Australia, formed by six states (New South Wales, Queensland, South Australia, Tasmania, Victoria, and Western Australia), is a constitutional monarchy governed by a two-chamber federal parliament – the House of Representatives (lower house), comprising 151 members who represent districts (electorates), and the Senate (upper house), comprising 76 members, 12 from each of the six states and two from each of the three territories (the Australian Capital Territory, the Jervis Bay Territory, and the Northern Territory). The party or parties that win the most lower house seats form the government and nominate the prime minister, who in turn selects the ministers and the cabinet, which form the executive. Laws are made by passing bills through the House of Representatives and the Senate with a simple majority vote. Australian has a two-party preferential voting system and despite challenges in recent years from minor parties, voters still predominantly vote for either the centre-left ALP or the centre-right LP-National coalition in the lower house.

Current Prime Minister Morrison is a liberal in economic policy terms and, similarly to former Turnbull, is an advocate of strong market principles. He will aim to stimulate domestic economic growth through corporate and personal tax cuts. Although Morrison’s poor handling of the 2019-20 bushfire crisis has affected his popularity, he is unlikely to be ousted by another internal leadership battle, due to the December 2018 changes to the LP’s internal voting rules. Under the new rules, a sitting prime minister can only be removed by a two-thirds parliamentary majority (instead of a simple majority).

The ruling LP-National coalition in the May 2019 general elections secured a slim majority in the House of Representatives (lower house of parliament) but not in the Senate (upper house). Although the coalition is in a stronger position than it was in its previous term, a return to the period of legislative ineffectiveness before the 2019 election remains a significant risk, given the propensity for lawmakers to defect and disqualifications due to constitutional provisions concerning citizenship. This legislative inertia and associated political risk will continue to affect businesses awaiting policy decisions.

Australia’s foreign policy has two priorities: remaining an active and valued member of the US-led security alliance, and maintaining regional stability. The country’s key concerns include free trade, economic co-operation with Asia, and terrorism. It has also increasingly looked to expand relations with countries around the Indian Ocean rim (the “Indo-Pacific”). Moreover, regulatory changes in Australia have generally been introduced in phased stages and are rarely implemented abruptly, albeit with the exception of bills focused on national interest and national security risks in recent months.

Additionally, Australia´s foreign relations with China deserve consideration. While the Victorian government worked on the Belt and Road Initiative agreement with China (signed in 2015 and renewed in 2019), federal government aims to rip up such controversial deal, due to escalating tensions between the countries. In fact, the federal government created legislation allowing the Commonwealth to cancel agreements with foreign powers made by states, local governments or universities if the deals are deemed harmful. This situation could spell the end of the Victoria Belt and Road agreement under foreign veto laws, after the state government included it in a list of documents submitted to the Commonwealth under its new foreign veto laws. 

Australia is considered a Full Democracy in the 2020 Democracy Index, developed by The Economist Intelligence Unit (EIU), where the country ranks 9 out of 167 countries scored.

The country ranks 8 at the 2019 Human Development Index developed by the United Nations Development Programme.

Australia’s operational environment is attractive and welcoming to potential investors. Days lost to industrial action have declined in the past two decades despite a slight increase in strike activity during the past year. Although business confidence has fallen slightly since the beginning of the pandemic, the overall business environment remains stable. It currently presents no serious systemic or institutional risks to domestic or foreign investors, despite increased screening requirements and likely investment restrictions on national security grounds. In fact, Australia is one of the most secure investment environments in the developed world, where business rights are firmly protected by comprehensive statutes at both the federal and state levels. A highly respected and transparent judiciary has a long record of defending business against any government excesses. 

With high pandemic-driven unemployment rates likely persisting over the next two years, labour concerns are likely to play a more pivotal role in the next general election (due by 2022). Moreover, restrictions on foreign labour – both skilled and temporary migrant workers – are likely to increase over the next several years

In May 2018, 100,000 union members protested peacefully in Melbourne to demand a salary increase. Labour strikes over pay and labor conditions in the mining as well as civilian and cargo transportation sectors occur several times per year but are unlikely to cause disruption longer than a few days. Corruption levels remain low despite an increase in public perceptions of corruption in public services and among politicians, fuelled by scandals such as the “sports rorts” affair.

The quality of the medical, hotel, and road infrastructure is high.All forms of infrastructure are generally well developed, but population growth and the increasing needs of the resources and agriculture sectors have highlighted weaknesses. Public transportation systems are well-developed and health conditions are good throughout the country.

Overall, Australia ranks 14 out of 190 countries scored at the 2020 Doing Business Index by the World Bank and 11 out of 198 at the 2020 Corruption Perception Index by the Transparency International Organization.

Foreign business visitors face no major security risks. Areas frequented by foreign business personnel are generally safe, though the usual precautions should be taken against petty crime in major cities. Australians are generally tolerant and it is unusual for business personnel or foreign- and immigrant-owned businesses to be singled out for harassment.

However, Australia is perceived as a legitimate target for Islamist extremist terrorism. There have been at least six terrorist attacks and 16 foiled plots since September 2014.

Crime levels in Australia are comparable to those in developed Western economies. Violent crime has broadly declined during the past decade, although sexual assault rates rose during 2017. However, crime levels in Australia are moderate and police are generally responsive and effective. Robbery and other types of property crime are the most likely to affect businesses and employees. 

The government considers serious and organised crime one of seven key national security risks. Most significant organised crime groups in Australia have international links and interests. Such groups are typically involved in some form of financial crime or money laundering and have some connection with the illicit drugs market. Australia is a hub for drug trafficking. In a single incident in December 2019, authorities seized 1.6 tonnes of methamphetamine worth almost AUD1.2 billion. Australia’s anti-money-laundering regime is comprehensive, with legislative amendments passed in late 2017 extending the legislation to cover digital currency providers.

There has also been an increase in youth crime, particularly in Melbourne (Victoria state), including a rise in gang violence. Rising unemployment, driven by the pandemic, is likely to exacerbate the existing high school drop-out problem. Small protests motivated by social and environmental concerns occur monthly in Australia and usually attract several hundred participants. Larger protests occur several times per year and typically relate to environmental concerns. Although protests occasionally cause disruption to central business districts and local traders, the likelihood of property damage is negligible. 

Australia enjoys relatively stable relations with its regional neighbours – despite the occasional diplomatic tussle – and faces no major international security challenges. Australia’s isolated location and comprehensive border security further minimise the risk of overt hostilities being targeted against the country. Therefore, the risk of interstate conflict affecting Australian territory is low, although Australia’s defense strategy formulated in 2016 underestimated the pace of technological advancements in weaponry and the rapidity of geopolitical changes in the Indo-Pacific region. In particular, the defense strategy is over-reliant on the United States, whose regional military authority is waning amid a greater strategic challenge from China. The government intends to increase defense spending to 2% of GDP by 2021, although a reassessment of defense strategy and military capabilities is highly likely to bring a spending increase. Both major political parties are likely to support this policy.

Domestically based lone-actors pose a moderate terrorist threat in Australia, with attacks likely to be low-capability and aimed at soft targets in Sydney or Melbourne. Attacks would aim to cause civilian casualties and the risk of significant asset damage is low. As well as Islamist or Islamic State-inspired attacks, the March 2019 attacks in Christchurch, New Zealand, which were carried out by an Australian national, raise the risk of copycat attacks in the country. Australia has experienced more severe bomb threats but counter-terrorism capabilities are robust and plots are likely to be disrupted during the planning stages.

Overall, Australia ranks 13 out of 163 within the 2020 Global Peace Index by the Institute for Economics and Peace.

Australia ranks as the 34 most cyberattacked country, according to Kaspersky cyber threat map. There has been an increasing trend of cybercrime and fraud in Australia, which has led to a more concerted effort by business and government to bolster cyber security frameworks.

Yellow fever: Although there is no risk of contracting yellow fever in Australia, the government requires proof of vaccination for travelers arriving from countries with a risk of yellow fever transmission. A single dose of YF vaccine is sufficient to confer sustained life-long immunity against the disease.

Australia ranks 4 out of 195 within the 2019 Global Health Security Index, a project of the Nuclear Threat Initiative (NTI) and the Johns Hopkins Center for Health Security (JHU), developed with The Economist Intelligence Unit (EIU).

Due to its vast size, Australia experiences a variety of diverse climates (equatorial, tropical, arid, etc.). Along the eastern coast, the climate is temperate: summers are hot and winters are mild. The area receives rain throughout the year.

In the north and the northeast of the country the climate is tropical (summers are hot and humid, winters mild) and the majority of rainfall comes in the summer.

The interior of the country and portions of the western coast are semi-arid.

Temperatures are generally lower in the south although they never fall below freezing in Melbourne.

Finally, in the southeast (Perth, Adelaide), the climate is Mediterranean, with mild winters and hot and dry summers.

As said, Australia is home to an array of diverse climates and therefore a variety of natural hazards. Between late October and early May, tropical cyclones strike the northern and western coasts of the country, sometimes violently. In addition to storms, the country is also regularly afflicted by forest fires in the summer months (December to February). Furthermore, large-scale floods resulting in extensive material damage are not rare.

It should also be noted that Australia is located in an active seismic zone.

If you plan to visit Australia, stay informed by the Australian Government disaster recovery assistance hotline.