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 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 vested in 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. Seats are apportioned in relation to 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 is primarily a ceremonial role which is advised by the Council of Ministers, led by the Federal Chancellor, and is answerable to the Nationalrat. The current Federal President is Mr Heinz Fischer.

The 2008 federal election, after the collapse of the one year coalition between the OVP and the SVP, resulted in losses for the major centre parties and Greens with a big swing to the smaller right parties. The SPÖ returned as the strongest party (29.3 per cent of the vote), followed by the ÖVP (26 per cent), the Freedom Party (FPO, 17.5 per cent), the Alliance for Austria's Future (BZÖ, 10.7 per cent) and the Greens (10.4 per cent). The ÖVP party leader, Wilhem Molterer, subsequently resigned and was succeeded by Josef Pröll. Following lengthy negotiations, the SPÖ and the ÖVP agreed to form a coalition government on 23 November. The new coalition government was sworn in on 2 December. Mr Faymann (SPÖ) was appointed Chancellor and Mr Pröll (ÖVP) Vice-Chancellor. Dr Michael Spindelegger (ÖVP) replaced Dr Ursula Plassnik as the Federal Minister for European and International Affairs.

Foreign policy

The new SPÖ/ÖVP grand coalition government's foreign policy reflects bipartisan policies on major issues such as support for the EU and immigration.

Austria's role within the EU remains a key area of interest for the government. Austria has been an EU Member State since January 1995 and last held the rotating EU Presidency in the first half of 2006. Former Austrian Foreign Minister, Dr Benita Ferrero-Waldner, who has been the EU Commissioner for External Relations and European Neighbourhood Policy since late 2004, will conclude this appointment in September 2009.

Austria has a strong policy commitment to 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 government ratified the EU Lisbon Treaty on 9 April 2008.

Austria's borders with the Czech Republic , Slovakia , Hungary and Slovenia opened completely in December 2007 when the Schengen area was extended to include these countries; and with Switzerland and Liechtenstein in December 2008 and February 2009 when they respectively entered the Schengen area.

While maintaining its neutral status, Austria is engaged in the Partnership for Peace program with troops in Bosnia and Kosovo, involved in peacekeeping in Chad and in Afghanistan as part of the NATO-led International Security Assistance Force (ISAF). Austria has no current plans to join NATO.

Austria is a non-permanent member of the UN Security Council in 2009/2010 and is holding the chair in November 2009.

Economic overview

Austria’s exports of goods and services, valued at US$241 billion in 2008 (Economist Intelligence Unit) contributed almost 60 per cent to GDP. 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.

In response to the global financial crisis, the Austrian government provided a €100 billion (approximately A$193 billion) package in October 2008 to guarantee lending among banks and to support their capitalisation. The Austrian government subsequently facilitated the takeover of Constantia Privatbank by five major Austrian banks in October 2008 and in January 2009 nationalised the Medici Bank. The government's economic policy package, passed in September 2008, aimed to boost consumer spending including by abolishing student fees, introducing a 13th month for family allowances, increasing care subsidies and some price controls. The new government's longer term key economic priorities are to increase expenditure on research and development to three per cent of GDP by 2010; raise education standards; improve infrastructure links with eastern Europe; and reform taxation. A major new infrastructure package will invest US$27.7 billion (approximately A$40.2 billion) in both railway and motorway links by 2013, including a tunnel under the Brenner Pass, linking Italy with southern Tyrol .

Austria's national energy company, OMV, is leading a natural gas pipeline project "Nabucco" to channel gas from Baku, Azerbaijan, to Austria. In addition to OMV, Nabucco shareholders include MOL of Hungary, Transgaz of Romania, Bulgargaz of Bulgaria, BOTAS of Turkey and RWE of Germany. Construction on the 3,300 kilometres pipeline is scheduled to begin in 2010, with completion date set for 2013.

Austrian Airlines, the former national carrier, merged with Germany's Lufthansa airline with effect from September 2009.

Key Economic Indicators

Austria, with exports making up a significant proportion of GDP, was exposed to the global economic crisis. As global demand for Austrian exports fell, Austria’s economy contracted suddenly in the first quarter of 2009. GDP is forecast (Economist Intelligence Unit) to contract by 3.9 per cent in 2009. There are signs that the worst is over with the contraction in GDP slowing from 2.7 per cent in the first quarter to 0.4 per cent in the second quarter of 2009. This is mainly attributed to a rise in consumer spending and the decline in exports slowing from 5.7 per cent in the first quarter to 1.1 per cent in the second. Recent studies show a recovery in 2010 with the European Commission predicting a growth rate of 1.1 per cent of GDP.

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 a 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 successful first tour of Australia in 2006. The Australian Chamber Orchestra (ACO) is one of many Australian groups that have repeatedly performed in Austria.

High Level Visits

A parliamentary delegation headed by the Hon Roger Price MP visited Austria from 11-14 October 2009. The Deputy Speaker, Ms Anna Burke, visited Vienna from 12-17 July 2009 to participate in the Inter Parliamentary Union’s 5th meeting of Women Speakers in Parliament. The former Minister for Immigration and Multicultural and Indigenous Affairs, Mr Philip Ruddock, visited Austria 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 merchandise trading partner. In 2008-09, Australia's imports from Austria rose slightly to A$1.16 billion resulting in a deficit of $A1.07 billion. Australian merchandise exports to Austria also rose slightly over the year to A$91 million. The main products exported to Austria were gold coin, civil engineering equipment, leather, 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 non-alcoholic beverages, medicinal and pharmaceutical products, and tractors.

The main services trade with Austria is tourism and the number of Austrian students in Australia is growing. In 2008, 390 Austrian student enrolments were received 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 eased to A$1 billion in 2008, of which A$136 was foreign direct investment - mainly in medical equipment, transport industry, financial services and the retail sectors.

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 Swarovski (jewellers). OMV, Austria's largest firm, has interests in 12 operating exploration licenses for oil and gas in Australia and one license which it has not yet taken up. These licenses are located off north- west Australia in the Carnarvon Basin and Timor Sea.

Companies based in Austria supply defence and police equipment to Australia – including Defence vehicles (Mercedes, Graz), weapons (Steyr and Glock) and air traffic systems, air defence systems and public security systems (Frequentis).

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. Opportunities exist in tourism, financial services, education and niche areas of the highly diversified Austrian manufacturing sector which is focused on medium-technology industry 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

Australian business operations in Austria include Macquarie Capital GmbH, Central EU Biofuels and Derma Medical. Macquarie Capital was established in Austria in 2001 to focus on the development of products for Austria 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 development. Macquarie was a pioneer of public private partnerships (PPP) in Austria, in its role as 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.

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).

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 through clinical research cooperation with the Department of Dermatology, University of Vienna Medical School. The Vienna operation focuses on research and development.

Tradeinfo Contacts

If you would like more information on the trade and economic conditions in Austria, please e-mail the Department of Foreign Affairs and Trade: Tradeinfo@dfat.gov.au

Updated 8 December 2009