Comparing Australia and Japan

Australia and Japan

Economic growth

Australia is a small open economy with a population of over 21 million. It is characterized as an advanced economy by the World Bank with a gross domestic product of US$766.8 billion; whereas Japan has the third largest economy in the world and is the second most technologically powered economy after the US. It has a population of over 127.4 million and has a GDP of US$4.346 trillion.
However in 2007 Australia had a slightly higher GDP per capita than Japan with US$34,943 and a ranking of 19th, compared to Japan’s US$34,024 and a ranking of 20th. Australia was also estimated to have grown in GDP by 3.9% in 2007 while Japan grew only by 1.8%.

Employment and Unemployment

Australia has an unemployment rate of 4.3%, which is well below average of the Organization of Economic Cooperation (OECD) total of 5.6%. However Japan has an even lower rate of 3.9%.
Australia also has a much smaller labour force compared to Japan due to Australia’s small population size. Australia has a labour force of almost 11 million with a population of over 21 million, while Japan has a total labour force of 66 million with population of over 127 million.
Figure 1.1 shows how Japan and Australia have similar figures in relation to the share of labour force by industry. It shows that the majority of the labour force is employed in services. This is due to an international trend that is also present in Singapore and the USA.
Thus we can see that Australia and Japan both perform well in relation to employment and unemployment but as Japan has a larger labour force it is able to produce at a much greater rate. Their lower unemployment rate also indicates that Japan is able to utilise their labour resources more efficiently than Australia.

Quality of Life

Quality of life is measured by the Human Development Index, which is a narrow but popular measure of quality of life. Australia was ranked third in 2005, with an HDI of 0.962, while Japan had a lower HDI of 0.953. Some other quality of life indicators are also shown in fig.1.2. These figures show that Australia and Japan have a similar quality of life, with both nations living in very developed societies. However Japan has a lower percentage of population living in urban areas than Australia, which could be due to the portion of the labour force that are employed in primary industries located in country areas. Japanese workers also work longer hours on average than Australians.

|Quality of life indicators |Australia |Japan |
|Human Development index (2005) |0.962 |0.953 |
|Life expectancy at birth, total (years) 2007 est. |80.62 |82.02 |
|Urban Population (% of total) 2005 |88.2 |65.8 |
|Adult literacy rate (% of population aged 15 and over) |99 |99 |
|Under-five mortality rate (per 1,000 live births) 2005 |6 |4 |
|Internet users (per 1,000 people) 2005 |698 |668 |
|Average annual hours actually worked per person (2006) |1714 |1784 |

Figure 1.2

Environmental Quality

Australia is very rich in minerals and it makes up a large portion of its export goods. It is also the reason that Australia uses and emits such a high amount of non-renewable energy such as coal and oil, while Japan only uses coal for only 21.1% of its total energy supply source, as seen in fig 1.3.
Japan also faces environmental issues such as: • air pollution from power plant emissions resulting in acid rain • acidification of lakes and reservoirs ← degrading water quality and threatening aquatic life (and seafood export industry)
While some environmental issues that Australia face include: • soil erosion • urbanization • soil salinity rising due to the use of poor quality water • limited natural fresh water resources • deforestation • Land degradation
Thus it can be said that both countries treat their environments almost equally as the other as they both protect about the same amount of land and have the same amount of threatened species. Even though Australia emits more CO2 gases, it consumes less energy than Japan.

|Environmental Indicators |Australia |Japan |
|CO2 emissions per capita (tonnes) 2004 |16.2 |9.9 |
|Major protected land (% of total area) 2007 |18.5 |17 |
|Total energy consumption (Mtoe) 2005 |76.48 |350.85 |
|Hydro, solar, wind and geothermal power (% of total primary energy supply) 2005 |1.2 |2 |
|Coal (% of total primary energy supply) 2005 |44.5 |21.1 |
|Oil (% of total primary energy supply) 2005 |31.1 |47.4 |
|Threatened Species (% all known species) |18.5 |18.5 |

Figure 1.3

Role of government

Australia and Japan are both characterized as mixed market economies, which mean that though most economic decisions are made by the private sector, but the government also plays a significant role in stabilising and maintaining the economy. The index of economic freedom is one measure used to assess how much governments intervene in the operation of the market. The 2007 index ranked Australia fourth free-est economy with an index of 82.0 while Japan was ranked 17th and defined as mostly free with an index of 72.5.
The level of government spending and taxation revenue also indicate the governments contribute and role in the economy. In 2007 it is estimated that Australian government injected 21.5% of GDP into the economy and collected a further 22.5% of GDP in taxation, while Japan spent a considerably higher 36.2% of GDP and collected 33.7% of GDP in revenue. These figures support Japan’s index of economic freedom rating, because it shows that Japan spends and collects more than Australia and thus their government plays a more significant role in maintaining its economy.

|Role of Government indicators |Australia |Japan |
|Total Revenue (% of GDP) 2007 est. |22.5 |33.7 |
|Total Expenditure (% of GDP) 2007 est. |21.5 |36.2 |
|Public expenditure on health (% of GDP) 2004 |6.5 |6.3 |
|Private expenditure on health (% of GDP) 2004 |3.1 |1.5 |
|Expenditure on social security (% of govt expenditure) 2007 |40.9 |25.5 |

Figure 1.4

Health
Australia and Japan both have an established universal health care scheme. 40% of the Japanese universal health system is funded by the government, 35% (insurance premium) by the household and 25% by the employer. Private health insurance is also available but only to cover co-payments or non-covered costs. In 2004 the majority of Japan’s health system was funded by public expenditure with 6.3% of GDP, while 1.5% of GDP was supported by the private health system. In Australia 6.5% of GDP was spent on health by public expenditure, of which roughly two thirds is from the government, while 3.1% of GDP was from private entities.
The difference in private expenditure between the two nations is due to the Australian government’s plan to slowly decrease the burden of providing the majority of health care services which will increase in the future due to its growing ageing population. While the Japanese government can afford to rely more on its universal system as they only have to fund 40% of the costs.

Welfare
Social welfare is provided by the Australian government through the government body Centrelink, and 40.9% of the government’s revenue is spent on welfare payments. The majority of these payments go towards: • Aged Pension • Family assistance • Disability allowance • Family allowance
While the Japanese government spends a lower 25.5% of its revenue on social welfare, which is administrated by the Ministry of Health, Labour and welfare, who mainly provide pensions and social insurance. This covers areas from health, accident compensation and employment insurance.
However welfare is a lot harder to receive in Japan due to means policies than Australia, and only about 0.1% of the population receive support such as family support, accommodation assistance, etc.

Education
Primary and secondary education in both countries is mostly funded by public expenditure. But Japan and Australia also rely on a portion of funding to be from private sources. As seen in figure 1.5 and fig 1.6 both Australia and Japan fall below the OECD average for public funding in both primary and secondary, and tertiary. Though public expenditure on education of GDP in Australia (4.7%) is higher than Japan’s (3.6%), it is still much lower than many European nations, the USA and NZ. It is also much lower than the OECD average of 5.2% of GDP.

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Figure 1.1

Figure 1.6

Figure 1.5