Australia is a vibrant free market economy of the West, as long as the issues of private ownership, market mechanisms and free trade are concerned. This economy evolved from the British rules and systems, boasting best practices of free market and capitalism since the 18th century.
Being a market economy clears a major stumbling block for Australia to be recognised as a good place to do business. With this crucial credential, Australia is not vulnerable ideologically, in terms of not being discriminated against as those non market economies or authoritarian societies. Consider the ordeals China has had to endure through her path to be treated fairly and equally in the world economy, such as trade embargoes, sanctions, non-tariff trade barriers, anti-dumping actions and forced foreign exchange policies. Australia is lucky not to bear those heavy punches, as a result of having a recognised market economy solidly behind it.
Taking a closer look, Australia in recent decades has in fact a mixed economy, being identified with many long standing social democratic components and operations. In practice, a mode of mixed economy is usually the norm of the world, with the public (state) and private (market) sectors taking varying shares in the economy. these days, examples of total state controls are perhaps non-existent, and that of textbook, completely free market economies are hard to find as well. The central point is instead a preferred balance of the two sectors in a particular economy, rather than an absolute confirmation of merits of one extreme of the other.
Above all, Australia is a welfare state and provides adequate safety nets and cushions against frequent economic shocks rooted in a free market economy. This legacy status has this far endured torrents of assaults, from spreading Thatcherism and unrelenting privatisation pushes of the ruling conservative government. In this sense, the Australian economy is more of the Western and Northern European type, rather than the idealised free market economy people have heard so much about after the end of Cold War.
This welfare state rationale has worked to spread the wealth created more evenly across the society. Full social welfare covers are built on tax revenues and public asset earnings, and large numbers of public servants are employed to distribute them. With government paying for most of expenses in major areas of life, one almost has little to worry about incomes if not working at all. Many grew accustomed to taking benefits regularly from a local branch of Department of Social Security. I managed to get the meaning of "dole bludger" right soon after arriving Australia, since this term was so frequently mentioned in news and in conversations, often regarded as a kind of social disease out of a badly run system. It is also possible that these generous offerings have something to do with the fact of Australians winning world-level surfing champions so often.
As this welfare system touches upon people at lower end of social spectrum, proposals or actions to alter or restrain it would seem and assault on the conscience of the whole society and are very likely to encounter loud criticisms. This system often appears as a ratchet in a piece of complicated machinery, leaving little room for reversal or rewinding. To solve entangled problems arising in this web-like system, one needs not only a little courage and determination, but also a nice touch and patience, and above all a background of decisive and detectable shifts in public mood.
Some instances indicate to people the faults in this system, such as union strikes affecting public services. Many strikes targeted governments rather than business corporations, for wage increases and benefits, disregarding shortfalls in government coffers. At one stage, tram drivers and conductors locked up their trams in central Melbourne for weeks. Those tram cars resembled abandoned street vehicles and soon began to smell. In such industrial actions, workers behaved not dissimilar to Chinese workers in state run enterprises before reforms, and their employers, governments at all levels, was not able to adopt the dismissal tactics private companies would find convenient. These incidents helped a mood change in the society about wide social welfare.
With the existence of public owned companies and state regulatory institutions, a managed balance was expected between the rich and the poor, between output and costs, and between productivity and social welfare. This ideal status quo had indeed been a reality in Australia, a more or less well apportioned mixed economy, until the raging bull of economic rationalism charged in the china shop.
The Australian economy has similarities to and difference from the economy of the US. Australia has an extraordinarily large continent to its own, but it does not have a massive domestic market to fall back on, unlike the US economy. Australia has only coastal regions to rely on, and domestic markets have insurmountable troubles to grow huge, even with a prediction of population growth to 30 million in the near future. Sucking in money from new immigrants has been balanced by constant local concerns over tides of new arrivals and environmental degradation. The economy then has relied largely on exports to bring in most earnings, from exports to motherland Britain, to the US, and to East Asian economies of new prowess. Australia is constantly in a process seeking export markets around the globe.
Australia's economic links with East Asia has been established with certain reluctant, considering the origins of this country and strong bonding with the mother country Britain. The industrialised Japan became an early taker of large quantity of Australian exports. At the height of the 1980s when that economy was hot, it was completely not comprehensible to witness Japan's long recession and mediocre performance thereafter. The economy of Japan impacted on Australia with large orders and investment of various forms in Australia. A good example is the development of Gold Coast regions of Queensland, transforming sleepy beach areas into splashy holiday resorts and fashionable dwellings. In the car industry, Toyota and Mitsubishi built car plants to sell directly to local customers, eventually making them recognised as domestic car markers of the country. Extremely old Japanese moved from Japan into purpose built villages in Queensland to be cared for during remaining days.
Although it was quite hard to foresee the reversal of fate between China and Japan at the end of the beginning of the 20th century, it is now an acceptable educated guess of a resurgent China in relative terms to Japan's remaining clout by the early 2010s. Despite all these economic rises and downturns in other places, Australia is in a position to tough it out, receiving double gains when new powers (and buyers) come to the front door. All the signs of a healthy economy and enviable living standards hinge on export markets to bring home the bacon.
Like the US, Australia has been importing from other countries to meet demands of local consumers. The list of imports is long and with wide varieties. Australia has found ways to pay for all these imports, with its bumper output of minerals and metals for export, plus manufactured goods. Some exports in the latter category are fairly high tech and in niche areas, such as medical equipment. Chinese hospitals have long used Australian made equipment, even during the high times of the Cultural Revolution. There was also a wide recognition among Chinese medical professionals of quality products Australians can make in this exclusive manufacturing field. Again in Hong Kong, the super efficient MTR system has it passenger car remodeled by a contracted Australian company, a job well done in an oversea market, but not to Melbourne's own rail systems with many aging and even shabby cars. The pull factor on the basis of business orders works wonders in a globalised world market, providing opportunities for Australian experts and business corporations.