Editing Economy of Australia (section)

==Overview==
[[File:ABS-6401.0-ConsumerPriceIndexAustralia-Cpi-AllGroupsIndexNumbersPercentageChanges-PercentageChangeFromCorrespondingQuarterPreviousYear-AllGroupsCpi-Australia-A2325847F.svg|thumb|right|Australia's annual inflation rate (percentage change in CPI) since 1949.]]
Australia's per-capita GDP is [[List of countries by GDP (PPP) per capita|higher]] than that of the UK, Canada, Germany and France in terms of [[purchasing power parity]]. Per Capita GDP (PPP) Australia is ranked 18th in the world (CIA World Factbook 2016). The country was ranked fifth in the United Nations 2022 [[Human Development Index]] and sixth in ''[[The Economist]]'' worldwide quality-of-life index 2005.<ref>{{cite web|url=http://hdr.undp.org/en/statistics/|title=Statistics|work=hdr|access-date=13 May 2014}}</ref><ref>{{cite news|url=http://www.economist.com/media/pdf/QUALITY_OF_LIFE.pdf|title=Quality of Life|newspaper=The Economist|access-date=13 May 2014}}</ref> In 2014, using constant exchange rates, Australia's wealth had grown by 4.4% annually on average after the [[2008 financial crisis]], compared with a 9.2% rate over 2000–2007.<ref name="crSuisse-2014p57"/> Australia's sovereign credit rating is "AAA" for all three major rating agencies, higher than the United States of America.

The emphasis on exporting commodities rather than manufactures underpinned a significant increase in Australia's terms of trade during the rise in commodity prices since 2000. However, due to a colonial heritage a lot of companies operating in Australia are foreign-owned and as a result, Australia has had persistent [[Current account (balance of payments)|current account]] deficits for over 60 years despite periods of positive net merchandise exports;<ref>{{Cite web|title=Australia Business Facts|url=https://bizpages.org/countries--AU--Australia|url-status=live|archive-url=https://web.archive.org/web/20200420174547/https://bizpages.org/countries--AU--Australia|archive-date=20 April 2020}}</ref> given the net income outlay between Australia and the rest of the world is always negative. The current account deficit totalled AUD$44.5&nbsp;billion in 2016<ref>{{cite web|url=http://www.abs.gov.au/ausstats/abs%40.nsf/mediareleasesbyCatalogue/1BC434D146B7F511CA257EB2001133A1?OpenDocument|title=Balance of Payments and International Investment Position|access-date=26 July 2017}}</ref> or 2.6% of GDP.

Inflation has typically been between 2 and 3% and the pre-GFC cash rate typically ranged between 5 and 7%, however, partly in response to the end of the mining boom the cash rate has recently been steadily falling, dropping from 4.75% in October 2011 to 1.5% in Aug 2016, then to 1.25% in June 2019 and 1.0% in July 2019.<ref>{{Cite web|url=https://www.rba.gov.au/statistics/cash-rate/|title=Cash Rate Target}}</ref> The service sector of the economy, including tourism, education and financial services, constitutes 69% of GDP.<ref>{{cite web|url=http://www.rba.gov.au/snapshots/economy-snapshot/|title=RBA: Australian Economy Snapshot|website=rba.gov.au|access-date=15 January 2022|archive-url=https://web.archive.org/web/20150205071655/http://www.rba.gov.au/snapshots/economy-snapshot/|archive-date=5 February 2015|url-status=dead}}</ref> [[Australian National University]] in [[Canberra]] also provides a probabilistic interest-rate-setting project for the Australian economy, which is compiled by shadow board members from the ANU academic staff.<ref>{{cite web|url=http://cama.crawford.anu.edu.au/pro-pol/|title=CAMA RBA Shadow Board|access-date=23 May 2014}}</ref>

Rich in natural resources, Australia is a major exporter of agricultural products, particularly wheat and [[wool]], minerals such as iron ore and gold, and energy in the forms of [[LNG|liquified natural gas]] and coal. Although [[Agriculture in Australia|agriculture]] and natural resources constitute only 3% and 5% of GDP, respectively, they contribute substantially to Australia's export composition. Australia's largest export markets are Japan, China, South Korea, India and the United States.<ref name=extdata>{{cite web|title=Australian Government, DFAT, Composition of Trade Australia 2008–09|url=http://www.dfat.gov.au/publications/stats-pubs/cot_fy_2008_09.pdf|access-date=23 May 2014|url-status=dead|archive-url=https://web.archive.org/web/20120916105949/http://www.dfat.gov.au/publications/stats-pubs/cot_fy_2008_09.pdf|archive-date=16 September 2012}}</ref>

At the turn of the current century, Australia experienced a significant mining boom. The mining sector's contribution to overall GDP grew from around 4.5% in 1993–94, to almost 8% in 2006–07. The services sector also grew considerably, with property and business services in particular growing from 10% to 14.5% of GDP over the same period, making it the largest single component of GDP (in sectoral terms). This growth has largely been at the expense of the manufacturing sector, which in 2006–07 accounted for around 12% of GDP. A decade earlier, it was the largest sector in the economy, accounting for just over 15% of GDP.<ref name="abs.gov.au">{{cite web|url=http://www.abs.gov.au/AUSSTATS/abs@.nsf/Latestproducts/5204.0Main%20Features502006-07?opendocument&tabname=Summary&prodno=5204.0&issue=2006-07&num=&view=|title=Summary|url-status=dead|archive-url=https://web.archive.org/web/20080907050320/http://www.abs.gov.au/AUSSTATS/abs%40.nsf/Latestproducts/5204.0Main%20Features502006-07?opendocument&tabname=Summary&prodno=5204.0&issue=2006-07&num=&view=|archive-date=7 September 2008}}</ref>

In 2018 Australia became the country with the largest median wealth per adult,<ref name="csgwr2018">{{Cite journal|last=Urs|first=Rohner|date=October 2018|title=Global Wealth Report 2018|url=https://www.credit-suisse.com/media/assets/corporate/docs/about-us/research/publications/global-wealth-report-2018-en.pdf|journal=Credit Suisse - Research Institute|language=en|publisher=Credit Suisse|pages=55}}</ref> but slipped back to second highest after Switzerland in 2019.<ref name="csgwr2019">{{Cite journal|last=Urs|first=Rohner|date=October 2018|title=Global Wealth Report 2019|url=https://www.credit-suisse.com/media/assets/corporate/docs/about-us/research/publications/global-wealth-report-2019-en.pdf|journal=Credit Suisse - Research Institute|language=en|publisher=Credit Suisse|pages=59}}</ref> Australia's total wealth was estimated to be AUD$10.9&nbsp;trillion as of September 2019.<ref name="abswealthsep2019">{{cite web|title=Household wealth up 3.0% in the September quarter|url=https://www.abs.gov.au/AUSSTATS/abs@.nsf/Latestproducts/5232.0Media%20Release1Sep%202019?opendocument&tabname=Summary&prodno=5232.0&issue=Sep%202019&num=&view=|publisher=Australian Bureau of Statistics|access-date=8 January 2020|archive-date=25 January 2020|archive-url=https://web.archive.org/web/20200125053157/https://www.abs.gov.au/AUSSTATS/abs@.nsf/Latestproducts/5232.0Media%20Release1Sep%202019?opendocument&tabname=Summary&prodno=5232.0&issue=Sep%202019&num=&view=|url-status=dead}}</ref>

===Regional differences===
Between 2010 and 2013, much of the economic growth in Australia was attributed to areas of the country where mining- and resource-based industries and services are mostly located. Western Australia and the [[Northern Territory]] are the only states that have economic growth.<ref name="recession">{{cite web|url=https://www.dfat.gov.au/geo/fs/aust.pdf|title=Economy grows but some non-mining states in recession|url-status=dead|archive-url=https://web.archive.org/web/20060824020854/https://www.dfat.gov.au/geo/fs/aust.pdf|archive-date=24 August 2006}}</ref><ref>{{cite news|author=Tim Colebatch|url=https://www.smh.com.au/business/state-close-to-recession-20120307-1ukme.html|title=State close to recession|work=The Sydney Morning Herald|date=8 March 2012|access-date=25 July 2012}}</ref><ref>{{cite news|author=Tim Colebatch|url=https://www.smh.com.au/opinion/politics/no-place-for-political-stunts-in-tackling-economic-crisis-20120604-1zs23.html|title=No place for political stunts in tackling economic crisis|work=The Sydney Morning Herald|date=24 October 2009|access-date=25 July 2012}}</ref> During 2012 and 2013 [[Australian Capital Territory]], [[Queensland]], [[Tasmania]], South Australia, [[New South Wales]] and [[Victoria (Australia)|Victoria]] experienced recessions at various times.<ref name="recession"/><ref>{{cite magazine|url=http://www.crikey.com.au/2012/06/08/tasmanian-recession-not-at-david-walshs-bizarre-world-of-art/|title=David Walsh: MONA economic benefits for Tasmania|magazine=Crikey|date=8 June 2012|access-date=24 July 2012}}</ref><ref>{{cite web|url=http://www.adelaidenow.com.au/recession-biting-our-state-bank-warns/story-e6frea6u-1226317963456|archive-url=https://web.archive.org/web/20120406061828/http://www.adelaidenow.com.au/recession-biting-our-state-bank-warns/story-e6frea6u-1226317963456|url-status=dead|archive-date=6 April 2012|title=South Australia is in recession, Westpac warns|work=The Advertiser|location=Adelaide|date=4 April 2012|access-date=24 July 2012}}</ref><ref>{{cite web|url=http://www.dailytelegraph.com.au/news/rate-cut-may-save-nsw-sliding-into-recession/story-e6freuy9-1226390009700|title=Rate cut may save NSW sliding into recession|work=The Daily Telegraph|location=Australia|date=10 June 2012|access-date=24 July 2012|archive-date=18 January 2021|archive-url=https://web.archive.org/web/20210118170046/https://www.dailytelegraph.com.au/news/rate-cut-may-save-nsw-sliding-into-recession/story-e6freuy9-1226390009700?nk=752a498e4a5c83b35834743b52b63fcc-1610989246|url-status=dead}}</ref><ref>{{cite news|url=http://www.news.com.au/business/victoria-in-a-state-of-decay/story-e6frfm1i-1226296709689|work=Herald Sun|location=Australia|title=Victoria in a state of decay|date=10 March 2012|url-status=dead|archive-url=https://web.archive.org/web/20120702160447/http://www.news.com.au/business/victoria-in-a-state-of-decay/story-e6frfm1i-1226296709689|archive-date=2 July 2012}}</ref><ref>{{cite web|url=http://www.melbournetimesweekly.com.au/news/national/national/general/state-close-to-recession/2481890.aspx|title=State close to recession – National News – National – General|work=Melbourne Times Weekly|date=8 March 2012|access-date=24 July 2012}} {{dead link|date=July 2017 |bot=InternetArchiveBot |fix-attempted=yes}}</ref> The Australian economy is characterised as a "two-speed economy".<ref>{{cite news|url=http://www.theaustralian.com.au/business/economics/reserve-bank-governor-says-australia-has-long-had-a-two-speed-economy/story-e6frg926-1226389046980|first=Adam|last=Creighton|title=Reserve Bank governor says Australia has long had a two-speed economy|date=8 June 2012|work=The Australian}}</ref><ref>{{cite news|url=http://www.brokernews.com.au/article/hia-bursts-swans-economic-bubble-129795.aspx|title=HIA bursts Swan's economic bubble|access-date=13 May 2014|url-status=dead|archive-url=https://web.archive.org/web/20120701232824/http://www.brokernews.com.au/article/hia-bursts-swans-economic-bubble-129795.aspx|archive-date=1 July 2012}}</ref><ref>{{cite news|url=https://www.smh.com.au/business/the-economy/banking-made-tricky-by-10speed-economy-clyne-20120814-245rb.html|work=The Sydney Morning Herald|title=Banking made tricky by '10-speed' economy: Clyne|date=14 August 2012}}</ref><ref>{{cite news|author=Tim Colebatch|url=http://www.theage.com.au/opinion/politics/no-place-for-political-stunts-in-tackling-economic-crisis-20120604-1zs23.html|title=No place for political stunts in tackling economic crisis|work=The Age|date=24 October 2009|access-date=24 July 2012|location=Melbourne, Australia}}</ref><ref>{{cite news|url=http://www.stuff.co.nz/taranaki-daily-news/news/7072872/Flow-across-Tasman-tipped-to-reverse|title=Flow across Tasman tipped to reverse|publisher=Stuff|location=New Zealand|date=9 June 2012|access-date=24 July 2012}}</ref><ref>{{cite web|url=http://www.abc.net.au/news/2012-06-07/warning-to-tone-down-recession-row/4057108|title=Warning to drop recession row|publisher=Australian Broadcasting Corporation|date=7 June 2012|access-date=24 July 2012}}</ref><ref>{{cite web|url=http://www.themercury.com.au/article/2012/06/07/335121_tasmania-news.html|archive-url=https://archive.today/20121231020612/http://www.themercury.com.au/article/2012/06/07/335121_tasmania-news.html|url-status=dead|archive-date=31 December 2012|title=Giddings rejects figures|work=The Mercury – The Voice of Tasmania|date=7 June 2012|access-date=24 July 2012}}</ref>{{Clarify|date=December 2024}} From June 2012 to March 2013 Victoria experienced a recession. In 2012 the [[Government of Victoria]] cut 10% of all jobs in the public service.<ref>{{cite web|url=http://www.wsws.org/en/articles/2013/03/07/bail-m07.html|title=Australia: Victorian premier removed as state slides into recession|work=WSWS.org|date=7 March 2013|access-date=13 May 2014}}</ref><ref>{{cite web|url=http://www.melbournetimesweekly.com.au/story/1345419/victoria-sa-tasmania-slide-into-recession/?cs=12|title=Victoria, SA and Tasmania slide into recession|work=Melbourne Times Weekly|access-date=13 May 2014|url-status=dead|archive-url=https://archive.today/20130410014323/http://www.melbournetimesweekly.com.au/story/1345419/victoria-sa-tasmania-slide-into-recession/?cs=12|archive-date=10 April 2013}}</ref> The period since has seen these trends reversed with Western Australia and Northern Territory, who are heavily dependent on mining, experience significant downturns in GDP while the eastern states returned to growth, led by strong upturns in NSW and Victoria.<ref>{{cite web|url=https://www.commsec.com.au/content/dam/EN/ResearchNews/CommSec_State_of_the_States_July2016.pdf|title=Commsec state of the states, 2016}}</ref>

===Taxation===
[[File:ABS-5206.0-AustralianNationalAccounts-NationalIncomeExpenditureProduct-TaxesCurrentPrices-TotalTaxes-A2301963V.svg|thumb|right|Quarterly taxation revenue ($millions) since 1959.]]
{{Main|Taxation in Australia}} {{See also|Income tax in Australia|Goods and Services Tax (Australia)|Passenger Movement Charge|Fiscal imbalance in Australia}}
Taxation in Australia is levied at the federal, state, and local government levels. The federal government raises revenue from [[Income tax in Australia|personal income taxes]] and business taxes. Other taxes include the [[Goods and services tax (Australia)|goods and services tax (General Service Tax)]], excise and customs duties. The federal government is the main source of income for state governments. As a result of state dependence on federal taxation revenue to meet decentralised expenditure responsibilities, Australia is said to have a vertical [[fiscal imbalance]].

Besides receipts of funds from the federal government, states and territories have their own taxes, in many cases as slightly different rates. State taxes commonly include [[payroll tax]] levied on businesses, a poker-machine tax on businesses that offer gambling services, [[Land value tax|land tax]] on people and businesses that own land and most significantly, [[stamp duty]] on sales of land (in every state) and other items (chattels in some states, unlisted shares in others, and even sales of contracts in some states).

The states effectively lost the ability to raise income tax during the Second World War. In 1942, Canberra invoked its Constitutional taxation power (s. 51 (ii)) and enacted the ''Income Tax Act'' and three other statutes to levy a uniform income tax across the country. These acts sought to raise the funds necessary to meet burgeoning wartime expenses and reduce the unequal tax burden between the states by replacing state income taxes with a centralised tax system. The legislation could not expressly prohibit state income taxes (s. 51(ii) does not curtail the power of states to levy taxes) but the federal government's proposal made localised income tax extremely difficult politically. The federal government offered instead compensatory grants authorised by s. 96 of the Constitution for the loss of state income (''State Grants (Income Tax Reimbursement) Act 1942'').

The states rejected Canberra's regime and challenged the legislation's validity in the First Uniform Tax Case (''[[South Australia v Commonwealth]]'') of 1942. The High Court of Australia held that each of the statutes establishing Commonwealth income tax was a valid use of the s. 51(ii) power, in which Latham CJ noted that the system did not undermine essential state functions and imposed only economic and political pressure upon them.

The Second Uniform Tax Case (''Victoria v Commonwealth'' (1957)) reaffirmed the court's earlier decision and confirmed the power of the federal government's power to make s. 96 grants conditionally (in this case, a grant made on the condition that the recipient state does not levy income tax).

Since the [[Victoria v Commonwealth (1957)|Second Uniform Tax Case]], a number of other political and legal decisions have centralised fiscal power with the Commonwealth. In ''Ha vs. New South Wales'' (1997), the High Court found that the ''Business Franchise Licences (Tobacco) Act 1987'' (NSW) was invalid because it levied a customs duty, a power exercisable only by the Commonwealth (s.90). This decision effectively invalidated state taxes on cigarettes, alcohol and petrol. Similarly, the imposition of a Commonwealth goods and services tax (GST) in 2000 transferred another revenue base to the Commonwealth.

Consequently, Australia has one of the most pronounced vertical fiscal imbalances in the world: the states and territories collect just 18% of all governmental revenues but are responsible for almost 50% of the spending areas. Furthermore, the centralisation of revenue collection has allowed Canberra to force state policy in areas well beyond the scope of its constitutional powers, by using the grants power (s.96) to mandate the terms on which the states spend money in areas over which it has no power (such as spending on education, health and policing).

Local governments (called ''councils'' in Australia) have their own taxes (called rates) to enable them to provide services such as local road repairs, local planning and building management, garbage collection, street cleaning, park maintenance services, libraries, and museums. Councils also rely on state and federal funding to provide infrastructure and services such as roads, bridges, sporting facilities and buildings, aged care, maternal and child health, and childcare.

In 2000, a [[Goods and services tax (Australia)|goods and services tax]] (GST) was introduced, similar to the European-style [[Value-added tax|VAT]].<ref>{{Cite web|title=A brief history of Australia's tax system {{!}} Treasury.gov.au|url=https://treasury.gov.au/publication/economic-roundup-winter-2006/a-brief-history-of-australias-tax-system|access-date=2024-12-18|website=treasury.gov.au}}</ref>