PESTEL analysis of Australia
This detailed 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 the 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 (Plecher, 2019). 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, it drew a lot of criticisms over a number of issues in the past. For instance, its deportation laws were criticised by Justice Minister of New Zealand (Newshub, 2017). Similarly, the UN 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 14th largest economy in the world. It was relatively less affected by global lockdowns in 2020 and its GDP is expected to grow by 3.1% by 2022. Business investment, household incomes, and inflation are also expected to pick up gradually (OECD, 2020).
All companies in Australia are subject to a federal tax rate of 30% on their taxable income. However, small businesses pay a reduced tax rate of 26%. This rate is expected to go down to 25% soon (PwC, 2020). Individual tax rates vary depending on the income of the individuals.
Vehicles, machinery, mineral fuels including oil, refined petroleum, delivery trucks, electrical machinery and equipment, pharmaceuticals, medical apparatus, precious metals, plastics and furniture are some of the key imports of Australia. On the other hand, iron ore, gold, coal, natural gas, beef, wheat, financial services, educational services, and copper are some of its top exports. The major trading partners are China, Japan, Germany, India, USA, Thailand, and South Korea (OEC, 2021).
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 around 26 million (Worldometer, 2021)). 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.
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. However, many analysts are of the view that Australia has a long way to go if it would like to challenge tech hubs in Asia, Europe, the Middle East, and the US.
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 the country. 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: 04 February 2021
Australian Taxation Office (2020) Changes to company tax rates, https://www.ato.gov.au/Rates/Changes-to-company-tax rates/#Baserateentitycompanytaxrate (Accessed 03 February 2021)
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)
OEC (2021) Australia, available at: https://oec.world/en/profile/country/aus (Accessed 03 February 2021)
OECD (2020) Australia – Economic forecast summary (May 2018), available at: http://www.oecd.org/eco/outlook/australia-economic-forecast-summary.htm (Accessed 03 February 2021)
Plecher, H (2019) 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 03 February 2021)
PwC (2020) Australia, Corporate – Taxes on corporate income, available at: https://taxsummaries.pwc.com/australia/corporate/taxes-on-corporate-income (accessed 03 February 2021)
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)
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)
Worldometer (2021) Australia population, available at: https://www.worldometers.info/world-population/australia-population/ (accessed 03 February 2021)
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Author: Joe David
Joe David has years of teaching 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. He holds a Postgraduate Diploma in Management Studies and a Post Graduate Diploma in Marketing Management.