The world's sixth-largest country, Australia is an island continent located between the Indian and Pacific Oceans. Its varied landscapes include tropical rainforests, the deserts of the arid "red center," snowcapped mountains, rolling tracts of pastoral land, and magnificent beaches. Famous natural features include Uluru (Ayers Rock) and the Great Barrier Reef. Most Australians live on the coast, and all the state capitals, including Sydney, host of the 2000 Olympics, are coastal cities. Only Canberra, the national capital, lies inland. The vast interior is dotted with large reserves, sparsely inhabited by communities from the small Aboriginal population.

The first settlers arrived in Australia at least 100,000 years ago. Their modern descendants, the Aborigines, today make up less than 3% of the population. European settlement began in 1788 and was dominated by British and Irish immigrants – some of whom were convicts – until the gold rushes of the 1850s. Immigrants of other nationalities – including many Chinese – arrived to prospect for gold, then settled in the cities, especially Melbourne and Sydney. When the new federal government was installed in 1901, one of its first acts was to prevent further Chinese immigration. The act set out the "White Australia" policy, which conditioned attitudes to immigration for almost 70 years.

A massive immigration drive after World War II brought many more British settlers to Australia in the 1950s. Further government initiatives to "populate or perish" saw the arrival of large numbers of Italians and Greeks.

From the late 1960s, the "White Australia" policy was progressively wound down. It was officially ended during the 1972–1975 Whitlam administration. Ever since, up to 50% of immigrants each year have come from Asia, transforming Australia from an almost exclusively European enclave into a multicultural society in which immigrant groups are encouraged to maintain connections with their own cultures and languages.

Aborigines, the exception in an otherwise integrated society, number around 410,000. Economically and socially marginalized, they face considerable discrimination. Until the mid-1960s, they were denied the vote and full social benefits. Their land had been occupied as terra nullius – belonging to no one. Since the 1970s, Aborigines have made a more organized stand on land and civil rights. Native title to land was recognized in 1993, although controversies continue over the extent of its application. Civil rights campaigns have moved on from the initial phase of antiracist protests to demand greater equality in areas such as health, housing, and education. Average life expectancy is still 20 years lower than the rest of the population. Alcoholism is a pervasive problem both in towns and rural areas. Aborigines in urban areas may be relatively better housed but face particular problems in asserting their cultural identity.

During the 1950s and 1960s, Catholic–Protestant differences were sufficient to cause a rift in the ALP. However, a subsequent policy encouraging mixed denomination schooling, coupled with a decline in religious observance, has largely neutralized the issue.

Strengths

Efficient agricultural and mining industries. Vast mineral deposits. Highly profitable tourist industry with record of dramatic growth. Good history regarding both economic growth and inflation.

Weaknesses

May suffer from EU and NAFTA protectionist policies. Political and financial instability in export markets in southeast Asia. Competition from Asian economies with lower wage rates and poorer working conditions. Unemployment likely to remain high. Balance-of-payments deficit.

Profile

Australian companies concentrated during the 1990s on the Asian market, which grew to represent 60% of Australia's trade. They were hit hard when the 1997 Asian financial crisis tipped the region into recession. Japan remains the key trading partner. In order to compete in Asia, Australia's economy has been undergoing massive structural adjustment. The Howard government, like its ALP predecessor, has been dismantling the tariffs that had made Australia one of the most protected economies within the OECD. Higher unemployment and the collapse of many businesses accompanied this change. However, the economy appeared to have weathered the global economic slowdown in 2001, posting positive growth and lower unemployment by the end of that year.

Australia is a parliamentary democracy on the British model. There are six state governments, all but one (Queensland) bicameral. The Northern Territory became self-governing in 1978.

Profile

The ALP and the Liberal and National parties have dominated Australian politics since 1945. The latter two, politically to the right, work together in coalition and broadly represent big business and agricultural interests. The ALP gained some of this support in the 1980s, adopting free-market policies and blurring the differences between parties, but 13 years of ALP rule ended in 1996, when a Liberal–National coalition took office under John Howard. It retained power with a much reduced majority in the 1998 poll, and again in 2001, due largely to popularity for its hard-line stance on immigration and terrorism. However, by March 2002 it faced ALP regional governments in all states and territories, highlighting the fragility of its hold on power.

Main Political Issues

Immigration

Public concern at images of boatloads of would-be immigrants entering Australian waters has given a boost to right-wing policies. Dramatic attempts by asylum seekers to protest over the conditions in which they are housed have only served further to alienate public opinion.

The Howard government has actively courted public mistrust of refugees, focusing on "unacceptable" behavior. Its allegations that immigrants had thrown children overboard in a desperate attempt to secure asylum were proved groundless in 2002, and its notorious "Pacific solution" – encouraging tiny Pacific states to house asylum applicants temporarily in return for financial aid – has been roundly criticized by the international community.

The far right

Although consistently unsuccessful at the federal level (it failed to win a single seat in the 2001 general election), the local success of Pauline Hanson's One Nation party has done much to legitimize many right-wing policies. In response conservative parties have adopted a notably anti-immigrant position while the ALP has conspicuously toned down its support for immigration and embraced market economics.

Republicanism

Despite international press coverage, the republican issue is not of major importance to most Australians. The former ALP government played down the debate in order to avoid inflaming monarchist groups. In his 1996 oath of office, Prime Minister Howard swore allegiance to Queen Elizabeth II, but not her successors. His government's Constitutional Convention of February 1998 discussed various republican models, including the popular election of a head of state. The alternative to monarchy which was eventually chosen to put to referendum in 1999 – where the president would be chosen by parliament, requiring a two-thirds majority – was rejected by the voters.

Australia's international focus has shifted from Europe and the USA toward Asia. Geopolitically it is in an ambiguous position. It lost its place as a major UK trading partner after the UK joined the EU, but was still regarded as a Western outsider by the Asian nations with which it wanted closer links. Australia took practical steps to redefine its role, backing the 1989 Asia–Pacific Economic Cooperation forum (APEC) to create a multilateral regional trading bloc similar to the EU and NAFTA. The USA was a strong supporter, seeing APEC as a means of promoting free-market economics in Asia. Australia's ambition is for APEC to become the leading association in the region. However, the move toward market liberalization slowed, following the 1997 Asian financial crisis.

Relations with the USA are tense on questions of trade. Australia objects to subsidized US wheat undercutting its own exports, particularly in the key Chinese market. It sees the EU and the USA as its main competitors in selling to southeast Asia.

On security issues Australia still supports the West. It sent troops to the 1991 Gulf War and to assist in the "war on terrorism" in Afghanistan in 2001. Its commitment to the Pacific region also remains strong. In the post-Cold War era this is expressed mainly through development aid rather than defense arrangements, but Australian troops led the UN force in East Timor in 1999.

Australia objects to longline fishing, which kills large numbers of dolphins, and employs submarine patrols in an effort to regulate the industry. There have been a number of minor skirmishes with Indonesian and Japanese boats.

Australia has been strongly criticized by the UN and the international community for its treatment of the Aboriginal population and asylum seekers. The "Pacific Solution" to the immigration problem prompted condemnation on its adoption in late 2001.

Strategic ties with the USA remain important. Australia has defense arrangements with the Philippines, Brunei, and Thailand among others. It dramatically increased spending in 2001–2002 to promote its position as a regional power. Updating military equipment and exploiting information technologies are priorities. 1550 soldiers were despatched to assist in the "war on terrorism" in late 2001.

Australia has one of the world's most important mining industries. It is a world leader in exports of coal, iron ore, gold, bauxite, and copper. Minerals account for a tenth of Australia's GDP and over half of its merchandise export earnings. Since the first discoveries of coal in 1798, mineral production in Australia has risen every year; in the decade to 1992 it doubled. Growth slowed but continued during the 1990s: many new projects are planned. The share of minerals in the total economy is expected to continue growing, but, having benefited from Australia's location close to the markets of southeast Asia, it was left vulnerable following the regional crisis of 1997.

While minerals underpin much of Australia's wealth, there is growing concern at the environmental cost of extraction. There is also ongoing uncertainty over the possibility of Aboriginal claims to land holding valuable minerals. The 1992 "Mabo Judgment" recognized Aboriginal land rights predating European settlement. The 1993 Native Title Act confirmed these rights, and in 1996 the High Court's historic "Wik decision" enabled claims to be made over land which was subject to a "pastoral" lease. But legislation passed in 1998 cut back Aborigines' rights to make such claims.

Australians are among the most environmentally conscious in the world, but the government has strongly resisted any commitment to cutting greenhouse gas emissions to help limit global warming. It has not even endorsed the 1997 Kyoto protocol, which would in fact allow Australia to increase emissions by up to 8% until 2010, whereas most industrialized countries had to commit to cuts.

Green issues are dominated by Greenpeace and the less radical Australian Conservation Foundation (ACF), which has concentrated on developing industry links. It has been highly critical of Australia's record of destroying natural habitats.

Air transportation is well developed and vital to Australia's sparsely populated center and west. Sydney suffers from air congestion, but proposals for a new West Sydney airport remain controversial. A proposed high-speed train network on the east coast has been shelved due to cost. Most long-distance freight in Australia travels in massive trucks known as "road trains." Improvements in urban transportation are a priority and gained impetus in Sydney from the 2000 Olympic Games.

Australia's extensive public health service has among the highest standards in the world. Hospital waiting lists are short. Outback areas are serviced by the efficient Royal Flying Doctor Service. While vigilance continues in the areas of hygiene, nutrition, and general living standards, health authorities have targeted heart disease, injury prevention, personal fitness, Aboriginal health, and the prevention of cancers – particularly lung, cervical, breast, and skin cancers – as current priorities. Incentives to encourage private health insurance, introduced during the 1990s, sparked fears over public health funding and quality.

Education in Australia is a state responsibility, except in Canberra (where it is funded by the federal government). State education departments run the government schools and set the policies for educational practice and standards for all schools. Nongovernment schools, run by religious and other groups, exist in all states. Special provision is made for inaccessible outback areas, with recent moves to bring new technologies to the bush.

Schooling is compulsory from age 5–6 to age 15–16 in all states. After their final year at school, students sit for the Higher School Certificate. Universities are independent of state control and are funded by the federal government.

Each state has its own police force and court system. The High Court and Family Court both have national jurisdiction. Since the 1970s, the legal system has been placing greater emphasis on individual rights. The disproportionate number of Aboriginal deaths in custody is of concern, as are rising narcotics-related offenses. Australia is active in narcotics control throughout southeast Asia. Gun control laws were strengthened following the 1996 Port Arthur shooting, when a lone gunman killed 35 people. In 1997 the Wood inquiry uncovered widespread police corruption in New South Wales and led to major reforms.

Australians traditionally enjoyed reasonable equality of wealth distribution. A large proportion of families own two cars and have relatively high disposable incomes, and a benign climate helps most people to live comfortably. However, high unemployment during the 1990s recession widened the gap between rich and poor, and Australia slipped down the world standard of living list for a few years. The incidence of homelessness, critical poverty, and child neglect due to poverty have increased.

Tourism is now Australia's largest single foreign exchange earner. Faster, cheaper air travel and highly successful government marketing campaigns, both on a national and a state level, attract tourists in increasing numbers. The focus during the 1990s on drawing tourists from nearby Asian countries left the Australian tourist industry vulnerable after the Asian financial crisis of 1997. In recent years New Zealanders have equaled the Japanese as the largest category of visitors to Australia. However, tourists from southeast Asia continue to arrive in significant numbers.

The country's many attractions include wildlife, swimming and surfing off Pacific and Indian Ocean beaches, skin diving along the Great Barrier Reef, and skiing in the Australian Alps. Uluru, Aboriginal culture, and the town of Alice Springs are among the outback's attractions. The far north has tropical resorts, the northwest, pearl fishing. The vineyards of the south and southeast attract many visitors, as do the cultural life of Melbourne and Sydney and the arts festivals held in state capitals. Sydney's famous landmarks and cosmopolitan feel, as well as the world-renowned Bondi Beach, make it a favorite.

The mid-1980s saw a phenomenal boom; tourist arrivals almost tripled in five years to reach two million in 1990. Even though growth slowed during the early 1990s, by 2000 the number of visitors had reached almost five million, boosted greatly by the celebrated Sydney Olympic Games.

Dutch, Portuguese, French, and – decisively – British incursions throughout the 17th and 18th centuries signaled the end of millennia of Aboriginal isolation. Governor Arthur Philip raised the British Union Flag at Sydney Cove on 26 January 1788.

• 1901 Inauguration of the Commonwealth of Australia.
• 1915 Australian troops suffer heavy casualties at Gallipoli.
• 1939 Prime Minister Menzies announces Australia will follow Britain into war with Germany.
• 1942 Fall of Singapore to Japanese army. Japanese invasion of Australia seems imminent. Government turns to USA for help.
• 1950 Australian troops committed to UN/US Korean War against North Korean communists.
• 1962 Menzies government commits Australian aid to war in Vietnam.
• 1966 Adopts decimal currency.
• 1972 Whitlam government elected. Aid to South Vietnam ceases.
• 1975 Whitlam government dismissed by Governor-General Sir John Kerr. Malcolm Fraser forms coalition government.
• 1983 Bob Hawke becomes prime minister at the head of an ALP administration.
• 1985 Corporate boom followed by deepening recession.
• 1992 Paul Keating defeats Hawke in leadership vote, becomes prime minister; announces "Turning toward Asia" policy. High Court's "Mabo Judgment" recognizes Aboriginal land rights.
• 1993 Against most predictions, Keating's ALP government reelected. Native Title Act provides compensation for Aboriginal rights extinguished by existing land title.
• 1996 Defeat of Keating government. Liberal John Howard becomes prime minister. Shooting of 35 people by gunman in Port Arthur, Tasmania, prompts tightening of gun control laws. First death under Northern Territory's controversial euthanasia legislation; legislation later overruled at federal level.
• 1998 Elections: Howard's Liberal and National coalition retains power with reduced majority; fears of right-wing One Nation party breakthrough prove unfounded.
• 1999 Referendum rejects proposals to replace Queen as head of state by indirectly elected president.
• 2000 Olympic Games in Sydney.
• 2001 Surprise reelection of Liberal–National coalition.