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 grand coalition government between the Social Democratic Party of Austria (SPÖ) and the conservative People's Party (ÖVP), sworn in on 11 January 2007, collapsed in June 2008. The ÖVP leader Wilhelm Molterer withdrew his party from the coalition due to growing tensions. On 9 July, parliament was dissolved and an early election was called for 28 September 2008. Dr Gusenbauer stepped down as SPÖ Party leader and Mr Werner Faymann was appointed the new leader.
The 2008 federal election resulted in loses for the major centre parties and Greens and a big swing to the smaller right parties. The SPÖ returned as the strongest party (29.3 per cent of the vote), then 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 support on major issues such as 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, has been the EU Commissioner for External Relations and European Neighbourhood Policy since late 2004.
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 they entered the Schengen area; and with Switzerland and Liechtenstein in December 2008 when they also entered the Schengen area.
Austria is 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 almost 60 per cent of GDP. The trading surplus (in both goods and services) was around US$26 billion (Economist Intelligence Unit).
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 new 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 new government's economic policy package, passed in September 2008, is to boost consumer spending and includes 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 (reduce income tax in 2009). A major infrastructure package covers investing 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 oil company, OMV, has initiated a natural gas pipeline project "Nabucco" to channel gas from Baku, Azerbaijan, to Austria. In addition to OMV, Nabucco shareholders include MOL of Hungary, S.N.T.G.N. Transgaz S.A. of Romania, Bulgaragaz-Holding EAD of Bulgaria, BOTAS Petroleum Pipeline Corporation 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.
The Austrian government sold it's 41.56 per cent stake in Austrian Airlines to Germany's Lufthansa airline in December 2008.
Key Economic Indicators
The global financial crisis and Germany's contracting economy (Austria's key trading partner) have led to a downward revision of economic forecasts. For 2009 the Economist Intelligence Unit (April 2009) forecasts GDP to contract by 3.3 per cent, inflation to fall to zero and unemployment to rise 6.3 per cent. The budget deficit is forecast to rise to 4.6 per cent in 2009.
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 36th largest merchandise trading partner. In 2007-08, Australia's imports from Austria fell to A$993 million resulting in a deficit of $A925 million. Australian merchandise exports to Austria fell over the year to A$68 million. The main products exported to Austria were gold coin, leather, 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 non-alcoholic beverages, medicinal and pharmaceutical products, motorcycles and cycles.
The main services trade with Austria is tourism and the number of Austrian students in Australia is growing. In 2007, 403 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 reached A$1.9 billion in 2007, 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 Swarski (jewellers). OMV, Austria's largest firm, has interests in 12 operated exploration licenses for oil and gas in Australia and one non-operated license. These licenses are located in the Carnarvon Basin and Timor Sea.
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, 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.
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.
Tradeinfo Contacts
If you would like more information on the trade and economic conditions in Austria, please email the Department of Foreign Affairs and Trade: Tradeinfo@dfat.gov.au
Last reviewed date: 08/05/2009