Australia has compulsory voting, which encourages parties to appeal to the average voter rather than just their most motivated supporters. It also uses preferential voting, which ensures that winners command broader support and encourages moderation. Together these features nudge politics towards the centre.
In the 2022 election a wave of independents—mostly professional women contesting wealthy inner-city seats on the need for climate action—won seats from the Liberal Party. Preferential voting gave such candidates room to thrive.
Anthony Albanese is the prime minister, leading a Labor (social-democrat) government. The May 3rd 2025 election was Labor's best performance since the second world war: the party won at least 90 of 150 seats in the House of Representatives. The Liberal-led coalition won only 40 seats, its worst result ever. Peter Dutton, the Liberal leader, lost his own seat. The Liberals lost votes across every demographic except the over-60s.
An anti-Trump mood helped Albanese, as it helped Mark Carney in Canada. Dutton stoked anti-woke culture wars and praised the American president; it backfired.
The Coalition, a partnership of the Liberal and National parties, has ruled Australia for around two-thirds of the past century. After the 2025 election debacle, the Coalition broke up on May 21st when the Nationals split away, only to reunite a week later. The Liberals hold 28 lower-house seats to the Nationals' 15.
Sussan Ley succeeded Dutton as Liberal leader, becoming the first woman in that role. On February 13th 2026 the party ousted her after less than nine months. Her successor, Angus Taylor from the party's conservative wing, is signalling a shift to the right on immigration—but the Liberals risk shedding more progressive supporters in the cities, where since 2018 they have been defeated in eight urban strongholds by independent "teal" candidates, mostly women. In late January 2026 polls showed One Nation had overtaken the coalition parties for the first time, attracting over 20% support. If current trends continue it could yet overtake Labor. The Nationals, who vie for the same rural voters as One Nation, face the prospect of being wiped out.
David Littleproud leads the Nationals. The two parties' fundamental ideological differences were exposed: Liberals are more consistently pro-market, while the Nationals want government power to break up Australia's big supermarkets (Coles and Woolworths together hold around 65% market share). The Liberals agreed to back forced divestiture powers for retailers abusing market power, and not to drop a call to lift a national moratorium on nuclear power—though a proposal to build seven nuclear power plants was partly blamed for the Liberals' catastrophic electoral performance. Malcolm Turnbull, a former Liberal prime minister, said the Nationals were "holding a gun to the Liberal Party's head".
Australia's economy grew by just 1.3% in 2024, the slowest rate (apart from during the pandemic) since the early 1990s. Over ten years disposable incomes per person have risen by just 1.5%, compared with 22% on average in other wealthy countries. Since 2021 Australians' disposable incomes have declined faster than in any other OECD country, partly owing to weak wage growth and tax brackets that are not indexed to inflation. Productivity growth slumped between 2019 and 2024: Australia now ranks second-last in the OECD, ahead only of Mexico. Not counting the mining sector, private business investment is at an all-time low. The proportion of women working full-time is among the lowest in the OECD; many are deterred by high income taxes and child-care costs. Firms face the second-highest corporate-tax rate in the rich world and must navigate a labyrinth of state and federal regulations.
Jim Chalmers is the treasurer. He has made boosting productivity and managing the economic risks arising from American-Chinese tensions his priorities. In August 2025 the government convened 30 leaders from business, trade unions and community organisations to discuss economic reforms. Economists at the roundtable called for raising taxes on capital gains—by trimming discounts for people selling properties held for more than a year—reforming family trusts (which let the well-off spread income among relatives in lower tax brackets) and making tax breaks for large pension savings less generous.
Over the past quarter of a century, house prices have doubled relative to incomes. Australia has fewer dwellings per 1,000 people than most other rich countries. Renters spend roughly one-third of their median household income on rent; mortgage-holders spend 50% on repayments. Tax-relief policies encourage Australians to put too much of their money into housing. Baby-boomers have built enormous wealth doing so, but home ownership among the young is falling. Labor promises to ease zoning rules and build 1.2m homes over five years. It takes twice as long to put up a house as it did three decades ago, owing to onerous regulations and too few workers.
China's once-insatiable appetite for Australian iron ore, copper, coal, meat and wine has slowed sharply.
Australia is the world's second-largest wheat exporter. It has posted two whopping recent harvests.
Governments in the 1980s and 1990s floated the Australian dollar, opened the country up to trade and made saving for retirement compulsory—a run of big economic reforms. In the past 15 years governments have been much more cautious, partly because they have been burnt by high-profile policy failures including a mining tax and a carbon price.
Climate policy, especially a carbon tax, has been the most polarising issue in Australian politics over the past two decades, toppling three prime ministers. Had the coalition not scrapped a carbon price in 2015, Australia would be collecting A$70bn ($45.2bn) more each year in revenue, according to Ross Garnaut, an economist. In its first term Labor legislated to cut emissions to zero by 2050 or earlier, but integrating solar and wind projects into an ageing electricity grid is slow-going.
Since 2022 Australia's Labor government has committed more than $1bn to new security agreements in the Pacific. Treaties with Tuvalu and Nauru gave Australia the right to veto any security deals those countries might make with China. On October 6th 2025 Australia and Papua New Guinea signed the first new military alliance in the Asia-Pacific since the cold war. Under the deal, the two neighbours are obliged to come to each other's defence; up to 10,000 Papuans could join the Australian armed forces. Most importantly, the agreement includes what amounts to an Australian veto on Chinese access to Papua New Guinea's territory and critical infrastructure. Papua New Guinea is both the largest and most populous of the Pacific-island countries, making the alliance a significant setback for China's efforts to extend its influence in the region.
In September 2025 Albanese flew to Vanuatu to sign a $324m deal of the same kind, but came away empty-handed—one Vanuatu minister said the country did not want to give up the option of Chinese investment in its critical infrastructure.
In South-East Asia, where no country would sign a treaty giving Australia a veto over its relations with China, Australia has instead presented itself as the region's steadiest democratic friend, untroubled by differences over human rights or political systems. No outside power has closer relations with Indonesia than Australia; in 2024 the two signed a defence treaty committing them to closer co-operation.
Australia is well positioned to sustain the Quad, an informal grouping with America, India and Japan, though its work has stalled because of a falling out between Trump and Narendra Modi. Some bilateral projects between Australia and India may continue; in October 2025 Rajnath Singh, India's defence minister, made a rare visit abroad to review co-operation with Australia.
Penny Wong is the foreign minister; Richard Marles is the deputy prime minister and defence minister. Albanese has little interest in questions of geopolitics, leaving them to Wong and Marles, but Wong's popularity and reputation for mastering her brief make hers the most important voice on strategic questions.
When Labor returned to office in 2022, Wong inherited a mess: the previous conservative government had turned sharply against China, which in turn had stopped buying Australian commodities or taking ministers' phone calls. China had also signed a security agreement with the Solomon Islands on Australia's northern approaches. Wong undertook a gruelling travel schedule in her first year, visiting 18 Pacific Island states and every country in South-East Asia except Myanmar. China has since lifted all trade restrictions, though Australia has continued to work closely with America to constrain China's regional ambitions. AUKUS remains on the books, but the Pentagon is demanding that Australia sharply increase defence spending and commit in advance to fighting alongside America in a potential war over Taiwan. Many Australians regard this as an affront to their sovereignty; AUKUS hangs in the balance.
Albanese has promised to raise defence spending from 2.1% to 2.4% of GDP. Trump's administration has demanded a sharper increase, to 3.5% of GDP. Key priorities include acquiring nuclear-powered submarines through AUKUS; enhancing long-range strike capabilities; and upgrading military bases in northern Australia. Australia announced it would buy frigates from Japan, a step towards building the region's defence-industrial base.
During his first term Australia steadied its tumultuous relations with China while deepening ties with Japan, India, South-East Asia and Pacific islands.
In March 2026, during the Iran war, Australia sent a command-and-control aircraft and some air-to-air missiles to the Middle East, but was careful to frame its contribution as helping defend the United Arab Emirates—home to many Australians—rather than as a boost to America's war effort.
Australian officials liken the contest for influence in the Pacific to a "knife fight". China is seeking diplomatic, economic and military beachheads across the Pacific islands. It has its own police on the ground in three Pacific countries, including Kiribati (the closest Pacific island chain to Hawaii) and Vanuatu (the closest to Australia). American officials say China would like to station military forces in the region. Chinese navy ships and air-force planes have been visiting more often, ostensibly to deliver aid, and China is said to have sought privileged access to ports or airfields in at least five Pacific countries. American, Australian and New Zealand officials say that China would already have a base in the region but for their efforts to block one. Australia has more than matched Chinese aid to the Solomon Islands, where China has made the greatest inroads.
Australia is full of people of European descent who are evolutionarily ill-suited to its sunny climate, giving it some of the world's highest rates of skin cancer. It pioneered the sun-avoidance message that became standard public-health advice worldwide. In 2024 it tweaked its guidance to take account of the benefits of sunlight, and the importance of skin colour.
In December 2025 Australia banned under-16s from using social media, one of the strictest such laws in the world. Over 70% of Britons and two-thirds of Americans support similar measures, and a dozen countries including Britain and Spain are considering them. The ban excludes messaging platforms such as iMessage and WhatsApp but includes YouTube, despite its educational content. Within days of the ban, 4.7m accounts were deactivated—a large number given that Australia has only 2.5m children aged 8-15. Many of those accounts were inactive, however, and many young people appear to have found workarounds. According to earlier government surveys, 95% of teenagers at the upper end of the 8-15 age bracket used at least one social-media site. Fears that teens would circumvent the ban using VPNs proved largely unfounded: by the end of January 2026 use of the ten most popular VPN apps was only about 10% higher than before the ban, according to Apptopia, a data firm. Nor did smaller social networks see a lasting surge in use. The ban makes no allowance for "teen accounts" or other child-friendly versions of platforms, removing the incentive for tech firms to develop them. Children can still use social-media platforms without logging in, meaning they see unfiltered feeds.
Australia has long sent asylum-seekers to remote Pacific islands for processing, a policy that has been emulated by European governments considering similar offshore schemes.
One in three people in Australia was born overseas—millions of them in Asia, Africa and the Middle East. The "White Australia" policy largely kept non-Europeans out of the country until the 1970s, when a policy of multiculturalism was adopted, transforming the country's demography. Yet the ideology of "White Australia" still appeals to a sizeable number of Australians.
Pauline Hanson's One Nation party, founded in 1997, has enjoyed limited electoral success but was polling at almost one in six Australians in late 2025, up from one in 20 in June. High living costs and anxiety about immigration have fed its rise, as has dysfunction inside the Liberal-National coalition, which has been shedding conservative voters—and politicians—to One Nation. Barnaby Joyce, a former Nationals leader and one-time deputy prime minister, defected to One Nation on December 8th 2025.
Beyond One Nation, all sorts of hard-right groups have grown stronger. "March for Australia" rallies in big cities have jostled neo-Nazi and other extremist groups together with mainstream outfits favouring immigration cuts. In November 2025 a neo-Nazi group protested outside the New South Wales state parliament in Sydney. In 2023 the state of Victoria outlawed the fascist salute. A radical group has said it plans to register a "White Australia Party"; the Australian Electoral Commission says there is no rule to stop this. The head of Australia's spy agency says that the majority of terror threats it investigated last year involved racist or nationalist ideologies.
On December 14th 2025 two gunmen opened fire on crowds at a Hanukkah celebration at Bondi Beach in Sydney, killing 15 people in the deadliest terrorist attack in Australian history. The attackers, Sajid Akram, 50, and his son Naveed Akram, 24, were motivated by Islamic State ideology. The elder Akram was killed by police; his son was charged with 59 offences. Naveed Akram had been investigated by ASIO, Australia's domestic intelligence service, in 2019 but no evidence of radicalisation was found at the time. In November 2025 the pair spent four weeks in the Philippines, possibly seeking training.
Australia has had relatively tight gun laws since the Port Arthur massacre in Tasmania in 1996, when a gunman killed 35 people. Automatic and semi-automatic weapons were largely banned, and the government bought back hundreds of thousands of firearms. Only around 12% of killings involved a firearm in the year to June 2024, compared with about 80% in America in 2023. Yet there are now around a million more guns in civilian hands than before Port Arthur. Following the Bondi Beach attack, the government announced a gun-buyback scheme—the largest since 1996—a review of the federal police and ASIO, tougher hate-speech laws, and plans for a national firearms register.
Albanese attended a vigil for the victims and was booed; Binyamin Netanyahu had linked the attack to Albanese's recognition of a Palestinian state. New South Wales handed police new powers to restrict public protests for up to three months after a terrorist attack. The government promised to implement 13 recommendations from a report by Jillian Segal, the antisemitism envoy, which pushes for an official definition of antisemitism and for withholding public money from institutions that do not take enough action against hate.
There have been more antisemitic attacks in Australia in the past two years than in the whole of the preceding decade, according to the Executive Council for Australian Jewry. The share of Australians who express a positive attitude towards people of Jewish faith fell from 38% in 2023 to 29% in 2025, according to the Scanlon Foundation Research Institute.
Australia has the second-highest number of shark bites globally, after America, with an average of 22 per year between 2010 and 2022. Shark nets can be installed at calmer beaches but do not work at high-energy beaches; research suggests nets can attract sharks by trapping prey. Climate change is warming the oceans and creating more frequent extreme weather events, intensifying the risks.
In recent years Australia has developed a bustling startup scene. In 2025 Australian startups raised over $5bn in venture-capital funding, up by nearly half since 2018 and only a little behind France and Germany. For every $1bn of VC money invested since 2000, Australia has produced 1.22 unicorns—a higher ratio than any other country, and nearly twice the figure for America.
Notable successes include Atlassian (enterprise software, launched 2002, listed Nasdaq 2015), Canva (design tools, founded 2013, valued at $42bn) and Afterpay ("buy now, pay later", acquired by Block for $29bn in 2022). Many alumni of these firms have gone on to found startups of their own.
Australia has seven of the world's top 100 universities for computer science, as ranked by Times Higher Education. The "boomerang effect"—where homegrown talent returns after a stint in Silicon Valley—has grown stronger as the local tech ecosystem has expanded. Australians are also keen early adopters of new technologies: Anthropic reports that the country has the third-highest per-person usage of its Claude chatbot, after Israel and Singapore.
The local VC industry remains small; two-thirds of deals last year involved foreign investors. Stringent rules make Australia's "superannuation" funds, which manage $3.2trn in retirement savings, particularly conservative; regulations intended to protect pensioners from fee gouging discourage these funds from backing VC firms. Last year just 20 deals accounted for 58% of all VC funding.
A spate of lay-offs has rattled the tech sector. In early 2026 Atlassian sacked 1,600 staff, roughly 10% of its total, including around 480 in Australia. By one count Sydney has had the most tech lay-offs in 2026 of any city outside America.
America imposed a 10% tariff on Australian steel and aluminium in 2025 under Donald Trump's trade policy. By mid-2025 two-thirds of Australians said America could not be trusted as a security partner and wanted a more independent defence policy, up from 39% in June 2024. A separate poll found that 64% of Australians had little or no trust in America to "act responsibly".
Any two philosophers can tell each other all they know in two hours.