. It
includes increased spending on education and infrastructure, tax breaks for small businesses
and cash handouts to eligible workers, farmers and students. Prior to this, in December 2008,
the government had pumped an additional A$10.4 billion (around $8 billion) in the economy
to boost consumer spending. Besides these fiscal stimulus measures, the government
continued with its policy of aggressive interest-rate cuts, the latest being a percentage point
cut to reach a 45-year low of 3%. Since September 2008, there has been significant easing of
425 basis points (BPs). Such monetary measures, along with the fiscal stimulus, are expected
to ease the effects of the economic crisis.

Improving economic ties with New Zealand

New Zealand and Australia share a unique economic relationship through their involvement
in one of the world's most successful FTAs: the Australia New Zealand Closer Economic
Relations deal (CER). Two-way trade in goods and services expanded by an average of 9%
per year during 2006–08, reaching around $24 billion in the year ending March 2008, the
CER's 25th anniversary year. The countries met to further enhance their relationship in
March 2008. Australia and New Zealand are making efforts to focus on the Single Economic
Market program, which complements the CER by seeking greater harmonization of economic
regulation and addressing various other impediments to trade. The countries also agreed to
bring the development and economic integration benefits to all their Pacific island neighbors
through ‘PACER Plus’, the next stage of the Pacific agreement on closer economic relations.

Free trade agreements

The idea of having an FTA between Australia and China was first proposed in 2005, and
negotiations in April 2008 seem to have been fruitful. Under the current FTA, the Australian
government is expecting China to come up with revised tariff offers on all goods, including
agricultural commodities. In their latest round of free-trade talks, the governments discussed
agricultural products affected by tariff-rate quotas (cotton, wheat, rice, sugar, wool and corn).
Furthermore, the Australian government has also emphasized that its producers will not be a
threat to China's farmers. The FTA is expected to boost the GDP of Australia and China by
$23.2 billion and $77.2 billion, respectively, during 2006–15. The Australian government
also entered into a pact with South Korea in April 2008 for a long-term free-trade agreement,
to be effective until 2020. According to the Australian government, the Australia-Korea FTA
may boost Australia's GDP by up to $22.7 billion and South Korea's by up to $29.6 billion
over the period 2007–20. With these mutually beneficial agreements, Australia is set to boost
its external trade with both countries.
Future risks

Growing budgetary deficit

After maintaining a comfortable fiscal position, the Australian government is set to record a
large budgetary deficit of 4.9% in 2009–10. The government’s responsible fiscal policies
enabled it to enjoy a solid fiscal position for nearly 15 years. However, the financial
condition will change with the large-scale state expenditure proposed to facilitate economic
revival. According to the budget unveiled in May 2009, owing to large-scale infrastructure
spending the budget deficit will almost double during 2009–10. According to the 2009–10
budget forecasts, the economy will contract by 0.5% in 2009–10 before returning back to
2.25% growth in 2010–11. While this is held to be overly optimistic, the economy may suffer
if the external conditions worsen and domestic consumption fails to take off. In such a
scenario, future budgets will have to increase public expenditure. If government borrowing
goes up, the state’s fiscal health will deteriorate in the coming years.
FOREIGN RELATIONS

Australia has been an active participant in international affairs since federation in 1901, and
Australian forces have fought beside the United States and other Allies in every significant
conflict since World War I. On January 8, 1940, the governments of the United States and
Australia announced the establishment of bilateral diplomatic relations. In 1944, Australia
concluded an agreement with New Zealand dealing with the security, welfare, and
advancement of the people of the independent territories of the Pacific (the ANZAC pact).
After World War II, Australia played a role in the Far Eastern Commission in Japan and
supported Indonesian independence during that country's revolt against the Dutch. Australia
was one of the founding members of the United Nations, the South Pacific Commission, and
the Colombo Plan. In addition to contributing to UN forces in Korea--it was the first country
to announce it would do so after the United States--Australia sent troops to assist in putting
down the 1948-1960 communist revolt in Malaya and later to combat the 1963-1965
Indonesian-supported invasion of Sarawak. The United States, Australia, and New Zealand
signed the ANZUS Treaty in 1951, which remains Australia's pre-eminent formal security
treaty alliance. Australia sent troops to assist South Vietnamese and U.S. forces in Vietnam,
and joined coalition forces in the Persian Gulf conflict in 1991, in Afghanistan in 2001, and
in Iraq in 2003.

Australia has been active in the Australia-New Zealand-U.K. agreement and the Five-Power
Defense Arrangements--successive arrangements with Britain and New Zealand to ensure the
security of Singapore and Malaysia. Australia participates in a Trilateral Security Dialogue
with the United States and Japan. One of the drafters of the UN Charter, Australia has given
firm support to the United Nations and its specialized agencies. It was last a member of the
Security Council in 1985-86, a member of the Economic and Social Council for 1986-89, and
a member of the UN Human Rights Commission for 1994-96 and 2003-2005. Australia is
seeking a non-permanent seat on the UN Security Council for 2013-2014. Australia takes a
prominent part in many other UN activities, including peacekeeping, nonproliferation and
disarmament negotiations, and narcotics control. Australia also is active in meetings of the
Commonwealth Heads of Government and the Pacific Islands Forum, and has been a leader
in the Cairns Group--countries pressing for agricultural trade reform in World Trade
Organization (WTO) negotiations--and in founding the APEC forum. In 2002, Australia
joined the International Criminal Court.

Australia has devoted particular attention to relations between developed and developing
nations, with emphasis on the 10 countries of the Association of Southeast Asian Nations
(ASEAN) and the island states of the South Pacific. Australia is an active participant in the
ASEAN Regional Forum (ARF), which promotes regional cooperation on security issues,
and has been a member of the East Asia Summit since its inauguration in 2005. The Rudd
government argued that the Asia-Pacific area needs a regional body that addresses both
security and economic issues. In September 1999, acting under a UN Security Council
mandate, Australia led an international coalition to restore order in East Timor upon
Indonesia's withdrawal from that territory. In 2006, Australia participated in an international
peacekeeping operation in Timor-Leste (formerly East Timor). Australia led a regional
mission to restore law and order in Solomon Islands in 2003 and again in 2006. Australia is
part of the Asia Pacific Partnership on Clean Development and Climate, which also includes
the United States.

The government is committed to increasing official development assistance to 0.5% of gross

national income by 2015-2016. Australia budgeted $A4.35 billion (U.S. $3.9 billion) for FY
2010-2011 and $A3.82 billion (U.S. $3.4 billion) in FY 2009-2010. The Australian aid
program is currently concentrated in Southeast Asia (Papua New Guinea and Indonesia are
the largest recipients) and the Pacific Islands. Selected aid flows are allocated to Africa,
South Asia, and reconstruction in Afghanistan and Iraq. Contributions to global programs and
other expenses account for 39% of the foreign assistance budget.
Social Environment
Overview
Australia has an impressive healthcare network, and the government has also taken up tele-
education to disseminate information among the healthcare units. The country has also
entered into several healthcare partnerships in Asia Pacific. Australia has far greater social
mobility than countries such as the US. While it has a good healthcare network, the country is
challenged with a weak social security system and professional work pressure leading to high
stress levels. Another problem that is now becoming a worry is the aging population and the
corresponding reduction in the labour force. The country’s booming education industry may
also take a hit because of increasing instances of attacks on Indian students, who constituted a
significant 18.7% of total international students in 2008.
Australia has an impressive welfare system, which includes income support programs funded
by the government. The Welfare to Work reform package was announced in 2005, and
included a combination of changes to payments and work incentives, work participation
requirements and employment units. Other social welfare programs are designed to address
The issues of health, housing and education. The programs also include family assistance,
student support and child care support. Australia has maintained a restrictive immigration
policy, favouring the skilled labour from the Asian communities and barring the entry of poor
refugees. From 1901 to 1973, Australia followed the White Australia Policy, which favoured
immigrants from the British Isles and Eastern Europe over Asians. Though this policy was
abandoned in 1965, the country's immigration policy continues to be restrictive and is heavily
criticized. The UN Human Rights Commission has censured the Australian policies on
asylum and the treatment of aborigines, although the US State Department has recognized
Australia for its respect for human rights

Current strengths

Social mobility
Australia offers good opportunities for social mobility, with chances to rise up the income
ladder more frequent than in other countries, such as the US. In a survey carried out by the
Australian National University, the income growth of a sample of 5,000 people born during
1910–80 in Australia was compared directly to that of people born in the US during the same
period.
The results showed that people in Australia enjoyed higher income growth than the
equivalent group in the US. This kind of higher social mobility is attracting many foreign
nationals to migrate to Australia. Improving avenues for social
Mobility bode well for the country.

Increased operational efficiency in the healthcare sector

There has been constant improvement in the healthcare sector, with important companies
taking the lead. Sterling Commerce (a subsidiary of AT&T Inc.) and 4Solutions Enterprises
(a company specializing in delivering business process management and professional services
in Australia) have together improved the IT integration between wholesalers and distributors,
servicing about 5,500 retail pharmacies across Australia. As a result, health supplies have
become more streamlined and better integrated across the nation. The healthcare network
handles up to 50,000 transactions each month, with a large cash inflow. Furthermore, 95% of
the stock transacted is common to three main distributors: Australian Pharmaceutical
Industries Limited, Sigma Company Limited and Symbion Pharmacy Services. Due to this IT
integration, the health supply network has met its deadlines and reduced the amount of stock
residing in warehouses, which is critical to achieving economies of scale in a competitive
market.

Tele-education in healthcare services

Tele-education is becoming increasingly important to train healthcare professionals in remote

areas of Australia. In an effort to lower costs and provide training and education to a wider
audience, corporations and universities are adopting e-learning solutions. In 2008, the
Australian government invested $1 billion in e-learning and e-health, which will further
expand the resources throughout the country. Some of the advantages experienced by the
country due to the implementation of tele education are:
• Patient and doctor travel is minimized.

• Local medical staff can consult with specialists anywhere in the world.

• Hospital and related travel costs are reduced.

• Students can watch an operation being performed irrespective of distance.

Current challenges

Social security system

The social security system was originally intended to act as a safety net during short spells of
unemployment. It worked well during the 1950s and 1960s, but the increase in
unemployment since the 1970s has made the costs of the system more apparent. Apart from
the fiscal expenses, the indirect costs in terms of providing funds to people searching for jobs
and the families that are unemployed for generations are becoming more costly. Long-term
unemployment and the growing phenomenon of jobless families (where two or three
generations of a single family may be out of work) are indicative of the kind of problems
faced by the system. The most problematic features of the Australian welfare system are its
complexity and the marginal tax rates applied to people who move out of the welfare bracket
and work.

Comparatively poor educational expenditure

Government expenditure on education as a percentage of GDP was nearly 4.5% in 2005, but
increased to 5% in 2008. Despite the increase, Australia’s performance does not compare
favourably with other OECD nations. In an OECD report on education comparing it with
other advanced economies, the country’s track record was assessed as "must improve". The
report ranked Australia second-to-last in terms of government funding of public education, as
Australia is one of the few countries where the state pays for less than half of the costs of
tertiary education. The report revealed that, by the standards of developed economies, the
most highly paid Australian teachers earned comparatively little. Furthermore, working hours
were longer for teachers in Australia compared to those of its peers, and classes were larger.
These limitations place the country at a disadvantage compared to other developed nations
Future prospects

Incentives to increase employment opportunities

To help raise participation rates, the government has undertaken policy initiatives in the form
of the Australians Working Together (AWT) package. The country has also introduced
welfare-to-work initiatives, which have proved popular in all quarters. Under these reforms,
the employment prospects for people aged 55 and over are no longer to be taken into
Consideration when determining eligibility for the disability support pension. Australia is
also taking steps to encourage older workers to continue working after they become eligible
for an old-age pension. This move is to reduce the incentives to retire early under the
superannuation guarantee scheme by aligning the eligibility age of superannuation (currently
55, but to be increased to 60 by 2025) with the pension age (65) over time. The increased age
limit for superannuation will keep people employed for a longer period of time by acting as a
disincentive against retiring early.

Health partnerships in the Asia Pacific

The Australian government is establishing stronger alliances with a range of domestic,

regional and international partners to improve the quality and effectiveness of the healthcare
sector in the Asia Pacific region. As part of this program, the government is investing $24m
over four years to establish knowledge hubs in the healthcare sector with various universities
of Australia. This funding is focused on improving the quality and effectiveness of health
development assistance, partly through increased investments in research. These hubs are
being built to improve the effectiveness of the Australian government's development
assistance program in health.

Future risks
Aging population
As the large Australian baby boomer generation progressively moves into older age brackets,
maintaining high per capita income growth will become harder to achieve. The proportion of
people aged below 55 , where labour force participation is normally highest, is expected to
decline significantly during the next 20 years. Australian government projections foretell a
Doubling of the number of people aged over 65 to around 25% of the total population over
the next 40 years, while growth in the population of traditional workforce age is expected to
slow to almost nil. Excluding an unprecedented rise in fertility rates, the age structure of the
population is likely to stabilize thereafter with a far higher proportion of older people than
Before. As a result, the aggregate labour force participation rate is predicted to be 9% lower
than the current level by the early 2040s. This would reduce the growth in real GDP per
capita to about 1.5% per year from the 2020s onwards, under the assumption of labour
productivity growth of 1.75% (the average of the last 30 years). Additionally, increasing age-
related public expenditures would raise budget pressures. Moreover, the government will also
face the burden of rising health and insurance costs.

Lower number of Indian students to opt for Australia

Australia has emerged as an attractive destination for international students. International
education is the third largest source of overseas earnings, generating around $12 billion in
2008 and supporting more than 125,000 jobs in Australia. China and India are the largest
source of enrolments in Australia with a share of 24.1% and 18.7%, respectively. However,
This booming industry will take a hit in view of the increasing attacks on Indian students. A
number of people planning to study in Australia may reconsider their options and choose the
UK or Canada, where the cost of studying in these countries is also lower than Australia. The
lower cost is because the UK and Canada have one-year master’s degrees whereas the
Australian equivalent is of two years' duration.
SOCIAL LANDSCAPE

Summary
Australia has a high literacy rate and a relatively small population. In 1990, the population of
Australia was 17 million, which rose to around 19 million in 2003 and to 21 million in 2008.
The national population growth rate since 2000 on an average has been around 1%. The
overall decreasing population coupled with the increase in the aging population is now a
Challenge for the government. Nevertheless, Australia is one of the most urbanized countries
in the world: less than 15% of the population lives in rural areas. The educational and health
sectors are well developed, reflected in a high literacy rate of99% and a low death rate of 6.7
deaths per 1000 people. The country also has a strong social welfare network, providing
Various facilities for the disabled, unemployed and pensioners.
A very important and significant feature of Australian society since the beginning of
European settlement in 1788 has been foreign immigration. For many centuries, most
immigrants came from the British Isles, bringing with them a distinctively Western culture.
This Western mindset made many impressions on Australian society in terms of culture,
lifestyles and standard of living. Soon, the country was flooded with people from the Middle
East, Asia, and Latin America due to a governmental initiative that gave immigrants access
through a planned program introduced in 1960. By 2000, about 5.9
Million immigrants had settled in Australia, with nearly three out of every 10 Australians
being foreign-born. Furthermore, the country’s social development policies have been
reformulated to meet the new challenges faced by the country. There has also been a stronger
policy focus by the government on social welfare issues. The country is historically known
for contributing huge funds to enhance its healthcare network and education system.

Urban/rural composition and migration

Despite its large geographical size, Australia has a relatively small population that is highly
urbanized and concentrated in certain regions of the country. Sydney and Melbourne are the
two biggest cities in Australia, with populations of more than
Four million and 3.5 million, respectively. The low population density in the country impedes
the authorities from providing services such as higher education to rural and isolated
communities.

Religious composition
In Australia, about 25% of the population are Catholic, 21% belong to other Christian groups,
21% are Anglican and 2% are Muslim. People following other religions constitute about
16%, leaving 15% who do not follow any organized religion.

Education
Education is compulsory from six to 16 years of age in the states of South Australia and
Tasmania and up to age 15elsewhere in Australia. The curriculum varies between states,
although measures have been taken to standardize core educational areas and the age at which
education begins. These changes have allowed students to have access to 13years of
schooling on a comparable basis anywhere in Australia. The education system in Australia
consists of a total of 15 years. There are many types of education for children up to five
Years of age, but the main ones are the child care regulated centres or families in registered
residences who take care of preschoolers in a system called 'family day care'. Up to age 12,
students are considered to be part of the primary and secondary educational system. This is
followed by high school, where the students study different courses up to age 17
And, after completion, receive a high school diploma. The options after the completion of
education at the high school level include obtaining an apprenticeship, entering the workforce
or studying any vocational course. After high school education, students can enter university.
University education within Australia is provided by both the government and the private
universities. The courses offered are referred to as ‘undergraduate’ programs, followed by
‘Graduate or postgraduate programs.’ The duration of university study is generally very
short: the minimum duration is six months for graduate programs, one year for a masters, 1.5
years for a master honours and two years for a doctorate.

Healthcare
Healthcare services
The healthcare services in Australia are handled and managed by the Department of Health
and Aging. The department focuses on establishing healthy lifestyles, and preventing and
adopting best practices for handling chronic diseases. It also
Works to improve the transparency, accessibility, accountability and quality of public and
private health and aged care service provision through financing and agreements with
stakeholders, industry and state and territory governments.

The central government takes the lead in terms of development of national health policies,
regulation and funding, while
States and territories are responsible for the implementation of healthcare services and
regulation of healthcare providers. It’s estimated that around 70% of Australia’s healthcare
expenditure is funded by the government. The government provides the services through
subsidized schemes such as Medicare and the Pharmaceutical Benefits Scheme. The rest of
the contribution comes from the Private Health Insurance Rebate.

Healthcare performance
Healthcare expenditure of Australia stood at around $50 billion in 2008, representing 5.3% of
GDP. In fact, healthcare spending has remained at similar levels since 2002, which was lower
than most of the other developed OECD nations. According to the OECD Health Data 2008
report, there are fewer physicians per capita in Australia than in most other OECD countries.
In 2005, Australia had 2.8 practicing physicians per 1,000 people, below the OECD average
of 3.1. There were 9.7 nurses per 1,000 people in Australia that year, a similar figure to the
average in OECD countries. Furthermore, the number of acute care hospital beds in Australia
was 3.5 per 1,000 people in 2005, slightly below the OECD average of 3.9beds per 1,000
populations. As in most OECD countries, the number of hospital beds per capita in Australia
has fallen overtime. Health and aged care spending is projected to grow at an average rate of
7% during 2008–12. Consequently, the government projects that the federal government’s
budget surplus will deteriorate to a deficit of 5% of GDP in the early2040s. It has been
predicted that there will be a long-term rise in government spending on aged care. An
increased focus is required on preventive measures to minimize future growth in healthcare
costs and reduce long-term financial pressure. The challenges lie in reducing the disparities in
efficiency across jurisdictions in a range of healthcare services, reinforcement of prevention,
and allowing private insurance to cover a more comprehensive range health services
Social welfare
Social welfare policies
An important challenge for Australia is to sustain the growth in living standards, particularly
in the face of an aging population. This entails additional expenditure on the exchequer of the
government and calls for fiscal prudence. The main areas to be considered are labour, health
and education. The recent reform focuses on reducing the dependency of income support
through increasing the access of the individuals to the labour market. Under the Welfare to
Work reform package announced in the 2005 budget, various incentives were provided.
The initiative's goals include an increase in workforce participation and employment among
four priority clusters: people with a disability, principal career parents, older people and the
very long-term unemployed. The new arrangements include stricter rules for eligibility and
participation requirements for new disability support pension applicants with working
capacity above 15 hours per week. Furthermore, the primary objective of the reforms is to
improve the skill sets of the workforce for industry and promote necessary workplace re-
organization, thereby increasing productivity. On the other hand, public spending on various
welfare activities in the country is rising. To face this challenge, the government has been
taking active steps such as paying off the pension debt, and increasing the efficiency of
different levels of the government.

Income distribution
Standard of living
Over the period 1990 to 2008, there was an increase in the standard of living in Australia.
The percentage of the population living below $1 a day declined from 1.8% to 0.8%. The
percentage of the population living below $2 a day has also declined, from 3.6% to 1.7%.
Living standards have steadily improved since the beginning of the 1990s, and the Gini index
Has also improved. More than 60% of population was in the higher income bracket of higher
than $2000 in 2007. This indicates that Australia has achieved a certain success in reducing
poverty. The unemployment rate also declined during2001–07, which also contributed to the
decline in poverty levels (the unemployment rate decreased from 7% in 1999 to
5.4% in 2008).

Education
The literacy rate in Australia is 99% for both males and females: one of the highest literacy
rates in the world. This is mainly because of easy access to education and government
support for learning. The government expenditure on education as a percentage of GDP was
nearly 4.5% in 2005 but has increased to 5% in 2008. Despite the increase, Australia’s
performance does not compare favourably with other OECD nations. In an OECD report card
on education comparing it with other advanced economies, the country’s track record was
assessed as '"must improve". The report ranked Australia second-to-last in terms of
government funding of public education, as Australia is one of the few countries where the
state
Pays for less than half of the costs of tertiary education. The report revealed that, by the
standards of developed economies, the most highly paid Australian teachers earned
comparatively little. Furthermore, working hours were longer for teachers in Australia
compared to those of its peers, and classes were larger.
To enhance the education infrastructure of the country, the government initiated the Building
the Education Revolution (BER) program in 2009. This program proposes to provide
infrastructure funding worth $14.7 billion to Australia’s 9,540schools to enable them to meet
the changing educational requirements. Nevertheless, Australian students perform better than
students of other OECD nations. Australia has emerged as an attractive destination for
international students. International education is the third largest source of overseas earnings,
Generating around $12 billion in 2008 and supporting more than 125,000 jobs in Australia.
China and India are the largest sources of enrolments in Australia, with shares of 24.1% and
18.7%, respectively. The booming industry will take a hit in view of the increasing instances
of attacks on Indian students, however. A number of students planning to study in Australia
May opt not to and choose the UK or Canada instead, especially considering that studying in
these countries is cheaper than in Australia. The lower cost is because the UK and Canada
have one-year master’s degrees whereas the Australian degree is of two years duration.
Technological Environment
Current strengths
Budgetary support for ICT
The telecommunications sector has been one of the fastest-growing industries in Australia.
The sector demonstrated average annual growth of around 6.5% during 2000–07. The
government has continued its tradition of support for important communications and IT
programs, particularly through the establishment of a framework for digital radio, and has
made far-reaching reforms to strengthen the Australian film and television industry. The
government has approved a $10.5m grant to two of the biggest broadcasting networks, the
Australian Broadcasting Corporation and Special Broadcasting Services, to enhance and
extend their services to the world. Other budget announcements within the communication
portfolio included a $360m grant to the Australian Communications and Media Authority
until 2012, which includes a package of $13.6m over four years to help protect Australians
from sophisticated online attacks targeting home and small business computers. With
continuous patronage from the government, the communications market is expected to grow
at a much faster rate in the coming years.
High usage of e-commerce
In Australia, business driven by online shopping and e-commerce is at a high, with more than
five million household shaving access to internet at their homes. Among the business
segments, 60% of small and medium enterprises (SMEs) use the internet for their transactions
and more than 50% of these SMEs use the internet to sell their products and services.
The business segment is estimated to have spent more than $2 billion on online advertising in
2008–09. It is also estimated that by 2015, e-commerce will contribute more than $20 billion
to the economy. With the expansion of broadband throughout the country, the e-commerce
market is set to expand its base and reach many more customers.
Current challenges
Low levels of productivity
Australia’s productivity levels in R&D are still considerably below those of countries like the
US, the UK and several other OECD countries. The government has prioritized policies
aimed at maintaining Australia’s recent advances in productivity, announcing a package of
measures in 2001 aimed at encouraging the adoption of new technology to this end.

Moreover,the state has restored tax incentives for R&D expenditure and increased its
spending on public research and relevant university education. However, all of these
measures have been ineffective in raising the R&D levels in the country.
Concerns have been raised over the levels of R&D expenditure in recent years. Following the
reduction in the favorable tax treatment of R&D expenditure in 1996, research-related
spending fell sharply. During 2000–07, R&D expenditure did not show any signs of
improvement, with the rate hovering around 1.5% of GDP. Low expenditure and an
inadequate focus on R&D are two causes of the low level of productivity.
Rural Australians missing out on broadband
The digital divide between the urban and rural areas in Australia has increased in recent
times, with less than a quarter of rural communities having access to high-speed internet
services. According to a study carried out by the Bureau of Rural
Sciences, only 24% of rural communities have access to broadband, compared to 46% of
homes in major cities. Although some initiatives have been taken up by the private sector to
cover far-flung areas, rural access to broadband is yet to be addressed by the government.
This inequitable access to broadband exists in spite of the Australian Broadband Guarantee.
Future prospects
International co-operation on science
As a part of their international science collaboration, Australia and India set up a joint
working group (JWG) to create a roadmap for strengthening bilateral co-operation in science
and technology in April 2008. Prior to this special agreement, 21 projects were already
functioning under the India-Australia Strategic Research Fund for advanced scientific
development. The JWG was set up to strengthen bilateral scientific co-operation focusing on
industrial research and development, and high technology areas such as nano-composites,
bio-energy, health and agricultural biotechnology, climate change and renewable energy,
particularly photo-voltaic technology. Furthermore, Australia and China work
together via the China-Australia Special Fund for advanced science and technology
development. The country has also entered into scientific bilateral collaborations with the US,
Canada, South Korea and Japan. With growing international science and technology pacts,
the country is set to augment its R&D capabilities.

Legal Environment

There are two broad levels of courts in Australia: the federal level, and the state or territorial
level. The High Court of Australia and the state supreme courts are requirements of the
constitution. The others are inferior courts with limited
powers and authority.
According to the Doing Business survey by the World Bank, the process of operating a firm
in Australia has remained stable. The 2008 indicator shows that the number of days required
to start a company in Australia is just two days,
compared to the OECD average of six days.

Human Rights Council

The Australian Mission to the United Nations in Geneva represents Australia's interests in the

Human Rights Council. The Council was created in March 2006 to replace the former
Commission on Human Rights as the United Nations' pre-eminent human rights body.

Australia's national statement to the 13th regular session of the Human Rights Council,
delivered 3 March 2010 Australia: Human Rights Council Universal Periodic Review
Working Group (8–19 February 2010): Australia's Interventions

The Human Rights Council's Universal Periodic Review (UPR) is a unique process which
involves a review of the human rights records of all 192 UN Member States once every four
years. 

Australia will be reviewed during the tenth UPR session in early February 2011.

The Attorney-General's Department will coordinate the Australian Government's National

Report ahead of Australia's appearance. 
Restructure of competition law
The Australian government has revealed that it will take a series of measures targeted at
promoting competition and cracking down on anticompetitive practices by powerful
businesses. The planned reforms to the Trade Practices Act (TP
Act) 1974 include moves to further defend small business from predatory pricing and give the
sector a permanent voice in the Australian Competition and Consumer Commission (ACCC),
the trade regulator.
These moves are intended to ensure genuine competition for the benefit of both consumers
and small businesses.
Furthermore, it is hoped that the new rules will pave the way for indicting businesses that
engage in anticompetitive
practices. The package will also give small businesses cheaper and more efficient judicial
access, and permit cases
involving a misuse of market power to be heard in the federal magistrate’s court rather than
in the federal court.

Tax reforms help the rich instead of the poor

According to an OECD study on taxation reforms in different countries, Australia’s tax
reforms resulted in helping the rich instead of the poor. The tax cuts undertaken in the
country during 2003–07 helped only those with families, including single parents; unmarried
workers without children did not fare well. Only those earning at least 50% more than the
average wage, or about $78,599, profited from these tax reforms; the people below that range
did not see any benefit. This issue needs to be rectified, but is yet to be addressed by the new
government.

Investment restrictions in select sectors

Despite a number of liberalization measures, a few restrictions with respect to investment in
particular sectors still exist in Australia. Investment in media, transport and communication
has not been fully liberalized. For instance, cross-media ownership is only allowed subject to
conditions that no less than five independent voices remain in metropolitan markets and four
in regional markets. Similarly, foreign investment in airlines is subjected to more stringent
requirements than the standard limit of 49% of the equity in an Australian international
airline.
Furthermore, foreign investment proposals for acquisitions of Australian airports are subject
to examination in accordance with the standard notification requirements and prior approval
is required for foreign entry into the telecommunications sector. The existence of such pre-
conditions impedes foreign investment in important areas.

Tough laws against terrorism

The July 2005 terrorist attacks in London prompted the Australian parliament to implement
the Australian Anti-Terrorism Act 2005, which was revised and passed by the
Commonwealth parliament on December 6, 2005. Under this law, individuals can be held
under preventive detention without evidence of criminal activity and can be interrogated by
the Australian Security Intelligence Organization (ASIO). The controversial “shoot to kill”
clause allows the police to treat people wanted for detention in the same manner as the
current law treats wanted suspects. Furthermore, the Australian government has introduced
comprehensive measures to fight the threat of terrorism. Between9/11 and 2007, the
government committed up to $2.3 billion for over 100 new security measures. Finally, the
2004–05Budget provided additional resources to the attorney general’s office to let it
implement a range of new measures.
Environmental Factors

Atmosphere

The Australian Government has taken decisive measures in recent years to protect the
atmosphere, and will continue working to improve the quality of air in urban areas and to
promote the recovery of the ozone layer.

Australia's standards for air quality, whether already established or under development,
represent world best practice in dealing with the threat air pollution poses to our health.

The focus is now on improving fuel quality and reducing vehicle emissions, transport options
that reduce pollution without impacting on access and mobility, management of wood heater
emissions and the monitoring and management of fine particle pollution.

Air quality

Air quality issues confronting our towns and cities are being addressed through a
comprehensive package of programmes underpinned by research and public education.

Key strategies implemented to improve air quality include the National Environment
Protection Measure on ambient air quality, and the development of national fuel quality
standards.

The impact of air toxics is a significant environmental issue. These are gaseous, aerosol or
particulate pollutants which are present in the air in low concentrations but which may be a
hazard to human, plant or animal life. They are emitted from a wide range of sources,
including combustion processes. Motor vehicles are a dominant source. While all Australians
are exposed to some level of air toxics, the highest concentrations are found in urban areas.
National strategies to manage air toxics and indoor air quality are considered in the State of
Knowledge Report on Air Toxics and Indoor Air Quality. This report provides a basis for
informed community debate on developing management options for the major air toxics.

Fuel quality

Fuel quality standards are in place for petrol, diesel, biodiesel and LPG. A further standard is
in place to ensure consumers are informed when they purchase ethanol blended fuel. The
Australian Government has an ongoing compliance and enforcement program to ensure that
fuels supplied in Australia meet the fuel standards.

Ozone Depleting Substances and Synthetic Greenhouse Gases

Australia continues to lead the world in phasing out and managing ozone depleting
substances and their synthetic greenhouse gas replacements. The Government supervises the
orderly phase-out of ozone depleting substances in accordance with Australia’s commitments
under the Montreal Protocol on Substances that Deplete the Ozone Layer. The Government
is also working on the management of the end uses of ozone depleting substances and their
synthetic greenhouse gas replacements - in areas such as fire protection, refrigeration and air-
conditioning, and fumigation 

Reducing pollution from motor vehicles

National initiatives to reduce the impact of road transport on environment quality, urban
amenity and human health.

The strategies for the Department of the Environment, Water, Heritage and the Arts are:

 monitoring in-service petrol vehicle emissions

 improving the emissions performance of the Australian vehicle fleet, by
o improving fuel quality
 o reducing in-service diesel vehicle emissions through the National Environment
Protection (Diesel Vehicle Emissions) Measure
 managing and promoting the Product Stewardship for Oil Program, which provides
incentives to increase used oil recycling in the Australian community and ensures the
environmentally sustainable management of used engine oil.

Marine Bioregional Planning

Australia's marine bioregional planning program is designed to provide a clearer focus on

conservation and sustainable management of Australia's marine environment. It is a process
that is underpinned by the principles of ecologically sustainable development and it takes an
ecosystem approach in managing Australia's marine biodiversity and environment.

Fisheries and the environment

The implementation of the Environment Protection and Biodiversity Conservation Act 1999
(EPBC Act) allows the Australian Government to assess the environmental performance of
fisheries and promote ecologically sustainable management.

The Sustainable Fisheries Section (SFS) is responsible for the assessment of fisheries
managed under Commonwealth legislation and state export fisheries in accordance with the
Act.

Our primary role is to evaluate the environmental performance of fisheries, including:

 the strategic assessment of fisheries under Part 10 of the EPBC Act;

 assessments relating to impacts on protected marine species under Part 13; and
 assessments for the purpose of export approval under Part 13A.

Environment Protection and Biodiversity Conservation Act

The Environment Protection and Biodiversity Conservation Act 1999 (the EPBC Act) is the
Australian Government's central piece of environmental legislation. It provides a legal
framework to protect and manage nationally and internationally important flora, fauna,
ecological communities and heritage places — defined in the EPBC Act as matters of
national environmental significance.

What is protected under the EPBC Act?

Matters of national environmental significance

Under the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act),
actions that have, or are likely to have, a significant impact on a matter of national
environmental significance require approval from the Australian Government Minister for the
Environment, Heritage and the Arts (the minister). The minister will decide whether
assessment and approval is required under the EPBC Act.

The eight matters of national environmental significance protected under the EPBC Act are:

 world heritage properties

 national heritage places
 wetlands of international importance (listed under the Ramsar Convention)
 listed threatened species and ecological communities
 migratory species protected under international agreements
 Commonwealth marine areas
 the Great Barrier Reef Marine Park
 nuclear actions (including uranium mines)

Australia's unique plants and animals are known throughout the world and are an important
part of our natural heritage. The Australian Government recognises the inherent value of our
native species and the need to ensure their continued survival.

Regulation of international movement (exports and imports) of wildlife and wildlife products
is an important element of effective nature conservation.

In addition to protecting native species, the Australian Government reinforces the efforts of
other countries to protect their wildlife by regulating trade in those species identified under
the Convention on International Trade in Endangered Species of Wild Fauna and Flora
(CITES).
 Australian Market entry strategies

There are numerous market entry strategies that a business can adopt when setting up
offshore. Each has differing levels of risk, legal obligation, advantages and disadvantages.
Following is an overview of factors that should be considered when assessing the options.

Local office

Under this simple form of foreign direct investment the exporter establishes a local presence
through a representative or branch office, rents office space and hires staff (could be just one
person).

Advantages

 Greater control of marketing and distribution

 Direct contact with customers
 Improved credibility in market place with customers
 Access to local venture capital

Disadvantages

 Cost of establishing an office is higher than using an agent and/or distributor

 Do not have a local partner with contacts and expertise as in a joint venture
 Strategic alliances

If the company is interested in going beyond the simple export of goods and services,
licensing, joint ventures (JV) and offshore operations should be explored. While direct
exporting may be a profitable method of market entry for some businesses, licensing
manufacturing rights to your product to a foreign company or setting up a foreign
manufacturing JV may be viable alternatives. Strategic alliance partners are often identified
through bankers, accountants, business consultants, industry associations and networks, and
government contacts. Austrade (a government organisation) can normally supply lists of
such contacts or, through its own network, a short-list of potential partners for Australian
exporters at a reasonable cost.

Joint venture

A market entry option which the exporter and a domestic company in the target country join
together to form a new incorporated company. Both parties provide equity and resources to
the JV and share in the management, profits and losses. The JV be limited to the life of a
particular project. This option is popular in countries where there are restrictions on foreign
ownership, eg. China and Vietnam.

Advantages

 Acquire competencies or skills not available in-house

 When market needs to be penetrated quickly, eg. when competitive entry is imminent
or technological change is very rapid
 Spread the risk of a large project over more than one firm
 Enable faster entry and payback
 Often forced into JV by government regulation or pressure
 Avoid tariff barriers and satisfy local content requirements

Disadvantages

 Partners do not have full control of management

 May be impossible to recover capital invested
 Disagreement on new export markets
 Partners may have different views on expected benefits
The '4Cs' sum up some of the most important factors to think about when selecting a foreign
partner:

Complementary skills

Cooperative cultures

Compatible goals

Commensurate risk

E.g. Austrade can assist you by short-listing a number of prospects. Undertake a background
check on each to determine if there are any ‘warning bells’. The final judgement on who to
partner with will usually come down to a financial analysis of how the joint venture will go
with each of the potential partners. It's important to spend time making the decision.