Austria country brief
Overview
Australia enjoys friendly relations with Austria, underpinned by a wide range of political, economic and social links. The two countries share common positions on a number of multilateral issues including non-proliferation, arms control, human rights and the protection of civilians in armed conflict.
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, currently has 183 members elected for five-year terms, but the government has proposed to lower membership to 165 persons as of next general elections. 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 President has the right to run for re-election for a second term. The Federal Presidency is primarily a ceremonial role. As part of his duties, the Federal President appoints the Federal Chancellor (the head of government) and, upon proposal by the Federal Chancellor, the government members. The current Federal President, Mr Heinz Fischer, took office on 8 July 2010 for a second term. The next Presidential elections are scheduled for 2016.
A Federal election was last held in Austria in 2008 and a coalition government was sworn in on 2 December 2008. Mr Werner Faymann of the Social Democratic Party of Austria (SPÖ) is the Chancellor. Since 2011 Dr Michael Spindelegger of the Austrian Peoples' Party (ÖVP) has been the Vice-Chancellor and the Federal Minister for European and International Affairs. The next parliamentary elections are scheduled for 2013.
Foreign policy
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 is a member of the Schengen region. Since 2010, former Austrian Science Minister Johannes Hahn has been EU Commissioner for Regional Policy.
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 its neighbour countries are open as Austria and all its neighbours are part of the Schengen area. Neighbours include the Czech Republic, Germany, Hungary, Italy, Liechtenstein, Slovakia, Slovenia and Switzerland.
While maintaining its neutral status, Austria is engaged in NATO’s Partnership for Peace program with troops in Bosnia and Herzegovina, Kosovo and on the Golan Heights, and is involved in peacekeeping in Afghanistan as part of the NATO-led International Security Assistance Force (ISAF). Austria has no current plans to join NATO.
Austria was a non-permanent member of the UN Security Council from 1 January 2009 to 31 December 2010. Austria’s former Permanent Representative to the UN in New York, Thomas Mayr-Harting, is the current EU Head of Delegation to the United Nations in New York.
Economic overview
Austria's Gross Domestic Product (GDP) was Eur 301.3 billion (A$482.9 billion) in 2011, a 5.3 per cent growth in terms of value in comparison to 2010. Austria's exports of goods contributed approximately 42 per cent of GDP in 2011. The EU's eastward expansion and Austria's geographic location make it an attractive hub for regional trade. Austria is one of the leading foreign investors in Eastern European countries.
In response to the Eurozone crisis, Austria is supporting the Eurozone’s permanent rescue funding program (the European Stability Mechanism) by committing Eur 2.23 billion in cash, and offering guarantees of Eur 17.3 billion. Austria has signed, but not yet ratified the EU Fiscal Compact.
Following the downgrading of Austria’s sovereign credit rating from AAA to AA+ by Standard & Poor’s in January 2012, the Austrian Parliament adopted an austerity package in March 2012. It consists of a mix of revenue-raising and savings measures and aims to raise a total of EUR 26.5 billion by 2016. Under it, the budget deficit is to be reduced from minus 3.10 per cent of GDP in 2011 to minus 0.59 per cent of GDP in 2016 (in accordance with the EU fiscal compact), and national debt from 72.2 per cent of GDP in 2011 to 71 per cent of GDP in 2016. Following the measures taken, the Finch rating agency kept Austria’s AAA rating.
Austria continues to promote the introduction of a financial transaction tax at the EU or Eurozone level. In April 2012 Austria signed an agreement with Switzerland to tax deposits held by Austrian taxpayers in Switzerland, which the Austrian government hopes will raise up to EUR 1 billion.
The Government's longer term key economic priorities are: to introduce pension, education, civil sector and health reform; to increase expenditure on research and development to three per cent of GDP; and to reform taxation.
Key economic indicators
The Eurozone recession has affected Austria to some degree, but the stimulus provided to its exports by economies outside of Europe cushioned its effects, in particular in the first half of 2011. Austria's GDP, in terms of volume, grew by 3.1 per cent by the end of 2011, but is expected to slow to 0.4-0.9 per cent in 2012 as important neighbouring export markets such as Italy and Hungary are weakening. Unemployment is expected to increase to approximately 4.6 per cent in 2012, up from 4.2 per cent in 2011, and inflation to drop to 2.4 per cent in 2012 following a 3.3 per cent rate in 2011.
Bilateral 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. In 2005 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 second successful tour of Australia in 2011. The Australian Chamber Orchestra (ACO), the Sydney Theatre Company and Back-to-Back Theatre are some of the many Australian groups that have performed in Austria.
The National gallery of Victoria hosted the Austrian exhibition Vienna: Art and Design from June to October 2011 as part of its Melbourne Winter Masterpieces program. Artists such as Gustav Klimt, Egon Schiele, Josef Hoffman, and Adolf Loos featured with over 250 works of art, including paintings, drawings, graphic and decorative art, furniture, fashion, jewellery, and photography. The highly successful exhibition attracted 172, 000 visitors.
High level visits
A parliamentary delegation headed by the Hon Dick Adams MP visited Austria from 23-25 October 2011. The then Minister for Foreign Affairs, Mr Stephen Smith MP, visited Austria from 16–17 February 2010.
Austria’s Foreign Minister, Dr Michael Spindelegger, visited Australia from 17-20 February 2011 and met with the then Minister for Foreign Affairs, Mr Kevin Rudd MP, and Minister for Trade, Dr Craig Emerson MP.
Bilateral agreements
Australia has a number of bilateral agreements with Austria, including on social security. In 2010, then Foreign Minister, Mr Stephen Smith MP, and Austria's Minister for Labour, Social Affairs and Consumer Protection, Mr Rudolf Hundstorfer, signed the second protocol to the bilateral social security agreement. This amendment reduces the superannuation costs for Australian companies doing business in Austria and for Austrian companies operating in Australia.
Texts of bilateral agreements are available at the AUSTLII website.
Bilateral economic and trade relationship
Bilateral trade
In 2011 Austria was Australia's 41st largest merchandise trading partner with Austria being the stronger partner in the relationship. Since 2008, however, Australia’s exports to Austria have steadily increased (from A$ 76.7 million in 2008 to A$ 125.4 million in 2011). During this time Austrian exports to Australia have decreased from A$ 1,123 million in 2008 to A$ 802 million in 2011.
The main products exported by Australia to Austria were gold coin and legal tender coin, leather, electrical circuits equipment, vehicle parts and accessories, and in 2011, for the first time, silver and platinum. Major Austrian imports to Australia in 2011 were non-alcoholic beverages, pharmaceutical products and medicaments, manufactures of base metal, and motorcycles and cycles.
The main services trade with Austria is tourism and the number of Austrian students in Australia is growing. In 2010-11, 18,000 Austrians visited Australia and 574 Austrian students (up from 465 in 2009) arrived in Australia to pursue their studies. A number of Australian musicians and students are working and studying in Vienna.
Bilateral investment
Total Australian investment in Austria increased to A$ 1.5 billion in 2011, up from A$1 billion in 2010. Investment is mainly in medical equipment, transport, financial services and the retail sectors. A new development is the investment of Australian mining companies in Austria.
Total Austrian investment in Australia increased to A$5.7 billion in 2011, up from A$4 billion in 2010. Around 70 Austrian companies have production facilities, sales offices and/or representative offices in Australia. Another 500 companies maintain regular business contact with Australia. Austrian investment is mainly in the areas of machinery, oil production, railway construction, communication systems, gambling and the electrical industry. Some of the larger firms operating in Australia include Boehler (specialty steel), Andritz (hydroelectric turbines), Casinos Austria and Swarovski (jewellers). The OMV gas and oil exploration company, Austria's largest firm, has been active in Western Australia and offshore since 1999. In April 2011 it made one of its largest gas discoveries. Frequentis supplies public security systems as well as air traffic control systems. Plasser&Theurer, Voest and Rhomberg are active in the railway sector. Magna Steyr has a contract with the Australian Army to deliver special vehicles under the Overlander Project.
Export opportunities
Austria's economic potential provides scope for further market opportunities in both goods and services for Australian exporters. Opportunities exist in tourism, financial services, education and niche areas of the highly diversified Austrian manufacturing sector.
Trade and investment successes
Australian business operations in Austria include Macquarie Capital GmbH, 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. Macquarie was a pioneer of public private partnerships (PPP) and of cross-border leasing in Austria.
Derma Medical Systems is a 100 per cent Australian 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 and skin disorders.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.
Australian East Coast Minerals has mining rights for lithium in Austria. A subsidiary of Australian Exchange Minerals has rights to mine for gold.
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.
Updated May 2012