Credit Management July and August 2021

COUNTRY FOCUS
AUTHOR – Adam Bernstein
Government policy on uranium is such that
mining, and export, of uranium is under strict
international agreements designed to prevent
nuclear proliferation.
AGRICULTURE AND TOURISM
The agricultural sector accounts for 2.2 percent of
Australian GDP according to 2020 data from the
Australian Government. The industry employs
over 228,000 people and covers 58 percent of
the land mass. The Government reckons that it’s
worth around $69bn a year of which 70 percent is
exported annually – 11 percent of Australia’s total
exports. Production includes wheat, grains, wine
grapes, fruits and nuts, vegetables, cattle, sheep,
cotton, wool and many more.
With 446m hectares used for so many strands of
agriculture it’s a natural target for those looking
for growth in Australia.
In terms of holidaymakers, Australia is a big
draw for international tourists and 2019 data from
Tourism Australia (there’s precious little point in
looking at data for 2020), shows that there were
9.4m visitors who collectively spent $45.2bn and
used 27m aircraft seats.
According to Statista, the sector contributes
well over $50bn to GDP and rose in value by 6.6
percent in 2019. Over 650,000 people were directly
employed in the sector in 2019.
BUILDING AND CONSTRUCTION
Australian construction has seen some turbulence
in the last few years with output in 2014 (real 2017
US$) of $176bn, $155bn in 2016, $172bn in 2017,
$163bn in 2019. But Global data reckons that the
sector is heading for a period of growth that is
predicted to be worth close to $185bn in 2023.
The decline was a function of problems in
the residential sector as a result of oversupply.
However, the report believes that growth will come
from investments in transport infrastructure,
especially $58.9bn from the Government to
develop the country’s transport infrastructure by
2027–2028. Commercial and industrial projects
and an improvement in consumer and investor
confidence will also provide support. That
prospect appears to be backed by data from ABS
where value of the private sector rose in the fourth
quarter of 2019 to the same period in 2020 by 1.4
percent, 2.6 percent in the public sector and 1.9
percent in engineering construction.
MANUFACTURING EXPERTISE
Australia’s manufacturing sector is large.
According to 2020 data from the Government, it
employs around 900,000 Australians, contributes
$100bn to GDP and contributes 26.4 percent
of business expenditure on research and
development.
IBISWorld lists the industry categories of the top
manufacturers for 2019 as including food product
manufacturing (17 of the top 100 manufacturers),
pharmaceuticals (7/100), basic chemical and
chemical product manufacturing (5/100), beverage
and tobacco product manufacturing (5/100) and
non-metallic mineral manufacturing (5/100).
While the country is known for agricultural
exports and minerals – see above – it appears that
its strict medical standards and regulations have
created opportunities for its pharmaceuticals
sector.
IBISWorld also notes a key strength for
Australian manufacturers – the tendency to
vertically integrate so that, for example, Caltex
Australia not only drills and refines petroleum,
but also runs its own petrol stations.
Notably, the Government has published a set
of National Manufacturing Priorities with a goal
to ‘deliver long term transformational outcomes
for the Australian economy.’ And it’s looking to
further develop resources technology and critical
minerals processing, food and beverage, medical
products, recycling and clean energy, defence
and space. Some $1.4bn will be spent by the
Government in this area.
RUNNING A BUSINESS
The first thing to note is that Australia is
federally constructed. The Federal Government
is responsible for the conduct of national affairs.
Its areas of responsibility are stated in the
Australian Constitution and include defence and
foreign affairs; trade, commerce and currency;
immigration; postal services, telecommunications
and broadcasting; air travel; most social services
and pensions.
The states and territories are responsible for
everything not listed as a federal responsibility.
Confusingly, sometimes both are involved. Key
state responsibilities include schools, hospitals,
conservation and environment, roads, railways
and public transport, public works, agriculture
and fishing, industrial relations, community
services, sport and recreation, consumer affairs,
police, prisons and emergency services. Each state
has its own constitution setting out its system of
Government.
As a result, good advice is essential to
understand the interaction of federal and state
level rules before setting up shop.
FINDING THE ENTITY
According to Mazars, the two most common
business structures for foreign run businesses are
a private company and branch office.
The former requires at least one Australian
resident director and a public officer that is
ordinarily a resident in Australia. The company
is incorporated through registration with
the Australian Securities and Investments
Commission (ASIC) which is usually completed
within one working day.
Private companies are categorised as large or
small. A company is classed as large if it meets two
of the following criteria – consolidated revenue
of $50m or more; consolidated end of the year
gross assets of $25m or more; the company and its
controlled entities have 100 employees or more.
Large private companies must lodge audited
financial reports with ASIC.
Advancing the credit profession / www.cicm.com / July & August 2021 / PAGE 26