PESTEL analysis of Australia
This PESTEL analysis of Australia aims to address some of the political, economic, social, technological, environmental, and legal factors that affect Australia today. Australia is one of the best countries to live in the world. It is also a powerful country and plays a considerable role in global economy and politics.
Political environment in Australia
Australia is a constitutional monarchy with Elizabeth II (the Queen of the United Kingdom and the other Commonwealth realms) as the head of state. The Queen of Australia is represented by the Governor-General at the federal level and by the Governors at the state level. The Prime Minister is the head of government of Australia.
Canberra is the capital of Australia and Sydney is the largest city in the country. The total area of Australia is 7,741,220 square kilometres that makes it the 6th largest country in the world (Statista, 2017). The neighbouring countries are Papua New Guinea, Indonesia, East Timor, the Solomon Islands, Vanuatu, and New Zealand.
Australia is a member of the Commonwealth of Nations, OECD, G20 and the World Trade Organisation. It maintains a very close association with the United States. It has a safe and stable political environment. However, Australia has drawn a lot of criticisms over a number of issues. For instance, Australia’s deportation laws have been criticised by the Justice Minister of New Zealand (Newshub, 2017). Similarly, the UN has criticised Australia for its failures in areas such as the protection of human rights, Indigenous rights, and the treatment of refugees (The Conversation, 2018).
Economic environment in Australia
The next element to address in the PESTEL analysis of Australia is the economic environment. Australia is the 13th largest economy in the world. The economy grew by 2.4 per cent in 2017 which was below expectations. However, it is expected to grow by around 3% in 2018. Business investment, household incomes, and inflation are also expected to pick up gradually (OECD, 2018).
The current company tax rate in Australia is 30%. However, a base rate entity company with an aggregated turnover of less than $25 million can apply for the lower company tax rate which is 27.5%. This base rate is for the income year 2017–18. Individual tax rate for the income of up to $18,200 is zero and 19c for each $1 over $18,200. Higher rates apply for higher individual incomes (Australian Taxation Office, 2018).
Vehicles, machinery, mineral fuels including oil, electrical machinery and equipment, pharmaceuticals, medical apparatus, precious metals, plastics and furniture are some of the key imports of Australia. In fact, Australia imported US$221.4 billion worth of goods from around the world in 2017 (Workman, 2018). On the other hand, iron ore, gold, coal, natural gas, beef, wheat, financial services, educational services, and copper are some of the top exports of Australia.
Social environment in Australia
Australia is one of the best countries to live in the world in terms of wealth, education, health and quality of life. Compared to other major economies, Australia has a relatively small population of 22.9 million (BBC, 2018). The life expectancy for men is 80 years while 84 years for women. However, having more retirees and fewer people of working age is an area of concern for the country.
Australia is one of the most multicultural and multiracial countries in the world. It has an important heritage from its indigenous people who are believed to have migrated from Asia many thousands of years before the arrival of British settlers in 1788. Australia adopted a policy of mass immigration after the Second World War; however, migration is a politically sensitive issue in Australia.
Australia has a good number of public and private universities which attract a lot of international students every year. In fact, international students now make up more than a quarter of enrolments at some universities in the country (Robinson, 2018). Most of the international students come from countries such as China, India, Nepal, Malaysia, Vietnam, Brazil & Colombia.
Australians are generally lively, hardworking, and outward looking. They spend a lot of their spare time in playing or watching sports. In fact, Australia is one of the world’s best in many sports e.g. cricket, hockey, and swimming. Its sport sector makes a significant contribution to the country’s GDP.
Technological environment in Australia
Australia is one of the most technologically advanced countries in the world. It is well-known for adopting new technologies at a faster rate than many other developed countries. The country has witnessed an enormous growth in technology over the years. Technology purchases will grow 4% in 2018 to $63 billion and to $65 billion in 2019 (Pash, 2018).
Local companies are investing in technologies to meet the growing demands of their customers. Computers & equipment, software, tech consultancy services, cloud, and artificial intelligence are likely to drive these investments which should result in more innovation and designs.
Environmental factors in Australia
Australia is one of the most beautiful countries in the world with stunning beaches, mountains and forests. It is also widely known for its brilliant biodiversity. In fact, more than one million species of plants and animals are found in Australia. No wonder why millions of overseas visitors visit the country every year!
However, Australia faces some environmental challenges. For instance, Australia is the driest inhabited continent on earth. Likewise, climate change is also a great challenge. A recent Senate inquiry has concluded that climate change is a ‘current and existential national security risk’ to Australia. Water insecurity, the spread of infectious diseases, and regional conflicts over food, water and land are some of the potential outcomes of climate change.
Legal environment in Australia
The last element to address in the PESTEL analysis of Australia is the legal landscape of the country. In order to ensure fair trading for both businesses and consumers, Australia has fair trading laws, competition laws, and consumer laws. The Fair Work Act 2009 is the primary piece of legislation that governs employment in the country. Likewise, privacy laws deal with how businesses handle the personal information of their customers.
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Last update: 31 August 2018
Australian Taxation Office (2018) Changes to company tax rates, https://www.ato.gov.au/Rates/Changes-to-company-tax rates/#Baserateentitycompanytaxrate (20 July 2018)
Newshub (2017), Andrew Little stands by criticism of Australia despite hostile backlash, available at: https://www.newshub.co.nz/home/politics/2018/07/andrew-little-stands-by-criticism-of-australia-despite-hostile-backlash.html (Accessed 21 July, 2018)
OECD (2018) Australia – Economic forecast summary (May 2018), available at: http://www.oecd.org/eco/outlook/australia-economic-forecast-summary.htm (Accessed 21 July, 2018)
Robinson, N. (2018) Australia hosting unprecedented numbers of international students, available at: http://www.abc.net.au/news/2018-04-18/australia-hosting-unprecedented-numbers-international-students/9669030 (Accessed 30 August, 2018)
Statista (2017) The 30 largest countries in the world by total area (in square kilometers) available at https://www.statista.com/statistics/262955/largest-countries-in-the-world/ (Accessed 25 November 2017)
The Conversation Trust (UK) Limited (2018) UN slams Australia’s human rights record, available at: https://theconversation.com/un-slams-australias-human-rights-record-87169 (Accessed 21 July, 2018)
Workman, D. (2018) Australia’s Top 10 Imports, available at: http://www.worldstopexports.com/australias-top-10-imports/ (21 July 2018)
Photo credit: Pixabay
Author: Jo David
Jo David has years of experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality and tourism management.