The pre-European economy of Australia was
based on hunting and gathering by an aboriginal population of about 1.2
million. The first British convict settlements (1788) had to be entirely
supported from Great Britain. However, within a short time a sheepherding
industry was begun. It served as the basis for almost the entire economy
until after World War II. Of particular importance to Australia's economic
growth were the development of wool as an export product during 1820-1850;
the gold finds and gold rush in Victoria in 1851-1858; the introduction
of techniques for freezing meat, in 1879, which enabled Australia to begin
exporting meat to Great Britain in 1880; the creation of a common market
through federation, in 1901; the enlargement of the labor force through
large-scale immigration after World War II; and the development of new
markets in Asia for such products as iron ore, bauxite, coal, wool, wheat,
and dairy products. The stock market collapse of 1987 precipitated an economic
retraction and Australia slid into a recession. The period following 1989
was one of slow decline in economic growth, gradual lowering of interest
rates, rising unemployment, and huge budget deficits. By 1993 inflation
stood at an annual average of 1.9 percent, but unemployment was 11.1 percent.
In 1992 Australia's gross domestic product (GDP) -- its total output of marketable goods and services -- was valued at A$393 billion, equivalent in purchasing power to U.S.$292 billion. Australia's GDP per person was equivalent to U.S.$16,693, on a par with Sweden ($16,766) and the Netherlands ($17,199). In 1990-1991, 19 percent of Australia's GDP was derived from industry, 9 percent each from construction and transportation, 5 percent from mining, 3 percent from agriculture, and the remainder from trade and services. For at least the four decades since 1950 Australia's GDP has grown, but at uneven rates. In 1992 its national income was 2.2 percent more than in 1991.
In 1991 Australia's labor force numbered
about 8.5 million. Less than 6 percent of the labor force was in agriculture;
about 14 percent was in manufacturing. In 1993 the unemployment rate was
Since 1983 Australia has had a centralized wage-fixing system under which state and federal tribunals make wage determinations; 80 percent of the labor force is covered by this method. About 40 percent of the labor force is unionized, down from 50 percent in 1982. In 1991 the average weekly wage was A$493, rising slightly to A$505 in 1992. The standard workweek ranges from 35 to 40 hours.
The principal sources of energy in Australia are coal, accounting for 40 percent of the commercial energy used in 1990; oil, accounting for 37 percent; and natural gas, accounting for 17 percent. Hydroelectricity supplied less than 2 percent of Australia's energy in 1990. About 15 percent of the oil is imported. Australia had a total electric generating capacity in 1990 of 34 million kilowatts, about four fifths of it in coal-burning thermal plants. The greater part of New South Wales' generating capacity is within 100 miles (160 km) of Sydney and uses bituminous coal from the Newcastle and Lithgow fields. Victoria's power comes mainly from thermal stations using brown coal from the Morwell fields. Hydroelectric power is generated in the Snowy Mountains Hydro-Electric Scheme (used by Sydney and Melbourne) and in Tasmania.
Distance is the major economic handicap Australia has had to overcome.
Ocean transportation has always been basic to the movement of Australia's heavy, bulky products, which are its economic mainstay. In 1991 its ports handled 974.4 million metric tons of freight, 9.1 percent of which was coastal. Measured by the tonnage of cargo handled, the most important ports were Dampier (iron ore), Newcastle (coal and iron ore), Hay Point (coal), and Port Hedland (iron ore). The capital cities of all states are located on tidewater and are general cargo ports; Melbourne, Sydney, and Fremantle (the port for Perth) handle the largest tonnages. The Australian National Line is owned by the federal government. In 1992 it operated 14 vessels.
Australia's first railroad was built in Melbourne in 1854. Uncoordinated building by colonial governments using three principal gauges resulted in a system which even now is inconvenient, expensive, and slow. Since the government viewed railroads as a means of opening up new country, there was much overbuilding. Peak mileage was reached in 1921, when there were 26,100 miles (42,000 km) of railroad. While there has been some contraction of the system since then, in 1991 there were still 23,200 miles (37,300 km) of open lines. There were also about 2,000 miles (3,220 km) of private lines, mostly owned by iron ore companies.
Roads are a vital means of moving freight and people. In 1990 there was one registered vehicle for every 1.7 persons. There were 503,500 miles (810,000 km) of roads. However, only the eastern, southeastern, and far southwestern parts of the country were adequately served. Just one third of the road mileage was sealed, with blacktop or concrete. Many roads were "formed" roads (roughly graded) or mere tracks, and others were gravel or loose stone surfaced. In the rural and remote districts road travel during the wet season may be impossible for weeks at a time. There is now a sealed road entirely around the continent, and from Darwin to Adelaide.
Air transportation has helped Australia to overcome its international and internal distances. Overseas service is provided by Qantas, a government owned and operated airline, and 37 foreign lines. Internally, two airlines -- the privately owned Ansett Airlines of Australia and Australian Airlines -- provide virtually all of the scheduled interstate service. The 428 licensed airfields range in size from huge international airports to small landing strips serving a single sheep station. Air service has brought to the vast, sparsely settled areas regular delivery of mail, fresh fruits and vegetables, and the innovative Flying Doctor Service. Planes are also used to spread seed and fertilizers on pastures and to haul a wide variety of freight.
In Australia the term "rural industry" is used to cover a wide range of agricultural activities, including sheepherding, farming, dairying, and poultry raising. From 1795, when the continent's first settlement became partially self-sufficient in basic foodstuffs, until after World War II rural industry -- and especially sheepherding -- dominated the economy. Although rural industry lost its dominance as Australia industrialized, it remains basic to the nation's well-being. In 1991 it accounted for almost 3 percent of the gross domestic product and about one fifth of the country's export earnings.
The saying "Australia rides on the sheep's
back" was valid for more than a century, from about 1820 to about 1920.
The Australian Merino is virtually a man-made animal, designed to produce
remarkably fine-textured wool. Starting with several Spanish merinos obtained
from the Cape of Good Hope in 1797 and others from England a few years
later, John Macarthur and his wife, Elizabeth, through careful crossbreeding,
laid the foundation for the Australian Merino. Mechanization of the British
textile industry had created a demand for fine wool, and by 1820 Australia
could begin to supply it. By 1850 there were 17.5 million sheep in Australia.
After 1860 money from the Victoria goldfields financed expansion of the
sheepherding industry. The number of sheep passed 100 million in 1894.
In the 20th century it has fluctuated in accordance with economic and climatic
conditions, reaching an all-time high of 180 million in 1970. In 1990 Australia
had 170 million sheep, or 14 percent of the world total. Climatic and market
conditions, however, cut the count to 163 million in 1991, and to 147 million
Australia produces more than one fourth of the world's wool. Shorn by gangs of unionized contract shearers, the wool is carefully classed into about 700 types, compressed into bales weighing 300 pounds (140 kg) or more, and transported by truck or rail to huge warehouses in coastal cities, where it is sold by auction to buyers from all parts of the world. Production varies somewhat in response to climatic fluctuations. In 1991, Australia produced 875,000 metric tons of wool, 32 percent of the world total and about 5 percent of the country's export total for the year. In 1974 a plan to ensure a "floor" under the auction price was introduced and worked well until 1991, when a massive stockpile of wool forced its abandonment; wool selling has reverted to a "free market" system, with a consequent sharp drop in price.
Although wool found a ready market after the early 19th century, for many years there was no market for meat, so old and surplus sheep were slaughtered for their hides and boiled down for tallow. The opening of the Suez Canal in 1869 and techniques for freezing meat invented in 1879 enabled Australia to export mutton to Britain. The success of this trade led in turn to development of crossbred sheep that produced better meat than the Merino but gave a somewhat coarser wool. In 1991 Australia exported 224,000 metric tons of mutton and lamb.
Three concentric zones contain most of Australia's sheep. A sheepherding zone of about 1.5 million square miles (3.9 million sq km) with an unreliable rainfall averaging less than 20 inches (500 mm) annually supports less than one fourth of the sheep but is the prime Merino country. It is located in a broad arc through southeastern South Australia, central New South Wales, and as far north as central Queensland; in Western Australia it forms a belt along the central coast and then trends inland southeastward to the Nullarbor Plain. Properties in this zone average 50,000 acres (20,000 hectares), and stocking rates are low -- one sheep to 8 acres (3.2 hectares). A sheep-wheat zone of about 206,000 square miles (534,000 sq km) on the outer borders of the pastoral zone supports about two fifths of Australia's sheep. Rainfall is up to 30 inches (750 mm) annually and reasonably reliable. Grain growing and sheep raising are of about equal importance, and the sheep are crossbreds, suitable for meat or wool. Properties average 2,500 acres (1,000 hectares), and the average stocking rate is one sheep to 1.8 acres (0.7 hectare). The outer arc, a high rainfall zone reliably receiving more than 30 inches (750 mm) of rain per year, supports more than one third of the sheep. Sheep, beef cattle, and crop raising are all carried on. Properties average about 1,200 acres (485 hectares), and the stocking rate is 1.3 sheep per acre (3.2 sheep per hectare).
With no natural predators other than the
dingo, cattle thrived in colonial Australia and were favored over sheep
in the drier and more remote areas, but export was impossible and the domestic
market small. The Victorian gold rush in the 1850's attracted thousands
and provided the first substantial market for beef, marking, together with
the resulting available finance, the beginning of the commercial beef industry.
It was not until about 1890, however, when frozen Australian beef was put
on the British market in quantity, that the industry's future was assured.
By then most parts of the continent now carrying cattle had been occupied,
and all cattle numbered about ten million. In 1991 there were 25.3 million
beef cattle. Production of beef and veal was about 1.7 million metric tons,
of which 62 percent were exported. A significant development in the beef
export trade was the opening, in 1988, of the Korean and Japanese markets
to Australian beef.
Although beef cattle are much more widely distributed than sheep, their areas of highest concentration are similar. The tropical far north and the dry interior, famous for their vast cattle ranches, called stations, carry cattle only in default of any better use. Very low carrying capacities make large holdings and herds necessary; while there are still many stations larger than 1,000,000 acres (405,000 hectares), subdivision has reduced their number somewhat. Most stations are owned by sheepherding companies and run by hired managers, although the family-owned and operated station is becoming more common. Control of cattle diseases inflicts added expenses on both stock owners and governments. Since 1970 an extensive eradication program costing nearly $200 million has virtually eliminated brucellosis and tuberculosis from Australian herds, but pleuropneumonia and tick fever are still endemic over much of the north. Introduction of exotic tropical legumes holds much promise for pasture improvement. The 20 to 30 inch (500-750 mm) rainfall belt of Queensland, New South Wales, and northern Victoria is Australia's best cattle country. Carrying capacities are 3 to 30 acres (1.2-12 hectares) per head, and properties are 1,000 to 26,000 acres (400 to 10,500 hectares); most are owner-occupied. Improved, often irrigated, pastures are common in this region, and sheep and cereal farming are combined with cattle raising. In the moister coastal zone carrying capacities are slightly lower -- 4 to 30 acres (1.6 to 12 hectares) per head -- and the properties average 1,000 to 36,000 acres (400-14,600 hectares). It is in these two zones that most of Australia's beef cattle are found and where the growing feedlot industry is located. Most Australian beef cattle are range fed. Favored breeds are the Hereford, Shorthorn, and Angus. Since 1959, considerable success has attended the introduction of Zebu blood lines into northern Australian herds, and their influence can now be found in most beef cattle districts. The Texan breed Santa Gertrudis is very successful, and a similar breed, the Droughtmaster, has been developed in the area of north Queensland.
Australia's dairy farms are concentrated
in the southeastern coastal fringes, where there is reliable rainfall or
irrigation; the most important areas are the south coast of Victoria, the
Murray valley around Echuca, and the area of the border between Queensland
and New South Wales. In 1991 there were 2.4 million dairy cattle. Numbers
of dairy cattle have declined since the early 1960's, but because of improvements
in herds, pastures, and management methods, milk production has not declined.
Milk production in 1991 was about 1.8 billion gallons (6.7 billion liters).
The dairy industry produced 179,000 metric tons of cheese and 106,000 metric
tons of butter. Australian butter and cheese, as well as powdered milk,
is exported mostly to Asian markets. Virtually all operations of the dairy
industry are subsidized, and most products are sold through government
Other Livestock. Other livestock industries, such as pig and poultry raising and beekeeping, satisfy domestic needs and allow for limited export of some products.
Crop growing in Australia is sharply restricted
to the east and southeastern margins of the continent, with less important
areas in southwestern Western Australia and Tasmania. Fertilizers are necessary
for all crops and much pasture. In 1990 they were used on 68 million acres
(27 million hectares), 54 percent of which was pasture and 26 percent wheat.
After 1950, when the area cropped was 20.8 million acres (8 million hectares),
there was a general increase to a peak of 54 million acres (22 million
hectares) in 1984. Since then unfavorable climatic and economic conditions
have caused a decline of 21 percent to 43 million acres (17 million hectares)
cropped in 1991. This was 2.3 percent of the continent. Most agricultural
crops are marketed through some form of governmental agency, which assumes
responsibility for domestic wholesaling, international bargaining, maintenance
of stable prices, and allocation of subsidies. In 1991 crops had a total
value of $7.2 billion (A$9.2 billion).
Irrigation plays an increasingly important role in Australian farming. In 1991, 5 million acres (2 million hectares) were irrigated, an increase of 117 percent over 1971. Most (90 percent) was in the three eastern states, and irrigated pastures accounted for 56 percent of the total.
Wheat, grown in districts receiving 15 to 20 inches (380500 mm) of rainfall annually, is the most valuable crop and usually occupies more than half of the total cultivated area; it is generally a winter crop. The premier year was 1983-1984, when 22 million metric tons were grown on 32 million acres (13 million hectares) for a yield of 1,520 pounds per acre (680 kg per hectare). In 1991 production was 15 million metric tons. Australia is a substantial wheat exporter. In 1991 it exported 12.1 million metric tons. The principal importers were Iran, Korea, and Egypt.
Barley and oats are the other important winter cereals. Both provide grain feed and are also usually sown on stubble and frequently grazed. Australia is usually among the world's leading producers of oats; in 1991, 1.5 million metric tons were grown on 2.5 million acres (1 million hectares). A portion of the barley crop, of which South Australia is the major producer, is used for malting; the remainder is used for stock feed or exported. In 1991, 4.1 million metric tons were grown on 6.4 million acres (2.6 million hectares). Other field crops include corn (maize, used principally for fodder), sorghum (grown for both grain and fodder), triticale, and oil crops such as peanuts, sunflower, safflower, rapeseed, and soybeans.
Most (98 percent) of Australia's rice crop is grown in irrigation areas along the Murray and lower Murrumbidgee rivers in southern New South Wales; acreages are strictly controlled because of water availability. In 1991, 788,000 metric tons were grown on 219,000 acres (89,000 hectares).
Sugarcane cultivation is restricted to the coastal areas of eastern Queensland and northern New South Wales. Acreage is closely controlled because Australia is a signatory to the International Sugar Agreement and exports are limited. Total sugar production in 1991 was 2.6 million metric tons, 74 percent of it exported. Australia exports more sugar than any other country except Cuba and Thailand.
Australia is self-sufficient in short and medium staple cotton but must import long staple cotton. Most of the crop is grown under irrigation. The major cotton areas are the Namoi, Gwydir, and Macintyre valleys of New South Wales and the Bourke District. In 1991, 433,000 metric tons of cotton lint were produced.
Vegetable production is sufficient for Australia's needs and both area planted and types grown have increased over the last decade. While most of those for fresh use are still grown in small, intensively cultivated areas near the cities, better transportation has led to specialization in some areas where soils and land prices are favorable. Irrigation districts provide the bulk of canned and frozen vegetables.
Australia is more than self-sufficient in orchard and vine crops, except nuts and olives. The most productive areas are the irrigation districts along the Murray and Murrumbidgee rivers, which yield grapes, citrus fruits, and a variety of stone fruits such as peaches, cherries, and apricots. Australia's major fruit exports are raisins, oranges, pears, and apples. Tropical fruits, such as pineapples, bananas, papaya, mangoes, macadamia nuts, and passion fruit come from the east coast between Coffs Harbor, New South Wales, and Cairns, Queensland.
Grapes are grown for wine making, drying, and table use. In 1992 there were 150,000 acres (61,000 hectares) of vines. Between 1971 and 1992 wine production increased nearly 120 percent to 120 million gallons (453 million liters). Some wine is made in all states and territories, but in 1992 South Australia made 48 percent of the total, while New South Wales and Victoria made 32 percent and 19 percent respectively. The Barossa Valley of South Australia is the premier wine district; others of importance are the Hunter and Murray valleys of New South Wales and the Swan Valley of Western Australia. In 1992 exports were 20.8 million gallons (78.6 million liters). That same year brewers made 494 million gallons (1.9 billion liters) of beer, some of it also for export. Brandy is also made, mostly in South Australia.
Manufacturing production in Australia was greatly stimulated by the cutoff in imports during World War II. The expansion continued during the 1950's and 1960's, when factory employment rose by 70 percent. The growth of manufacturing employment stalled in the 1970's, and from 1976 to 1982 the number of manufacturing jobs fell by 7.5 percent. In 1987 industry employed about one quarter of the labor force, returning to its 1976 share. Throughout, industry supplied the nation with its basic requirements of manufactured goods and provided exports that in 1987 accounted for 42 percent of total export earnings. The group of industries producing foods, beverages, and tobacco is very important. The manufacture of basic metals, particularly iron and steel, expanded greatly beginning in the early 1950's, but it declined somewhat in the early 1980's. In 1989 production of pig iron was 5.9 million metric tons and that of crude steel ingots was 6.7 million metric tons. Aluminum, copper, lead, and zinc are also produced, largely near their respective mining centers. Other leading manufactures are chemicals, transportation equipment, machinery, and paper and paper products. Most modern industries are found in Australia, although often on a minor scale, because the domestic market is insufficient for mass production. There is virtual monopoly in many fields, such as iron and steel manufacturing and sugar production. Broken Hill Proprietary produces nearly all of the country's iron and steel. The largest and most complex industrial area lies between Newcastle and Wollongong, New South Wales; Melbourne and the other capital cities are the industrial centers of their respective states.
Mineral production in Australia expanded
in the past 30 years and contributed about 42 percent of total export earnings
in 1991, compared with 7 percent in 1960-1961. During this period, production
of most minerals was increased.
In former times, the most important mineral was gold, which attracted Australia's first sizable free population and gave rise to the continent's first period of economic expansion. Gold is now produced in all states and in the Northern Territory. Between 1851 and 1865 the Victorian and New South Wales fields, where gold was first found, produced an average of 2.5 million fine ounces (70.8 million grams) of gold annually. Later gold strikes were made in Queensland, the Northern Territory, and Western Australia. Production of gold in 1991 was 734.1 million troy ounces (236,000 kg). Most of it came from the Kalgoorlie field, in Western Australia.
From 1950 on, there were extensive explorations for minerals. During the 1960's important discoveries were made, especially in the Pre-Cambrian shield of the Western Plateau and the sedimentary basins. A mining boom resulted, unequaled since the gold rushes of the 1850's. Development was mainly financed by Japanese, U.S., and British capital combined with that of Australia. The most active development, especially in iron ore, was in Western Australia.
At one time iron ore was a prohibited export because domestic reserves were believed to be limited. This policy was dramatically reversed after the huge deposits in Western Australia's Pilbara region were discovered in 1964. In 1991 Australia produced 117.7 million metric tons of iron ore and passed Brazil as the world's largest exporter of this mineral. The major deposits are in Western Australia -- in the Hammersley Ranges and at Mount Newman and Mount Goldsworthy. Other deposits are at Tallering Peak, Koolanooka, and Koolyanobbing.
Australia contains vast reserves of bauxite, the major ore of aluminum, and since 1985 has produced at least 40 percent of the world's bauxite supply. Bauxite was first discovered in 1952 at Gove, Northern Territory, and later at Weipa, Queensland, in 1955. There are also deposits in Western Australia, in the Darling Ranges southeast of Perth, and at the Mitchell Plateau in the Kimberley district; all but the last are being exploited. In 1991, 41.8 million metric tons were mined. Part of the Weipa bauxite is converted to alumina at Gladstone, and the remainder is exported. There are also alumina reduction plants at Gove; at Kwinana and Pinjarra, in Western Australia; and at Bell Bay, in Tasmania. Total alumina production in 1991 was 11.4 million metric tons. Although much of the ore is exported, Australian smelters produced 1.2 million metric tons of refined aluminum in 1991.
Coal deposits have been exploited near Newcastle since 1800, and coal was one of Australia's first mineral exports. Anthracite and semianthracite grades are rare, but reserves of other types are large. The principal bituminous (coking and steaming) deposits are in the Bowen and Sydney basins; some seams are more than 60 feet (18 meters) thick and can be worked by open-cut methods. It is this coal, particularly from the Queensland fields situated near Collinsville, Moura, Blair Athol, and Bridgewater, that has revitalized the Australian coal industry. Japan, the main importer of Australian coal, has invested heavily in the Bowen Basin fields, opening several new mines. In 1991 Australia exported 113.4 million metric tons of coal; it is the leading coal exporter in the world. Coking coal for the domestic iron and steel industry is obtained from fields near Newcastle and Wollongong. Subbituminous coal is worked in the Ipswich and Callide districts of Queensland, at Leigh Creek, South Australia, and Fingal, Tasmania. Western Australia's principal field is at Collie, 200 miles (320 km) south of Perth. Large deposits of brown coal are exploited in the Latrobe Valley of Victoria, where three major seams are worked by highly mechanized open-cut methods; much of it is burned on the field to generate electricity for southern Victoria. Other brown coal deposits are west of Melbourne at Anglesea and Bacchus Marsh.
An oil exploration program, begun in the 1950's with government subsidies, has delineated at least 20 sedimentary basins, nine of them now producing. The most important are the Gippsland (Victoria), Carnarvon (Western Australia), Bonaparte (Northern Territory and Western Australia), and Cooper-Eromanga (South Australia and Queensland) fields. In 1991 oil production was 180 million barrels. Australia has nearly attained self-sufficiency in refined petroleum products.
Natural gas, first discovered in the Roma district of Queensland in 1904, was of only local importance until 1961. But by 1991 Australia was producing 8 trillion cubic feet of gas and ethane, much of it from the Gippsland and North West Shelf fields. All mainland capital cities and numerous other centers have been connected to producing fields by pipelines. Brisbane receives gas from the Roma-Surat fields; Sydney, Canberra, and Adelaide from the Cooper-Eromanga Basin; Melbourne from fields on the Gippsland Shelf; Perth from the Dongarra-Mandarra and North West Shelf fields; Darwin is connected to Amadeus Basin fields. A significant development was the installation of a major liquefaction plant on the Burrup Peninsula, near Dampier, Western Australia.
Australia is a major producer of zinc and lead, which often occur in combination with silver. The most important mineral province yielding these metals is centered on the Mount Isa-Cloncurry district of western Queensland; its ores are treated at smelters in Mount Isa and Townsville.
Lead and zinc mining are synonymous with Mount Isa. Older and still important districts are the Zeehan-Dundas in Tasmania (founded 1882) and Broken Hill in western New South Wales (1883). Measured in terms of metallic content, 570,000 metric tons of lead ore were mined in 1991. Australia mined one million metric tons of zinc in 1991.
The Mount Isa-Cloncurry district is also the most important center of copper mining, which was first mined in the 1840's in the Kapunda-Burra district of South Australia. In 1991 Australia mined 7.4 million metric tons of copper.
In 1991, 1,180 metric tons of silver were produced, most of them as by-products of lead and zinc mining in Queensland.
Australia has been a major producer of nickel ore since that metal was discovered in 1966 at Kambalda, south of the Western Australian gold mining district of Kalgoorlie. In 1991, 65,400 metric tons were produced.
Since the discovery of diamonds in northeastern Western Australia in 1979 Australia has become a major producer. Production from the Argyle mine began in 1983, and it is now among the largest in the world. Most of the diamonds produced are industrial grade. Australia also mines substantial quantities of opal and sapphire. Mines at Coober Pedy, Andamooka, and Mintabe in South Australia yield much of the world's precious opal; in New South Wales there are mines at Lightning Ridge and White Cliffs. Sapphires are mined near Glen Innes and Inverell in New South Wales, and at Anakie, Queensland.
Australia has much of the world's known reserves of rutile, zircon, and thorium from beach sands along the east coast between Stradbroke Island, Queensland, and Byron Bay, New South Wales, and on the Western Australian coast at Capel.
Production of manganese ore well exceeds domestic needs needs and three fourths of the 1.4 million metric tons produced in 1991 were exported. Virtually all manganese comes from Groote Eylandt in the Gulf of Carpentaria. Australia has about one third of the world's low-cost reserves of uranium. Government policy restricts mining to two operations at any one time. Mining on the Ranger-Nabarlek deposits near Jabiru in the Northern Territory began in 1979, and in 1988 at Olympic Dam in South Australia. Deposits that have also been worked are at Radium Hill, South Australia; Rum Jungle, Northern Territory; and Mary Kathleen, in western Queensland. In 1991 ore production contained 4,398 metric tons of uranium. Australia was once a major producer of tungsten and still mines sufficient surplus to export. Tungsten mines are in northeastern Tasmania and King Island. Salt for domestic consumption is produced from seawater by solar evaporation. One of the world's largest solar salt plants is at Port Hedland.
Although deposits of phosphates, essential for fertilizers, are known, especially in the Mount Isa district, little domestic production has resulted. Australia is still dependent on its traditional source, Nauru, although these resources are nearly exhausted. Small amounts of calcium phosphate rock are also imported. Potassium and sulfur, also for fertilizers, are imported as well.
In June 1992 a new, unsettling factor was introduced into the mining industry. The Australian High Court, by its so-called Mabo Decision, upheld, under certain as yet not fully defined conditions, Aboriginal land titles. While possibly applicable to a wide variety of land tenure and title situations, it is of particular importance to the mining industry because of the potential effect on the security of title it considers essential for investment in exploration and mining operations.
Australia is poorly supplied with good timber. Only about five percent of the continent is covered by native forests, and almost three fourths of the forests are eucalypts, of which few are suitable for milling; exceptions are the mountain ash of Gippsland and the Western Australia karri. Native softwoods are in particularly short supply. To alleviate the shortage, about 2.6 million acres (one million hectares) of exotic softwood plantations, largely Monterey pine, have been established. Yet Australia must import timber, most of it softwoods from Canada and the United States. Australia exports woodchips, which are produced in Tasmania and New South Wales.
Fishing is confined mainly to the southern and eastern continental shelf and is mostly for domestic consumers. The total catch in 1987 was 200,000 metric tons, of which the most important finned species included tuna, Australian salmon, mullet, and shark. Some of the catch was used fresh, but most was canned or frozen. The most valuable crustacean is spiny lobster, caught along much of the southern coast. In 1991 more than 14,000 metric tons were taken. Prawn production, which amounted to only 2,200 metric tons in 1961, had increased to 29,000 metric tons by 1991. Extensive new prawning grounds have been opened in northern Australian waters. Most of the oyster, scallop, and abalone catch is used domestically. Since the mid-1980's aquaculture has met with some success, particularly with salmon in Tasmania. The once active northern pearl fishery has all but disappeared; however, cultured pearl farms have been established at several sites (at least ten) along the north coast. Australia engaged in whaling in the 1970's, but under pressure from environmentalist groups whaling has been outlawed. The streams and rivers of the Eastern Highlands provide good trout fishing.
Tourism has become a dynamic and important component of the Australian economy. In 1992 it contributed $19 billion (A$26 billion), 5.5 percent of the GDP, and generated employment for 458,000 people. The industry is comprised of two sectors, domestic and international. The former is the stronger. In 1992 domestic tourists spent 70 percent of the total expenditure for tourism. That same year Australia attracted 2.6 million overseas visitors spending an average of 2.5 nights in the country. Japanese, at 24 percent of total visitors, constituted the largest regional group. Other nationalities that visited in large numbers were New Zealanders, southeast Asians, British and Irish, and Americans. Like the domestic tourists, they were attracted most by the more populous states and cities. The Great Barrier Reef and Gold Coast of Queensland, as well as gambling casinos, were major attractions. Tours to more remote areas, such as Ayres Rock, and to national parks were popular with Japanese and Americans. Tourism has contributed to many sectors of the economy, such as the construction industry.
Australia has always been dependent upon
overseas markets to absorb the raw materials produced by its ranches, farms,
mines, and, more recently, its manufacturing industries. In 1992 exports
of goods earned $40.2 billion (A$55 billion). As Great Britain, its traditional
market, entered the European Community in 1973, Australia's search for
new markets centered increasingly on Japan and southeast Asia. In 1991
Japan took 28 percent of Australia's export goods by value, followed by
the countries of southeast Asia (12 percent), the United States (11 percent),
South Korea (6 percent), and Great Britain (4 percent). That same year
manufacturing contributed 60 percent of all exports, mining 27 percent,
and agriculture 10 percent.
In 1992 Australia spent $37.3 billion (A$51 billion) on imports. Machinery, transportation equipment, and chemicals (including petroleum) were the major imports. The United States, Japan, Germany and Great Britain were the leading suppliers.
Products of the rural and mining industries are particularly vulnerable to price fluctuations on the world market, and this has strongly affected the balance of payments. In the 1980's falling prices for Australian wheat and barley hurt many Australian farmers who produced for export. In the grain trade, Australia competes with the United States, and government subsidies for U.S. farm exports are seen in Australia as a form of unfair competition. Import quotas and tariffs set by foreign countries also hinder exports. Government efforts to increase domestic processing of raw materials such as wool have met with mixed results.
The Australian economy has always depended heavily on foreign investment. With a stable market-oriented government, sound economy, and large-scale development projects, capital has poured in from overseas. By 1991 total foreign investment stood at $219.5 billion (A$280.5), of which the United States, Great Britain, and Japan provided just over 19 percent each.
Throughout the 1960's foreign capital was welcomed, but by 1971 the volume of foreign-owned assets in Australia and the failure of foreign investors to reinvest their profits in Australia were causing concern. Foreign interests controlled the major share of some industries, particularly the minerals industry, in which 60 percent of production was controlled by foreign investors.
In the 1980's almost four fifths of the foreign capital inflow was no longer in the form of equity investment but rather in loans to Australian private and government-owned enterprises. In 1992 Australia's total foreign borrowing was $138.5 billion.
From the 1970's through the early 1990's Australia faced a serious imbalance in foreign payments. It was chiefly caused by payments of interest and dividends to foreign investors; high shipping and insurance costs for international trade were other factors. One consequence was a sharp decline in the valuation of the Australian dollar relative to the U.S. dollar.
Australia has a decimal currency, adopted in 1966. The Australian dollar is issued by the Federal Reserve Bank of Australia, which regulates interest rates, credit, and foreign exchange and acts as banker for the federal and some of the state governments. Trading bank facilities are provided by about 25 domestic and foreign-owned banks, including the government-owned Commonwealth Bank of Australia; all major trading banks operate savings subsidiaries. Credit to the public is also supplied by finance and sheepherding industry finance companies and building and cooperative societies.
In 1928 the central government took over
all state debts and assumed responsibility for all borrowing. In 1942 the
federal government took over all basic taxation (such as income taxes);
the states receive reimbursements from the consolidated revenues. This
gives the central government substantial control over state finances.
In 1990-1991 the central government's revenues amounted to $75 billion (A$95.9 billion), mostly from personal and corporate income taxes and from indirect taxes such as excise taxes. Its expenditures amounted to $62.2 billion (A$82.1 billion). Spending for social security and welfare accounted for 37 percent of central government expenditures, health services for 15 percent, defense for 10 percent, and education for 7.7 percent. The central government has run a budget surplus since 1986.
State governments receive more than half the money they require in the form of grants from the central government, but they supplement this with revenue from taxes, fees, and fines. The largest items of state government spending are education, health services, and transportation.