Austria country brief

Introduction

Austria's capital Vienna is the base for a number of major 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 (UN) has a major centre in Vienna.

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. The Lower House, the Nationalrat, has 183 members elected for five-year terms. The Upper House, the Bundesrat, has 62 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 their 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, Heinz Fischer, took office on 8 July 2010 for a second term. The next Presidential elections are scheduled for 2016.

A Federal election was held in Austria in 2013 and the SPÖ/ÖVP coalition government was returned. Werner Faymann of the Social Democratic Party of Austria (SPÖ) is the Chancellor. Sebastian Kurz (ÖVP) is the Federal Minister for Europe, Integration and Foreign Affairs. The next parliamentary elections are scheduled for September 2018.

Foreign policy

Austria has been an EU Member State since January 1995 and ratified the EU Lisbon Treaty in 2008. It is committed to strengthening the EU's role as an international actor, supporting measures to deepen the Common Foreign and Security Policy and the interests of South East European countries to integrate with the EU. Former Austrian Science Minister Johannes Hahn has been EU Commissioner for European Neighbourhood Policy and Enlargement Negotiations since 2014. From 2010 to 2014, he was EU Commissioner for Regional Policy.

While maintaining its neutral status, Austria is engaged in the NATO Partnership for Peace program. Austrian troops are are deployed in a range of missions, including in Bosnia and Herzegovina, Kosovo, Lebanon and Cyprus. Austria was 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 member of the UN Human Rights Council for the 2011-2014 term. Its last term on the UN Security Council was 2009-10. In February 2013, Austria hosted the Fifth Global Forum of the UN Alliance of Civilizations. Austria's former Permanent Representative to the UN in New York, Thomas Mayr-Harting, is the current EU Head of Delegation to the UN in New York. Austria’s Permanent Representative to the UN in New York, Martin Sajdik, was elected President of the UN Economic and Social Council (ECOSOC) from January 2014 until July 2015.

Austria's borders with its neighbouring countries are open as Austria and all its neighbours are part of the Schengen area.

Economic Overview

Austria is a well-developed market economy with a skilled labour force and high standard of living. It has a population of 8.5 million. Its economy is closely tied to other EU economies, especially Germany's. 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 Central and Eastern European countries. Its economy features a large services sector (e.g. tourism) of just below 70 per cent of GDP; an industrial sector of almost 30 per cent of GDP, which includes construction, machinery, motor vehicles, metals, chemicals, paper, communications equipment and food; and a small agricultural and forestry sector (approximately 2 per cent of GDP). Austrian exports of goods and services represented 55 per cent of GDP in 2013. The government's key economic priorities are to reform taxation; to introduce pension, education, civil sector and health reform; and to increase expenditure on research and development.

Austria's fiscal position compares favourably with other Eurozone countries. The government renewed its commitment to a 2012 austerity budget approved by parliament that aims to bring public finances into balance by 2016. In 2014, the budget deficit is estimated to have grown to 2.8 per cent of GDP, up from 1.5 per cent of GDP in 2013. National debt is estimated to have grown to 59.3 per cent of GDP in 2014, up from 53.7 per cent in 2013, and is expected to decline to 56.1 per cent of GDP by 2016 through further implementation of fiscal consolidation measures. Austria has contributed to Eurozone rescue funds. Austria is one of the eleven Eurozone countries supporting introduction of a financial transaction tax.

Key economic indicators

The international financial crisis of 2008, Eurozone recession and difficult economic conditions in Austria's neighbouring countries have affected Austria, but less so than most other EU Member States. Total GDP growth for 2014 is estimated at 1.0 per cent, up from 0.3 per cent in 2013. The GDP growth forecast for 2015 is 1.9 per cent. Unemployment grew to 4.9 per cent in 2013, up from 4.4 per cent in 2012, and is estimated to have grown to approximately 5 per cent in 2014. Inflation is estimated to have dropped to 1.7 per cent in 2014 following a 2.1 per cent rate in 2013.

Aid programming

Austrian Development Cooperation (ADC) strategies and programs are developed by the Federal Ministry for Europe, Integration and Foreign Affairs and implemented through the Austrian Development Agency (ADA). ADC aims at reducing poverty, conserving natural resources and promoting peace and human security in partner countries across Africa, Asia, South Eastern and Eastern Europe and the Caribbean. Overseas Development Assistance (ODA) amounted to €882 million in 2013, representing 0.28 per cent of GNI. The Austrian Government has committed to achieving the 0.7 per cent ODA/GNI target in its Work Program 2013-18.

Bilateral Relations

Austria has had links with Australia since the beginning of European settlement. Austrians visited Australia as members of scientific, diplomatic and religious missions in the late 18th and 19th centuries. 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 42,500 Australians of 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 World War II. The Vienna Philharmonic Orchestra made a second successful tour of Australia in 2011. The Australian Chamber Orchestra (ACO), the Sydney Theatre Company, Back-to-Back Theatre and the Belvoir Theatre are some of the many Australian groups that have recently performed in Austria.

High level visits

Speaker of the House of Representatives, the Hon Bronwyn Bishop MP, visited Austria in October 2014, and then President of the Senate, Senator the Hon John Hogg, visited Austria in June 2014. The then Governor-General of Australia, the Hon Quentin Bryce AC CVO, visited Austria in June 2013, leading a delegation from the European Australian Business Council. Austria's then Foreign Minister, Dr Michael Spindelegger, visited Australia in February 2011.

Bilateral agreements

Australia has a number of bilateral agreements with Austria, including on social security, double taxation, mutual legal assistance, and aviation. In 2010, then Foreign Minister, Stephen Smith, and Austria's Minister for Labour, Social Affairs and Consumer Protection, 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

In 2013-14, Austria was Australia's 39th largest merchandise trading partner. Following a four-year increase in Australian exports to Austria from 2008-09 to 2011-12, total exports fell to $85.3 million in 2013-14 from $110 million in 2011-12. Australia’s main exports to Austria were leather, gold coin and legal tender coin, electrical circuit equipment and civil engineering equipment. Australia’s imports from Austria totalled $1 billion, with motorcycles and cycles, goods vehicles, and medicaments and mechanical handling equipment comprising the major Australian imports from Austria. The primary services trade between Australia and Austria is tourism. In 2013-14, 14,918 Australians visited Austria and over 16,000 Austrians visited Australia.

Total Australian investment in Austria was $1.6 billion in 2013, primarily focused in the medical equipment, transport, financial services, retail and mining sectors. Austrian investment in Australia was over $3.7 billion in 2013. 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 Austrian firms operating in Australia include Andritz (hydroelectric turbines); Voestalpine (VAE Railway Systems); Plasser & Theurer; and Rhomberg (all active in the railway sector); and Frequentis, which supplies public security systems as well as air traffic control systems. 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 in the Carnarvon Basin on the North West Shelf off the coast of Western Australia. AVL, a leader in the development, simulation and testing technology of powertrains for automotives, has a presence in Sydney through NTC Powertrain.

Trade and investment successes

Austria's economic potential provides scope for further market opportunities in both goods and services for Australian exporters. Opportunities exist in tourism, biotech, financial services, education, research and innovation, and niche areas of the highly diversified Austrian manufacturing sector.

Australian business operations in Austria include Macquarie Capital GmbH, Derma Medical and IFM Investors. Macquarie Capital was established in Austria in 2001 to focus on the development of products for Austria and Eastern European countries. In 2010, Macquarie took over an Austrian asset management firm, which serves institutional clients in Austria and Germany. The operations constitute a new hub for the Macquarie Funds Group in Central Europe.

Derma Medical Systems is a wholly-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.

In December 2014, a fund advised by IFM Investors acquired a 29.9 per cent share of the Vienna Airport. IFM Investors is a global fund manager across infrastructure, debt, equities and private capital. It is owned by 30 major Australian pension funds.

The Australian Trade Commission (Austrade) contributes to Australia’s economic prosperity by helping Australian businesses, education institutions, tourism operators and governments develop international markets, win productive foreign direct investment, promote Australian education internationally and strengthen Australia's tourism industry. Austrade's website is a valuable resource for information on international opportunities in these areas, including Austria. Austrade has an office in Frankfurt which covers Austria.

Last Updated: 26 March 2014