Why Australia is the richest country in the world?

Australia is well known for the mining production and that would be the first place where people would think of when asking why are the Australian are so rich. Because Australia has a lots of Iron, ore, coal, natural gas and other valuable resources on its continent. And also its geographical location where it is a perfect location for trading partner. Most of these material will be exported in the raw form to countries of an example of India, Japan, South Korea and China. And it can be said that the mining industry in Australia plays quite an important role in driving the Australian economy. In 2018, Australia exported their natural resources worth over 270,000 billion USD. Where it helps drive the economy in Asia too.

From this event that Australia can make a lot of money from mining production, it made a huge benefit to the mining workers where unskilled workers in mining industry can be paid as much as 150,000 USD when the unskilled labor in the US will be paid for around 47,000 USD. unskilled labor that work for mining industries can earns 3 times more than people from the USA. Nevertheless, even mining production seems to make a lot of money to Australia and we can see from the statistics that workers who were woking in this industry has been paid a lot but mining industry only help in Australia’s success. Because the mining sector in Australia only makes up about 3 percent of Australia’s total workforce. And more over, mining production in Australia only made up about 7% of Australia falling behind bigger industries for examples of the services provided in Australia where it made up to 53.6, construction 8.1% , finance 7.9%and education for 7.1%.

Further than mining industry, a great quality of life that Australian has, also create a huge benefit to Australia too. When the country is safe and clean, and also have a good education system and good public health system with a large opportunity of work. These factors made Australia and its major cities like Sydney and Melbourne a very popular place for people to work, study and settle down for a wealthy migrants. Moreover, Australian government also has a very open immigration policy for migrants that have skills, migrants that are independently wealthy and a student visa program for foreigner students for both school and university. And the interesting part is that when there are more migrants who are independently wealthy and skilled, they will very help boost up the economy. And the fact that Australia has a lot of people like this and as the factors above that made Australia a good place for people to settle down, it made the economy in Australia boost up very fast. But the effect that it creates is the surplus demand for housing or accommodation has skyrocketed.

The solution that Australia’s government came up with is the “Negative Gearing” which this method is very tax efficient and means that the investors would rather put their money into rental properties more than the stock market. The consequence that it made is that, it makes the Australian property market one of the most expensive in the world. That is mean, people who can live in Australia will have to whether be rich or quite rich so they can live and stay in Australia. Another interesting thing that Australian do to be rich is the way that the people save for retirement.

It began in 1991, when the Australia government introduced the superannuation guarantee. It was a law that mandated that employees had to contribute a curtain % of their incomes to a retirement saving account. These account will be invested into the market. And the benefits would applied to all workers in Australia. And from doing this, when the wage of Australian are already very high so it means that they will have opportunity to save more for their retirement. The result from doing this is that people who retire from the work can have up to 1 million AUD at the age of their retirement. Which it is considering a very high amount of money and so after people retire from work, they still able to live a good life in Australia. And these are the main factors that influence Australia to the success.

This article is a part of the class

“751309 Macroeconomics 2” supervised by Asst. Prof. Napon Hongsakulvasu

Faculty of Economics, Chiangmai University

This article was written by

Chanikarn Chaiduangdee, 651615011