Austria Country brief
Overview
Australia enjoys friendly relations with Austria, underpinned by a range of political, economic and social links. The two countries share common positions on a number of multilateral issues including non-proliferation, arms control and whaling.
Austria’s capital Vienna is the base for key international organisations, including the Organization for Security and Cooperation in Europe (OSCE), the International Atomic Energy Agency (IAEA) and the Organization of Petroleum Exporting Countries (OPEC). The United Nations also has a major centre in Vienna.
Political Overview
Austria is a Federal Republic, comprising nine provinces, each with its own provincial assembly and government. Legislative power is held by a bicameral Federal Assembly, which has a similar structure to the Australian Federal Parliament. The Lower House, the Nationalrat, has 183 members elected for four-year terms. The Upper House, the Bundesrat, has 63 members elected by the provincial assemblies. The distribution of seats is in accordance with the population of each province. The Head of State, the Federal President, is elected by popular vote for a six year term. The Federal Presidency has a mainly ceremonial role and normally acts on the advice of the Council of Ministers, led by the Federal Chancellor, and is answerable to the Nationalrat. The current Federal President is Mr Heinz Fischer.
The last federal election was held on 1 October 2006. A grand coalition between the Social Democratic Party of Austria (SPÖ) and the conservative People’s Party (ÖVP) was sworn in on 11 January 2007. SPÖ Party leader Dr Alfred Gusenbauer was appointed Federal Chancellor. The previous (ÖVP) Foreign Minister, Dr Ursula Plassnik and State Secretary for Foreign Affairs, Hans Winkler, were reappointed.
The government holds a majority of seats in parliament - 134 out of 183 - enabling it to enact constitutional reform which requires a two-thirds majority. The next Federal election is due in 2010.
Foreign Policy
The SPÖ/ÖVP grand coalition government is continuing to implement many of the previous government’s foreign policies, reflecting bipartisan support by the SPÖ and ÖVP on major issues such as EU enlargement and immigration. Austria’s role within the EU remains a key area of interest. Austria has been an EU Member State since January 1995 and last held the rotating EU Presidency in the first half of 2006. In late 2004 former Austrian Foreign Minister, Dr Benita Ferrero-Waldner, became the EU Commissioner for External Relations and European Neighbourhood Policy.
Austria has a strong policy commitment to the strengthening the EU’s role as an international player and supports measures to deepen the Common Foreign and Security Policy (CFSP) and the development of a common European Security and Defence Policy (ESDP). The Austrian coalition government ratified the EU Lisbon Treaty on 9 April despite opposition from the far-right parties.
Austria is also keen to strengthen transatlantic relations. While maintaining its neutral status, Austria is engaged in the Partnership for Peace program with troops in Bosnia, Kosovo and Afghanistan as part of the NATO-led International Security Assistance Force (ISAF). Austria has no current plans to join NATO.
Economic Overview
Austria is an export-led economy where exports of goods and services, valued at US$217 billion in 2007, contributed more than 60 per cent to GDP. Austria has a current trading surplus (in both goods and services) of around US$24 billion which the Economist Intelligence Unit has forecast to rise to US$25 billion in 2008.
The EU's eastward expansion and Austria's geographic location make it an attractive hub for regional trade. One third of Austrian foreign investment is currently directed into Eastern European countries.
The coalition government’s economic priorities are to reduce unemployment by 25 per cent over the next four years; increase expenditure on research and development to three per cent of GDP by 2010; raise education standards; improve infrastructure links with eastern Europe; balance the budget by 2009-10; and reform taxation.
Key Economic Indicators
Germany is Austria’s key trading partner. Strong export performance and sustained robust growth in Germany pushed Austria’s GDP growth to 3.4 per cent in 2007. Consensus Economics May 2008) forecasts GDP growth easing to 2.1 per cent in 2008 and inflation rising to 2.8 per cent. Unemployment is forecast at around 4.3 per cent (Economist Intelligence Unit).
Bilateral Relations
Cultural Relations
Austria has had close links with Australia since the 18th and early 19th centuries, when Austrians visited Australia as members of scientific, diplomatic and religious missions. The bulk of Austrian migration to Australia took place between the end of World War II and 1960. Today, the relationship is marked by strong people-to-people links with around 51,000 Australians with Austrian ancestry.
Austria is growing as magnet for Australian artists and musicians. Australian conductor Simone Young became the first woman to conduct the Vienna Philharmonic Orchestra since 1935 and the first woman to conduct at the Vienna State Opera since the end of the Second World War. The Vienna Philharmonic Orchestra made a highly successful first tour of Australia in 2006.
High Level Visits
The most recent Australian federal minister to visit Austria was former Minister for Immigration and Multicultural and Indigenous Affairs, Mr Philip Ruddock, in August 2002.
Bilateral Agreements and Official Dialogue
Australia has a number of bilateral agreements with Austria, including on social security. Texts of bilateral agreements are available at the AUSTLII site.
Bilateral Economic and Trade Relationship
Bilateral Trade
Austria is Australia's 35th largest trading partner. In 2007, Austrian imports grew to A$1.006 billion resulting in a deficit of almost $A1 billion. Australian merchandise exports to Austria fell over the year to A$63 million. The main products exported to Austria were leather, gold coin, medications, civil engineering equipment and electrical circuits. Major Austrian imports were passenger motor cars with substantial imports of the Austrian-built Chrysler Voyager and Jeep Cherokee. Other main imports included medicinal and pharmaceutical products, motorcycles, non-alcoholic beverages, iron or steel rails, electric power machinery, and paper and paperboard.
The main services trade with Austria is tourism and the number of Austrian students in Australia is growing. In 2007, 17,800 Austrians visited Australia and 402 Austrian students were enrolled in Australian educational institutions. A number of Australian musicians and students are working and studying in Vienna.
A senior business delegation of the European Australian Business Council (EABC) visited Vienna from 25 to 26 May 2008, as part of a visit to European countries. The delegation held discussions with senior officials from international organisations, including OPEC, and met the Governor of the Austrian National Bank.
Bilateral Investment
Total Australian investment in Austria has grown steadily over the last four years to almost A$1 billion in 2006, mainly in medical equipment, transport industry, financial services and the retail sectors. Total Austrian investment in Australia increased almost seven fold between 2001 and 2004 to A$1.4 billion. Two-way investment almost doubled to over A$2.4 billion in 2004.
Around 200 Austrian companies are currently in the Australian market, mostly with representative offices for distribution of products/services, but also some as fully operational enterprises. Austrian investment is mainly in the areas of machinery, oil production, gambling and the electrical industry. Some of the larger firms operating in Australia include Boehler (special steel), Agrana (fruit products), Red Bull (energy drinks), Casinos Austria and Swarski (jewellers). OMV, Austria’s largest firm, has recently acquired licences for oil and gas exploration in the North West Shelf.
Export Opportunities
Austria's improved economic potential, and the recent growth in Australia's exports to Austria, provides scope for further market opportunities in both goods and services. There are opportunities in tourism, financial services, education and the highly diversified Austrian manufacturing sector which is focused on medium-technology sectors producing top-end intermediate and capital goods for the German market.
The Australian Trade Commission (Austrade) is the Federal Government agency that helps Australian companies win overseas business for their products and services by reducing the time, cost and risk involved in selecting, entering and developing international markets.
Austrade’s Opportunities Online website is a valuable resource for information on export opportunities to many countries, including Austria.
Trade and Investment Successes
Recent Australian business operations in Austria include Macquarie Capital GmbH, Babcock & Brown; Central EU Biofuels and Derma Medical.
Macquarie Capital was set up in Austria in 2001 and focuses on the development of products in particular for the Austrian and the Eastern European countries. The product range includes corporate finance/project finance and infrastructure advisory services. The company cooperates closely with local and regional partners, in particular on infrastructure. Macquarie has been one of the pioneers of public private partnerships (PPP) in Austria. Macquarie was the financial adviser to a consortium of leading telecommunications companies on the provision of an Austrian-wide secure radio network for the Ministry of the Interior – one of the first PPP models in Austria.
Babcock & Brown set up business in Vienna in 2007. The company is investing in real estate for retail shops and so far has invested in Vienna locations. The Vienna office mainly serves as a base to expand on the Central and Eastern European markets.
Central EU Biofuels Pty Ltd is an Australian Proprietary Limited Company. The most advanced project in Europe is a 100 per cent investment in an Austrian Biodiesel company, Carbon Cycle Management AG (CCM), at the town of Ennsdorf (Ennsdorf Biodiesel Project). CCM is expected to be producing biodiesel for sale into the rapidly expanding EU market in the third quarter of 2008.
Derma Medical Systems is a 100 per cent Australia owned company and is one of the world leaders in the development and production of skin imaging systems using leading technology for the early detection of melanoma, as well as for imaging of other skin disorders and cosmetic aesthetic imaging applications (digital dermatoscopy). Derma Medical Systems was established in 1996 when a know-how and clinical research cooperation with the Department of Dermatology, University of Vienna Medical School was initiated. The Vienna operations focus on research and development.
TradeWatch Contacts
If you would like more information on the trade and economic conditions in Austria, please email the Department of Foreign Affairs and Trade: Tradewatch@dfat.gov.au
Last reviewed date: 03/06/2008