20140922-G. H. Schorel-Hlavka O.W.B. To Submissions To The Financial System Inquiry-SUPPLEMENT 9

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Financial System Inquiry 22-9-2014
fsi@fsi.gov.au
20140922-G. H. Schorel-Hlavka O.W.B. to Submissions to the Financial System Inquiry-SUPPLEMENT 9 5

NOT RESTRICTED FOR PUBLICATION
Submission Stability - Addressing too-big-to-fail
Sir,
I wonder quote frankly if this inquiry is a hoax as set out below this whole too big too fail 10
inquiry is a needless exercise because the banks can never fail! As set out below! This as where a
debt of the ADI (Deposit-taking Institutions) is irrevocable then no matter what the banks can
borrow up to the hill whatever and the taxpayers in Australia are bound to compensate for any
unsecured borrowings by the banks. Actually any deposit taking institution, which appears to me
to include any credit union, etc. 15
http://www.sec.gov/Archives/edgar/data/805157/000134100409000414/scheduleb.htm
QUOTE
Subject to completion, dated 17 February 2009

The information in this prospectus is not complete and may be changed. We may not sell these securities until the 20
registration statement
filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these
securities and it is not
soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted
25
PROSPECTUS
Commonwealth of Australia

30
Guarantee of Debt Securities of
Australian Authorised Deposit-taking Institutions
covered by
the Australian Government Guarantee Scheme
for Large Deposits and Wholesale Funding 35

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Under the Australian Government Guarantee Scheme for Large Deposits and Wholesale Funding, which
we refer to as the Guarantee Scheme, eligible authorised deposit-taking institutions, which we refer to as
ADIs, may apply to have eligible senior unsecured debt securities, which we refer to as ADI Debt
Securities, guaranteed by the Commonwealth of Australia. In its discretion, the Commonwealth of
Australia may issue "Eligibility Certificates" evidencing that ADI Debt Securities are guaranteed under the
Guarantee Scheme, creating what we refer to as the Guarantee. See "The Commonwealth of Australia
Guarantee" in this prospectus.

The Guarantee of ADI Debt Securities is irrevocable and ranks equally with other unsecured debts
and financial obligations of the Commonwealth of Australia.

The Commonwealth of Australia will issue one or more prospectus supplements separately identifying the
ADI Debt Securities to which the Guarantee relates. The relevant prospectus supplement will accompany
this prospectus. The Guarantee of ADI Debt Securities will not be issued separately from the related ADI
Debt Securities.
5

The terms of each issue of guaranteed ADI Debt Securities will be set forth in a separate prospectus and
any related prospectus supplement of the relevant ADI offering such issue of ADI Debt Securities.
END QUOTE
In my view this scheme set up under John Howard and continued under
Rudd/Gillard/Rudd/Abbott is unconstitutional as it is not borrowing for the Commonwealth.
Neither can the Commonwealth incur debt for and on behalf of any private corporation as the
banks are as it is not for public purposes. Nor as I detected for Telstra, which is a private 10
corporations.
As a CONSTITUTIONALIST I am well aware that the Commonwealth is bound by handing
down Appropriation b ills and Taxation Bills which should together balance As such any alleged
free reign of borrowing by the banks cannot be part of the budget of ordinary Appropriation Bills
but must be by special Appropriation Bills approved by the Parliament. 15
What John Howard did was to set up a corporation under the title Commonwealth of Australia to
which no constitutional powers exist. Indeed, s44 of the constitution prohibits any foreign
alliance, and if therefore the Commonwealth of Australia were to be validly a corporation (this I
do not concede) then the Ministers are citizens of this foreign country the district of Columbia
and by this their seats in the Parliament are no more. 20

This scheme that was set up by John Howard in 2002 effectively allows politicians to borrow
monies without parliament approval and then through backdoor manner put part or all of it in
their own pockets.

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This whole swindle of having the Commonwealth of Australia registered as a corporation must
be stopped without delay. Indeed, every court decision by any federal court adhering to this
registered Commonwealth of Australia would have no legal force, because the High court of
Australia itself is on record that a corporation cannot adjudicate. All and any court/tribunal using
therefore an ABN/ACN (number) by this is excluded from adjudicating in any legal matters. 5

I also noticed that Telstra (a public company) is part of the scheme.
Rather than typing it all out I reproduce some information downloaded today and quoted below.
Save to say this needs to be properly investigated, as going along this rot makes members of this
financial inquiry in my view as much as guilty as the perpetrators of this evil. 10

There is a lot more to this all but it seems to me we have a totally corrupt government that is 15
borrowing without Parliament consent and allowing also the Queensland Government to do so
and no proper control over what monies were borrowed by whom and what security there exist.

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It totally undermined the Appropriation Bills-Taxation Bills system because what has been
engineered is that the people calling themselves federal government are nothing but a bunch off
crooks robbing us blind, not just now but also our children, grandchildren, etc.
We have a constitution and the Framers of the Constitution made clear that the Commonwealth
would be entitled to borrow monies and at the premiers conference it was also included the 5
Commonwealth could then upon its terms lend monies to the States in case of possible
bankruptcy,. However this is totally different from being a guarantor for Telstra, banks, credit
unions, and States such as Queensland. The Commonwealth if it were to borrow monies would
have to include in its Appropriation Bills the cost of such borrowings. Now however we have an
area of private companies which can borrow and the Commonwealth guarantees it all in clear 10
violation of the constitution. Do you really want to but in debt your children/grandchildren, etc
by risky borrowings of private companies?
.
Hansard 1-3-1898 Constitution Convention Debates
QUOTE 15
Mr. HIGGINS.-Suppose the sentry is asleep, or is in the swim with the other power?

Mr. GORDON.-There will be more than one sentry. In the case of a federal law, every member of a
state Parliament will be a sentry, and, every constituent of a state Parliament will be a sentry.
As regards a law passed by a state, every man in the Federal Parliament will be a sentry, and the whole 20
constituency behind the Federal Parliament will be a sentry.
END QUOTE

QUOTE 25
S-B 1 scheduleb.htm SCHEDULE B

As filed with the Securities and Exchange Commission on 17 February 2009

Registration Statement No. 333-

30

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________
35
REGISTRATION STATEMENT
UNDER
SCHEDULE B OF
THE SECURITIES ACT OF 1933
____________________________ 40

(Name of Registrant)
____________________________
45
MR. DAVID PEARL
Minister - Counsellor (Economic)
Australian Embassy
1601 Massachusetts Avenue, N.W.
Washington, D.C. 20036 50
(Name and address of Authorised Agent of the Registrant in the United States
to receive notices and communications from the Securities and Exchange Commission)
____________________________

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It is requested that copies of notices and communications from the Securities and Exchange Commission be sent to:

ADRIAN J.S. DEITZ, ESQ.
Skadden, Arps, Slate, Meagher & Flom
Level 13 5
131 Macquarie Street
Sydney, NSW 2000
Australia
___________________________
10
Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes effective.

The Guarantee of ADI Debt Securities
(1)
covered by this Registration Statement is to be offered on a delayed or
continuous basis pursuant to Release Nos. 33-6240 and 33-6424 under the Securities Act of 1933. 15
___________________________

CALCULATION OF REGISTRATION FEE

Title of each class of
securities to
be registered
Amount to be
registered
Proposed maximum
offering
price per Unit
Proposed maximum
aggregate offering
price
Amount of
registration fee

Guarantee of ADI Debt
Securities
(1)

--

--

--

US$1.00
(2)

20
(1) This Registration Statement covers the Guarantee of the Commonwealth of Australia issued under the Australian Government Guarantee
Scheme for Large Deposits and Wholesale Funding (the "Guarantee Scheme") of eligible senior unsecured debt securities ("ADI Debt
Securities") of eligible Australian authorised deposit-taking institutions ("ADIs"). Such ADI Debt Securities will be registered on a
registration statement of the relevant ADI. No separate consideration is being paid for the Guarantee. The Guarantee is not severable from
the ADI Debt Securities to which it applies.
(2) A registration fee of US$1.00 has been paid in respect of the Guarantee of ADI Debt Securities covered by this Registration Statement. A
separate registration fee has been, or will be, paid by each relevant ADI in respect of the ADI Debt Securities guaranteed pursuant to this
Registration Statement.
____________________________

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its
effective date until the Registrant shall file a further amendment which specifically states that this Registration 25
Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

30

35

CROSS REFERENCE SHEET
40
Cross reference sheet between Schedule B of the Securities Act of 1933 and the Prospectus:

Schedule B Item Heading in Prospectus

1.
Cover Page
2.

Use of Proceeds
3.

Public Debt

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4.

Public Debt
5.

Government Finance
6.

**
7.

Authorised Agent in the United States
8.

Use of Proceeds
9.

Use of Proceeds; The Commonwealth of
Australia Guarantee
10.

Plan of Distribution
11.

*
12.

Validity of the Guarantee
13.

Plan of Distribution**
14.

*
__________

* Additional information included in Part II to this Registration Statement or as an exhibit hereto or to be
provided from time to time by one or more amendments to this Registration Statement.

** Additional information to be provided from time to time in the prospectus and any related prospectus
supplement of the relevant ADI offering an issue of ADI Debt Securities and in the registration statement of
which such prospectus and any related prospectus supplement form a part.

5

10


The information in this prospectus is not complete and may be changed. We may not sell these securities until the
registration statement 15

PROSPECTUS 20


25

covered by

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for Large Deposits and Wholesale Funding

5

The Guarantee of ADI Debt Securities is irrevocable and ranks equally with other unsecured debts and
financial obligations of the Commonwealth of Australia.

Debt Securities.


Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or
disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any 10
representation to the contrary is a criminal offence.

This prospectus may not be used to sell the Guarantee of ADI Debt Securities unless accompanied by a
prospectus supplement and a prospectus and any related prospectus supplement of an ADI relating to those
ADI Debt Securities. 15

The date of this prospectus is 2009.

20

TABLE OF CONTENTS
25
Page

ABOUT THIS PROSPECTUS ii
Official Documents and Statements ii
Forward-Looking Statements iii
Presentation of Financial and Other Information iii
Certain Defined Terms and Conventions iv
USE OF PROCEEDS 1
THE COMMONWEALTH OF AUSTRALIA GUARANTEE 2
Enforcement of Civil Liabilities 3
THE COMMONWEALTH OF AUSTRALIA 5
Population and Geography of Australia 5
Form of Government 6
THE AUSTRALIAN ECONOMY 9
Overview 9
Domestic Economic Conditions 10
Economic Outlook 15
Major Sectors of the Economy 17
EXTERNAL TRADE AND BALANCE OF PAYMENTS 24

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Merchandise Trade 24
Balance Payments 26
Changes in Official Reserve Assets 27
Exchange Rate 28
Foreign Investment Policy 30
Foreign Financial Relations 30
CURRENCY, MONETARY AND BANKING SYSTEM 32
Australian Currency 32
Monetary Conditions 32
Regulation of the Financial System 33
The Financial System Regulatory Regime 39
GOVERNMENT FINANCE 40
Federal Government Budget 40
Pensions and Superannuation 44
Taxation 45
Commonwealth-State Financial Relations 49
Domestic Issuance of Government Bonds 50
Guarantees and Other Contingent Liabilities 51
PUBLIC DEBT 53
Debt Record 55
Credit Ratings 55
PLAN OF DISTRIBUTION 56
VALIDITY OF THE GUARANTEE 56
AUTHORISED AGENT IN THE UNITED STATES 56
FURTHER INFORMATION 56

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ABOUT THIS PROSPECTUS

The Government of the Commonwealth of Australia has prepared this prospectus in connection with offerings
registered under the Securities Act of 1933 of ADI Debt Securities issued by ADIs that are covered by the Guarantee 10
Scheme.

This prospectus provides you with a general description of the Guarantee. Each time the Commonwealth of
Australia guarantees an issue of ADI Debt Securities to be offered in an offering registered under the Securities Act
of 1933, it will provide a prospectus supplement identifying the issue of ADI Debt Securities to which the Guarantee 15
relates. The prospectus supplement may also add, update or change information contained in this prospectus. If the
information in this prospectus differs from any prospectus supplement, you should rely on the information in the
prospectus supplement. You should read both this prospectus and the accompanying prospectus supplement together
with the additional information described under "Further Information".
20
The information contained herein is not to be construed as legal, business or tax advice. This prospectus summarises
material documents and other information, and we refer you to them for a more complete understanding of what we
discuss herein. In making an investment decision, you must rely on your own examination of the Commonwealth of
Australia, the Guarantee and the offering.
25
You should rely only on the information provided in this prospectus and in any prospectus supplement. Neither we,
nor any underwriters or agents, have authorised anyone to provide you with different information. We are not
offering the Guarantee of ADI Debt Securities in any jurisdiction where the offer is prohibited. You should not
assume that the information in the registration statement, this prospectus or any prospectus supplement is truthful or
complete at any date other than the date mentioned on the cover page of these documents. 30

This prospectus and the accompanying prospectus supplement are not, and may not be used in connection with, an
offer or solicitation by anyone in any jurisdiction in which the offer or solicitation is not authorised or in which the
person making the offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make an
offer or solicitation. See "Plan of Distribution" in this prospectus. 35

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The Commonwealth of Australia has not participated in the preparation of the registration statement, the prospectus
or any related prospectus supplement of any ADI offering an issue of ADI Debt Securities to which the Guarantee
relates. The Commonwealth of Australia has not approved any such registration statement, prospectus or prospectus
supplement and does not assume any responsibility in relation to any such prospectus or prospectus supplement.
5
Official Documents and Statements

Certain financial and statistical information contained in this prospectus has been derived from official Australian
Government sources, including:
10

the 2008-09 Commonwealth Budget dated 13 May 2008, which we refer to as the 2008-09 Budget
(available at http://www.budget.gov.au);

the Mid-Year Economic and Fiscal Outlook 2008-09 Statement released on 5 November 2008, which we
refer to as the 2008-09 MYEFO (available at http://www.budget.gov.au/2008-
09/content/myefo/html/index.htm);

the February 2009 Updated Economic and Fiscal Outlook Statement released on 3 February 2009, which
we refer to as the 2009 UEFO (available at http://www.budget.gov.au/2008-
09/content/uefo/html/index.htm); and

the Final Budget Outcome 2005-06 released on 29 September 2006, which we refer to as the Final Budget
Outcome 2005-06 (available at http://www.budget.gov.au/2005-06/fbo/html/index.htm), the Final Budget
Outcome 2006-07 released on 28 September 2007, which we refer to as the Final Budget Outcome 2006-07
(available at http://www.budget.gov.au/2006-07/fbo/html/index.htm) and the Final Budget Outcome 2007-
08 released on 26 September 2008, which we refer to as the Final Budget Outcome 2007-08 (available at
http://www.budget.gov.au/2007-08/fbo/html/index.htm).

Information available on the websites referenced above is not incorporated by reference in this prospectus. 15

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Information included in this prospectus or any prospectus supplement which is identified as being derived from a
publication of the Australian Government or one of its agencies or instrumentalities is included in this prospectus or
such prospectus supplement on the authority of such publication as a public official document of the Australian 25
Government. All other information included in this prospectus and in the Registration Statement is included as a
public official statement and has been reviewed by Dr Ken Henry AC, Secretary of the Treasury of the
Commonwealth of Australia, in his official capacity, and is included herein on his authority. Except as may
otherwise be provided in any prospectus supplement, all other information included in such prospectus supplement
will be included as a public official statement and will be reviewed by Dr Ken Henry AC, in his official capacity, 30
and will be included therein on his authority.

The address of the Commonwealth of Australia is c/o The Treasury of the Commonwealth of Australia, Treasury
Building, Langton Crescent, Parkes ACT 2600, Australia, and its phone number is +61 2 6263 2111.
35
Forward-Looking Statements

This prospectus contains, and any accompanying prospectus supplement may contain, forward-looking statements as
defined in Section 27A of the Securities Act of 1933. These forward-looking statements can be identified by the use
of forward-looking terminology, including the terms "believes", "forecasts", "estimates", "projects", "expects", 40
"intends", "may", "will", "seeks", "would", "could" or "should" or, in each case, their negative or other variations or
comparable terminology, or in relation to discussions of forecasts, policies, strategy, plans, objectives, goals, future
events or intentions.

Forward-looking statements are statements that are not historical facts, including statements about the 45
Commonwealth of Australia's beliefs and expectations. These statements are based on current plans, estimates and
projections and, therefore, undue reliance should not be placed on them. Forward-looking statements speak only as

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of the date they are made. Although the Australian Government believes that the beliefs and expectations reflected
in such forward-looking statements are reasonable, no assurance can be given that such beliefs and expectations will
prove to have been correct.

Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause 5
actual results to differ materially from those expressed in any forward-looking statement. Factors that could cause
the actual outcomes to differ materially from those expressed or implied in forward looking statements include:

the international economy, and in particular the rates of growth (or contraction) of Australia's major trading
partners;

the effects of the global financial crisis;
10
changes in commodity prices and/or global demand for Australia's major export commodities;

increases or decreases in international and domestic interest rates;

increases or decreases in domestic consumption;

increases or decreases in Australia's labour force participation and productivity;

exchange rate fluctuations; and
15
increases or decreases in Australia's rate of inflation.

Presentation of Financial and Other Information

The fiscal year of the Commonwealth of Australia is 1 July to 30 June. Annual information presented in this
prospectus is based on fiscal years, unless otherwise indicated. In this prospectus, the fiscal year beginning on 1 20
July 2007 and ending on 30 June 2008 is referred to as "2007-08" and previous and subsequent fiscal years are
referred to using the same convention.

Any discrepancies between totals and sums of components in this prospectus are due to rounding.
25

iii

30

Statistical information reported herein has been derived from official publications of, and information supplied by, a
number of departments and agencies of the Commonwealth of Australia, including the Treasury of the
Commonwealth of Australia, the Department of Finance and Deregulation, the Reserve Bank of Australia (the
"RBA") and the Australian Bureau of Statistics ("ABS"). Some statistical information has also been derived from 35
information publicly made available by the International Monetary Fund (the "IMF") and the Organisation for
Economic Co-operation and Development (the "OECD"). Similar statistics may be obtainable from other sources,
but the underlying assumptions, methodology and, consequently, the resulting data may vary from source to
source. In addition, statistics and data published by a department or agency of the Commonwealth of Australia may
differ from similar statistics and data produced by other departments or agencies due to differing underlying 40
assumptions or methodology. Certain historical statistical information contained in this prospectus is based on
estimates that the Commonwealth of Australia and/or its departments or agencies believe to be based on reasonable
assumptions. The Commonwealth of Australia's official financial and economic statistics are subject to review as
part of a regular confirmation process. Accordingly, financial and economic information may be subsequently
adjusted or revised. While the Australian Government does not expect revisions to be material, no assurance can be 45
given that material changes will not be made. The Commonwealth of Australia adheres to the IMF's Special Data
Dissemination Standards, which guide members in the dissemination of economic and financial data to the public.

All references in this prospectus to "Australian dollars," "A$," "dollars" or "$" are to the lawful currency of the
Commonwealth of Australia and references in this prospectus to "U.S. dollars" or "US$" are to the lawful currency 50
of the United States.

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Certain Defined Terms and Conventions

The terms set forth below have the following meanings for purposes of this prospectus:
5
APRA means the Australian Prudential Regulation Authority.

ASI C refers to the Australian Securities and Investments Commission.

Basic price refers to the amount receivable by the producer from the purchaser for a unit of a good or
service produced as output, minus any tax payable plus any subsidy receivable on that unit
as a consequence of its production or sale; it excludes any transport charges invoiced
separately by the producer.

Balance of payments refers to the total of all of the amounts transacted between residents of Australia and
residents of the rest of the world (non-residents) over a specific period of time.

Capital account records the values of the non-financial assets that are acquired, or disposed of, by resident
institutional units by engaging in transactions, and shows the change in net worth due to
saving and capital transfers or internal bookkeeping transactions linked to production
(changes in inventories and consumption of fixed capital).

Chain volume
measures
refers to measures derived by linking together (compounding) movements in volumes,
calculated using the average prices of the previous fiscal year, and applying the
compounded movements to the current price estimates of the reference year. Chain
volume measures were introduced in the national accounts in 1998 because, by annually
rebasing, they provide price relativities that reflect the current situation, thereby providing
better real estimates than constant price measures, especially in times of rapidly changing
relative prices.

Consumer price index measures quarterly changes in the price of a 'basket' of goods and services which account
for a high proportion of expenditure by the CPI population group (i.e., metropolitan
households) and is commonly referred to as the headline rate of inflation.

iv
10

Current account includes the balance of trade (exports of goods and services minus imports of goods and
services), net factor income (income earned by Australia from the rest of the world minus
income earned by the rest of the world from Australia) and net transfer payments
(including, for example, net outflows of foreign aid payments). The current account
excludes capital transfers.

Current prices refers to estimates valued at the prices of the period to which the observation relates. For
example, estimates for 200203 are valued using 200203 prices. This contrasts to chain
volume measures where the prices used in valuation refer to the prices of the previous
year.

Fiscal year means each year commencing 1 July and ending 30 June.

Free on board (or
f.o.b.)
The value of goods measured on a free on board basis includes all production and other
costs incurred up until the goods are placed on board the international carrier for export.
Free on board values exclude international insurance and transport costs. They include the
value of the outside packaging in which the product is wrapped, but do not include the
value of the international freight containers used for transporting the goods.

Gross domestic product means the total market value of goods and services produced in Australia within a given

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(or GDP) period after deducting the cost of goods and services used up in the process of production
but before deducting allowances for the consumption of fixed capital.

GDP per capita means the ratio of the chain volume estimate of GDP to an estimate of the resident
Australian population.

Gross national income (formerly gross national product) refers to the aggregate value of gross primary incomes
for all institutional sectors, including net primary income receivable from non-residents.

Gross value added means the value of output at basic prices minus the value of intermediate consumption at
purchasers' prices.

Household saving ratio refers to the ratio of household net saving (calculated as household net disposable income
less household final consumption expenditure) to household net disposable income
(calculated as household gross disposable income less household consumption of fixed
capital).

I MF means the International Monetary Fund.

I mplicit price deflator is obtained by dividing a current price value by its real counterpart (the chain volume
measure).

I nflation refers to a continuous upward movement in the general level of prices.

Labour force means, for any group, persons who were employed or unemployed.

National net savings is calculated as national net disposable income less final consumption expenditure.

Net domestic product is calculated as GDP less consumption of fixed capital.

Net worth represents the difference between the stock of assets (both financial and non-financial) and
the stock of liabilities. Because it is derived residually, it can be negative.

OECD means the Organisation for Economic Co-operation and Development.

Participation rate means, for any group, the labour force expressed as a percentage of the civilian population
aged 15 years and over in the same group.

RBA means the Reserve Bank of Australia.

v
5

Real gross domestic
income
is calculated by:

taking the volume measure of gross national expenditure;

adding exports of goods and services at current prices deflated by the implicit price
deflator for imports of goods and services;

deducting the volume measure of imports of goods and services; and

adding the current price statistical discrepancy for GDP, deflated by the implicit
price deflator for GDP.

Real gross national is calculated by adjusting real gross domestic income for the real impact of primary

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income income flows (property income and labour income) to and from overseas.

Real net national
disposable income
is calculated by:

taking real gross domestic income;

deducting real incomes payable to the rest of the world;

adding real incomes receivable from the rest of the world; and

deducting the volume measure of consumption of fixed capital.

Real incomes payable and receivable are calculated by dividing the nominal income flows
by the implicit price deflator for gross national expenditure.

Real means adjusted for the effects of inflation.

Seasonal adjustment involves estimation of seasonal factors in data and adjustment of the data to remove the
seasonal effect.

Total gross fixed
capital formation
refers to expenditure on new fixed assets plus expenditure on second-hand fixed assets,
whether for additions or replacements (but not including repairs), where fixed assets are
produced assets that are used repeatedly or continuously in production processes for more
than one year. It includes capital formation undertaken by government, public corporations
and the private sector.

Unemployment rate means, for any group, the number of unemployed persons expressed as a percentage of the
labour force in the same group.

vi

5

USE OF PROCEEDS

The Commonwealth of Australia will not receive any proceeds from investors from the issuance of the Guarantee of
ADI Debt Securities. No separate consideration will be payable by investors for the Guarantee of the ADI Debt 10
Securities. The issuer of any ADI Debt Securities guaranteed by the Commonwealth of Australia under the
Guarantee Scheme will receive the proceeds from their offer and sale.

The Commonwealth of Australia will charge each ADI issuing ADI Debt Securities guaranteed under the Guarantee
Scheme a fee in accordance with the scheme rules governing the Guarantee Scheme. 15

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THE COMMONWEALTH OF AUSTRALIA GUARANTEE

In November 2008, in order to promote financial system stability and ensure the continued flow of credit through the 25
economy at a time of heightened turbulence in international capital markets, the Government of the Commonwealth
of Australia implemented the Guarantee Scheme. The Commonwealth of Australia has executed a Deed of
Guarantee (the "Deed of Guarantee") and adopted the Australian Government Guarantee Scheme for Large Deposits
and Wholesale Funding Scheme Rules (the "Scheme Rules") to give effect to the Guarantee Scheme.
30

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Under the Guarantee Scheme, ADIs may apply to the Reserve Bank of Australia as the administrator of the
Guarantee Scheme (the "Scheme Administrator") to have senior unsecured debt instruments with maturities of up to
60 months that satisfy the eligibility criteria set out in the Scheme Rules guaranteed by the Commonwealth of
Australia. In its discretion, the Commonwealth of Australia may issue an "Eligibility Certificate", which evidences
that the liability specified therein is guaranteed by the Commonwealth of Australia under the Deed of Guarantee, 5
creating what we refer to as the Guarantee.

The following is a summary of certain terms of the Deed of Guarantee and the Scheme Rules, and is qualified in its
entirety by reference to the full text of those documents, which have been filed as exhibits to the Registration
Statement of which this prospectus forms a part. 10

Under the Deed of Guarantee, the Commonwealth of Australia irrevocably:

guarantees to the persons to whom such liabilities are owed (each, a "beneficiary") the payment by each
ADI of liabilities that are the subject of an Eligibility Certificate (the "Guaranteed Liabilities"); and

undertakes in favour of such persons that, whenever an ADI does not pay a Guaranteed Liability on the date
on which it becomes due and payable, the Commonwealth of Australia shall, upon a claim by a beneficiary
made in accordance with the Scheme Rules, and following the expiry of any applicable grace period, pay
the Guaranteed Liability in accordance with the Scheme Rules.
15
The Commonwealth of Australia will not be liable under the Deed of Guarantee in respect of any Guaranteed
Liability that has been varied, amended, waived, released, novated, supplemented, extended or restated in any
material respect without the written consent of the Commonwealth of Australia.

A holder of securities that benefits from the Guarantee will not receive payment under the Guarantee if they fail to 20
follow the Scheme Rules for submission of claims. A claim by a beneficiary for payment under the Guarantee must
be in writing and made in the form of Schedule 8 to the Scheme Rules and delivered to the Scheme
Administrator. A claim that is not made in the form of Schedule 8 is not a valid claim and shall be treated as not
having been made. A valid claim is one that establishes that the amount claimed:
25

is due to the beneficiary;

remains unpaid despite the beneficiary having made a claim on the ADI;

is in respect of a Guaranteed Liability with a due date on or before the expiration of the relevant Eligibility
Certificate; and

has not been paid, and is not eligible to be claimed by the beneficiary in accordance with the Financial
Claims Scheme in Division 2AA of the Banking Act 1959 (which generally applies to claims in relation to
deposits of eligible ADIs of less than $1,000,000).

The Commonwealth of Australia shall pay to the beneficiary the amount specified in a valid claim. There is no 30
designated period within which the Commonwealth of Australia is required to make payments after it receives a
valid claim. All payments will be made in the currency in which the Guaranteed Liability is denominated.

35
2

The Commonwealth of Australia may amend the terms of the Deed of Guarantee or the Scheme Rules at any time in 40
its discretion by publishing the amendment on the website referred to in the Scheme Rules (which is currently
www.guaranteescheme.gov.au), which amendment will be filed as an exhibit to the Registration Statement of which
this prospectus forms a part; provided that (except insofar as such amendment is required by law) such amendment
does not reduce the Commonwealth of Australia's obligations to the beneficiaries in a manner which is prejudicial to
the interests of the beneficiaries in respect of any subsisting Guaranteed Liability. The contents of the website are 45
not incorporated by reference into this prospectus.

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ADIs whose liabilities are guaranteed under the Guarantee Scheme are subject to a number of obligations under the
Scheme Rules, including the obligation to:

provide a counter-indemnity deed indemnifying the Commonwealth of Australia against all liabilities, costs
and expenses that it may incur in consequence of or arising from guaranteeing the ADIs' obligations;

provide written reports to the Scheme Administrator; and
5

pay specified fees to the Commonwealth of Australia for the Guarantee.

However, the Scheme Rules provide that a beneficiary's rights in relation to a Guaranteed Liability shall not be
prejudiced by the failure of an ADI to comply with the Scheme Rules.

The Deed of Guarantee is governed by, and shall be construed in accordance with, and any matter related to it is to 10
be governed by, the law of the State of New South Wales, Australia.

The Guarantee of ADI Debt Securities is irrevocable and ranks equally with other unsecured debts and financial
obligations of the Commonwealth of Australia.
15
Each issue of ADI Debt Securities to which the Guarantee relates will be identified in a prospectus supplement that
will accompany this prospectus. No consideration separate from that paid for the ADI Debt Securities will be paid
for the Guarantee of ADI Debt Securities. See "Use of Proceeds" in this prospectus.

If the Commonwealth of Australia does not perform its obligations under the Guarantee, beneficiaries may be 20
required to commence proceedings in Australia to enforce their rights. See "Enforcement of Civil Liabilities" in
this prospectus.

Enforcement of Civil Liabilities
25
The Commonwealth of Australia is a sovereign state. The Commonwealth of Australia has not agreed to waive any
sovereign immunity or immunity from personal jurisdiction in respect to any action brought in the courts of the
United States or elsewhere (except the courts of competent jurisdiction in Australia), nor has it appointed an agent in
New York upon which process may be served for any purpose.
30
As a consequence, it may be that the Commonwealth of Australia's obligations under the Deed of Guarantee can
only be enforced in an Australian court of competent jurisdiction. In any suit in an Australian court of competent
jurisdiction relating to the Deed of Guarantee, the Commonwealth of Australia would not be entitled to any defence
based on Crown or sovereign immunity. If investors are able to invoke the jurisdiction of a foreign court in respect
of the Guarantee or any other claim against the Commonwealth of Australia under the Deed of Guarantee or 35
otherwise, it may be difficult for investors to obtain or realise upon judgments of foreign courts against the
Commonwealth of Australia. Furthermore, it may be difficult for investors to enforce in Australia or elsewhere the
judgments of foreign courts against the Commonwealth of Australia. The Deed of Guarantee does not contain any
submission to the jurisdiction of the courts of a foreign jurisdiction or any waiver of any immunity that might be
available to the Commonwealth of Australia under the law of any foreign jurisdiction or in respect to any claim 40
brought against the Commonwealth of Australia in any such foreign jurisdiction for any reason.

3 45

Under the applicable provisions of the Judiciary Act 1903 (Cth), no execution or attachment may be issued against
the property or revenues of the Commonwealth of Australia pursuant to the Guarantee. However, on receipt of the 50
certificate of a judgment against the Commonwealth of Australia the Minister for Finance and Deregulation is
obligated to satisfy the judgment out of moneys legally available. Payment could not be made by the
Commonwealth of Australia in satisfaction of any judgment except from monies appropriated by the Australian
Parliament. The Australian Parliament has passed legislation appropriating the Consolidated Revenue Fund for the
purposes of paying claims under the Deed of Guarantee in accordance with the Scheme Rules. 55

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4

5
THE COMMONWEALTH OF AUSTRALIA

Population and Geography of Australia

Australia is located in the Southern Hemisphere. It has an area of nearly 7.7 million square kilometres. It is the 10
world's sixth largest nation after Russia, Canada, China, the United States and Brazil. The major portion of
Australia's population lives in the eastern and southern coastal regions. The vast central area of Australia is arid and
largely unsuitable for agriculture.

The preliminary estimated resident population of Australia at 30 June 2008 was 21,374,000 persons. This was an 15
increase of 359,000 persons (1.7%) since 30 June 2007 and 91,400 persons since 31 March 2008.

The estimated resident populations of the six States, the Australian Capital Territory and Northern Territory at 30
June 2008 were as follows.
20
Table 1: Preliminary estimated resident population of States and Territories
State / Territory Population (as at 30 June
2008)

New South Wales 6,967,200
Victoria 5,297,600
Queensland 4,279,400
Western Australia 2,163,200
South Australia 1,601,800
Tasmania 498,200
Australian Capital Territory 344,200
Northern Territory 219,900
Source: ABS Catalogue No. 3101.0.

The majority of the population lives in the metropolitan areas of the capital cities of the six States, and in Canberra,
the national capital. 25

The growth of Australia's population has two components: natural increase (the number of births minus the number
of deaths) and net overseas migration.

Natural increase for the year ended 30 June 2008 was estimated to be 145,500 persons, an increase of 4.3% (or 6,000 30
persons) on the natural increase for the year ended 30 June 2007 (139,500 persons). The preliminary estimate for
births during the year ended 30 June 2008 (287,500) was 4.8% higher than the figure for the year ended 30 June
2007 (274,300). The preliminary estimate for deaths during the year ended 30 June 2008 was 142,000.

For the year ended 30 June 2008, Australia recorded a preliminary net overseas migration ("NOM") estimate of an 35
increase of 213,500 persons. This was the difference between 443,200 overseas arrivals that were added to the
population and 229,700 overseas departures that were subtracted from the population. Australia's current migration
program allows people from any country to apply to migrate to Australia, regardless of their ethnicity, culture,
religion or language, provided that they meet the criteria set out in law. The Australian Government views
Australia's cultural diversity as a source of both social and economic wealth. The contribution made to population 40
growth by NOM (59.5%) was higher than that of natural increase (40.5%).

5 45

The following table sets forth the estimated resident population of Australia by age group as of 30 June 2008:
50
Table 2: Preliminary estimated resident population by age group

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Age group
(years)

Population
(as at 30 June 2008)
Males Females
0-4 703,896 667,155
5-9 689,772 656,156
10-14 718,972 681,661
15-19 753,065 713,132
20-24 771,929 744,681
25-29 759,327 741,516
30-34 732,525 732,183
35-39 791,930 801,116
40-44 753,090 760,073
45-49 767,253 780,987
50-54 698,762 710,347
55-59 638,731 645,880
60-64 564,229 562,960
65-69 412,024 419,816
70-74 319,595 343,575
75-79 253,178 296,135
80-84 178,408 245,080
85-89 89,897 156,248
90-94 26,807 64,554
95-99 5,691 18,293
100 and over 723 2,646
All ages 10,629,804 10,744,194

Australia's current total fertility rate (the average number of babies that a woman could expect to bear during her
reproductive lifetime, assuming current age-specific fertility rates apply), is 1.935 births per woman in the year
ended 30 June 2008, a rate higher than the fertility rates in many OECD countries, including Italy, Germany, Japan 5
and Canada, and higher than the OECD average of 1.63 in 2005. However, Australia's current total fertility rate is
below those for New Zealand (2.0 in 2005) and the United States (2.05 in 2005). Based on recent age-specific
fertility trends, Australia's total fertility rate is projected to increase initially, then to fall slowly to 1.7 by 2047.

Average Australian mortality rates have fallen strongly over the past century. As a consequence, life expectancies 10
have risen for both men and women. Falling mortality rates add to population growth and imply a higher proportion
of aged people in the population. Mortality rates are falling across all age groups and this trend is projected to
continue for at least the next four decades.

Australia's NOM helps to reduce population ageing. However, falling fertility and mortality rates are projected to 15
lead to an overall rise in the average age of the population. The pace of ageing of the population is projected to
quicken after 2010, as the baby boomer generation starts to reach age 65. While many OECD countries share
Australia's demographic challenges, Australia is in a stronger position to meet them than most.


The Commonwealth of Australia was formed as a federal union on 1 January 1901 when the six former British
colonies - now the six States of New South Wales, Victoria, Queensland, South Australia, Western Australia and
Tasmania - were united in a 'Federal Commonwealth' under the authority of the Commonwealth of Australia
Constitution Act enacted by the British Parliament. In addition to the States, there are ten Territories that include the 25
Australian Capital Territory, which contains the national capital (Canberra), the Northern Territory, Norfolk Island,
the Ashmore and Cartier Islands, the Australian Antarctic Territory, Christmas Island, the Cocos (Keeling) Islands,
the Coral Sea Islands, the Jervis Bay Territory and the Territory of Heard Island and McDonald Islands. The
Northern Territory, the Australian Capital Territory and Norfolk Island have been granted forms of self-
government. The remaining Territories are administered by the Commonwealth Government. 30

6
35

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Federal legislative powers in Australia are vested in the Federal Parliament (the "Parliament"), which consists of the
Queen as head of state, the Senate and the House of Representatives. The Governor-General represents the Queen
throughout Australia. The Senate and the House of Representatives are both elected by the compulsory vote of all 5
eligible persons (generally, Australian citizens aged 18 years and older). Twelve senators are elected from each of
the six States for a term of six years; half the senators from each State are elected every third year. In addition, two
senators are elected from each of the Australian Capital Territory and the Northern Territory and hold office until the
next general election of the House of Representatives. The House of Representatives consists of 150 members, each
elected for a term not exceeding three years. Each State's representation in the House of Representatives is 10
approximately proportionate to its population. This representation is reviewed during the life of every Parliament in
response to population shifts. In accordance with established practice, the election for members of the Senate is
usually held on the same date as the election for members of the House of Representatives. Under certain
circumstances the Governor-General may simultaneously dissolve the Senate and the House of Representatives.
15
The Senate has equal power with the House of Representatives except in relation to laws appropriating money or
imposing taxes, which must originate in the House of Representatives. Laws imposing taxes and laws appropriating
money for the ordinary annual services of the Government may not be amended by the Senate, but may be rejected
or returned by the Senate to the House of Representatives with a request for amendment. Any member of the House
of Representatives or the Senate may introduce a proposed law (a "bill"). To become law, bills must be passed by 20
both the House of Representatives and the Senate.

Under the Constitution, the Parliament is empowered to make laws on certain specified matters such as defence,
external affairs, interstate and overseas trade and commerce, foreign corporations and trading or financial
corporations formed within the limits of Australia, borrowing money, taxation (including customs and excise taxes), 25
postal, telegraphic and telephonic services, currency and banking, insurance, immigration, pensions and social
services. Some of these powers are given to the Parliament to the exclusion of the State Parliaments. Other powers
are exercised by the Parliament concurrently with the State Parliaments, but any legislation within the limits of its
powers enacted by the Parliament prevails over any inconsistent laws of the States. Powers not conferred on the
Parliament remain with the States, subject to certain Constitutional limitations. 30

The executive power of the Commonwealth of Australia under the Constitution is formally vested in the Queen and
is exercisable by the Governor-General as the Queen's representative. There is a Federal Executive Council to
advise the Governor-General. This Council is composed of the Prime Minister and other Federal Ministers. These
Ministers are members of either the House of Representatives or the Senate and generally belong to the party or 35
coalition of parties which has a majority in the House of Representatives. Such Ministers form the Government with
the practical result that executive power is exercised by the Prime Minister and the other Ministers.

The major Australian political parties are the Australian Labor Party, the Liberal Party of Australia and the
Nationals. Minor parties include the Australian Greens, the Family First Party and the Country Liberal Party. From 40
March 1996 to November 2007, the Government was formed by a coalition of the Liberal Party of Australia and the
Nationals. A Federal election was held on 24 November 2007, following which the Australian Labor Party won a
majority of the seats in the House of Representatives and became the Government, with the Hon. Kevin Rudd MP
being elected as Prime Minister.
45
The following tables show the composition of the House of Representatives and the Senate as at 31 December 2008.

Table 3: House of Representatives composition
Australian Labor Party 83
Liberal Party of Australia 55
The Nationals 9
Independents 3
Total 150

50

7

55
Table 4: Senate composition

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Australian Greens 5
The Nationals
4
Family First Party 1
Country Liberal Party 1
Independents 1
Total 76

Judicial power in Australia is vested in the High Court of Australia, other Federal courts and State and Territory
courts. The High Court is a superior court of record and consists of the Chief Justice and six other Justices who are
appointed by the Governor-General following consultations with the States. The Justices are appointed until they
are 70 years of age and can be removed by the Governor-General in Council in certain circumstances on the grounds 5
of misbehaviour or incapacity. In certain limited matters the High Court has original jurisdiction. It also has
appellate jurisdiction in relation to Federal courts, including the Federal Court of Australia, and the Supreme Court
of each State and the Northern Territory and other courts of the States exercising federal jurisdiction. Appeals from
the Supreme Court of a Territory (other than the Northern Territory) may be taken to the Federal Court of
Australia. The common law system, as developed in the United Kingdom, forms the basis of Australian 10
jurisprudence.

8 15

THE AUSTRALIAN ECONOMY
20
Overview

Australia is a stable, culturally diverse and democratic society with a skilled workforce and a strong, competitive
economy. Between 1990-1991 and 2007-08, Australia's real economy grew by an average of around 3.4% a
year. Australia's GDP in 2007-08 (in value terms) was just over $1 trillion. The IMF estimates that in 2007 25
Australia was the world's 17th largest economy by GDP. Based on OECD data, Australia's real per capita GDP
ranked 11th among OECD nations in 2007.

Principal Economic I ndicators
30
The following table sets forth Australia's principal economic indicators for each of the 2003-04, 2004-05, 2005-06,
2006-07 and 2007-08 fiscal years.

Table 5: Principal Economic Indicators
2003-04 2004-05 2005-06 2006-07 2007-08
GDP, Chain Volume Measure (A$ millions) 956,017 982,786 1,012,269 1,045,674 1,083,942
Percentage change 4.0 2.8 3.0 3.3 3.7
GDP per capita, Chain Volume Measure (A$) 47,834 48,590 49,337 50,220 51,243
Unemployment Rate (% of labour force)
(a)
5.5 5.1 4.9 4.3 4.3
Consumer Price Index (% change)
(b)
2.5 2.5 4.0 2.1 4.5
Wage Price Index (% change)
(b) (c)
3.5 4.2 4.1 4.0 4.1
Exports, Chain Volume Measure (A$
millions) 197,382 203,407 207,886 215,695 225,060
Imports, Chain Volume Measure (A$
millions) 173,993 195,124 209,246 228,452 257,400
Balance of Payments Current Account (A$
millions)
(d)
-45,590 -56,325 -52,839 -58,999 -70,171
Official Reserve Assets at end of period (A$
millions) 50,342 56,170 63,815 79,682 35,856

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Commonwealth Government Net Debt (A$
millions) 23,948 12,453 -2,250 -27,385 -42,918
(a) As at the June quarter; calculated as an average over the quarter.
(b) Percentage change to the June quarter of each period from the previous June quarter.
(c) Seasonally adjusted.
(d) As at release of the September quarter under ABS Catalogue No. 5302.0.
Source: ABS Catalogue No. 5206.0, 6202.0, 6401.0, 5302.0, 6345.0; Mid-Year Economic and Fiscal Outlook 2008-09 Statement. 5

GDP Growth

Australia's GDP expanded by 3.7% in 2007-08. Growth in 2007-08 was broadly-based, with private business
investment growing by 15.5%, total gross fixed capital formation growing by 9.9%, and household consumption 10
expenditure growing by 3.7%. In the 2009 UEFO released on 3 February 2009, GDP growth was forecast to slow to
1% in 2008-09 and % in 2009-10, assuming implementation of the Nation Building and Jobs Plan described under
"Economic Outlook" in this prospectus and contingent on there being no further deterioration in global economic
conditions.
15
Major I ndustries

Australia's major industries include property and business services, mining, manufacturing and construction. Growth
during 2007-08 was recorded in most industries, including agriculture, forestry and fishing (up 8.2%, following a
decline of 17.7% in 2006-07), communication services (7.1%), construction (6.4%), transport and storage (5.4%), 20
property and business services (5.1%) and manufacturing (3.3%).

During 2007-08, the industry accounting for the largest share of GDP (at basic prices, excluding ownership of
dwellings) was property and business services, with a share of 14%. Manufacturing was the second largest industry
with a share of 12%. Prior to 1999-00, manufacturing was the largest industry. 25

9
30

Net Worth

Australia's general government sector net worth, reflecting the difference between total assets and total liabilities, as 35
at 30 June 2008 was estimated to be $71,165 million, an increase of $24,506 million since 30 June 2007.

Budget Balance

A sustained period of government budget surpluses in the years prior to 2008-09 enabled the Australian Government 40
to retire large amounts of government debt. Net debt was eliminated for the Australian Government during the year
ended 30 June 2006. In the 2009 UEFO released on 3 February 2009, Australian Government general sector net
debt for 2008-09 was forecast to be -$16.2 billion (-1.3% of GDP). The 2009 UEFO forecast net debt to increase to
5.2% of GDP in 2011-12.
45
The Australian Government underlying cash surplus forecast of $21.7 billion (1.8% of GDP) in the 2008-09 Budget
was reduced to $5.4 billion (0.4% of GDP) in the 2008-09 MYEFO. Since the release of the 2008-09 MYEFO on 5
November 2008, the Australian Government has announced three additional fiscal stimulus packages. See "
Economic Outlook" in this prospectus. In the 2009 UEFO, the underlying cash balance forecast for 2008-09 was
further reduced to a deficit of $22.5 billion (-1.9% of GDP). A Government budget underlying cash deficit of $35.5 50
billion (-2.9% of GDP) was forecast for 2009-10, and underlying cash deficits of $34.3 billion (-2.7% of GDP) and
$25.7 billion (-1.9% of GDP) were projected for 2010-11 and 2011-12, respectively.

Trade
55
Australia's trade in goods and services totalled $489.2 billion in 2007-08, accounting for about 1% of world trade.
Australia's largest trading partners were China, Japan, the United States, Singapore and the United Kingdom.

Domestic Economic Conditions
60

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Gross Domestic Product

The following table shows chain volume GDP and related measures, real income measures and current price
measures for each of the 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08 fiscal years.
5
Table 6: Key National Accounts Aggregates
2003-04 2004-05 2005-06 2006-07 2007-08
Chain volume GDP and related measures
(a)

GDP (A$ millions) 956,017 982,786 1,012,269 1,045,674 1,083,942
GDP per capita (A$) 47,834 48,590 49,337 50,220 51,243
GDP market sector (A$ millions) 615,212 633,888 651,619 674,897 701,863
Net domestic product (A$ millions) 817,422 840,163 861,377 886,572 915,422

Real income measures
(a)

Real gross domestic income (A$ millions) 911,529 953,965 1,000,464 1,045,674 1,095,362
Real gross national income (A$ millions) 885,730 918,562 961,531 999,771 1,047,267
Real net national disposable income (A$
millions) 746,669 775,350 809,914 840,330 878,971
Real net national disposable income per capita
(A$) 37,359 38,334 39,474 40,358 41,553

Current price measures
GDP (A$ millions) 841,351 897,642 967,454 1,045,674 1,131,586
GDP per capita (A$) 42,097 44,380 47,152 50,220 53,495
Gross national income (A$ millions) 817,508 864,310 929,784 999,771 1,083,339
National net saving (A$ millions) 45,844 45,486 62,411 69,250 83,382
Household saving ratio 3.1 2.1 1.9 0.8
Notes: = nil or rounded to zero.
(a) Reference year for chain volume measures and real income measures is 2006-07.

10 10

Following the fall in GDP in volume terms in 1990-91 and a flat result in 1991-92, Australia has experienced 16
years of consecutive growth. In 2007-08, GDP increased by 3.7% and GDP per capita increased by 2.0% (chain 15
volume measures).

The table below details the expenditure components of GDP on a chain volume measurement basis for each of the
2003-04, 2004-05, 2005-06, 2006-07 and 2007-08 fiscal years.
20
Table 7: Expenditure Components of Gross Domestic Product (Chain Volume Measures
(a)
)
2003-04 2004-05 2005-06 2006-07 2007-08
(A$ millions)
Final consumption expenditure
General government
Nationaldefence 16,038 16,762 16,853 17,203 17,959
Nationalnon-defence 50,745 53,926 54,835 57,157 58,827
Total national 66,792 70,687 71,691 74,360 76,786
State and local 103,259 105,758 109,149 111,846 115,825
Total general government 170,057 176,447 180,839 186,205 192,611
Households 524,706 548,015 562,227 584,874 606,295
Total final consumption expenditure 694,686 724,435 743,043 771,080 798,906

Private gross fixed capital formation
Private business investment
Machinery and equipment
New 58,116 66,921 77,007 79,487 92,194
Net purchases of second hand assets 3,015 2,856 3,551 3,969 3,619
Total machinery and equipment 55,086 64,077 73,460 75,518 88,575

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Non-dwelling construction
New building 27,306 28,535 31,847 34,601 38,978
New engineering construction 18,302 21,136 27,749 32,440 35,585
Net purchases of second hand assets 635 958 642 1,286 478
Total non-dwelling construction 45,013 48,781 58,993 65,755 74,086

Livestock 2,523 2,617 2,658 1,867 2,016
Intangible fixed assets
Computer software 7,520 7,982 8,411 9,247 10,789
Mineral and petroleum exploration 1,922 2,335 2,641 3,940 5,084
Artistic originals 469 522 558 601 646
Total intangible fixed assets 10,035 10,921 11,671 13,788 16,519

Total private business investment 112,715 126,875 147,012 156,928 181,195

Dwellings
New and used dwellings 36,378 35,813 33,874 33,882 34,081
Alterations and additions 29,834 29,849 28,989 30,165 30,889
Total dwellings 66,203 65,657 62,860 64,047 64,969

Ownership transfer costs 21,269 17,733 18,134 17,973 18,017
Total private gross fixed capital formation 198,166 209,562 227,868 238,948 264,182

Public gross fixed capital formation
Public corporations
Commonwealth 3,112 3,678 4,409 2,326 1,011
State and local 10,694 11,880 14,044 16,430 18,925
Total public corporations 13,877 15,659 18,579 18,756 19,935

General government
Total national 4,892 4,828 5,684 6,666 6,739

State and local 16,821 18,249 18,075 20,337 21,992

11
5

2003-04 2004-05 2005-06 2006-07 2007-08
(A$ millions)

Total public gross fixed capital formation 35,314 38,400 42,042 45,758 48,666

Total gross fixed capital formation 233,564 247,997 269,936 284,707 312,848

Domestic final demand 928,399 972,547 1,012,988 1,055,785 1,111,754

Changes in inventories
Private non-farm 6,428 5,959 1,429 2,923 4,836
Farm 116 189 535 327 581
Public authorities 415 75 346 56 883
Total changes in inventories 6,209 6,102 2,298 2,652 4,531

Gross national expenditure 934,108 977,598 1,014,965 1,058,437 1,116,286

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Exports of goods and services 197,382 203,407 207,886 215,695 225,060
less Imports of goods and services 173,993 195,124 209,246 228,452 257,400
Statistical discrepancy 4

Gross domestic product 956,017 982,786 1,012,269 1,045,674 1,083,942
(a) Reference year for chain volume measures is 2006-07.

Gross fixed capital formation was a major contributor to GDP growth in 2007-08, increasing by 9.9% and
contributing 2.7% to GDP growth. 5

Household final consumption expenditure increased 3.7%, and contributed 2.0% to GDP growth in 2007-08. Within
household final consumption expenditure, recreation and culture (up 6.1%) and rent and other dwelling services (up
2.6%) were the largest contributors.
10
Growth in private business investment, after slowing to 6.7% in 2006-07, accelerated to 15.5% in 2007-08, similar
to growth in the four years prior to 2006-07. Private business investment contributed 2.3% to GDP growth in 2007-
08, up from 1.1% in 2006-07. Investment in machinery and equipment, and non-dwelling construction increased
17.3% and 12.7%, respectively, and contributed 1.2% and 0.8% to growth in GDP in 2007-08, respectively.
15
From an industry perspective, growth during 2007-08 was recorded in most industries including agriculture, forestry
and fishing (up 8.2% following a decline of 17.7% in 2006-07), communication services (7.1%), construction
(6.4%), transport and storage (5.4%) and property and business services (5.1%). Manufacturing recorded moderate
growth overall of 3.3%, but within the industry there was strong growth in metal products manufacturing (11.1%)
and other manufacturing (11.4%). 20

12
25

The following table identifies the income components of GDP on a current price basis for each of the 2003-04,
2004-05, 2005-06, 2006-07 and 2007-08 fiscal years.
30
Table 8: Income Components of Gross Domestic Product (Current Prices)
2003-04 2004-05 2005-06 2006-07 2007-08
(A$ millions)
Compensation of employees
Wages and salaries 357,002 383,856 412,808 445,206 479,144
Employers' social contributions
(a)
43,119 47,256 51,708 55,805 59,876
Total compensation of employees 400,121 431,112 464,516 501,011 539,020

Gross operating surplus
Non-financial corporations
Private non-financial corporations 142,661 156,486 178,180 199,494 220,374
Public non-financial corporations 20,874 20,951 20,655 16,551 15,563
Total non-financial corporations 163,535 177,437 198,835 216,045 235,937

Financial corporations 24,919 26,580 28,266 30,408 32,454
Total corporations 188,454 204,017 227,101 246,453 268,391

General government 14,661 15,646 16,770 17,938 19,252
Dwellings owned by persons 60,963 64,805 68,545 74,236 86,273
Total gross operating surplus 264,078 284,467 312,415 338,626 373,917

Gross mixed income 78,358 80,260 83,064 93,151 97,304

Total factor income 742,557 795,840 859,996 932,788 1,010,241

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Taxes less subsidies on production and
imports 98,791 101,800 107,458 112,886 122,325
Statistical discrepancy -980

Gross domestic product 841,351 897,642 967,454 1,045,674 1,131,586
(a) Includes contributions to superannuation made by employers and payments of workers' compensation premiums.

For the income components of GDP in 2007-08, there was growth in compensation of employees of 7.6% and
growth in gross operating surplus ("GOS") of 10.4%. The growth in GOS was driven by growth in private non- 5
financial corporations GOS (up 10.5%), partly offset by a fall in public non-financial corporations GOS (-6.0%).

Prices

Inflation was 3.7% through the year to the December quarter 2008, down from 5.0% through the year to the 10
September quarter 2008 and 4.5% through the year to the June quarter 2008. Over the year to the December quarter
2008, the increase in prices was mainly due to increases in the prices of housing and food, partially offset by a fall in
the price of automotive fuel. For further information about the Reserve Bank of Australia's medium-term inflation
target, see "Currency, Monetary and Banking SystemMonetary Conditions" in this prospectus.
15
The following table details the through the year change for the consumer price index and the implicit price deflator
for non-farm gross domestic product to the final (June) quarter of each of the fiscal years 2003-04, 2004-05, 2005-
06, 2006-07 and 2007-08.

The implicit price deflator for non-farm gross domestic product corresponds to a broader set of prices in the 20
economy than the consumer price index, including non-consumption goods and services such as those used by
businesses, and exports.

25
13

Table 9: Prices 30
All Groups
Consumer Price Index
(original)
Implicit Price Deflator for
Non-farm Gross Domestic Product
(seasonally adjusted)
(Percent change through the year)
Year
(a)
:
2003-04 2.5 4.2
2004-05 2.5 4.6
2005-06 4.0 4.3
2006-07 2.1 3.9
2007-08 4.5 6.7
(a) Percentage change to the June quarter of each period from the previous June quarter.
Source: ABS Catalogue No. 6401.0, 5206.0.

Wages
35
The preferred measure of wages in Australia is the wage price index, which measures changes in the price of a unit
of labour unaffected by changes in the quality or quantity of work performed.

Annual wage growth has been elevated since the beginning of 2005 but has remained contained below 4%
throughout this period. This is despite the fact that wage growth has been strong in industries (mining and 40
construction) and states (Western Australia and Queensland) associated with the resources boom.

The following table details the through the year change for the wage price index to the final (June) quarter of each of
the fiscal years 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08.
45
Table 10: Wages

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Wage Price Index
(Percent change through the year, seasonally adjusted)
Year
(a)
:
2003-04 3.5
2004-05 4.2
2005-06 4.1
2006-07 4.0
2007-08 4.1

Labour market
5
Labour market conditions were positive in 2007-08, with strong growth in employment, a low unemployment rate
and a high participation rate of 65%. The worsening global financial crisis has impacted on Australia's growth
prospects, with adverse consequences for the labour market. Australia's labour market conditions are expected to
weaken in line with the significant slowdown in the domestic economy.
10
The 2009 UEFO forecast employment growth to be -% through the year to the June quarter 2009 and 0% by the
June quarter 2010. The 2009 UEFO forecast the unemployment rate to rise to 5% by the June quarter 2009 and 7%
by the June quarter 2010.

The following table identifies key labour force statistics as at the June quarter in each of the referenced years. 15

Table 11: Labour force statistics
(a)

June
quarter
2004
June
quarter
2005
June
quarter
2006
June
quarter
2007
June
quarter
2008
Total Employment ('000) 9,636 9,966 10,143 10,442 10,701
Total Unemployment ('000) 556 534 520 472 477
Unemployment Rate (%) 5.5 5.1 4.9 4.3 4.3
20

14

25
Economic Outlook

The outlook for the world economy deteriorated sharply between the release of the 2008-09 MYEFO on 5
November 2008 and the release of the 2009 UEFO on 3 February 2009. Despite intervention to support financial
markets and stimulatory monetary and fiscal policies, the global financial crisis has driven almost all major 30
advanced economies into recession. It has also become clear that emerging economies will be more profoundly
affected by the crisis than originally thought. In particular, the momentum provided to the world from China's rapid
growth has dissipated in recent times. In the 2009 UEFO released on 3 February 2009, forecasts of world growth in
2009 were revised down to %, consistent with forecasts published by the International Monetary Fund.
35
Conditions in financial markets remain very fragile. Spillovers and contagion from further adverse financial market
developments continue to pose significant risks. A further risk is that gathering economic weakness will feed back
into even weaker financial conditions.

Against the backdrop of a weaker world economy, it is inevitable that the Australian economy will be affected. In 40
line with the worsening global outlook, forecasts for Australian growth in the 2009 UEFO have been revised down
significantly from the 2008-09 MYEFO to 1% in 2008-09 and % in 2009-10.

The Government of Australia and the Reserve Bank of Australia have engaged in substantial fiscal and monetary
policy responses. 45

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Between September 2008 and February 2009, the Reserve Bank of Australia reduced the cash rate by a cumulative
400 basis points.

The Australian Government has announced a number of fiscal stimulus measures including:
5

the Government's Economic Security Strategy, a $10.4 billion discretionary fiscal stimulus package
announced on 14 October 2008, focused on household consumption and dwelling investment;

the Council of Australian Governments' $15.1 billion job creation stimulus package announced on 29
November 2008;

the Government's $4.7 billion nation building package announced on 12 December 2008, providing for
investment in road, rail and education infrastructure, as well as tax changes encouraging capital investment
by Australian businesses; and

the Government's $42 billion Nation Building and Jobs Plan announced on 3 February 2009, providing for
payments to low- and middle-income Australians, investment in schools, housing, energy efficiency,
community infrastructure and roads and support to small businesses.

The Government expects that these measures will provide considerable support to the Australian economy. 10
However, given the magnitude of the global slowdown now underway, these measures are only partially expected to
offset the impact of the global recession. If the global recession is deeper and more protracted than expected, this
would inevitably cause a more severe slowdown in Australia.

The outlook for household consumption softened further between the release of the 2008-09 MYEFO on 5 15
November 2008 and the release of the 2009 UEFO on 3 February 2009. Households are facing significant falls in
wealth, with asset values falling sharply over the year to December 2008. Australian share markets have fallen by
over 40% over the year to December 2008 and house prices have begun to moderate in the last three quarters of
2008. This has been compounded by uncertainty around the duration and effect of the global financial crisis on
wealth and employment, which has had a negative impact on sentiment. Substantial monetary and fiscal policy 20
stimulus is acting to support consumption.

The 2009 UEFO forecasts a recovery in dwelling investment in 2009-10, although near-term results in 2008-09 are
likely to be subdued in line with recent weak building approvals data.
25

15

30

The recovery is expected to be supported by recent large interest rate cuts, strong underlying demand and the First
Home Owners Boost, a Government initiative to stimulate housing activity by supplementing the $7,000 grant
available to first home buyers with a further $7,000 for purchases of established homes and a further $14,000 for
purchases of newly constructed homes, with the 2009 UEFO forecasting dwelling investment growth to rise to 4% in 35
2009-10. A downside risk to these forecasts is that confidence in the household sector remains low, exacerbated by
uncertainty around unemployment levels.

There was a marked deterioration in the outlook for business investment between the release of the 2008-09
MYEFO on 5 November 2008 and the release of the 2009 UEFO on 3 February 2009. The weaker outlook for 40
global and domestic demand and a weaker outlook for commodity prices and profits have reduced much of the
stimulus for investment that has prevailed during the period between 2003-04 and 2007-08. The 2009 UEFO
forecasts business investment to fall by 15% in 2009-10. The Government's Nation Building and Jobs Plan aims to
counter some of the effects of this decline in private investment by providing measures to support private investors
through the Small Business and General Business Tax Break described under "Government FinanceTaxation 45
Business tax arrangementsInvestment Allowances" in this prospectus. The Australian Business Investment
Partnership is also expected to provide liquidity support to the commercial property sector.

The Nation Building and Jobs Plan is also anticipated to provide a large boost to public investment, which the
Australian Government expects to support growth across the forecast horizon. The 2009 UEFO forecasts public 50
final demand to grow by 5% in 2008-09 and 7% in 2009-10.

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The outlook for the external sector has softened in 2008-09 driven by the deterioration in the outlook for world
growth. The broad based nature of the weakness in the world economy means that demand for Australia's exports is
likewise expected to be weak. Half of Australia's top ten trading partners are already in recession, with seven
forecast to contract in 2009. Collectively, Australia's major trading partners are not expected to grow in 2009. The 5
2009 UEFO forecasts export growth to be % in 2008-09 and 2009-10, despite some support from the depreciation
in the Australian dollar of around 30% in trade-weighted terms since its peak in July 2008. This slowdown in export
growth in 2009-10 is expected to be offset by a weaker outlook for imports, driven by the slowdown in domestic
demand, particularly business investment which relies heavily on imported capital goods.
10
In line with the significant slowdown in the domestic economy, employment is expected to contract through 2009
and remain weak in 2010. This is anticipated to flow through to a rise in the unemployment rate, which the 2009
UEFO forecasts to increase to 5% by the June quarter of 2009 and 7% by the June quarter of 2010.

Inflation forecasts decreased significantly between the release of the 2008-09 MYEFO on 5 November 2008 and the 15
release of the 2009 UEFO on 3 February 2009. The 2009 UEFO forecasts inflation to ease on the back of weaker
global growth and domestic demand, moderating wage growth and substantially lower oil prices. The 2009 UEFO
forecasts headline and underlying inflation to fall to 2% through the year to the June quarter 2010.

Table 12: Domestic economy forecasts
(a)
20
2007-08 2008-09
Outcomes
(b)
Forecasts
MYEFO UEFO
(Percentages)
Panel A - Demand and output
(c)

Household consumption 3.7 2 1
Private investment
Dwellings 1.4 0 -2
Total business investment
(d)
14.2 5
(d)
11.2 -2
(d)
16.0 8 2
Private final demand
(d)
5.5 2
Public final demand
(d)
4.6 3 5
Total final demand 5.3 2 1
Change in inventories
(e)
0.2 - -
Gross national expenditure 5.5 2 1
Exports of goods and services 4.3 6
Imports of goods and services 12.7 7 2
Net exports
(e)
-1.9 - -
Real gross domestic product 3.7 2 1
Non-farm product 3.6 1 1

16
25

Farm product 8.5 13 11
Nominal gross domestic product 8.2 7 6
Panel B - Other selected economic measures
External accounts
Terms of trade 5.1 10 9
Current account balance (per cent of GDP) -6.2 -4 -3
Labour market
Employment (labour force survey basis)
(f)
2.5 -
Unemployment rate (%)
(g)
4.3 5 5
Participation rate (%)
(g)
65.3 65 64
Prices and wages

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(f)
4.5 3 2
Gross non-farm product deflator 4.4 6 5
Wage Price Index
(f)
4.1 4 3
(a) Percentage change on preceding year unless otherwise indicated.
(b) Calculated using original data from ABS Catalogue No. 5206.0 (which does not include revisions from ABS Catalogue No. 5204.0).
(c) Chain volume measures except for nominal gross domestic product, which is in current prices.
(d) Excluding second-hand asset sales from the public sector to the private sector, and adjusted for privatisation of Telstra.
(e) Percentage point contribution to growth in GDP.
(f) Through the year growth rate to the June quarter 2008 and 2009.
(g) Estimate for the June quarter 2008 and 2009.
Source: ABS Catalogue No. 5206.0, 5302.0, 6202.0, 6345.0, 6401.0; unpublished ABS and Treasury data.

The above estimates are based on forecasts of the economic outlook by the Treasury of the Commonwealth of 10
Australia. Treasury generally conducts two major rounds of forecasting each year, in connection with the budget
each May and the mid-year economic and fiscal outlook issued between October and January. In 2009, an additional
forecast update has been released in response to rapid changes in the global economy.

Treasury's forecasting approach encompasses a broad range of information. The national accounts form the 15
framework for the forecasting exercise. The technical assumptions about interest rates, exchange rates and oil prices
are reset in the light of recent developments: it is assumed that interest rates will move broadly in line with market
expectations, and that exchange rates and oil prices will remain around recent average levels. Any changes to fiscal
policy are also incorporated. Insight is also gathered from liaison visits with large, medium and small businesses,
industry organisations and State Treasuries and Treasury's International Economy Division's latest assessment of the 20
world outlook.

Treasury's Domestic Economy Division assesses the implications of these inputs using a mix of single-equation
econometric models, partial indicators, leading indicators, business surveys and advice from specialist
agencies. Forecasting judgments are informed by economic theory and assessments of recent economic 25
analysis. Forecasts are discussed both within Treasury and with other government agencies.

The above estimates assume implementation of the Nation Building and Jobs Plan described under "Economic
Outlook" in this prospectus.
30
Major Sectors of the Economy

In 2007-08, the industry with the largest share of gross value added (at basic prices) was property and business
services (excluding ownership of dwellings), with a share of 13.1%. Manufacturing ranked second with a share of
10.7%. 35

17
40

The following table identifies the percentage of gross value added by industry at basic prices for each of the 2003-
04, 2004-05, 2005-06, 2006-07 and 2007-08 fiscal years.
45
Table 13: Percentage of Gross Value Added (Basic Prices)
2003-04 2004-05 2005-06 2006-07 2007-08
(Percentages)

Agriculture, forestry and fishing 3.0 3.0 3.0 2.4 2.5
Mining 8.1 8.3 8.1 8.5 8.3
Manufacturing 11.7 11.3 10.9 10.7 10.7
Electricity, gas and water supply 2.5 2.4 2.4 2.3 2.2
Construction 6.9 7.0 7.4 7.5 7.7
Wholesale trade 5.0 5.0 5.0 4.9 4.9
Retail trade 5.9 5.9 5.8 5.9 5.9
Accommodation, cafes and restaurants 2.1 2.2 2.2 2.1 2.1
Transport and storage 4.8 4.9 4.9 5.0 5.1
Communication services 2.3 2.3 2.4 2.6 2.6

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Finance and insurance 7.3 7.4 7.6 8.0 8.1
Property and business services
(a)
13.3 13.1 13.1 13.0 13.1
Government administration and defence 4.2 4.2 4.2 4.2 4.1
Education 4.7 4.6 4.6 4.5 4.4
Health and community services 6.3 6.3 6.5 6.4 6.3
Cultural and recreational services 1.5 1.6 1.6 1.6 1.6
Personal and other services 2.0 2.0 2.0 2.0 2.0
Ownership of dwellings 8.3 8.4 8.5 8.5 8.4

Gross value added at basic prices 100.0 100.0 100.0 100.0 100.0
(a) Excludes ownership of dwellings.

The table below identifies employment share by industry for each of the 2003-04, 2004-05, 2005-06, 2006-07 and
2007-08 fiscal years. 5

Table 14: Employment share by industry
2003-04 2004-05 2005-06 2006-07 2007-08
(Percentages)

Mining 1.0 1.1 1.3 1.3 1.4
Manufacturing 11.2 11.1 10.6 10.3 10.4
Construction 8.1 8.5 8.7 9.1 9.1
Retail trade 15.1 15.2 14.9 14.5 14.8
Property and business services 11.8 11.5 11.9 12.0 12.0
Education 7.3 6.9 7.2 7.0 7.2

Total 100.0 100.0 100.0 100.0 100.0
Source: ABS Catalogue No. 6291.0.55.003.

10
18

Property and Business Services 15

The property and business services industry includes all units mainly engaged in renting and leasing assets as well as
units engaged in providing a wide variety of business services. Property and business services (excluding ownership
of dwellings) contributed 13.1% of gross value added (at basic prices) in 2007-08. Gross value added of the
property and business services industry grew by 15.9% (in volume terms) between 2002-03 and 2007-08, 20
representing average annual growth of 3.0%.

In 2007-08, the property and business services industry was the second-largest employer, employing 1.3 million
people (12% of total employment).
25
Manufacturing

The manufacturing industry has historically been the largest industry in Australia. However, the gross value added
contribution of manufacturing (at basic prices) has been decreasing over the past three decades. In the early 1970s,

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manufacturing value added contributed almost 25% of gross value added (at basic prices), while in 200708 the
manufacturing industry contributed 10.7% of gross value added (at basic prices). Although the manufacturing
industry currently contributes a smaller percentage of gross value added (at basic prices) than it did twenty years
ago, output in the industry has had an upward trend over the same time period.
5
The manufacturing sector accounted for around 10.4% of total employment in 2007-08.

The following table provides a breakdown of gross value added (chain volume measures) by the manufacturing
industry for each of the 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08 fiscal years.
10
Table 15: Industry Value Added (Chain Volume Measures)
2003-04 2004-05 2005-06 2006-07 2007-08
(A$ millions)
Food, Beverage and tobacco 19,635 19,812 19,668 19,846 19,769
Textiles, clothing and footwear 4,156 3,381 3,152 3,103 2,961
Wood and Paper Products 7,274 7,331 7,044 6,875 6,592
Printing, publishing and recorded media 10,871 10,600 10,399 10,646 10,948
Petroleum, coal, chemical, etc. 15,528 15,528 14,895 14,703 15,061
Non-Metallic mineral products 4,402 4,618 5,148 5,258 5,533
Metal products 17,240 16,751 16,582 18,322 20,350
Machinery and Equipment 19,577 19,682 20,560 20,510 21,020
Other manufacturing 4,850 4,464 4,032 4,030 4,490
Total 103,093 101,846 101,320 103,292 106,724

Ownership of Dwellings
15
Ownership of dwellings consists of landlords and owner-occupiers of dwellings. Owner-occupiers are regarded as
operating a business that generates a gross operating surplus. The imputation of a rent to owner-occupied dwellings
enables the services provided by dwellings to their owner-occupiers to be treated consistently with the marketed
services provided by rented dwellings to their tenants. Owner-occupiers are regarded as receiving rents (from
themselves as consumers), paying expenses and making a net contribution to the value of production which accrues 20
to them as owners. Ownership of dwellings contributed 8.4% of gross value added (at basic prices) in 2007-08.

Mining

In 2007-08, mining accounted for 8.3% of gross value added (at basic prices). However, in 2007-08, exports of 25
mining (non-rural) commodities accounted for around 49% of total exports by value.

The gross value of mine production for 2007-08 was $111.8 billion, a 10.0% increase over the previous
year. Mineral and petroleum exploration expenditure, after falling over 1997-02 as part of a cyclical and global
downturn, increased to $5.5 billion in 2007-08 (at current prices). 30

In 2007, Australia was the world's largest exporter of metallurgical coal, the second largest exporter of thermal coal,
iron ore, lead, zinc ores and concentrates and zinc metal and the third largest exporter of aluminium.

35

19

40
Australia's export earnings from non-rural commodities are estimated to have been $115.0 billion in 2007-08 (at
current prices).

Private (real) new capital expenditure in the mining sector was $27.4 billion in 2007-08, around 23.7% higher than
in 2006-07. In 2007-08, the mining sector, including services, employed around 146,000 people directly, around 45
1.4% of the work force. These sectors generate further manufacturing jobs downstream in smelting and refining,
basic metal fabrication, non-metallic mineral products, petroleum, coal and basic chemical products and electricity
and gas.

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Construction

The construction industry contributed 7.7% of gross value added (at basic prices) in 2007-08. Over the last 20 years,
value added in volume terms has grown by around 4% each year. The industry tends to experience peaks and 5
troughs due to factors such as changing interest rates, property speculation and fiscal policy.

In 2000-01, there was a large fall in output as a substantially large amount of building activity was brought forward
to avoid the introduction of the GST. Since 2001-02, value added has grown strongly, buoyed by the terms of trade
boom and strong growth in house prices. 10

Employment in construction reached 1 million persons in August 2008. Since 2000-01, employment in construction
has grown strongly, with its share in total employment rising from 7.6% to 9.1% over 2007-08, making it the fifth
largest employer among industries.
15
Finance and I nsurance

Companies in the finance and insurance industry provide a range of services, from the provision of credit and
financial advice to insurance. The sector contributed 8.1% of gross value added (at basic prices) in 2007-08, a
proportion that has remained generally stable over the past 15 years following deregulation during the 1980s. 20

However, the stability of the sector's share of gross value added hides rapid change within the industry. The advent
of internet banking, ATM machines and credit scoring have prompted massive investment in computer software and
machinery and equipment (computers), and far less construction (new branches and outlets). These innovations most
likely explain a trend decline in the wage share of total finance and insurance income over the past two decades. 25

Health and Community Services

The health and community services industry comprises hospitals, nursing homes, medical and dental services, child
care services and community care services. Health and community services contributed 6.3% of gross value added 30
(at basic prices) in 2007-08.

Retail Trade

Retail trade is one of the larger industries in Australia. The industry comprises food retailing, personal and 35
household goods retailing and motor vehicle retailing and services. Retail trade is a labour intensive industry, and
the average labour income share of 75% reflects this. The link between the deregulation of shopping hours and
measured hours worked is one of the key issues affecting productivity in this industry. Retail trade contributed 5.9%
of gross value added (at basic prices) in 2007-08.
40
Transport and Storage

The efficiency and competitiveness of the Australian economy is significantly influenced by the transport system,
which is a strategic network industry. The transport and storage sector accounted for approximately 5.1% of gross
value added (at basic prices) in 2007-08. The Bureau of Infrastructure, Transport and Regional Economics estimates 45
that the Australian freight task will almost double between 2005 and 2020. Passenger transport is also expected to
increase significantly, particularly in urban areas. This will require investment in additional transport infrastructure
and improvements in the utilisation of existing and new infrastructure.

The public sector in Australia provides those transport services (operations and infrastructure) that involve public 50
good characteristics and are generally not commercially attractive. The public sector also provides the regulatory
frameworks to support a safe, fair and efficient transport sector. The major airports have all been privatised. The
private sector also has a significant infrastructure role in rail and ports sectors.

55

20

60
Wholesale Trade

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The wholesale trade industry consists of basic material wholesaling, machinery and motor vehicle wholesaling,
which includes computer wholesaling, and personal and household good wholesaling. The 1990s saw strong growth
in industry value added. This increase in value added came from substantial rationalisation within the industry, a
wider uptake of technology amongst firms, and the increased use of new inventory management techniques, such as 5
'just-in-time' processing. Wholesale trade contributed 4.9% of gross value added (at basic prices) in 2007-08.

Education

The education industry is a labour intensive, service based sector, with a large and well educated workforce. The 10
education industry's share of gross value added (at basic prices) was 4.4% in 2007-08 and has remained fairly stable
over the past five years. The education industry is dominated by the public sector, with both Commonwealth and
State governments responsible for key education services across the economy, including the provision of primary,
secondary and tertiary education, and, increasingly, early childhood education.
15
Government Administration and Defence

The government administration and defence industry includes central, state and local government units mainly
engaged in government administration and regulatory activities, as well as judicial authorities and commissions,
representatives of overseas governments, and the Army, Navy and Air defence forces and civilian units mainly 20
engaged in defence administration. Government administration and defence contributed 4.1% of gross value added

Agriculture, Forestry and Fishing
25
The agriculture, forestry & fishing industry contributed 2.5% of gross value added (at basic prices) in 2007-08.
Historically, the contribution of this industry to the Australian economy has been trending downwards, though the
absolute size of the industry continues to grow. The industry is dominated by agriculture, with forestry and fishing
making up only around 5% of industry output in 2007-08 based on gross value added (chain volume
measures). Production in the past three years has been impacted by drought conditions. 30

Agriculture

The following table presents production data of Australia's principal rural commodities for each of the 2003-04,
2004-05, 2005-06, 2006-07 and 2007-08 fiscal years. 35

Table 16: Principal Rural Commodities - Gross values and volumes of Australian production
2003-04 2004-05 2005-06 2006-07 2007-08
Commodities A$m kt A$m kt A$m kt A$m kt A$m kt
Wool
(a)
2,397 509 2,166 520 2,054 520 2,282 502 2,612 441
Meat 10,896 3,694 12,033 3,892 11,960 3,864 12,336 4,103 12,113 4,029
Wheat 5,636 26,132 4,317 21,905 5,099 25,150 2,619 10,822 5,163 13,039
Cane sugar
(b)
854 36,993 980 37,822 1,032 37,128 1,183 36,397 885 35,011
Cottonseed and lint 689 843 1,222 1,557 1,105 1,441 514 662 273 321
Milk
(c)
2,809 10,076 3,194 10,127 3,341 10,089 3,178 9,583 4,575 9,223
Notes: kt = kilotonne.
NA = Not available.
(a) Value calculated from average auction price (greasy). 40
(b) Cut for crushing.
(c) Units of measurement: ML.
Source: Australian Bureau of Agricultural and Resource Economics, Australian Commodities (pages 762, 763, 765 and 766); ABS Catalogue
No. 7215.0.
45
Electricity, Gas and Water Supply

The electricity, gas and water supply industry contributed 2.2% of gross value added (at basic prices) in 2007
08. Electricity is the largest part of this industry and contributes 63% to industry value added (chain volume
measures). Water, sewerage and drainage account for 30% of gross value added (chain value measures) and gas 50
contributes 7% to gross value added (chain value measures). Prior to 1990, the industry was highly regulated and
most utilities operated as monopolies. The electricity industry was vertically integrated in most, if not all
jurisdictions, with single companies responsible for generation, transmission, distribution and retail. Significant
reforms occurred in the three sectors over the 1990s. However, different jurisdictions approached deregulation on

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different time frames. Some of the reforms included corporatisation, privatisation and the structural separation of
electricity utilities. These reforms have continued into the current decade. Value-added in volumes terms grew by
1.7% per year on average between 198586 and 200708.

5
21

Electricity 10

The energy market in Australia has undergone significant reform since the 1990s, which has increased investment
and improved productivity. The reforms have included: disaggregating elements of the electricity supply chain;
introducing competition in electricity generation and retailing; and corporatising, and, in some States, privatizing
electricity assets. The creation of the National Electricity Market has also allowed electricity trading between 15
Queensland, New South Wales, Victoria, South Australia, Tasmania and the Australian Capital Territory through a
wholesale electricity pool.

In 2006, the Council of Australian Governments ("COAG") agreed to energy market reforms to enhance
governance, improve transmission planning and assist the development of more effective energy financial 20
markets. COAG also agreed to establish a national energy market operator for electricity and gas with a national
planning function.

Australia's electricity prices, although having risen in recent years, remain low by world standards largely due to
substantial natural resources. In 2006, average electricity prices in capital cities were generally lower than in many 25
OECD countries, including the United Kingdom, Spain, France and Italy.

Australia has about 244 large electricity generators, of which around 190 are in the National Electricity Market
jurisdictions in eastern and southern Australia. The National Electricity Market supplies electricity to approximately
8.7 million residential and business customers using an extensive electricity distribution network covering 30
approximately 700,000 kilometres. In 2007-08, the market generated around 208 terawatt hours of electricity with a
turnover of almost $11.1 billion. The generation sector uses a variety of fuel sources to produce electricity. Black
and brown coal accounted for around two-thirds of total generation capacity across the National Electricity Market
in 2007-08, followed by hydroelectric generation (17%) and gas-fired generation (15%).
35
Electricity generation in Australia is emissions intensive due to the predominance of coal. The Government has
committed to policies aimed at addressing climate change. In 2007, the Government committed to ensuring 20% of
Australia's electricity supply is derived from renewable sources by 2020. On 15 December 2008, the Australian
Government indicated its intention to introduce emissions trading through the Carbon Pollution Reduction Scheme
from 1 July 2010. The Scheme will cover around 75% of national emissions, including the stationary energy 40
sector. It will be a 'cap and trade' scheme under which significant emitters of greenhouse gases will need to acquire
and surrender a carbon pollution permit for each tonne of greenhouse gas that they emit during the compliance
year. Permits will be tradable which ensures that emissions are reduced at the lowest possible cost. The price of
permits will be determined by the market.
45
The Australian Government has announced its medium-term target to reduce Australia's greenhouse gas emissions
by between 5% and 15% below 2000 levels by the end of 2020. The top of this range (5% below 2000 levels)
represents an unconditional commitment to reduce emissions by 2020, irrespective of the actions of other
countries. The bottom of this range (15% below 2000 levels) is conditional on a global agreement where all major
economies substantially restrain emissions and all developed countries take on comparable reductions to that of 50
Australia. The Australian Government's long-term target is to reduce emissions by 60% below 2000 levels by 2050.

These policies are expected to lead to significant new investment in electricity generation and transmission.

Communication Services 55

The communication services industry, which comprises postal, courier and telecommunications services, contributed
2.6% of gross value added (at basic prices) in 2007-08.

Telecommunications 60

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The Australian telecommunications market has been open to full competition since 1 July 1997. Since that time, the
telecommunications sector has developed into a more dynamic and innovative market, with businesses and
households benefiting from lower prices and more variety of carriers.

5

22

10
The telecommunications sector is subject to a number of regulatory mechanisms at the retail level. A Universal
Service Obligation ("USO") is placed on the telecommunications industry to ensure that all people in Australia have
reasonable access to basic telephone services, on an equitable basis. Funding of the USO is provided by all licensed
telecommunications carriers.
15
Telecommunications-specific competition provisions are contained in Parts XIB and XIC of the Trade Practices Act
1974 (the "TPA"). These provisions are based on, but do not exactly mirror, generic competition laws.

Part XIB of the TPA establishes an anti-competitive conduct regime for telecommunications markets,
which applies in addition to the general competition provisions under Part IV of the TPA.

Part XIC of the TPA establishes an industry specific regime for regulated access to bottleneck carriage
services and provides the core access arrangements for the telecommunications industry.
20
This competition framework has had a number of important benefits for consumers. For example, access to Telstra's
copper local loop network by its competitors has been a key driver of the growth of broadband in Australia. Telstra,
formerly a Government-owned monopoly, was privatised between 1997 and 2006. Tranches of approximately 33%
and 16% of Telstra were sold in 1997 and 1999. In 2006, the Government sold a further 34% stake in Telstra, with
the remaining 17% shareholding transferred to the Future Fund in February 2007. For further information with 25
respect to the Future Fund, see "Government FinancePensions and Superannuation" in this prospectus.

The Government has also committed to provide up to $4.7 billion and to consider necessary regulatory changes to
facilitate the roll-out of a new open access, high-speed, fibre-based broadband network the National Broadband
Network. 30

Accommodation, Cafes and Restaurants

The accommodation, cafes and restaurants industry consists of firms primarily engaged in the provision of
hospitality services. This includes accommodation, clubs, pubs, taverns and bars, along with cafes and restaurants. 35
The industry's contribution of gross value added (at basic prices) from 2003-04 to 2007-08 has been around 2.1%.
The largest proportion of value added in this industry is from pubs and clubs, while the largest employer is cafes and
restaurants.

Personal and Other Services 40

The personal and other services industry includes all units mainly engaged in providing personal services, and
services provided by religious organisations and other public interest groups. Personal and other services contributed
45
Cultural and Recreational Services

The cultural and recreational services industry comprises libraries, museums, parks and gardens, sporting facilities,
gambling services, radio and television services, and production, distribution and exhibition of film. Cultural and
recreational services contributed 1.6% of gross value added (at basic prices) in 2007-08. 50

Television Services

Free to air television broadcasts reach 100% of the Australian population. Subscription television can reach 100% of
Australia through a mixture of hybrid fibre coaxial cable in major cities and satellite transmission in rural areas. 55

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The Government has announced that all free-to-air television broadcasters in Australia will complete the switch from
analog transmission to digital-only transmission by the end of 2013. The switchover process will commence in
2010, and will be progressively carried out on a regional basis across the country.

5

23

10
EXTERNAL TRADE AND BALANCE OF PAYMENTS

Merchandise Trade

The value of goods measured on a free on board ("f.o.b.") basis includes all production and other costs incurred up 15
until the goods are placed on board an international carrier for export from the relevant exporting country.

Australia's merchandise exports (f.o.b.) and imports (f.o.b.) for the past five fiscal years in current prices, calculated
on a balance of payments basis, are shown in the table below.
20
Table 17: Merchandise exports and imports
2003-04 2004-05 2005-06 2006-07 2007-08
(A$ millions)
Exports
Rural Exports
Meat and Meat Preparations 5,758 6,933 6,709 7,078 6,540
Cereal grains and cereal preparations 5,093 5,160 4,852 4,171 4,992
Wool and Sheepskins 2,778 2,838 2,544 3,065 2,796
Other Rural 10,887 10,707 11,161 10,761 11,142
Total Rural 24,516 25,638 25,266 25,075 25,470

Non-rural Exports
Metal Ores and Minerals 14,863 19,852 28,934 35,315 41,641
Mineral Fuels - 19,786 28,394 37,570 37,570 43,354
Coal, coke and briquettes 11,000 17,240 24,352 21,928 24,556
Other mineral fuels 8,786 11,154 13,218 15,642 18,798
Metals (excl non-monetary gold) 7,753 8,670 11,271 14,820 14,036
Machinery 6,830 7,466 8,066 8,422 8,791
Transport equipment 5,156 4,944 5,314 4,648 5,719
Other manufactures 13,338 14,109 14,996 16,268 16,999
Other non-rural (incl sugar and beverages) 9,257 10,942 12,059 14,770 12,781
Total Non-Rural 76,983 94,377 118,210 131,813 143,321

Goods for processing 97 241 368 417 276
Repairs on goods 75 67 74 90 103
Goods procured in ports by carriers 771 1,072 1,420 1,379 1,547
Non-monetary gold 7,031 6,472 9,087 10,740 12,272

Total Merchandise Exports 109,473 127,867 154,425 169,514 182,989

Imports
Consumption goods 42,784 47,030 50,221 54,913 59,383
Capital goods 32,134 36,072 40,077 41,765 45,352
Intermediate and other merchandise goods 54,381 63,735 72,737 79,923 90,476
Repairs on goods 219 182 115 131 117

Total Merchandise Imports 133,018 150,873 169,716 184,024 204,964

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Balance on Merchandise Trade -23,545 -23,006 -15,291 -14,510 -21,975

24
5

The following table shows the shares of Australian exports and imports directed to and sourced from various
countries and country groups for each of the 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08 fiscal years. These
shares are calculated from values data and on a merchandise trade basis, rather than a balance of payments basis. 10

Table 18: Geographical distribution of Australia's recorded merchandise trade
2003-04 2004-05 2005-06 2006-07 2007-08
(Percentages)
Exports
China 9.1 10.3 11.9 13.6 14.9
Japan 18.2 19.7 20.4 19.4 19.3
Korea, Republic of 7.8 7.7 7.7 7.8 7.9
New Zealand 7.4 7.2 5.7 5.6 5.3
United Kingdom 4.7 3.8 5.1 3.7 4.6
United States 8.7 7.5 6.4 5.8 5.9
India 4.5 4.8 4.8 6.0 5.2
Singapore 2.8 2.7 2.8 2.8 2.9
Thailand 2.3 3.1 2.8 2.5 2.6
Indonesia 2.7 2.7 2.6 2.5 2.2
Malaysia 2.0 2.0 1.7 1.8 1.9
Other European Union
(a)
7.3 7.2 7.3 7.7 6.7
Other
(b)
22.5 21.3 20.8 20.8 21.0
Total 100.0 100.0 100.0 100.0 100.0

Imports
China 11.7 13.3 13.9 15.0 15.3
Japan 12.3 11.5 10.3 9.6 9.7
New Zealand 3.9 3.6 3.3 3.1 3.5
United Kingdom 4.1 4.0 3.6 4.1 4.2
United States 15.2 14.2 13.6 13.8 12.0
Singapore 3.9 4.8 6.3 5.6 6.8
Thailand 2.8 2.8 3.2 4.0 4.4
Indonesia 2.9 2.2 2.7 2.6 2.3
Malaysia 3.6 4.0 4.0 3.7 4.0
(a)
19.9 19.5 18.1 17.5 17.2
Other
(b)
16.0 16.8 17.1 17.7 17.6
Total 100.0 100.0 100.0 100.0 100.0
(a) Other European Union refers to trade with all current 27 member states, other than the UK.
(b) Care should be taken in interpreting the Other category, as it includes confidential items that are not classified by country. Thus it is possible
that the export and import shares of the countries or country groups listed above could be understated.
15
Australia's goods and services exports were valued at $234.3 billion in 2007-08. Australia's top five merchandise
export markets were Japan ($35.0 billion), China ($27.0 billion), Republic of Korea ($14.2 billion), United States
($10.6 billion) and New Zealand ($9.5 billion). Merchandise exports to the East-Asia region were valued at $106.0
billion (58.6% of Australia's merchandise exports); to the European Union, $20.5 billion (11.3% of Australia's
merchandise exports); and to North America, $12.8 billion (7.1% of Australia's merchandise exports). Major 20
merchandise and service exports were coal, iron ore, education services, gold and personal travel.

Australia's goods and services imports were valued at $254.9 billion in 2007-08. China was Australia's largest source
of merchandise imports (valued at $31.0 billion or 15.3% of Australia's merchandise imports), followed by the
United States ($24.3 billion or 12.0% of Australia's merchandise imports) and Japan ($19.7 billion or 9.7% of 25

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Australia's merchandise imports). Australia's major import items were crude petroleum, passenger motor vehicles,
personal travel, refined petroleum and freight services.

5
25

Balance of Payments 10

Australia has traditionally been a net importer of capital. This has facilitated the development of its rich endowment
of natural resources at a faster pace than would have been possible if domestic savings were the only source of
investment funds. Australia has traditionally run a current account deficit, reflecting the use of a net inflow of capital
to obtain real resources from the rest of the world. 15

The table below provides Australia's balance of payments details for each of the 2003-04, 2004-05, 2005-06, 2006-
07 and 2007-08 fiscal years.

Table 19: Balance of payments 20
2003-04 2004-05 2005-06 2006-07 2007-08
(A$ million)
CURRENT ACCOUNT -45,590 -56,325 -52,839 -58,999 -70,171

Goods and Services -21,495 -22,626 -14,520 -12,757 -20,619
Credits 147,219 167,562 196,274 215,695 234,308
Debits -168,714 -190,188 -210,794 -228,452 -254,927

Goods -23,545 -23,006 -15,291 -14,510 -21,975
Credits 109,473 127,867 154,425 169,514 182,989
Debits -133,018 -150,873 -169,716 -184,024 -204,964

Services 2,050 380 771 1,753 1,356
Credits 37,746 39,695 41,849 46,181 51,319
Debits -35,696 -39,315 -41,078 -44,428 -49,963

Income -23,840 -33,330 -37,670 -45,903 -49,227
Credits 17,001 21,741 26,474 35,988 41,575
Debits -40,841 -55,071 -64,144 -81,891 -90,802

Current transfers -255 -369 -649 -339 -325
Credits 4,191 4,268 4,602 5,155 5,272
Debits -4,446 -4,637 -5,251 -5,494 -5,597

CAPITAL AND FINANCIAL ACCOUNT 46,059 57,389 52,643 59,103 69,514

Capital account 1,372 1,594 1,726 2,380 2,176

Capital transfers 1,444 1,523 1,729 1,957 2,168
Credits 2,571 2,674 2,673 2,995 3,382
Debits -1,127 -1,151 -944 -1,038 -1,214

Net acquisition/disposal of non-produced,
non-financial assets -72 71 -3 423 8

26
25

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2003-04 2004-05 2005-06 2006-07 2007-08
(A$ million)
Financial account 44,687 55,795 50,915 56,724 67,337

Direct investment -15,926 51,494 -10,942 8,926 18,386
Abroad -26,225 59,307 -31,758 -31,232 -37,489
In Australia 10,299 -7,813 20,817 40,156 55,874

Portfolio investment 82,458 544 63,764 63,814 3,766
Financial derivatives -2,800 961 -1,328 3,575 -9,450
Other investment -13,918 10,919 5,027 537 10,345
Reserve assets -5,127 -8,123 -5,605 -20,127 44,292

NET ERRORS AND OMISSIONS -469 -1,064 196 -104 657

In original terms, the balance on current account for 2007-08 was a deficit of $70.2 billion, a 19% increase on the
deficit of $59.0 billion recorded for 2006-07. 5

The goods and services deficit for 2007-08 was $20.6 billion, an increase of $7.9 billion on the deficit of $12.8
billion recorded in 2006-07. Goods credits increased $13.5 billion or 8% (due to increases in volumes and prices)
and goods debits increased $20.9 billion or 11% (due to an increase in volumes) during 2007-08.
10
The services surplus of $1.4 billion for 2007-08 was a decrease of $0.4 billion on the surplus of $1.8 billion in 2006-
07.

The net income deficit for 2007-08 rose $3.3 billion (7%), with an increase in income credits of $5.6 billion (16%)
and an increase in income debits of $8.9 billion (11%). 15

The balance on financial account recorded a net inflow of $67.3 billion for 2007-08, with a net inflow on debt of
$92.9 billion and a net outflow on equity of $25.6 billion. This result was up $10.6 billion on the net inflow recorded
for the previous year as a result of:
20

a turnaround of $64.4 billion to a net inflow on reserve assets;

a decrease of $60.0 billion on the net inflow on portfolio investment;

a turnaround of $13.0 billion to a net outflow on financial derivatives;

an increase of $9.8 billion on the net inflow on other investment; and

an increase of $9.5 billion on the net inflow on direct investment.
25
Changes in Official Reserve Assets

The Australian Government meets its foreign exchange requirements from the Reserve Bank of Australia. The RBA
holds Official Reserve Assets ("ORA") primarily to facilitate foreign exchange intervention. The vast majority of
Australia's reserves are held as foreign exchange and are invested primarily in high quality government 30
securities. The value of ORA held by the RBA changes in response to transactions undertaken in the foreign
exchange market by the RBA, both on its own account and on behalf of its customers (primarily Australian
Government agencies), as well as fluctuations in the value of the foreign currencies and underlying assets in which
the reserves are invested. ORA also includes foreign currency that has been borrowed under swap to assist the RBA
to manage domestic liquidity for monetary policy purposes. 35

27
40

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The following table shows the composition of Australia's ORA over the past five years. For several years prior to
2007-08, the RBA's gross holdings of foreign currency rose sharply as foreign currency was borrowed under foreign
exchange swaps against Australian dollars. The Australian dollars lent to the market under these swaps helped to
offset the domestic liquidity impact of deposits placed with the RBA by the Australian Government. Over 2007-08, 5
the Australian Government drew down these deposits to seed the investment program of the Future Fund. As
deposits were drawn down, the related swaps were unwound and the gross level of foreign currency held by the
RBA declined. Net holdings of foreign currency rose over the period.

Table 20: Official Reserve Assets 10
As at 30 June
2004 2005 2006 2007 2008
(A$ millions)
Gold 1,473 1,468 2,117 1,967 2,481
Other 2,753 1,985 1,062 667 604
Foreign Currency 46,117 52,718 60,635 77,049 32,772
Total (gross) 50,343 56,171 63,814 79,682 35,857
Total (net) 24,791 26,405 30,215 32,175 35,862
Source: Reserve Bank of Australia Bulletin.

Exchange Rate

Australia has a free-floating dollar with substantially no exchange controls. Approved non-bank financial 15
institutions, in addition to banks, are licensed as foreign exchange dealers. Since the floating of the Australian dollar
on 12 December 1983, Australia's exchange rate has been determined by the overall supply of and demand for A$ in
the foreign exchange market. The floating of the Australian dollar was part of the deregulation of the financial
system.
20
There has been considerable variability in the exchange rate. The RBA is prepared to accept substantial fluctuations
in the exchange rate, both day-to-day and over the course of the economic cycle. Transactions to influence the
exchange rate or market conditions more generally, usually known as intervention, are relatively infrequent. They
are undertaken only when the value of the Australian dollar is judged to have moved to levels that are inconsistent
with underlying economic developments or when conditions in the foreign exchange market are thin and disorderly. 25

The sharp depreciation in the Australian dollar since July 2008 likely reflects the impacts of the global financial
crisis such as falls in commodity prices, and a narrowing interest rate differential between the U.S. and Australia as
the RBA reduces the official cash rate. The following table sets out the Australian dollar exchange rate against the
U.S. dollar for each of the 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08 fiscal years and each month end since 30
June 2008.

Table 21: Units of US$ per A$
(a)

Period At Period End Average Rate High Low

Year ended:
30 June 2004 0.6982 0.7133 0.8008 0.6339
30 June 2005 0.7624 0.7530 0.7989 0.6850
30 June 2006 0.7422 0.7474 0.7792 0.7013
30 June 2007 0.8486 0.7861 0.8521 0.7396
30 June 2008 0.9578 0.8964 0.9667 0.7672
Month ended:
31 July 2008 0.9417 0.9617 0.9849 0.9395
31 August 2008 0.8580 0.8810 0.9417 0.8492
30 September 2008 0.7941 0.8176 0.8580 0.7800
31 October 2008 0.6676 0.6866 0.8019 0.6004
30 November 2008 0.6548 0.6564 0.7013 0.6073
31 December 2008 0.7073 0.6727 0.7139 0.6289
31 January 2009 0.6350 0.6774 0.7266 0.6343
(a) Exchange rate data are provided by Thomson Reuters in respect of each trading day. Period averages are derived from these rates. Highs and
lows for these periods refer to intra-day data.
Source: Thomson Reuters. 35

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28

5

The table below details the Australian dollar exchange rate against the UK pound sterling for each of the 2003-04,
2004-05, 2005-06, 2006-07 and 2007-08 fiscal years and each month end since June 2008.

Table 22: Units of per A$
(a)
10

Year ended:
30 June 2004 0.3837 0.4099 0.4300 0.3696
30 June 2005 0.4254 0.4052 0.4280 0.3818
30 June 2006 0.4016 0.4202 0.4418 0.3971
30 June 2007 0.4223 0.4065 0.4293 0.3920
30 June 2008 0.4805 0.4475 0.4926 0.3897
Month ended:
31 July 2008 0.4747 0.4834 0.4903 0.4740
31 August 2008 0.4710 0.4669 0.4748 0.4533
30 September 2008 0.4453 0.4546 0.4766 0.4318
31 October 2008 0.4154 0.4061 0.4498 0.3689
30 November 2008 0.4255 0.4291 0.4501 0.4106
31 December 2008 0.4835 0.4523 0.4880 0.4204
31 January 2009 0.4377 0.4671 0.4940 0.4371
Source: Thomson Reuters.

The following table displays the Australian dollar exchange rate against the Euro for each of the 2003-04, 2004-05,
2005-06, 2006-07 and 2007-08 fiscal years and each month end since June 2008. 15

(a)


Year ended:
30 June 2004 0.5727 0.5976 0.6375 0.5607
30 June 2005 0.6299 0.5917 0.6435 0.5616
30 June 2006 0.5802 0.6139 0.6411 0.5759
30 June 2007 0.6265 0.6017 0.6338 0.5790
30 June 2008 0.6078 0.6096 0.6460 0.5725
Month ended:
31 July 2008 0.6036 0.6100 0.6170 0.6017
31 August 2008 0.5846 0.5890 0.6038 0.5758
30 September 2008 0.5624 0.5694 0.5853 0.5478
31 October 2008 0.5242 0.5164 0.5674 0.4722
30 November 2008 0.5156 0.5157 0.5405 0.4859
31 December 2008 0.5055 0.4968 0.5193 0.4752
31 January 2009 0.4965 0.5091 0.5372 0.4949
20
The table below details the trade-weighted index value of the Australian dollar for each of the 2003-04, 2004-05,
2005-06, 2006-07 and 2007-08 fiscal years and each month end since June 2008. The trade-weighted index is a
weighted average of a basket of currencies of Australia's major trading partners, with the weight of each foreign
currency equal to its share in trade. The most significant currencies in the trade-weighted index as re-weighted on 1
October 2008 are the Chinese renminbi, the Japanese yen, the Euro and the U.S. dollar. The trade-weighted index is 25
often used as an indicator of Australia's international competitiveness and is a useful gauge of the value of the
Australian dollar when bilateral exchange rates exhibit diverging trends.

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29

5

Table 24: Trade-Weighted Index value of the A$
(a)(b)


Year ended:
30 June 2004 59.1 61.4 66.3 57.1
30 June 2005 64.5 62.7 65.3 58.9
30 June 2006 62.2 63.3 65.1 59.9
30 June 2007 68.9 64.8 69.0 62.1
30 June 2008 73.4 69.7 73.4 63.3
Month ended:
31 July 2008 72.2 73.3 74.1 72.2
31 August 2008 67.7 68.6 71.7 67.3
30 September 2008 63.4 64.9 67.2 62.7
31 October 2008 54.7 56.1 63.5 51.0
30 November 2008 54.6 54.4 56.4 52.1
31 December 2008 55.6 54.6 55.9 53.7
31 January 2009 53.2 55.4 58.6 53.2
(a) The trade-weighted index is provided by the Reserve Bank of Australia in respect of each trading day. Period averages are derived from these
rates.
(b) The weights for the trade-weighted index are revised annually to capture changing trade patterns. Changes to the weights are usually
calculated in September, with the re-defined index joined onto the existing trade-weighted index on the first business day in October.
Source: Reserve Bank of Australia Bulletin. 10

Foreign Investment Policy

The Australian Government's policy approach to foreign investment is to encourage investment flows consistent
with economic development and performance and community interests. The Government's foreign investment 15
policy provides the framework for Government consideration of proposed foreign acquisitions of Australian
businesses and real estate. The vast majority of proposals are approved, with the last proposed business acquisition
that was not approved being in 2001. Where a proposal raises national interest concerns, the Government has the
power under the Foreign Acquisitions and Takeovers Act 1975 (the "FATA") to reject the proposal or to approve it
with conditions designed to mitigate the national interest concerns. The FATA and the Foreign Acquisitions and 20
Takeovers Regulations 1989 provide monetary thresholds below which the FATA does not apply, with separate
thresholds applying for U.S. investors. Screening under the FATA is not required for acquisitions in businesses
valued below the thresholds or of less than substantial or non-controlling interests.

In the majority of industry sectors smaller proposals are not subject to screening, being exempt from the FATA or 25
notification under the policy. Specific screening requirements and limited restrictions on foreign investment apply
in certain sensitive sectors such as the media, telecommunications, airlines and in relation to acquisitions of
residential real estate.

The screening process is intended to provide advice to the Australian Treasurer, including from the independent 30
advisory body, the Foreign Investment Review Board, on whether individual foreign investment proposals may be
contrary to the national interest. It involves consultation with relevant Government agencies and in some cases with
stakeholders. Under the FATA and the policy, the Treasurer determines what is considered 'contrary to the national
interest'.
35
Foreign Financial Relations

Australia is a member of the International Monetary Fund (the "IMF"). As at 31 December 2008, Australia's quota
in the IMF was 3.24 billion Special Drawing Rights ("SDR"). Australia is a participant in the SDR Department and,
as at 31 December 2008, had net cumulative allocations of SDR 470.55 million and actual holdings of SDR 113.02 40
million.

Australia is also a member of the International Bank for Reconstruction and Development ("IBRD") and its affiliates
in the World Bank Group: the International Finance Corporation (the "IFC"); the International Development

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Association (the "IDA"); the Multilateral Investment Guarantee Agency (the "MIGA"); and the International Centre
for Settlement of Investment Disputes (the "ICSID").

As at 31 December 2008, Australia held 24,464 shares in the IBRD, with the value of the paid-in portion of these
shares amounting to $259 million. 5

30
10

Australia also held 47,329 fully paid shares in the IFC, valued at $69.1 million, and 3,019 shares in MIGA, with the
value of the paid-in portion of these shares totalling $10.7 million. Each member country is equally represented in
the ICSID, with no system of shareholding. 15

In December 2007, Australia committed to contribute $583 million to the fifteenth replenishment of the International
Development Association.

Australia is also a member of the Asian Development Bank (the "ADB"), holding 204,740 shares. As at 31 20
December 2008, the value of the paid-in portion of these shares amounted to $287 million. In addition, Australia
contributes to the ADB's concessional lending arm, the Asian Development Fund (the "ADF"). In May 2008,
Australia committed to contribute $333 million to the ninth replenishment of the ADF.

Australia is also a member of the European Bank for Reconstruction and Development (the "EBRD"), holding 25
20,000 shares. As at 31 December 2008, the value of the paid-in portion of these shares was $84.8 million.

Australia is a member of the Organisation for Economic Co-operation and Development (the "OECD"), the Asia-
Pacific Economic Co-operation Forum ("APEC") and the East Asia Summit. Australia is also a member of the
Group of Twenty ("G-20") forum. 30

In addition, Australia is a member of various other regional and international organisations, including the United
Nations and many of its affiliated agencies.

35

31

40
CURRENCY, MONETARY AND BANKING SYSTEM

Australian Currency

Australia's unit of currency is the Australian dollar. Australia's currency comprises both coins and notes. Coins are 45
issued by the Treasurer of the Commonwealth of Australia under the Currency Act 1965; those intended for
circulation include denominations of 5, 10, 20 and 50 cents and $1 and $2. Numismatic (un-circulating collector)
legal tender coins are also approved for sale by the Treasurer from time to time. Under the Reserve Bank Act 1959,
Australia's currency notes are issued by the Reserve Bank of Australia (the "RBA") in five denominations: $5, $10,
$20, $50 and $100. 50

Monetary Conditions

The RBA's monetary policy operates within the framework of a medium-term inflation target of 2 to 3% on average
over the cycle. Given the lags involved in the operation of monetary policy, the RBA sets monetary policy in a 55
forward-looking manner in order to achieve its medium-term inflation target. Maintaining low inflation, and
therefore low inflation expectations, is vital to ensuring that economic growth is sustained, thereby supporting
productive investment and employment.

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The RBA carefully monitors a range of domestic and international economic and financial indicators in gauging
inflationary pressures. These indicators cover economic conditions, prices, wages, the labour market and financial
conditions.

Movements in interest rates over the 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08 fiscal years and the monthly 5
periods since June 2008 are provided in the table below.

Table 25: Key interest rates
Period
Target Cash Rate
(%)
90 Day Bank Bill Yield
(%) 10 Year Bond Yield (%)

Year ended:
30 June 2004 5.25 5.50 5.87
30 June 2005 5.50 5.66 5.11
30 June 2006 5.75 5.97 5.79
30 June 2007 6.25 6.43 6.26
30 June 2008 7.25 7.80 6.45
Month ended:
31 July 2008 7.25 7.69 6.23
31 August 2008 7.25 7.23 5.75
30 September 2008 7.00 7.01 5.40
31 October 2008 6.00 5.75 5.18
30 November 2008 5.25 4.51 4.58
31 December 2008 4.25 4.08 3.99
31 January 2009 4.25 3.34 4.10
4 February 2009
(a)
3.25 3.24 4.31
(a) Data as at close of business on 4 February 2009. Effective 4 February 2009, the RBA lowered the target cash rate to 3.25%.

32

15

The following table sets out monetary aggregate data for each of the 2003-04, 2004-05, 2005-06, 2006-07 and 2007-
08 fiscal years.

Table 26: Monetary aggregates 20
2003-04 2004-05 2005-06 2006-07 2007-08
A$b %
(a)
A$b %
(a)
A$b %
(a)
A$b %
(a)
A$b %
(a)

M1
(b)
163.4 4.1 176.1 7.8 194.2 10.3 226.0 16.4 233.3 3.2
M3
(c)
623.1 11.6 678.4 9.2 747.3 9.7 868.0 16.2 1,032.9 18.0
Broad Money
(d)
686.3 10.5 764.5 11.4 841.2 9.3 962.5 14.4 1,118.8 14.1
(a) 12-month ended percentage change. Where available, growth rates are reported in seasonally adjusted terms and adjusted for the effects of
breaks in the series, as recorded in the technical notes to the tables in the Reserve Bank of Australia Bulletin.
(b) M1 is defined as currency plus bank current deposits of the private non-bank sector.
(c) M3 is defined as M1 plus all other authorised deposit-taking institution deposits of the private non-ADI sector.
(d) Broad money is defined as M3 plus non-deposit borrowings from the private sector by all financial intermediaries, less the holdings of
currency and bank deposits by registered financial corporations and cash management trusts.

Regulation of the Financial System

Australia's financial regulation framework is based on three separate agencies operating on functional lines. These
institutions have prime responsibility for maintaining the safety and soundness of financial institutions, protecting 30
consumers and promoting systemic stability through implementing and administering the regulatory regimes that
apply to the financial sector. Specifically,

the Australian Prudential Regulation Authority ("APRA") is responsible for prudential regulation and
supervision of authorised deposit-taking institutions, general and life insurance companies and
superannuation funds;

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the Australian Securities and Investments Commission ("ASIC") is responsible for market conduct and
investor protection; and

the Reserve Bank of Australia has responsibility for monetary policy, overseeing financial system stability
and oversight of the payments system.

Figure 1: Key regulatory agencies in Australia

5

Responsibility for the operational or day-to-day supervision of financial institutions and markets lies with these
individual regulators, while accountability for the broad framework for the regulation of the financial sector rests
with the Australian Government, aided by the Council of Financial Regulators and the Australian Treasury.
10

33

15

The Council of Financial Regulators consists of high-level representatives of the RBA, Treasury, APRA and ASIC.
Given the central role played by each of these entities in the formulation of financial sector policy, in interacting
with foreign counterparts and standard setters and in monitoring and evaluating trends in domestic and international
markets, the Council of Financial Regulators is an important forum for addressing emerging trends and policy 20
issues. This coordination is crucial especially in the event of a crisis, when the Council would serve as the key
coordinating body for developing an official response. The role of the Council in crisis coordination is facilitated by
a Memorandum of Understanding ("MOU") dealing specifically with financial crisis management arrangements
signed in September 2008. The MOU reflects the strong commitment of Australia's regulatory agencies to the open
exchange of information and to a co-ordinated response to potential threats to the stability of Australia's financial 25
system. The MOU covers the objectives of financial distress management and the principles that guide decisions and
actions during times of financial distress, and also sets out the responsibilities of the individual Council members
during such times.

The regulation of the financial sector operates under the following Commonwealth legislation: 30

Australian Securities and Investments Commission Act 2001;

Corporations Act 2001;

Australian Prudential Regulation Authority Act 1998;

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Payment Systems (Regulation) Act 1998;

Payment Systems and Netting Act 1998;

Financial Sector (Shareholdings) Act 1998;

Financial Sector (Business Transfer and Group Restructure) Act 1999;

Retirement Savings Accounts Act 1997;
5

Life Insurance Act 1995;

Superannuation Industry (Supervision) Act 1993;

Insurance Acquisitions and Takeovers Act 1991;

Insurance Act 1973;

Banking Act 1959; and
10

Reserve Bank Act 1959.

In addition, the Australian Competition and Consumer Commission (the "ACCC") has responsibility for competition
policy under the Trade Practices Act 1974. That responsibility extends across the entire economy, including the
financial sector.
15
Reserve Bank of Australia

The RBA is responsible for maintaining stability of the overall financial system, promoting the safety and efficiency
of the payments system, managing the issuance of banknotes, providing banking services for the Australian
Government, and managing Australia's Official Reserve Assets. 20

The RBA is also responsible for monetary policy, which is determined by the Board of the Bank and is set in terms
of the level of the cash rate (the interest rate on unsecured overnight funds). The RBA undertakes daily operations in
the short-term money markets to ensure that the actual cash rate remains close to the monetary policy target.
25

34

30

The RBA's market operations are very flexible, permitting it to deal daily with a wide range of counterparties across
a wide range of maturities, and allowing it to respond rapidly to any tensions in the domestic money market. The
RBA has made a number of changes to its arrangements since late 2007 as the financial turmoil has unfolded. These
have included widening the pool of collateral the RBA will accept in its repurchase transactions, dealing on a regular 35
basis at long maturities and introducing a term deposit facility. In addition, the RBA has significantly increased the
pool of balances held by financial institutions in their exchange settlement accounts at the RBA.

In exceptional circumstances, the RBA may provide liquidity support to an individual authorised deposit-taking
institution, if the institution was solvent and its failure to make payments would have systemic implications. In 40
assessing solvency, the RBA would rely on APRA's judgment.

The statement of financial position of the Reserve Bank of Australia as of each of 30 June 2006, 2007 and 2008 is
set out in the table below.
45
Table 27: Statement of financial position Reserve Bank of Australia

30 June
2006
30 June
2007
30 June
2008
(A$ millions)

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ASSETS
Cash and cash equivalents 575 586 862
Australian dollar securities 30,306 34,955 54,702
Foreign exchange 71,689 93,538 42,505
Gold 2,151 2,001 2,509
Property, plant and equipment 329 421 456
Loans, advances and other 397 393 438
Total Assets 105,447 131,894 101,472

LIABILITIES
Deposits 43,204 65,830 39,006
Distribution payable to Australian Government 1,477 1,085 1,403
Other 11,493 16,072 9,786
Australian notes on issue 38,065 40,289 42,064
Total Liabilities 94,239 123,276 92,259

Net Assets 11,208 8,618 9,213

Capital and Reserves
Reserves:
Unrealised profits reserves 2,528 53 80
Asset revaluation reserves 2,354 2,239 2,807
Reserve Bank Reserve Fund 6,286 6,286 6,286
Capital 40 40 40
Total Capital and Reserves 11,208 8,618 9,213
Source: Reserve Bank of Australia Annual Report 2008 and Annual Report 2007.

Australian Prudential Regulation Authority

The Government established APRA on 1 July 1998 as the single prudential regulator in the Australian financial 5
system. APRA oversees authorised deposit-taking institutions, such as banks, building societies and credit unions,
life and general insurance companies (including reinsurers and friendly societies) and most members of the
superannuation industry (other than self-managed superannuation funds). The aim was to create a prudential
regulation framework that would not only meet safety and stability objectives, but would increase the
competitiveness and efficiency of the financial system by ensuring that regulation is applied consistently for similar 10
functions.

35 15

APRA Regulated Institutions
20
As detailed in the table below, APRA-regulated institutions hold approximately $3.4 trillion in assets for 21 million
Australian depositors, policyholders and superannuation fund members.

Table 28: APRA-Regulated Institutions
Number of Institutions Assets (A$ billions)
APRA-Regulated Institutions
30 June
2007
30 June
2008 % Change
30 June
2007
30 June
2008 % Change
ADIs 220 211 -4.1 1,945.5 2,409.0 23.8
Representative offices of
foreign banks 19 18 -5.3 - - -
General insurers 131 130 -0.8 90.5 91.0 0.6
Life insurers 34 32 -5.9 251.4 232.9 -7.4
Friendly societies 25 24 -4.0 6.9 6.6 -4.3
Licensed trustees 306 292 -4.6 - - -

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Superannuation entities 6,823 6,252 -8.4 707.9 673.6 -4.8
Non-operating holding
companies 14 18 28.6 - - -
Total 7,572 6,977 -7.9 3,002.2 3,413.1 13.7
Source: APRA Annual Report 2008.

Funding

APRA is funded largely by the industries that it supervises through a levy on regulated entities. The Government has 5
provided APRA with the necessary resources to enable it to manage the effects of the global financial crisis. In
October 2008, the Government agreed to provide additional funding to APRA of $9 million in 2008-09, $18.5
million in 2009-10 and $9 million in 2010-11 and 2011-12 to ensure that APRA continues to have sufficient
resources to fulfil its role in light of global developments. This funding will be provided from the 2008-09 Budget,
rather than being recovered from levies on the financial sector. Before this budget measure, APRA's budget was 10
approximately $100 million (recovered mainly from levies on the financial sector) for around 570 staff.

Governance

APRA's governance structure comprises a full-time Executive Group of at least three and no more than five 15
Members. The Executive Group is responsible and accountable for the operation and performance of APRA. It
currently has a Chairman, a Deputy Chairman and a Member.

APRA's Main Powers
20
Australian legislation provides APRA with strong powers to regulate and intervene in the operations of financial
institutions to protect depositors, policy holders and fund members and to maintain the stability of the financial
system.

APRA's main powers are provided by acts relating to each industry sector that it regulates: the Banking Act 1959, the 25
Insurance Act 1973, the Life Insurance Act 1995 and the Superannuation Industry (Supervision) Act 1993. These
acts provide APRA with the following main types of powers in regulating financial institutions:

authorisation or licensing powers;

powers to make, apply and enforce prudential standards;
30

powers to collect information, to conduct on-site examinations of supervised entities and to require third-
party audits; and

powers to act in circumstances of financial difficulties to protect depositors, policy holders and
superannuation fund members and to maintain the stability of the financial system, including powers related
to investigating, giving directions and assuming control of supervised entities in difficulty. APRA can
appoint a statutory manager to assume full control of an authorised deposit-taking institution and can apply
to the courts for the appointment of a judicial manager to assume control of a general or life insurer.

36 35

In broad terms, the powers available under each Act are similar but they vary somewhat reflecting the specific
characteristics of each industry sector. 40

In relation to the ADI sector, APRA has wide-ranging powers under the Banking Act 1959 to investigate the affairs
of an ADI and/or issue a direction to an ADI. For example, APRA can direct an ADI:

to comply with a prudential requirement;
45

to conduct an audit of its affairs;

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to remove a director, executive officer or employee; or

not to undertake a particular transaction.

APRA also has the power to revoke an ADI's authorisation if it fails to meet its authorisation requirements.
5
In a situation where an ADI may be unable to meet its obligations or where the interests of depositors or financial
system stability are at risk, APRA has the power under the Banking Act 1959 to replace an ADI's Board of Directors
with a statutory manager, which must manage the ADI in a manner that is consistent with interests of depositors and
financial system stability. In addition to the powers of the Board, the statutory manager has powers to deal in the
share capital of the ADI, such as by issuing new shares, and can alter the ADI's governance arrangements including 10
its constitution. The statutory manager can also sell or dispose of the assets of the ADI.

APRA also has the power to compulsorily transfer the business of the ADI to another entity using the Financial
Sector (Transfers of Business) Act 1999. The receiving entity must consent to the transfer.
15
Prudential Regulation

APRA has developed a regulatory framework for ADIs that is based on the banking supervision principles published
by the Basel Committee on Banking Supervision. The framework for prudential regulation includes requirements
regarding capital adequacy, credit risk, market risk, funds management and securitisation, liquidity, credit quality, 20
large exposures, associations with related entities, outsourcing, business continuity management, risk management
of credit card activities, audit and related arrangements for prudential reporting, governance and fit and proper
management.

Prudential regulation is concerned fundamentally with the quality of a financial institution's systems for identifying, 25
measuring and managing the various risks in its business and, in most cases, with the adequacy of its capital as a
buffer against unexpected losses. It promotes prudent behaviour by regulated entities with the objective of reducing
the likelihood of institutional insolvency and consequential losses to policyholders, depositors or members and
financial system instability.
30
Implementation of Basel II in Australia

APRA implemented the Basel II framework on 1 January 2008. This new framework is designed to strengthen risk
management and provide more risk-sensitive capital requirements for deposit-taking institutions.
35
All ADIs in Australia are subject to Basel II. ADIs can choose to implement the standard approaches or more
advanced approaches for credit risk and operational risk. The great majority of ADIs have chosen to use the
standardised Basel II approaches in determining their regulatory capital charge. The largest ADIs have chosen more
sophisticated approaches under Basel II, which allow them to use some of their own quantitative risk estimates in
calculating regulatory capital. 40

The new prudential rules under Basel II provide the Australian banking system with an enhanced regulatory
framework for the protection of depositors and the maintenance of systemic stability.

Although the intention of the Basel Committee on Banking Supervision was to maintain consistency of capital 45
adequacy regulation across countries and avoid a significant source of competitive inequality among internationally
active banks, international comparisons need to take into account the particularities of the implementation of the
Basel framework in each country. These include:

the use of national discretions within the Basel Framework;
50
37

the implementation of advanced models;

supervisory adjustments imposed under Pillar 2 by local regulators;

other regulatory requirements (e.g., accounting or tax); and

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transitional arrangements.

In implementing Basel II, APRA has exercised a number of discretions to make the framework more robust and
relevant in the Australian market. These discretions include:
5

The risk-weights for residential mortgage lending in the standardised approach were made considerably
more granular, adding to the risk-sensitivity of capital. The Basel II approach is that home loans are subject
to a 35% risk weight. APRA instead introduced a grid of risk-weights based upon loan to value ratio,
lenders' mortgage insurance status and product type (e.g., whether the loan is a standard or non-standard
housing loan), which starts at 35% and runs to 100%.

APRA chose not to adopt a lower risk-weight for 'other retail assets' under the standardised approach,
believing it would not provide a sufficient buffer against credit risk and concentration risk.

For banks using the advanced approaches to measure capital adequacy, APRA has established a minimum
capital requirement for interest rate risk in the banking book under Pillar 1.

Australian Securities and I nvestments Commission
10
ASIC is an independent statutory body established under the Australian Securities and Investments Commission Act
2001.

ASIC administers the Corporations Act 2001 (the "Corporations Act"), including the provisions governing the
operation of companies in Australia, corporate fundraising, financial reporting, takeovers and compulsory buy outs 15
and external administration/insolvency.

ASIC is also responsible for registering and supervising the operation of managed investment schemes. The
regulatory framework governing collective investment vehicles was reformed in 1998 through the passage of the
Managed Investments Act 1998. 20

ASIC has responsibility for the investor protection regime that applies to the provision of financial services. The
regime includes licensing, conduct and disclosure provisions that apply to financial services providers, as well as
product disclosure provisions applicable to financial products.
25
Financial markets and clearing and settlement facilities are licensed by the relevant Minister. ASIC is responsible for
monitoring compliance by market and clearing and settlement facility licensees with the relevant legislative
frameworks. The RBA is responsible for issuing financial stability standards for clearing and settlement facilities
and it monitors compliance with those standards. Australia's major licensed financial markets and clearing and
settlement facilities are operated by the ASX Limited. 30

ASIC is also responsible for administering the market misconduct provisions of the Corporations Act, which cover
market manipulation, insider trading and misleading or deceptive conduct.

Other Regulatory Entities 35

Australian Competition and Consumer Commission

The Australian Competition and Consumer Commission (the "ACCC") has responsibility for competition policy
under the Trade Practices Act 1974 (the "TPA"). This responsibility extends across the entire economy, including 40
the financial sector.

The TPA prohibits anti-competitive arrangements between competitors, such as price fixing, market sharing and
boycotts.
45

38

50

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Industry regulation

The Australian Bankers' Association (the "ABA") is the national organisation of licensed banks in Australia. Any
body corporate duly authorised to carry on banking business in Australia and carrying on such banking business may
become a member of ABA. 5

ABA is funded by its 23 member banks ranging from traditional retail, trading bank-style organisations to regional
banks, foreign bank and wholesale banks. Contributions to its operational expenditure are based on individual
member bank's liabilities in Australia.
10
The ABA's revised Code of Banking Practice is the banking industry's customer charter on best banking practice
standards. The Code sets out the banking industry's key commitments and obligations to customers on standards of
practice, disclosure and principles of conduct for banking services. The Code applies to personal and small business
bank customers.
15
AbacusAustralian Mutuals, the industry association for Australian credit unions, mutual building societies and
friendly societies, also keeps industry codes to which its members are signatories. Abacus members subscribe to
codes establishing standards of service to customers. Signatories to the codes are obliged to respond to complaints
about non-compliance, and the relevant external dispute resolution scheme can also hear and resolve such
complaints. Abacus is in the process of developing a consolidated Mutual Banking Code of Practice that will apply 20
to building societies and credit unions as of mid 2009.

The Financial System Regulatory Regime

The Australian Government is committed to increasing competition and contestability across the broad spectrum of 25
financial products, without sacrificing the basic goals of safety and stability in the financial system. The regulatory
system enables the non-bank deposit-taking sector to provide a more effective source of competition for the banks in
the retail market by operating under the same regulatory framework as banks. These institutions are able to maintain
commercial flexibility by retaining different corporate structures, including mutuality, and the terms 'building
society' and 'credit union'. The Government is also paving the way for greater future participation by non-traditional 30
suppliers in financial services markets, where there is demonstrable congruity between financial and non-financial
activities. One example of this is 2002 reforms to credit card schemes, which removed the restriction permitting
only ADIs to provide credit card services. This increased competition on incumbents from both credit card
specialists and large payments-processing institutions. Prudential controls, to ensure these new players do not
increase systemic risk, apply. 35

Australia maintains a stable, competitive and efficient financial system that is not only positioned to compete
strongly in the global economy, but also offers opportunities for those seeking to do business in Australia or to use
Australia as a focal point for regional activities.
40
There is no restriction on the number of foreign banks that may apply for banking licenses. The blanket ban on the
takeover of domestic institutions has been removed although such applications are still assessed on a case by case
basis under the Foreign Acquisitions and Takeovers Act 1975 and the Financial Sector (Shareholdings) Act 1998.

Foreign banks wishing to establish a retail bank in Australia may enter as a licensed subsidiary, subject to full 45
prudential supervision. They may also establish as a licensed foreign bank branch to conduct wholesale banking, as
branches are restricted from accepting retail deposits below $250,000. They may also establish as an unlicensed
money market corporation or merchant bank. Furthermore, the establishment of new merchant banks involving
investments of less than $10 million is exempt from foreign investment screening. As at 31 December 2008, there
were 45 foreign owned banks operating in Australia, comprising 10 locally incorporated subsidiaries and 35 50
branches of foreign banks.

39 55

GOVERNMENT FINANCE
60

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The basic provisions relating to the receipt and payment of public moneys of the Australian Government are set out
in the Constitution and the Financial Management and Accountability Act 1997 (the "FMA Act"). The FMA Act
sets out requirements relating to the collection and custody of public money; accounting, reporting and audit; and
borrowing and investment. The Commonwealth Authorities and Companies Act 1997 sets out separate financial and
corporate governance requirements for corporations controlled by the Australian Government. The general 5
administration of Australian Government finances is the responsibility of the Minister for Finance and Deregulation.

Under the Constitution, all moneys or revenues received by the Australian Government form one Consolidated
Revenue Fund, to be appropriated for the purposes of the Commonwealth of Australia. All disbursements made
from the Consolidated Revenue Fund must be made under appropriation made by the Parliament. 10

The financial statements and accounting records of each Australian Government agency and the consolidated
financial statements of the Government must be audited by the Australian Auditor-General. The Australian National
Audit Office ("ANAO") supports the Auditor-General in conducting financial statement and performance
audits. All financial statements must be tabled in the Parliament by the responsible Minister within the relevant 15
agency's annual report. These financial statements are audited by the Auditor-General, who may also report to the
Parliament on a wide range of other matters relating to public administration.

Federal Government Budget
20
As part of each annual budget, the Treasurer presents annual Appropriation Bills to the Parliament. The Bills detail
the purposes for which funds are to be expended by Government agencies. Additional Appropriation Bills may be
enacted by Parliament during the course of a financial year to provide funds for new expenditures approved by the
Government after the passage of the annual budgetary Appropriation Bills.
25
The major part of the budget is appropriated under 'special' or 'standing' appropriations contained in special
legislation that does not require annual re-enactment. For example, the payment of social security benefits and
pensions are provided for in this manner.

The Australian Government's main fiscal indicators are the 'underlying cash balance' and the 'fiscal balance' 30
(respectively cash and accrual measures of government finance statistics net lending), with the predominant focus on
the underlying cash balance for assessing the Government's fiscal strategy. The move to accrual budgeting now
means that the budget papers contain a complete set of accrual financial statements (i.e., an operating statement, a
statement of assets and liabilities, and a statement of cash flows).
35
The framework within which fiscal policy is conducted is set out in the Charter of Budget Honesty Act 1998. The
Charter provides a framework for the conduct of Government fiscal policy. The purpose of the Charter is to improve
fiscal policy outcomes. The Charter provides for this by requiring fiscal strategy to be based on principles of sound
fiscal management and by facilitating public scrutiny of fiscal policy and performance.
40
The key elements of the Australian Government's medium-term fiscal policy are:

achieving budget surpluses, on average, over the economic cycle;

keeping taxation as a share of GDP on average below the level for 2007-08; and

improving the Government's net financial worth over the medium term.
45
The Government's fiscal strategy aims to ensure fiscal sustainability over the economic cycle. A sustainable fiscal
position provides greater certainty for decision makers, supports broader economic sustainability, and requires a
focus on policies which strengthen the structure of the economy.

These medium-term fiscal policy objectives also provide sufficient flexibility for the Government to use fiscal policy 50
to support jobs and growth. The medium-term strategy does not require that the budget remain in surplus in every
year of the economic cycle.

To ensure that growth is supported in a way that is consistent with the medium-term fiscal strategy, the
Government's strategy is to: 55

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40

5
Support the economy: the fiscal strategy for 2008-09 and 2009-10

As Australia enters an economic slowdown of uncertain extent and duration, it is important that the Government
continues to support the economy by:
10

allowing the variations in revenue and expenditure, which are naturally associated with slower economic
growth, to drive a temporary underlying cash budget deficit; and

using additional spending to deliver timely, targeted and temporary stimulus, with the clear objective of
other budget priorities and new policy proposals being met through a re-prioritisation of existing
expenditure.

Return the budget to surplus: the fiscal strategy as the economy recovers

The Government reaffirms its commitment to achieve budget surpluses, on average, over the economic cycle. 15

As the economy recovers, and grows above trend, the Government will take action to return the budget to surplus
by:

allowing the level of tax receipts to recover naturally as the economy improves, while maintaining the
Government's commitment to keep taxation as a share of GDP below the 2007-08 level on average; and
20

holding real growth in spending to 2% a year until the budget returns to surplus.

In 2006-07 and 2007-08, the underlying cash balance was $17.2 billion and $19.7 billion, respectively. As at 30
June 2008, the Commonwealth of Australia had no overall net debt.

The 2009 UEFO released on 3 February 2009 forecast the Australian Government's underlying cash balance for 25
2008-09 to be a deficit of $22.5 billion (-1.9% of GDP). A Government budget underlying cash deficit of $35.5
$25.7 billion (-1.9% of GDP) were projected for 2010-11 and 2011-12, respectively. The 2009 UEFO estimates the
Australian Government general government sector net debt for 2008-09 to be -$16.2 billion (-1.3% of GDP). The
2009 UEFO forecasts net debt to increase across the forward estimates to 5.2% of GDP in 2011-12. 30

The Government will finance the projected budget deficits by issuing Commonwealth Government Securities. See
"Domestic Issuance of Government Bonds " in this prospectus.

Commonwealth Budget Position as at 30 J une 2008 35

In 2007-08, the Australian Government general government sector recorded an underlying cash surplus of $19.7
billion, or 1.7% of GDP. The fiscal balance was in surplus by $21.0 billion, or 1.9% of GDP.

Table 29: Australian Government general government sector budget aggregates 40
2005-06
(a)
2006-07
(a)
2007-08
Accrual aggregates
Revenue (A$ billions) 261.0 278.3 303.7
Per cent of GDP 27.0 26.6 26.9
Expenses (A$ billions) 242.1 259.1 280.1
Net operating balance (A$ billions) 19.0 19.2 23.6
Net capital investment (A$ billions) 2.5 2.3 2.6
Fiscal balance (A$ billions) 16.5 16.8 21.0

Cash aggregates
Underlying cash balance (A$ billions) 15.8 17.2 19.7

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41
5

2005-06
(a)
2006-07
(a)

2007-08
Balance sheet measures
Net debt (A$ billions) -2.3 -27.4 -42.9
Per cent of GDP -0.2 -2.6 -3.8
Net worth (A$ billions) 18.3 46.7 71.2
(a) Data for 2005-06 and 2006-07 has been adjusted for accounting changes to ensure consistency where relevant. For further information on these
adjustments, see the following: Mid-Year Economic and Fiscal Outlook 2008-09 Statement, Appendix D; 2008-09 Budget, Budget Paper No.
1, Statement 10; and Final Budget Outcome 2007-08, Appendix B.
Source: Mid-Year Economic and Fiscal Outlook 2008-09 Statement. 10

Total Australian Government general government sector net worth improved by $24.5 billion in 2007-08 to around
$71.2 billion, largely reflecting the strong budget surplus. Net debt also improved, falling by $15.5 billion in 2007-
08 to around -$42.9 billion or -3.8% of GDP.
15
The following table sets out general government sector revenue for each of the 2005-06, 2006-07 and 2007-08 fiscal
years.

Table 30: Australian Government general government sector revenue
2005-06 2006-07 2007-08
(A$ millions)
Individuals and other withholding taxes
Gross income tax withholding 103,811 107,809 114,700
Gross other individuals income tax 25,859 26,952 31,036
less: Individuals refunds 15,239 17,147 19,601
Total individuals and other withholding taxes 114,431 117,614 126,135
Fringe benefits tax 4,084 3,754 3,796
Company tax 48,987 58,538 64,790
Superannuation funds 6,705 7,879 11,988
Petroleum resource rent tax 1,991 1,594 1,871
Total income taxation revenue 176,198 189,378 208,579

Sales taxes 40,086 42,284 45,486
Excise duty
Petroleum and other fuel products and crude oil 14,073 14,653 15,085
Other excise 7,854 8,082 8,441
Total excise duty 21,927 22,734 23,526
Customs duty 4,988 5,644 6,070
Other indirect taxes 2,518 2,470 2,567
Total indirect taxation revenue 69,518 73,132 77,650

Total taxation revenues 245,716 262,510 286,229

Sales of goods and services 4,604 5,064 5,263
Dividends 4,387 2,999 2,848
Interest received 2,680 4,169 5,558
Other non-taxation revenue 3,658 3,520 3,814
Total non-taxation revenue 15,329 15,752 17,484

Total revenue 261,045 278,263 303,713

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Source: Data for 2005-06 and 2006-07 fiscal years sourced from 2008-09 Budget, Budget Paper No. 1, Table C1, adjusting for accounting
changes to ensure consistency where relevant. Data for 2007-08 fiscal year sourced from Final Budget Outcome 2007-08.

Total accrual revenue in 2007-08 was around $303.7 billion.
5

42

10

The table below provides information on general government sector expenses by function for each of the 2005-06,

Table 31: Australian Government general government sector expenses by function 15
2005-06 2006-07 2007-08
(A$ millions)
General public services
Legislative and executive affairs 768 870 961
Financial and fiscal affairs 3,958 4,832 6,102
Foreign affairs and economic aid 2,955 3,331 3,881
General research 2,346 2,476 2,146
General services 560 667 925
Governmental superannuation benefits 2,203 2,679 2,600
Defence 14,748 16,729 17,670
Public order and safety 2,558 3,318 3,506
Education 15,685 16,913 18,433
Health 37,549 39,948 44,397
Social security and welfare 86,240 92,083 97,842
Housing and community amenities 2,248 2,909 2,910
Recreation and culture 2,585 2,561 3,207
Fuel and energy 4,046 4,635 5,361
Agriculture, forestry and fishing 2,780 2,831 3,834
Mining, manufacturing and construction 1,905 1,920 1,410
Transport and communications 3,075 3,296 4,129
Other economic affairs
Tourism and area promotion 209 196 207
Labour and employment affairs 3,825 4,041 4,506
Other economic affairs 840 934 1,213
Other purposes
Public debt interest 3,628 3,592 3,544
Nominal superannuation interest 5,602 5,487 6,011
General purpose intergovernmental transactions 41,531 42,133 45,277
Natural disaster relief 211 115 28
Contingency reserve
(a)
36 589 8
Total expenses 242,087 259,083 280,109
(a) Asset sale related expenses are treated as a component of the contingency reserve.
Source: Data for 2005-06 fiscal year sourced from Final Budget Outcome 2005-06, adjusting for accounting changes to ensure consistency where
relevant. Data for 2006-07 fiscal year sourced from Final Budget Outcome 2006-07, adjusting for accounting changes to ensure consistency
where relevant. Data for 2007-08 fiscal year sourced from Final Budget Outcome 2007-08.
20
Total accrual expenses were around $280.1 billion in 2007-08.

43 25

General government sector net capital investment by function is set out in the table below.
30
Table 32: Australian Government general government sector net capital investment by function

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2005-06 2006-07 2007-08
(A$ millions)
General public services 251 332 372
Defence 1,644 1,069 1,478
Public order and safety 90 166 139
Education 11 10 4
Health 72 104 46
Social security and welfare 86 217 175
Housing and community amenities 98 40 159
Recreation and culture 68 83 53
Fuel and energy 1 3 2
Agriculture, forestry and fishing 19 17 49
Mining, manufacturing and construction 24 19 9
Transport and communications -1 1 5
Other economic affairs 118 236 99
Other purposes 16 35 2
Total net capital investment 2,498 2,333 2,593
Source: Data for 2005-06 fiscal year sourced from the Final Budget Outcome 2005-06, adjusting for accounting changes to ensure consistency
where relevant. Data for 2006-07 fiscal year sourced from Final Budget Outcome 2006-07, adjusting for accounting changes to ensure
consistency where relevant. Data for 2007-08 fiscal year sourced from Final Budget Outcome 2007-08.

Total net capital investment for 2007-08 was around $2.6 billion. 5

Pensions and Superannuation

Australia's Retirement I ncome System
10
Australia's retirement income system consists of three "pillars":

a taxpayer-funded means-tested age pension for people who are unable to fully support themselves in
retirement;

a minimum level of compulsory employer superannuation contributions made in respect of those in the
workforce; and

voluntary private superannuation and other savings.
15
The age pension has been the cornerstone of Australia's retirement income system since 1909. The age pension
provides a modest retirement for those people who are unable to fully support themselves. The maximum single rate
age pension is currently $14,615 ($24,414 for a couple). The actual amount an eligible person receives depends on
their other income and assets.
20
Employers are currently required to provide a prescribed minimum level of superannuation support each year for
each of their eligible employees. The prescribed minimum level of support is 9% of the employee's earnings. This
minimum prescribed amount is known as the Superannuation Guarantee. Payments under the Superannuation
Guarantee are contributed to a complying superannuation fund or retirement savings account to be accessed by the
employee upon retirement. 25

Voluntary superannuation savings are encouraged through concessional taxation treatment and other incentives.

As of September 30, 2008, APRA estimated that total Australian superannuation assets amounted to $1.15 trillion.
30
Superannuation for Commonwealth Employees

The Commonwealth of Australia operates and administers three main civilian superannuation schemes for
Commonwealth sector employees. The current scheme is the Public Sector Superannuation Accumulation Plan (the
"PSSAP") which was established by a trust deed under the provisions of the Superannuation Act 2005. 35

44

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PSSAP is a fully funded accumulation scheme. PSSAP commenced on 1 July 2005 upon the closure of the Public
Sector Superannuation Scheme (the "PSS") to new entrants. 5

The PSS commenced on 1 July 1990 upon the closure of the Commonwealth Superannuation Scheme (the "CSS") to
new entrants.

At 30 June 2008, there were 22,162 contributors to the CSS and 132,274 contributors to the PSS and benefits were 10
being paid to 115,431 CSS and 16,453 PSS pensioners.

The Commonwealth of Australia's estimated unfunded liability at 30 June 2008 for the CSS and PSS schemes was
$108 billion.
15
In 2006, the Commonwealth established an investment fund known as the Future Fund to assist future Australian
governments meet the cost of public sector superannuation liabilities by delivering investment returns on
contributions to the Fund. As of 31 December 2008, the value of the assets held by the Future Fund was $59.62
billion.
20
Taxation

Commonwealth, State and Local Governments levy taxes in Australia. Australia has no estate or gift taxes, or
separate social security levy, although taxpayers pay a Medicare levy of 1.5% on taxable income.
25
Australia's Future Tax System

On 13 May 2008, the Treasurer announced a review of Australia's tax and transfer system to recommend how
Australia could deal with the demographic, social, economic and environmental challenges of the 21st century. The
review encompasses Australian Government and state taxes, but must reflect Government policy not to increase the 30
rate or broaden the base of the goods and services tax ("GST"), and interactions with the transfer system. A review
panel oversees the review, consults with the public and is due to report by the end of 2009. The Government has
asked the review panel to bring forward its consideration of retirement income to March 2009, to follow a report to
Government on pensions due in February 2009.
35
Personal income tax

The Australian Government levies personal income tax, generally using the individual as the unit of assessment for
the system. Income subject to tax assessment includes salary and wage income, allowances, dividends, interest,
capital gains, business income, pensions, rents, royalties, partnership income and distributions from trusts. 40

The personal income tax system is based on self assessment. Under the pay-as-you-go system, individuals pay
instalments of their expected tax liability on their income from employment, business, or investment for the current
income year through withholdings and instalment payments. Australian residents for tax purposes pay tax on
income derived from within Australia and overseas. However, previously taxed income from overseas either is 45
exempt from Australian tax or attracts a tax credit.

From 1 July 2008, personal income tax cuts came into effect, worth $46.7 billion over the next four years. These
income tax cuts target low- and middle-income earners. Income tax rates and thresholds vary for 2008-09, 2009-10
and 2010-11 (Table 33). 50

Table 33: Personal income tax rates and thresholds for residents
1 July 2008 to 30 June 2009 1 July 2009 to 30 June 2010 1 July 2010 to 30 June 2011
Taxable income
(A$)
Rate (%) Taxable income
(A$)
(A$)
Rate (%)
0 6,000 0 0 6,000 0 0 6,000 0
6,001 34,000 15 6,001 35,000 15 6,001 37,000 15
34,001 80,000 30 35,001 80,000 30 37,001 80,000 30
80,001 180,000 40 80,001 180,000 38 80,001 180,000 37
180,001 + 45 180,001 + 45 180,001 + 45
Source: 2008-09 Budget, Budget Paper No. 1.

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Most residents also pay a Medicare levy rate of 1.5% of taxable income.

5
45

Australian resident taxpayers may be eligible for the low income tax offset (the "LITO") to reduce tax paid by low- 10
and middle-income earners. As part of the tax cuts, the LITO increased from $750 in 2007-08 to $1,200 from 1 July
2008. From 1 July 2009, the LITO will increase to $1,350 and from 1 July 2010 it will increase to
$1,500. Taxpayers eligible for the full LITO will not pay income tax until their annual income exceeds $14,000 for
2008-09, $15,000 for 2009-10 and $16,000 for 2010-11.
15
Taxpayers ineligible for the full LITO also benefit from its increase. The LITO begins to phase out at a rate of four
cents for each dollar of income over $30,000, so some taxpayers with income over $30,000 may still benefit from
some LITO. For example, taxpayers will be able to receive some LITO on incomes of $60,000 for 2008-09,
$63,750 for 2009-10 and $67,500 for 2010-11, thereby reducing their income tax liability.
20
Superannuation benefits paid from a taxed fund are tax-free for people aged 60 and over.

In general, employers also pay tax (at 46.5%) on the grossed-up (i.e., tax inclusive) value of fringe benefits they
provide to employees.
25
Foreign residents are taxed differently to Australian residents. See "Australia's jurisdiction to tax: source and
residence" in this prospectus.

Business tax arrangements
30
Corporate tax rate

The corporate tax rate is 30%. This applies also to the corporate profits of a branch of an overseas company.

Dividend imputation 35

The dividend imputation system ensures company income distributed to resident individual shareholders is not
double taxed. Franked dividends, effectively paid from previously taxed company income, carry an imputation
credit for shareholders.
40
Capital Gains Tax

Where assets are held for at least 12 months, capital gains tax applies to 50% of capital gains on the assets for
individuals and trusts, and 66 2/3% for superannuation funds. A range of business restructures, including scrip-for-
scrip takeovers between companies and between trusts, can roll-over their capital gain and several capital gains tax 45
concessions apply to capital gains on the disposal of active small business assets. The capital gains tax discount does
not apply to gains made on assets that are held on revenue account or as trading stock.

Research and Development
50
Eligible research and development ("R&D") expenditure attracts a 125% deduction and, for eligible companies, a
175% tax concession for additional R&D expenditure undertaken above the average level for the previous three
years.

Primary production 55

Special provisions for primary producers include income averaging.

Capital allowances
60

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A uniform capital allowance system, based on the effective life of assets, applies except where specific treatments
apply (for example, for primary producers, Australian films, computer software and R&D).

Amortisation at 4% per year applies to the capital costs of income-producing buildings for eligible industrial
activities; hotels, motels and guest houses containing at least ten bedrooms; and apartments, units or flats where the 5
taxpayer owns at least nine other units in the building.

Amortisation at 2.5% per year applies to the capital cost of other income-producing buildings and structural
improvements, including roads, dams, bridges and buildings used for R&D activities.
10

46

15

Investment allowances

Under the Nation Building and Jobs Plan, a temporary investment allowance in the form of an additional tax
deduction of 10% of the asset's cost is expected to be available for investments in tangible assets costing at least 20
$10,000 (or at least $1,000, in the case of small businesses) where the taxpayer starts to hold or starts to construct
the asset between 13 December 2008 and 31 December 2009 and has the asset installed ready for use by 31
December 2010. Where the taxpayer starts to hold or construct the asset before 30 June 2009 and has the asset
installed ready for use by 30 June 2010, the tax deduction is expected to be at the higher rate of 30% of the asset's
cost. The investment allowance is also expected to be available for expenditure above the threshold on existing 25
assets.

Small businesses

Small businesses, with an aggregated annual turnover of less than $2 million, can access concessions covering 30
income tax (including capital gains tax and simplified capital allowances rules), goods and services tax, pay-as-you-
go instalments and fringe benefits tax.

Taxation of Financial Arrangements Stages 3 and 4
35
As part of the 2008-09 Budget, the Government announced it would proceed with Taxation of Financial
Arrangements ("TOFA") Stages 3 and 4 covering, among other matters, accruals and other tax-timing rules as well
as character-hedging rules. The Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2008, which
contains provisions in respect of stages 3 and 4 of the TOFA reforms, was introduced into Parliament on 4
December 2008. 40

I ndirect tax

Goods and Services Tax
45
Goods and services tax ("GST") is a broad based value-added tax on most goods and services consumed in
Australia. It applies at a uniform rate of 10% on the supply or importation of taxable goods and services, based on
the selling price.

The Australian Government collects GST revenue and distributes it to the States and Territories. The GST rate and 50
base can only be changed with unanimous support from State and Territory governments.

GST is levied on businesses at all stages of the production process. Businesses are generally able to claim a credit
for GST paid on business inputs.
55
Exemptions from GST include health, education and basic food. GST is not levied on residential rents and financial
services, but suppliers of these products and services generally cannot claim a credit for GST paid on production
inputs.

Excise and customs duty 60

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Excises are specific taxes on goods, including liquid fuel, alcohol (except wine products) and tobacco.

An excise equivalent customs tariff applies to imports of excisable goods and is collected at the border usually from
importers or owners of the goods. Additionally, customs tariffs apply to a range of imported textiles, clothing and
footwear, passenger motor vehicles and other imported goods including foods, chemicals, industrial supplies, 5
machinery and equipment, and household electrical items. Businesses are not credited for tariffs paid on their
imports.

Excise rates for tobacco and alcohol (except wine products) are indexed twice a year to the consumer price index.
10
Tobacco is taxed on a per stick basis for cigarettes and cigars, or by overall weight of tobacco for other
products. Beer and spirits are taxed on alcohol volume, with different beers attracting different rates. Spirits attract
a higher rate than full strength beer.

Liquid fuels, primarily petrol and diesel, attract an excise of 38.143 cents per litre, which is not indexed. Other fuels 15
attract different rates. Fuel tax credits apply to fuel used for certain off-road uses and for on-road use in heavy
vehicles.

20
47

With the introduction of the Carbon Pollution Reduction Scheme, the rate of fuel tax will be cut on 1 July 2010 25
based on the effect of pricing the emissions of diesel. The cut will apply to fuels like petrol and diesel that currently
attract an excise of 38.143 cents per litre.

Wine equalisation tax
30
Wine is not subject to excise, but attracts a separate wine equalisation tax ("WET"), which applies as a percentage of
the value of wine products. The producer, importer or wholesaler normally pays 29% of the wholesale price of wine
at the last wholesale sale of the wine.

A $500,000 WET producer rebate reduces the WET paid by small wine producers to zero. 35

Luxury car tax

The luxury car tax generally applies to the value of a domestic or imported passenger vehicle exceeding a threshold,
$57,180 (in the year ending 30 June 2009), at a rate of 33% from 1 July 2008. 40

Luxury car tax concessions are available to certain fuel efficient cars and four wheel drives acquired by primary
producers and eligible tourist operators.

Resource taxes and royalties 45

Specific resource taxes and royalties apply to the extraction of oil and gas.

Other taxes
50
A range of Australian government departments administer a broad range of smaller taxes, including charges for
notional cost recovery, penalties, levies and licence fees.

Agricultural products attract more than 60 separate levies; this revenue funds services and research in specific
agricultural industries. 55

Australia's jurisdiction to tax: source and residence

The taxation of income in Australia is principally determined on the basis of whether the entity is an Australian
resident or a foreign resident for tax purposes. Australian residents are taxed on their worldwide income whereas 60
foreign residents are taxed only on income sourced in Australia.

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Double taxation

Double taxation is caused by overlapping tax jurisdictions arising from the application of the source and residence
principles noted above. For example, two countries may seek to tax the same income. Relief from double taxation is 5
typically provided under domestic law by either: (i) exempting the income from domestic tax, or (ii) crediting the
foreign tax paid on that income against domestic tax. Australia also allows a deduction for foreign tax paid under
certain limited circumstances. In addition to domestic law, bilateral tax treaties contain rules designed to eliminate
double taxation.
10
Australia's tax treaties allocate taxing rights between the residence (of the person) and source (of the income)
countries and require the former to eliminate double taxation when there are competing taxing rights. They also
provide an agreed basis for allocating the income and expenses of multinational groups operating in both countries.
In addition, they authorise administrative cooperation to prevent fiscal evasion and to assist in the collection of tax
debts. Australia has 42 bilateral tax treaties, based on the OECD Model Tax Convention on Income and on Capital. 15

I ntegrity rules

Thin capitalisation
20
Thin capitalisation rules aim to prevent undue exploitation by Australian and foreign multinational enterprises of the
different tax treatment that applies to the payment of interest versus dividends; taxpayers can deduct interest but not
dividends. The rules prevent excessive debt financing (as opposed to equity financing) of Australian entities, by
disallowing the interest expense if the debt finance exceeds certain limits. The rules apply to:
25
48

Australian entities that operate internationally and some of their associates;

Australian entities that are foreign controlled; and
30

foreign entities that operate in Australia.

The rules do not apply to entities: (i) with an annual debt deduction of $250,000 or less; (ii) that are outward
investing Australian entities at least 90% of whose assets are Australian assets; or (iii) that are qualifying special
purpose (securitisation) entities.
35
Transfer pricing

The transfer pricing rules are designed to ensure that Australian and foreign multinational enterprises price their
related party international dealings in accordance with the arm's length principle. The aim is to prevent profit
shifting between associated enterprises located in different jurisdictions to ensure taxable Australian profits are 40
commensurate with the economic value added in Australia.

Foreign source income anti-tax deferral (attribution) regimes

Australia's attribution regimes consist of: 45

the controlled foreign company rules;

the foreign investment fund rules;

the transferor trust rules; and

the deemed present entitlement rules.
50
These rules are designed to ensure residents cannot defer or avoid Australian tax by accumulating income
offshore. They tax residents on an accruals basis on their share of income accumulating offshore.

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Tax information exchange agreements

A tax information exchange agreement ("TIEA") is a bilateral agreement to establish a legal basis for the exchange
of taxpayer information, for both civil and criminal tax purposes. Australia has signed four TIEAs with low-tax
jurisdictions: Bermuda, Antigua and Barbuda, the Netherlands Antilles and the British Virgin Islands. 5

Commonwealth-State Financial Relations

Commonwealth-State financial relations involve the provision of Australian Government financial assistance to the
States and Territories, which we refer to as the States, and oversight by the Australian Loan Council of government 10
borrowings.

The States receive significant financial support from the Commonwealth of Australia. As of the 2009 UEFO
released on 3 February 2009, Commonwealth payments to the States for 2008-09 were estimated to total $83.5
billion, comprising general revenue assistance, including all GST revenue, of $42.6 billion and payments for specific 15
purposes of $40.9 billion. These amounts reflect additional Commonwealth funding to the States of $6.0 billion as
part of the three stimulus packages announced since the release of the 2008-09 MYEFO on 5 November 2008. See
"The Australian EconomyEconomic Outlook" in this prospectus.

General revenue assistance is a broad category of payments, including GST payments, which are provided to the 20
States without conditions to spend according to their own budget priorities. As of the 2009 UEFO, general revenue
assistance to the States was estimated to comprise $42.2 billion in GST payments and $359 million of other general
revenue assistance. As agreed by all States in the Intergovernmental Agreement, GST payments are distributed
among the States in accordance with the principle of horizontal fiscal equalisation. Under this principle, States
receive funding from the Commonwealth of Australia such that, if each made the same effort to raise revenue from 25
its own sources and operated at the same level of efficiency, each would have the capacity to provide services at the
same standard level.

The Commonwealth of Australia provides payments to the States for specific purposes in order to pursue important
national policy objectives in areas that may be administered by the States. 30

49
35

The Australian Loan Council

The Australian Loan Council is a Commonwealth-State ministerial council that coordinates public sector borrowing. 40
The Loan Council consists of the Prime Minister of Australia and the Premier/Chief Minister of each State and
Territory. However, in practice each member is represented by a nominee, usually the Treasurer of that jurisdiction,
with the Australian Treasurer as Chairman.

Current Loan Council arrangements operate on a voluntary basis and emphasise transparency of public sector 45
financing rather than adherence to strict borrowing limits. These arrangements are designed to enhance financial
market scrutiny of public sector borrowing and facilitate informed judgments about each government's financial
performance.

The Loan Council traditionally meets annually in March to consider jurisdictions' nominated borrowings for the 50
forthcoming year. As part of the agreed arrangements, the Loan Council considers these nominations, having regard
to each jurisdiction's fiscal position and the macroeconomic implications of the aggregate figure.

In March 2008, the Australian Government nominated, and the Loan Council endorsed, a Loan Council Allocation
surplus of $18,974 million. In the 2008-09 Budget, the Australian Government estimated a Loan Council Allocation 55
surplus of $23,641 million. In the 2008-09 MYEFO, the Australian Government's estimate for the 2008-09 Loan
Council Allocation surplus was revised to $7,258 million.

Since the release of the 2008-09 MYEFO on 5 November 2008, the Government has announced three additional
stimulus packages. See "The Australian EconomyEconomic Outlook" in this prospectus. As a result, the 60

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Commonwealth of Australia now expects to report a cash deficit with the impact that the Loan Council Allocation
estimate will be revised down.

Domestic Issuance of Government Bonds
5
The defining feature of the Australian Government's debt management in recent years has been the substantial
reduction in Australian Government net debt. The face value of Commonwealth Government Securities on issue as
at 30 June 2008, net of financial assets and Commonwealth holdings, stood at around $26.5 billion, down from
$107.3 billion eleven years earlier.
10
While persistent fiscal surpluses in years prior to 2008-09 removed the need to borrow for budget funding purposes,
the Australian Government continued to issue Treasury Bonds in order to maintain an active Treasury Bond market
and to support the market in Treasury Bond futures contracts. These two markets are used in the pricing and hedging
of a wide range of financial instruments and in the management of interest rate risks by market participants. These
markets provide additional diversity to the financial system and contribute to a lower cost of capital in Australia. 15

Treasury Fixed Coupon Bonds were the main debt instrument issued by the Australian Government in 2007-08. The
size of the program in 2007-08, at $5.1 billion, was smaller than the 2006-07 program of $5.3 billion. Twelve
tenders were conducted in 2007-08, the same number as during 2006-07.
20
Three Treasury Indexed Bond tenders added stock to the market in 2002-03 with an aggregate face value of around
$150 million, $50 million less than in 2001-02. The issuance of Treasury Indexed Bonds has been suspended.

The Government successfully conducted its first Treasury Fixed Coupon Bond conversion tender in October 2001;
two more conversion tenders followed. These tenders offered investors the opportunity to consolidate their holdings 25
of less liquid stocks into the larger, more actively traded, benchmark stocks.

The Government also has the power to issue Treasury Notes. Any issuance would be directed primarily towards
meeting the within-year funding task that arises from mismatches in the timing of outlays and revenue. No Treasury
Notes were outstanding as at 30 June 2008. 30

In 2007-08, all borrowing was undertaken in the domestic market. As of 11 February 2009, the Australian
Government had not borrowed directly in foreign currencies since 1987. However, in addition to the $8 million of
outstanding borrowings denominated in foreign currencies, the Australian Government has a foreign currency
exposure achieved by way of swapping out of domestic currency debt. This foreign currency exposure (mainly in 35
U.S. dollars) is for long term portfolio management reasons. There were no foreign currency swap transactions in
2007-08.

40
50

On 3 February 2009, the Australian Government released updated economic and budget forecasts. Consistent with 45
these forecasts, the Australian Office of Financial Management, which we refer to as the AOFM, will increase its
issuance of Treasury Bonds over the remainder of 2008-09.

The AOFM intends to conduct two Treasury Bond tenders most weeks (generally on a Wednesday and a Friday)
with the amount offered at each tender normally in the range of $500 million to $700 million. Total issuance over 50
this period is expected to amount to between $22 billion to $24 billion. In selecting bond lines to be offered at
tender the AOFM will consult with bond market participants.

There will continue to be a large within-year financing requirement as a result of differences in the timing of Budget
receipts and expenditures. In the period ahead, Treasury Notes will be used to assist with the management of short 55
term financing requirements. In addition, the AOFM may also use repurchase arrangements on its holdings of term
financial assets for this purpose.

Guarantees and Other Contingent Liabilities
60
Loan Guarantees by the Commonwealth

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It is current practice for Commonwealth-owned instrumentalities to borrow directly rather than for the Australian
Government to borrow on their behalf. The Financial Management and Accountability Act 1997 (the "FMA Act")
allows all Government Ministers to issue loan guarantees on behalf of the Australian Government using executive
authority under the Australian Constitution, subject to the authorisation of the Minister for Finance and 5
Deregulation. However, the governing legislation of some Commonwealth statutory authorities provides the
Treasurer specifically with the discretionary power to guarantee their borrowings, reflecting legislative arrangements
prior to the introduction of the FMA Act.

The number of new loan guarantees provided by the Australian Government has declined in recent years, reflecting 10
a policy that Commonwealth instrumentalities engaged in business enterprises should approach capital markets on a
basis more comparable with private businesses.

The Australian Government guarantees the due payment by Australia's export credit agency, the Export Finance and
Insurance Corporation ("EFIC"), of money that is, or may at any time become, payable by EFIC to any body other 15
than the Australian Government. The Australian Government also has in place a $200 million callable facility
available to EFIC on request to cover liabilities, losses and claims.

The following table shows, in summary form, information relating to borrowings supported by specific
Commonwealth guarantee and other indemnities and contingencies as at 30 June 2006, 2007 and 2008. 20

Table 34: Quantifiable Contingent Losses
At 30 June 2006 At 30 June 2007 At 30 June 2008
(A$ millions)
Guarantees 1,735 302 284
Indemnities 1,772 581 588
Uncalled shares/capital subscriptions 7,368 6,462 5,720
Claims for damages/costs 326 417 150
Other contingencies 112 96 116
Total quantifiable contingent losses 11,313 7,858 6,858
Less quantifiable contingent gains 138 77 70
Net quantifiable contingencies 11,175 7,781 6,788
Source: Commonwealth Consolidated Financial Statements for the years ended 30 June 2008 and 30 June 2007.

Commonwealth I nitiatives to Enhance the Stability of the Australian Financial System
25
In order to promote financial system stability and ensure the continued flow of credit throughout the economy at a
time of heightened turbulence in the international capital markets, the Australian Government has implemented:

the Financial Claims Scheme establishing measures to protect account holders' deposits made with ADIs,
and interest accrued on such deposits, to a total maximum value of $1,000,000; and

51 30

the Guarantee Scheme for Large Deposits and Wholesale Funding, a voluntary scheme allowing eligible
ADIs to apply to have deposit balances of greater than $1,000,000 per customer per ADI and eligible senior
unsecured debt instruments with maturities of up to 60 months that satisfy the eligibility criteria set out in
the Scheme Rules guaranteed by the Commonwealth of Australia.

The key elements of the schemes are as follows:
35
Financial Claims Scheme

The Commonwealth of Australia is guaranteeing new and existing deposits in eligible ADIs (including
Australian-incorporated ADI subsidiaries of foreign banks) up to a limit of $1,000,000 per customer per
ADI for a period of three years with no direct charge to account holders;

Guarantee Scheme for Large Deposits and Wholesale Funding
40

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Australian-incorporated ADI subsidiaries of foreign banks) of greater than $1,000,000 during the
continuance of the Guarantee Scheme upon application and for a fee;

The Commonwealth of Australia will guarantee on an issue by issue basis certain non-complex senior
unsecured short term (maturities up to 15 months) and term funding (maturities of 15 months up to 60
months) debt instruments upon application and for a fee;

With respect to foreign ADIs, subject to satisfaction of certain conditions, the Commonwealth of Australia
will guarantee certain deposits held by Australian residents at call or with maturities up to and including 31
December 2009 and certain non-complex senior unsecured short term debt instruments having maturities up
to and including 31 December 2009 held by Australian residents upon application and for a fee.

Reporting under the Guarantee Scheme for Large Deposits and Wholesale Funding
5
The Reserve Bank of Australia will establish and maintain a website, currently www.guaranteescheme.gov.au, to
provide information with respect to the operations of the Guarantee Scheme by identifying Guaranteed Liabilities by
ADI, issue size, date of extension of the Guarantee, liability class, currency, program/product name, security
identifier and maturity. The Reserve Bank of Australia will prepare monthly reports with respect to the operations
of the Guarantee Scheme. The Government will also provide six-monthly reports to the Australian Parliament 10
detailing:

the aggregate amount of Guaranteed Liabilities;

any calls made under the Guarantee Scheme for payment; and

any payments by the Commonwealth of Australia under the Guarantee Scheme.
15
Other Contingent Liabilities and Undertakings

The Australian Government has contingent liabilities with various international financial institutions. As at 31
December 2008, Australia's uncalled capital subscriptions totalled US$2.8 billion for the IBRD, US$2.4 billion for
the ADB, US$26.5 million for MIGA and $275 million for EBRD. In addition, the undrawn portion of promissory 20
notes issued and payable on demand in respect of maintenance-of-value obligations to the capital of the IBRD
amounted to US$42.6 million as at 31 December 2008. Promissory notes have also been issued by the Australian
Government as successive quota subscriptions to the IMF and in order to maintain the value of the IMF's holdings of
Australian dollars. At 31 December 2008, the undrawn portion of lodged promissory notes issued for this purpose
amounted to $3.8 billion. 25

As at 31 December 2008, the Australian Government had liabilities of $1.2 billion to existing replenishments of the
Asian Development Fund, the International Development Association (including with respect to the Heavily
Indebted Poor Countries initiative) and the Global Environment Facility. These liabilities are covered by the
instruments of commitment that were signed at the time of pledging. Promissory notes will be lodged regularly over 30
the life of the replenishment to enable the draw-downs to occur in line with the agreement timetable for cash
disbursements.

35
52

PUBLIC DEBT 40

The following table provides an account of all Commonwealth Government Securities on issue as of 31 December
2008.

Table 35: Government securities repayable in Australian dollars 45
Date of Issue
Date of
Maturity
Interest Rate
(%
Outstanding
31 December 2008

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Per Annum) (A$ '000)
Treasury Fixed Coupon Bonds
(a)

Oct 1996 15 Sep 2009 7.50 7,009,049
Jan 2005 15 Aug 2010 5.25 6,602,500
Aug 1998 15 Jun 2011 5.75 7,098,687
Dec 2006 15 Apr 2012 5.75 6,152,000
May 2000 15 May 2013 6.50 6,898,400
Jul 2008 15 June 2014 6.25 3,200,000
May 2002 15 Apr 2015 6.25 6,897,000
June 2004 15 Feb 2017 6.00 6,747,000
July 2006 15 Mar 2019 5.25 5,996,500
Sep 2007 15 May 2021 5.75 5,201,000
Total Treasury Fixed Coupon Bonds
(b)
61,802,136

Treasury Indexed Bonds
1985 - 2004 20 Aug 2010
(c)
1,452,000
20 Aug 2015 2,095,800
20 Aug 2020 2,472,200
Total Treasury Indexed Bonds 6,020,000
(d)

Treasury Notes
(a)
Various Various
(e)
0

Miscellaneous Securities
(f)
Various Various Various 20,225
Total Repayable in Australian Dollars 67,842,361
(a) Treasury Bonds and Treasury Notes issued since 1 July 1984 are available only as Inscribed Stock; before then Commonwealth securities
were also available in bearer form.
(b) Since 5 August 1982, Treasury Bonds have been sold by a tender system.
(c) Interest payable is dependent upon the rate of inflation.
(d) Original face value.
(e) Treasury Notes are issued at a discount and are redeemed at par on maturity.
(f) Includes debt assumed by the Commonwealth and various miscellaneous securities.

The tables below show the external debt of the Australian Government, on issue at 31 December 2008. The bonds
issued by Australia which are listed below require the Australian Government, in accordance with their terms, to
secure such bonds pari passu with new bonds, loans or borrowings which would otherwise rank in priority to such 10
bonds.

Table 36: Government securities repayable in Pounds Sterling
Date of Issue
Date of Final
Maturity
Interest Rate
(%
Per Annum)
Outstanding
31 December 2008
( Sterling)
('000)
Commonwealth Government issues
Various Maturedbonds not yet
presented for payment
(a)

Nil 51
State Government issues
Various At Treasurer's option 3.0 504
Total Repayable in Pounds Sterling 555
(a) Elapsed bonds reclaimed from fiscal agent.
15

53

20

Table 37: Government securities repayable in United States Dollars
Date of Issue
Date of Final
Maturity
Interest Rate
(%
Per Annum)
Outstanding
31 December 2008
(US$)
('000)

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March 1987 15 Mar 2017 8.375 5,321
Total Repayable in United States Dollars 5,321

Table 38: Government securities repayable in Euro
Date of Final Maturity
Interest Rate
(%
Per Annum)
Outstanding
31 December 2008
(Euro '000)
Matured Bonds not yet presented for payment
(a)
Nil 6
Total Repayable in Euro
(b)
6
(b) Bonds originally repayable in Deutsche Marks, converted to Euro at the 31 December 1998 rate of 1.95583 Deutsche Marks = 1.0 Euro
irrevocably fixed by the European Central Bank.
5
Table 39: Government securities repayable in Japanese Yen
Interest Rate
(Per Cent
Per Annum)
Outstanding
31 December 2008
( '000)
(a)
Nil 416
Total Repayable in Japanese Yen 416

Table 40: Government securities repayable in Swiss Francs
Interest Rate
(Per Cent
Per Annum)
Outstanding
31 December 2008
(SF '000)
(a)
Nil 51
Total Repayable in Swiss Francs 51

The following table shows estimated payments of principal (including contractual prepayments and payments at
maturity) to be made on the direct debt of the Australian Government outstanding on 30 June 2008.

Table 41: Summary of funded debt payment (as at 30 June 2008) 15
2008-09 2009-10
2010-11
- 2011-12
2012-13
- 2016-17
2017-18
- 2020-21
(A$ millions)
Repayable:
In Australian Dollars
(a)
5,094 5,709 18,047 16,889 10,470
Repayable overseas:
(b)

In United States Dollars 0 0

0 7 0
Total 5,094 5,709

18,047 16,896 10,470
(a) Excludes Treasury Notes and Treasury Bonds held as investment by the Commonwealth of Australia.
(b) Converted into Australian dollars at rates of exchange prevailing on 30 June 2008.

On 4 February 2009, the Australian Office of Financial Management announced that it will increase its issuance of
Treasury Bonds over the remainder of 2008-09, with total issuance over this period expected to amount to between 20
$22 billion to $24 billion. In the period ahead, the AOFM will also use Treasury Notes to assist with the
management of short term financing requirements. In addition, the AOFM may also use repurchase arrangements
on its holdings of term financial assets for this purpose. See "Government FinanceDomestic Issuance of
Government Bonds" in this prospectus.
25

54

30

Debt Record

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The Commonwealth of Australia has paid promptly, when due, the full amount of principal and interest on every
direct external obligation issued by it and has met every indirect external obligation on which it has been required to
implement its guarantee in the lawful currency, and in the country where payable, at the time of payment.

Credit Ratings 5

The Australian Government has a AAA rating for both foreign and domestic currency denominated debt from
Standard and Poor's and Moody's. Fitch rates Australia's domestic currency borrowings as AAA and foreign
currency borrowings as AA+. On 13 January 2009, Standard and Poor's affirmed Australia's AAA rating for both
foreign and domestic currency denominated debt, noting that the outlook is 'stable'. 10

55
15

PLAN OF DISTRIBUTION

The Commonwealth of Australia will not participate in the offering or sale of any of the ADI Debt Securities and 20
will pay no compensation to any underwriters in connection with the issuance of the Guarantee.

The Commonwealth of Australia has not agreed to indemnify any underwriter against civil liabilities under the
Securities Act of 1933 or to contribute payments which the underwriters may be required to make in respect thereof.
25
Except as may otherwise be provided in any prospectus supplement relating to the related ADI Debt Securities, the
Guarantee may be offered in those jurisdictions in the United States, Europe and Asia where it is legal to make such
offers.


Except as may otherwise be provided in any prospectus supplement, the validity of the Guarantee of ADI Debt
Securities will be passed upon for the Commonwealth of Australia by the Australian Government Solicitor, Lionel
Murphy Building, 50 Blackall Street, Barton ACT 2600, Australia. As to certain matters of United States federal
law, the Commonwealth of Australia is represented by Skadden, Arps, Slate, Meagher & Flom, Level 13, 131 35
Macquarie Street, Sydney, NSW 2000, Australia.

AUTHORISED AGENT IN THE UNITED STATES

The name and address of the authorised agent of the Commonwealth of Australia in the United States is Mr. David 40
Pearl, Minister - Counsellor (Economic), Australian Embassy, 1601 Massachusetts Avenue, N.W., Washington,
D.C. 20036.

FURTHER INFORMATION
45
This prospectus is part of a Registration Statement that the Commonwealth of Australia filed with the U.S. Securities
and Exchange Commission using a shelf registration process. This prospectus does not contain all of the information
provided in the Registration Statement. For further information, you should refer to the Registration Statement.

50

56

55
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS 60

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UNDERTAKINGS

The Commonwealth of Australia hereby undertakes:
5
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this
Registration Statement:

(i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
10
(ii) to reflect in the prospectus any facts or events arising after the effective date of this Registration
Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this Registration Statement; and

(iii) to include any material information with respect to the plan of distribution not previously 15
disclosed in this Registration Statement or any material change to such information in this Registration Statement.

(2) That, for the purposes of determining any liability under the Securities Act of 1933, each such post-
effective amendment, that contains a form of prospectus, shall be deemed to be a new registration statement relating
to the securities covered thereby, and the offering of such securities at that time shall be deemed to be the initial 20
bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
25
EXPENSES

An itemised statement showing estimated expenses of the Commonwealth of Australia, other than underwriting
discounts and commissions, in connection with the sale of the Guarantee of each issue of ADI Debt Securities will
be provided in the post-effective amendment to the Registration Statement relating to such issue. 30

AGREEMENT TO PROVIDE LEGAL OPINION

The Commonwealth of Australia agrees to furnish a copy of the opinion of the Australian Government Solicitor with
respect to the legality of the Guarantee of ADI Debt Securities in the post-effective amendment to this Registration 35
Statement relating to such issue.

II-1 40

CONTENTS OF REGISTRATION STATEMENT
45
This Registration Statement comprises:

(1) the facing sheet;

(2) the cross-reference sheet; 50

(3) Part I, consisting of the Prospectus;

(4) Part II, consisting of pages numbered II-1 to II-5; and
55
(5) the following exhibits:

A. Deed of Guarantee in respect of the Australian Government Guarantee Scheme for Large Deposits
and Wholesale Funding.

B. The Australian Government Guarantee Scheme for Large Deposits and Wholesale Funding Rules,

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including Sample List of Deposit Accounts and Guidelines on Interpretation of Not Complex for
the purposes of Schedule 3 Eligibility Criteria.

C. Eligibility Certificate(s).**

D. Form of Agreement for Offering Commonwealth Guaranteed Securities by and among the
Commonwealth, the relevant ADI and representatives of the Underwriters.*

E. Agreement for Offering Commonwealth Guaranteed Securities by and among the Commonwealth,
the relevant ADI and representatives of the Underwriters.**

F. Itemised statement showing estimated expenses of the Commonwealth of Australia in connection
with the sale of the Guarantee of each issue of ADI Debt Securities.**
5
G. Opinion of Australian Government Solicitor with respect to the legality of the Guarantee of ADI
Debt Securities.**

H. Consent of Dr. Ken Henry AC, Secretary of the Treasury of the Commonwealth of Australia.

I. Consent of Australian Government Solicitor (included in Exhibit G).**

__________
10
* To be filed by amendment.

** To be filed as an exhibit to the post-effective amendment to this Registration Statement relating to the
Guarantee of the relevant issue of ADI Debt Securities.

II-2 15

SIGNATURES
20

REGISTRANT:

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement 25
to be signed on its behalf by the undersigned, thereunto duly authorised, in the City of Canberra, Australia on 17
February 2009.

30
By: /s/ Dr. Ken Henry AC
Name: Dr Ken Henry AC
Title: Secretary of the Treasury of the

II-3 35

40

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TO RECEIVE NOTICES AND COMMUNICATIONS
FROM THE SECURITIES AND EXCHANGE COMMISSION:

Pursuant to the requirements of the Securities Act of 1933, the undersigned, the duly authorised agent of the 5
Commonwealth of Australia in the United States to receive notices and communications from the Securities and
Exchange Commission, has signed this Registration Statement in Washington, D.C. on 17 February 2009.

10
By: /s/ Mr. David Pearl
Name: Mr. David Pearl
Title: Minister - Counsellor (Economic)
Australian Embassy
Washington, D.C.
to receive notices and communications from
the Securities and Exchange Commission

II-4 15

INDEX TO EXHIBITS
20

Exhibit No. Description




D. Form of Agreement for Offering Commonwealth Guaranteed Securities between the Commonwealth,
the relevant ADI and representatives of the Underwriters.*



Debt Securities.**

H. Consent of Dr Ken Henry AC, Secretary of the Treasury of the Commonwealth of Australia.

__________



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END QUOTE
II-5

5

http://www.sec.gov/Archives/edgar/data/805157/000134100409000414/exhibita.htm

QUOTE
EX-99 3 exhibita.htm EXHIBIT A - DEED OF GUARANTEE 10
EXHIBIT A

15

DEED OF GUARANTEE IN RESPECT OF THE AUSTRALIAN GOVERNMENT GUARANTEE FOR
LARGE DEPOSITS AND WHOLESALE FUNDING
20

25

30

35

40
DEED

DEED OF GUARANTEE IN RESPECT OF THE AUSTRALIAN GOVERNMENT
GUARANTEE SCHEME FOR LARGE DEPOSITS AND WHOLESALE FUNDING

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5

10

15

20

CONTENTS

1.

Interpretation

2

1.1.

Definitions

2

1.2.

Interpretation

2

1.3.

Effective Date

3

1.4.

Eligibility Certificates

3

2.

Guarantee

3

3.

Claims

3

4.

Benefit of Guarantee

4

5.

Preservation of Rights

4

6.

Amendment and termination

4

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7.

Notices

4

8.

Governing law

4

Deed of Guarantee Page i

5

DEED OF GUARANTEE

10

Date

This Deed of Guarantee is dated the 20 day of November 2008.

Parties

This Deed of Guarantee is made by:

1.

THE COMMONWEALTH OF AUSTRALIA (the Commonwealth)

IN FAVOUR OF

2.

THE BENEFICIARIES being persons to whom the Guaranteed Liabilities are from
time to time owed (the Beneficiaries).

Context

This Deed of Guarantee is made in the following context:

A. The Commonwealth wishes to maintain public confidence in Australian incorporated

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authorised deposit-taking institutions (ADIs) and, to the extent they operate within
Australia, foreign ADIs and maintain the stability of the Australian wholesale debt
markets.

B. The Commonwealth has given effect to a guarantee of specific deposits with Eligible
Institutions under the Financial Claims Scheme established under the Banking Act
1959.

C. In accordance with this Deed of Guarantee, the Commonwealth guarantees
payments by Eligible Institutions under certain debt instruments and deposits.

NOW THIS DEED OF GUARANTEE WITNESSES as follows:

Deed of Guarantee Page 1

5

10

1.

Interpretation

1.1.

Definitions

1.1.1.

Unless the contrary intention appears a term in bold type has the meaning shown
opposite it:

Beneficiary

means a person to whom a Guaranteed Liability from time to
time is owed.

Business Day

means a day (excluding Saturday and Sunday) on which
banks are generally open in New South Wales for the
transaction of banking business.

Due Date

has the meaning given to it in Clause 2.1.1.b.

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Eligibility
Certificate

means a certificate issued in accordance with the Scheme
Rules.

Eligible Institution

has the meaning given in the Scheme Rules.

External
Administration

has the same meaning as in section 5 of the Payment
Systems and Netting Act 1998.

Final Application
Date

means the date determined by the Guarantor in accordance
with the Scheme Rules.

Guaranteed
Liability

means a liability that is the subject of an Eligibility Certificate.

Guarantor

means the Commonwealth of Australia

Scheme Rules

means the rules of the Australian Government Guarantee
Scheme for Large Deposits and Wholesale Funding published
on www.guaranteescheme.gov.au

1.2.

Interpretation

1.2.1.

Any reference in this Guarantee to a Clause or the Schedule is, unless otherwise stated,
to a clause hereof or the schedule hereto.

1.2.2.

Any reference in this Guarantee to "this Guarantee" shall be deemed to be a reference
to this Guarantee as a whole and not limited to the particular clause, schedule or
provision in which the relevant reference appears and to this Guarantee as varied,
amended, supplemented or substituted from time to time.

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1.2.3.

In this Guarantee, unless the contrary intention appears:

a.

Words and expressions defined in the Scheme Rules have the same meanings
where used in this Guarantee;

b.

The headings in this Guarantee are inserted for convenience only and shall be of no
legal effect;


5

10

c.

Words denoting the singular number only shall include the plural and vice versa;

d.

A reference to a person includes a body politic, body corporate or partnership;

e.

The word "includes" in any form is not a word of limitation;

f.

A reference to a person includes that person's administrators, successors and
permitted assigns; and

g.

Any reference to time of day shall be a reference to that time of day in Sydney in the
State of New South Wales.

1.3.

Effective Date

1.3.1.

This Guarantee comes into effect on 28 November 2008.

1.4.

Eligibility Certificates

1.4.1.

A Beneficiary may rely upon the issue of an Eligibility Certificate as conclusive evidence
that the liability described in the Eligibility Certificate satisfies the Eligibility Criteria.

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2.

Guarantee

2.1.1.

Subject to the terms of this Guarantee, the Guarantor irrevocably:

a.

guarantees to the Beneficiaries the payment by each Eligible Institution of the
Guaranteed Liabilities; and

b.

undertakes in favour of the Beneficiaries that, whenever the Eligible Institution does
not pay any Guaranteed Liability on the date on which it becomes due and payable
(the "Due Date"), the Guarantor shall, upon a claim by a Beneficiary made in
accordance with Clause 3, and following the expiry of any applicable grace period,
pay that Guaranteed Liability in accordance with the Scheme Rules.

2.1.2.

The Guarantor shall not be liable under Clause 2.1.1 in respect of any Guaranteed
Liability which has been varied, amended, waived, released, novated, supplemented,
extended or restated in any material respect without the written consent of the Guarantor.

3.

Claims

3.1.1.

A claim by a Beneficiary for payment under this Guarantee must be in accordance with
the Scheme Rules.


5

10

4.

Benefit of Guarantee

4.1.1.

This Guarantee shall inure to the benefit of each Beneficiary and its administrators,
successors and permitted assigns. Such administrators, successors and permitted
assigns shall be entitled to enforce this Guarantee against the Guarantor.

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5.

Preservation of Rights

5.1.1.

The obligations of the Guarantor under this Guarantee are continuing obligations despite
any intermediate payment or settlement of a claim in respect of a specific Guaranteed
Liability.

5.1.2.

Neither the obligations of the Guarantor nor the rights of the Beneficiaries under this
Guarantee shall be discharged, impaired or otherwise affected by the External
Administration or dissolution of an Eligible Institution or any analogous proceeding in any
jurisdiction.

6.

Amendment and termination

6.1.1.

Subject to Clause 6.1.2 below, this Guarantee shall terminate at midnight on the date
which is sixty-seven calendar months after the Final Application Date but without
prejudice to the rights of any Beneficiary in respect of a valid claim lodged prior to that
time.

6.1.2.

The Guarantor may extend the date of termination of this Guarantee at any time prior to
termination in accordance with the Scheme Rules.

6.1.3.

The Guarantor may amend the terms of this Guarantee at any time at its discretion by
publishing such amendment on the website referred to in the Scheme Rules provided
that (except insofar as such amendment is required by law) such amendment does not
reduce the Guarantor's obligations to the Beneficiaries in a manner which is prejudicial to
the interests of the Beneficiaries in respect of any subsisting Guaranteed Liability.

7.

Notices

7.1.1.

Any notice or other communication under this Guarantee shall be given in accordance
with the Scheme Rules.

8.

Governing law

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8.1.1.

This Guarantee is governed by, and shall be construed in accordance with, and any
matter related to it is to be governed by, the law of New South Wales.

5


10

Executed as a Deed.

Signatures

SIGNED for and on behalf of the
Commonwealth of Australia by:
)

)

)

/s/ Wayne Swan

The Honourable Wayne Swan MP,
Treasurer

Signature

In the presence of:

Andrew Thomas /s/ Andrew Thomas

Name of Witness Signature of witness

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5

10

15


END QUOTE
20

http://www.sec.gov/Archives/edgar/data/805157/000134100409000414/exhibitb.htm
25
QUOTE
EX-99 4 exhibitb.htm EXHIBIT B - SCHEME RULES

EXHIBIT B
30

35

THE AUSTRALIAN GOVERNMENT GUARANTEE SCHEME FOR LARGE DEPOSITS AND
WHOLESALE FUNDING RULES, INCLUDING SAMPLE LIST OF DEPOSIT ACCOUNTS AND
GUIDELINES ON INTERPRETATION OF NOT COMPLEX FOR THE PURPOSES OF SCHEDULE 3 40
ELIGIBILITY CRITERIA

45

50

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5

AUSTRALIAN GOVERNMENT GUARANTEE
SCHEME FOR LARGE
DEPOSITS AND WHOLESALE FUNDING
RULES

10

15

20

25

CONTENTS

1.

Interpretation

1

2.

Scheme Administrator

3

3.

Applications for Eligibility Certificates

3

Issue of Eligibility Certificate and Issuance of Guaranteed Liability

4

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4.

5.

Counter-Indemnity

4

6.

Fees

5

7.

Guarantee Statement and Website

5

8.

Notification of Breach

6

9.

Claims and Payment

6

10.

Reporting

6

11.

Auditing

6

12.

Status of Eligibility Certificate

7

13.

Notices

7

14.

Changes to Scheme Rules

8

Schedule 1

ELIGIBLE INSTITUTIONS

9

Schedule 2

APPLICATION

17

Schedule 3

ELIGIBILITY CRITERIA

22

Schedule 4

ELIGIBILITY CERTIFICATE

24

Schedule 5

FEE SCHEDULE AND PAYMENT ARRANGEMENTS AND

REPORTING ARRANGEMENTS

25

Schedule 6

FORM OF FEE LETTER

30

Schedule 7

FORM OF COUNTER-INDEMNITY

31

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Schedule 8

FORM OF CLAIM

35

Schedule 9

FORM OF LEGAL OPINION IN RESPECT OF THE COUNTER-

INDEMNITY

37

Schedule
10

FORM OF LEGAL OPINION IN RESPECT OF ELIGIBLE SCHEME

LIABILITIES

46

Government Guarantee Scheme Rules Page ii

5

AUSTRALIAN GOVERNMENT GUARANTEE SCHEME FOR LARGE DEPOSITS
AND WHOLESALE FUNDING RULES

Date

These Scheme Rules commence on 20 November 2008.

Context

These Scheme Rules are made in the following context:
10
A.
The Commonwealth of Australia (the Commonwealth) has executed a Deed of
Guarantee which comes into effect on 28 November 2008.

B.
Under the Deed of Guarantee the Commonwealth guarantees Guaranteed
Liabilities.

C.
These Scheme Rules are referred to in the Deed of Guarantee and govern access to
protection under the Deed of Guarantee.

1. Interpretation

1.1. Definitions

1.1.1.

Unless the contrary intention appears, a term in bold type has the meaning shown
opposite it:

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Applicant

means the Eligible Institution making an Application.

Application

means an application made under Rule 3.1.1.

Australian
Resident

means a person treated as an Australian resident for the purposes
of Australian income taxation law.

Beneficiary

means a person to whom a Guaranteed Liability from time to time
is owed.

Business
Day

means a day (excluding Saturday and Sunday) on which banks
are generally open in Sydney in New South Wales for the
transaction of banking business.

Counter-
Indemnity

means each deed of counter-indemnity to be provided under Rule
4.1.2.

Eligibility
Certificate

means a certificate issued in accordance with Rule 4.

Eligibility
Certificate
Fee

means the fee in respect of an Eligibility Certificate determined in
accordance with Schedule 5.

Government Guarantee Scheme Rules Page 1
5

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Eligibility
Criteria

means the criteria set out in Schedule 3.

Eligible
Institution

means an authorised deposit-taking institution (including a foreign
ADI) within the meaning of the Banking Act 1959 and listed in
Schedule 1.

Eligible
Scheme
Liability

means any liability of an Eligible Institution which satisfies the
Eligibility Criteria.

Fee Formula

means the relevant formula set out in Schedule 5 for the
calculation of the Fee payable by Eligible Institutions in respect of
an Eligibility Certificate.

Fee Letter

means the letter referred to in Rule 6.1.3.

Final
Application
Date

means the date determined by the Guarantor and notified in
accordance with Rule 3.1.2.

Guarantee

means the guarantee contained in the Deed of Guarantee
executed on behalf of the Commonwealth of Australia and which
takes effect from 28 November 2008, as amended from time to
time.

Guaranteed
Liability

means a liability that is the subject of an Eligibility Certificate.

Guarantee
Statement

means the statement referred to in Rule 7.1.1.

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Guarantor

means the Commonwealth of Australia.

Reserve
Bank of
Australia or
RBA

means the body corporate constituted and continued in existence
under the Reserve Bank Act 1959.

Scheme
Administrator

is the Reserve Bank of Australia.

Scheme
Rules

means these rules as amended and in force from time to time.

Specified
Account

means any of the following:

a. Farm Management Deposit within the meaning of section 393-25
of Schedule 2G of the Income Tax Assessment Act 1936; or

b. First Home Saver Account within the meaning of section 8 of the
First Home Saver Accounts Act 2008; or

c. Retirement Savings Account within the meaning of subsection
8(1) of the Retirement Savings Accounts Act 1997.


5

10

15

1.1.2.

In these Scheme Rules, unless the contrary intention appears:

a.

Words and expressions defined in the Guarantee have the same meanings where
used in these Scheme Rules;

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b.

References to a Schedule are to a Schedule to these Scheme Rules;

c.

The singular includes the plural and vice-versa;

d.

A reference to a person includes a body politic, body corporate or partnership;

e.

The word "includes" in any form is not a word of limitation;

f.

A reference to a person includes that person's administrators, successors and
permitted assigns;

g.

Any reference to time of day shall be a reference to that time of day in Sydney in
the State of New South Wales.

2.

Scheme Administrator

2.1.1.

The Scheme Administrator is responsible for administering the Scheme Rules on
behalf of the Guarantor.

2.1.2.

A reference in these Scheme Rules to something being approved by, at the discretion
of, or otherwise within the power or control of, the Guarantor shall include a reference
to the Scheme Administrator providing such approval or taking any relevant action on
behalf of the Guarantor in its capacity as Scheme Administrator and an Eligible
Institution or Beneficiary is entitled to rely, without further enquiry, on such approval
or action as if it had been done by the Guarantor.

2.1.3.

Eligible Institutions must comply with the reasonable directions of the Scheme
Administrator made within the scope of these Scheme Rules.

3.

Applications for Eligibility Certificates

3.1.1.

An Eligible Institution shall be entitled, until 5.00pm on the Final Application Date, to
apply for an Eligibility Certificate in respect of an Eligible Scheme Liability.

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3.1.2.

The Guarantor shall provide Eligible Institutions with no less than twenty Business
Days notice in writing of the Final Application Date.

3.1.3.

The Guarantor may extend the Final Application Date at any time at its discretion by
notice in writing to the Eligible Institutions.

3.1.4.

An Application must be made in the form of Schedule 2, signed on behalf of the
Eligible Institution and delivered to the Scheme Administrator.


5

10

3.1.5.

An Application which is incomplete or incorrect, including where APRA has notified
the Scheme Administrator that the letter of prudential compliance provided in
accordance with Schedule 2 B.9 is incomplete or incorrect, will be treated as not
having been made and the Scheme Administrator will notify the Applicant
accordingly.

4.

Issue of Eligibility Certificate and Issuance of Guaranteed Liability

4.1.1.

The decision to issue an Eligibility Certificate shall be at the discretion of the
Guarantor.

4.1.2.

No Eligibility Certificate in respect of an Eligible Scheme Liability will be issued
unless, prior to the issue, the Applicant has duly delivered to the Scheme
Administrator an Application in accordance with Rule 3.

4.1.3.

An Eligibility Certificate shall be substantially in the form of Schedule 4.

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4.1.4.

The Eligible Institution must not issue an Eligible Scheme Liability, in respect of which
an Eligibility Certificate has been issued, which differs in any material respect from
the particulars of the Eligible Scheme Liability specified in the relevant Eligibility
Certificate.

5.

Counter-Indemnity

5.1.1.

Subject to Scheme Rules 5.1.3 and 5.1.4, each Counter-Indemnity must be
substantially in the form of Schedule 7 or such other form as is approved by the
Guarantor.

5.1.2.

Each Counter-Indemnity shall be executed as a deed by the relevant Eligible
Institution and any additional counter-indemnitor required in accordance with Rule
5.1.3.

5.1.3.

The Guarantor shall be entitled, in its discretion, to require any member of the
corporate group of which the Eligible Institution is a member to become an additional
counter-indemnitor under the Counter-Indemnity, in which event the liability of the
relevant institution and the additional counter-indemnitor shall be expressed to be
joint and several under the Counter-Indemnity and the form of the Counter-Indemnity
in Schedule 7 shall be modified accordingly, all as reasonably required by the
Guarantor.

5.1.4.

The Guarantor shall, as a condition to the issue of an Eligibility Certificate, be entitled
to require the making of any amendment or supplement to a Counter-Indemnity which
has previously been delivered to it, and the delivery to it of a further legal opinion of
the kind referred to in Schedule 2 as applicable.


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6. Fees

6.1.1.

The Guarantor shall be entitled to determine the amount of, and to charge, an
Eligibility Certificate Fee to each Eligible Institution in respect of the Eligibility
Certificates issued to that Eligible Institution.

6.1.2.

The Eligibility Certificate Fee shall accrue during the period that the liabilities
described in that Eligibility Certificate are guaranteed and shall be calculated in
accordance with the Fee Formula.

6.1.3.

The Eligibility Certificate Fee shall be payable in accordance with the Fee Letter
which will be substantially in the Form set out in Schedule 6 and signed on behalf of
the Eligible Institution.

6.1.4.

The Guarantor may, at its discretion, waive the payment of an Eligibility Certificate
Fee by an Eligible Institution:

a.

in total;

b.

for a specific period;

c.

in respect of one or more Guaranteed Liabilities;

d.

in respect of one or a class of Beneficiaries; or

e.

for any combination of sub-paragraphs a to d above.

7.

Guarantee Statement and Website

7.1.1.

The Scheme Administrator will establish and maintain a website on which will be
published a statement of Guaranteed Liabilities. The current website is at
www.guaranteescheme.gov.au.

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7.1.2.

The Guarantee Statement published under Rule 7.1.1 shall have no legal status, shall
not affect the status or effect of any Eligibility Certificate, and shall be for information
purposes only.

7.1.3.

The Guarantor may have additional information published on the website referred to
in Rule 7.1.1, including but not limited to:

a.

the names of Eligible Institutions from time to time;

b.

a summary of the Guaranteed Liabilities from time to time in respect of individual
or groups of Eligible Institutions;

c.

any amendment or supplement to these Scheme Rules; and

d.

notification of the cancellation of an Eligibility Certificate in accordance with Rule
12.1.2.


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10

8.

Notification of Breach

8.1.1.

An Eligible Institution shall notify the Scheme Administrator as soon as is practicable
after becoming aware that the Eligible Institution will be, or is likely to be, unable to
make payment of a Guaranteed Liability on its Due Date.

9.

Claims and Payment

9.1.1.

A claim by a Beneficiary for payment under the Guarantee must be in writing and
made in the form of Schedule 8 and delivered to the Scheme Administrator.

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9.1.2.

A claim by a Beneficiary for payment under the Guarantee which is not made in the
form of Schedule 8 is not a valid claim and shall be treated as not having been made.

9.1.3.

Subject to Rule 9.1.4, the Guarantor shall pay to the Beneficiary the amount specified
in a valid claim.

9.1.4.

If the claim relates to a Specified Account, the Guarantor must pay the claim into
another account of the same type. The Beneficiary may direct the Guarantor to pay
the claim into an account of the same type at a particular institution.

9.1.5.

All payments made under this Deed in respect of a Guaranteed Liability shall be
made in the currency in which the Guaranteed Liability is denominated.

9.1.6.

A valid claim is one that establishes that the amount claimed:

a.

is due to the Beneficiary;

b.

remains unpaid despite the Beneficiary having made a claim on the Eligible
Institution;

c.

is in respect of a Guaranteed Liability with a Due Date on or before the expiration
of the relevant Eligibility Certificate; and

d.

has not been paid, and is not eligible to be claimed, by the Beneficiary in
accordance with the Financial Claims Scheme in Division 2AA of the Banking Act
1959.

10.

Reporting

10.1.1.

Each Eligible Institution must provide written reports to the Scheme Administrator in
accordance with the requirement in Schedule 5.

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11. Auditing

11.1.1.

The Guarantor or any person appointed by the Guarantor may at any reasonable time
during normal office hours and subject to prior mutual concurrence as to the nature
and extent of the material involved (such concurrence not to be unreasonably
withheld) inspect and take copies of such of the Eligible Institution's accounting and
working documents as specifically relate to the matters covered by these Scheme
Rules. Such right of inspection shall continue as long as either party remains under
any liability to the other arising from these Scheme Rules.


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10

12.

Status of Eligibility Certificate

12.1.1.

The Beneficiarys rights in relation to a Guaranteed Liability shall not be prejudiced by
the failure of an Eligible Institution to comply with these Scheme Rules.

12.1.2.

An Eligible Institution may apply to the Scheme Administrator to have an Eligibility
Certificate cancelled if there are no subsisting Guaranteed Liabilities in respect of the
Eligibility Certificate.

13.

Notices

13.1.1.

Any notice or other communication under or in connection with these Scheme Rules
or the Guarantee shall be in writing and dealt with as follows:

a.

If to be given to the Guarantor or the Scheme Administrator then signed by the
person giving the notice and:

i.

Sent by pre-paid post; or

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ii.

Transmitted electronically by electronic mail or facsimile transmission:

To
:
The Scheme Administrator
Australian Government Guarantee Scheme for
Large Deposits and Wholesale Funding
c/- The Secretary
GPO Box 5367
SYDNEY NSW 2001

email: administrator@guaranteescheme.gov.au

Fax: (02) 9551 8670

b.

If to be given by the Scheme Administrator or by the Guarantor to an Eligible
Institution then:

i.

Published on the website referred to in Rule 7;

ii.

Delivered by hand;

iii.

Sent by pre-paid post; or


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iv.

Transmitted electronically by electronic mail or facsimile transmission:

At the discretion of the Scheme Administrator or Guarantor as the case may be.

13.1.2.

In the case of delivery under 13.1.1.b.ii, 13.1.1.b.iii or 13.1.1.b.iv the notice will be
effective if sent to the registered office, publicly listed or otherwise notified facsimile
number or email address of the Eligible Institution to be notified.

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13.1.3.

Any notice or other communication under or in connection with these Scheme Rules
or the Guarantee to be made by the Scheme Administrator or the Guarantor to a
Beneficiary shall be made in such manner as the Guarantor, in its exclusive and
absolute discretion, decides is the most appropriate manner in the circumstances at
the time. For the avoidance of doubt the manner of notification or communication may
be by publication on the website referred to in Rule 7.

13.1.4.

A notice or communication is deemed to be effected:

a.

If published on the website referred to in Rule 7 - upon publication or, if
publication takes place after 5.00 pm, or on a day that is not a Business Day, then
on the next Business Day.

b.

if delivered by hand - upon delivery to the relevant address;

c.

if sent by post - upon delivery to the relevant address;

d.

if transmitted electronically - upon actual receipt by the addressee.

13.1.5.

A notice received after 5.00 pm, or on a day that is not a Business Day, is deemed to
be effected on the next Business Day.

14.

Changes to Scheme Rules

14.1.1.

The Guarantor may amend or supplement these Scheme Rules at any time at its
discretion by publishing such amendment on the website referred to in Rule 7
provided that (except insofar as such amendment is required by law) such
amendment does not reduce the Guarantor's obligations to the Beneficiaries in a
manner which is prejudicial to the interests of the Beneficiaries in respect of any
subsisting Guaranteed Liability.


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AUSTRALIAN GOVERNMENT GUARANTEE SCHEME FOR LARGE
DEPOSITS AND WHOLESALE FUNDING RULES
SCHEDULE 1 ELIGIBLE INSTITUTIONS

5
The following institutions are eligible to apply for the Guarantee:

A.

Australian-owned Banks

Adelaide Bank Limited

AMP Bank Limited

Australia and New Zealand Banking Group Limited

Bank of Queensland Limited

BankWest (the trading name of Bank of Western Australia Ltd)

Bendigo and Adelaide Bank Limited

Commonwealth Bank of Australia

Commonwealth Development Bank of Australia Limited

Elders Rural Bank Limited

Macquarie Bank Limited

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Members Equity Bank Pty Limited

National Australia Bank Limited

St.George Bank Limited

Suncorp-Metway Limited

Westpac Banking Corporation

B.

Australian-incorporated ADIs which are subsidiaries of foreign banks

Arab Bank Australia Limited

Bank of China (Australia) Limited

Bank of Cyprus Australia Limited

Citigroup Pty Limited

HSBC Bank Australia Limited

ING Direct (the trading name of ING Bank (Australia) Limited)

Investec Bank (Australia) Limited

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Laiki Bank (Australia) Ltd

Rabobank Australia Limited


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10

C.

Branches of Foreign Banks

ABN AMRO Bank N.V.

Allied Irish Banks, Public Limited Company

Bank of America, National Association

Bank of China Limited

Bank of Scotland plc

Barclays Capital (the trading name of Barclays Bank PLC)

BNP Paribas

Citibank, N.A.

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Credit Suisse

Deutsche Bank Aktiengessellschaft

Fortis Bank SA/NV

HSBC Bank plc

Industrial and Commercial Bank of China Limited

ING Bank N.V.

JPMorgan Chase Bank, National Association

Mega International Commercial Bank Co., Ltd.

Mizuho Corporate Bank, Ltd.

Oversea-Chinese Banking Corporation Limited

Rabobank Nederland (the trading name of Cooperatieve Centrale Raiffeisen-
Boerenleenbank B.A.)

Royal Bank of Canada

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Socit Gnrale

Standard Bank Plc

Standard Chartered Bank

State Bank of India

State Street Bank and Trust Company

Sumitomo Mitsui Banking Corporation

Taiwan Business Bank

The Bank of Tokyo-Mitsubishi UFJ, Ltd


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10

The Hongkong and Shanghai Banking Corporation Limited

The Northern Trust Company

The Royal Bank of Scotland PLC

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The Toronto-Dominion Bank

UBS AG

United Overseas Bank Limited

WestLB AG

D.

Building Societies

ABS Building Society Ltd

B & E Ltd

Greater Building Society Ltd

Heritage Building Society Limited

Hume Building Society Ltd

IMB Ltd

Lifeplan Australia Building Society Limited

Maitland Mutual Building Society Limited

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Newcastle Permanent Building Society Limited

The Rock Building Society Limited

Wide Bay Australia Ltd

E.

Credit Unions

Alliance One Credit Union Ltd

Allied Members Credit Union Ltd

AMP Credit Union Ltd

Australian Central Credit Union Ltd

Australian Country Credit Union Ltd (trading as Reliance Credit Union)

Australian Defence Credit Union Limited

AWA Credit Union Limited

Bananacoast Community Credit Union Ltd

Bankstown City Credit Union Ltd

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Berrima District Credit Union Ltd

Big Sky Credit Union Ltd

CAPE Credit Union Limited

Capricornia Credit Union Ltd

Central Murray Credit Union Limited

Central West Credit Union Limited

Circle Credit Co-operative Limited

Coastline Credit Union Limited

Collie Miners Credit Union Ltd

Community Alliance Credit Union Limited

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Community CPS Australia Limited

Community First Credit Union Limited

Companion Credit Union Limited

Country First Credit Union Ltd

Credit Union Australia Ltd

Defence Force Credit Union Limited

Dnister Ukrainian Credit Co-operative Limited

EECU Limited

Electricity Credit Union Ltd

Encompass Credit Union Limited

Eurobodalla Credit Union Ltd

Family First Credit Union Limited

Fire Brigades Employees' Credit Union Limited

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Fire Service Credit Union Limited

Firefighters & Affiliates Credit Co-operative Limited

First Choice Credit Union Ltd

First Option Credit Union Limited

Fitzroy & Carlton Community Credit Co-Operative Limited

Ford Co-operative Credit Society Limited


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10

Gateway Credit Union Ltd

Geelong & District Credit Co-operative Society Limited

GMH (Employees) Q.W.L. Credit Co-Operative Limited

Goldfields Credit Union Ltd

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Gosford City Credit Union Limited

Goulburn Murray Credit Union Co-operative Limited

Heritage Isle Credit Union Limited

Holiday Coast Credit Union Ltd

Horizon Credit Union Ltd

Hunter Mutual Limited

Hunter United Employees' Credit Union Limited

Industries Mutual Credit Union Limited

Intech Credit Union Limited

Karpaty Ukrainian Credit Union Limited

La Trobe Country Credit Co-operative Limited

La Trobe University Credit Union Co-Operative Limited

Laboratories Credit Union Limited

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Latvian Australian Credit Co-operative Society Limited

Lithuanian Co-operative Credit Society "Talka" Limited

Lysaght Credit Union Ltd

Macarthur Credit Union Ltd

Macquarie Credit Union Limited

Maleny and District Community Credit Union Limited

Manly Warringah Credit Union Limited

Maritime, Mining & Power Credit Union Limited

Maroondah Credit Union Ltd

MECU Limited

Melbourne University Credit Union Limited

MemberFirst Credit Union Limited

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5

MyState Financial Credit Union of Tasmania Limited

New England Credit Union Ltd

Newcom Colliery Employees Credit Union Ltd

Northern Inland Credit Union Limited

Nova Credit Union Limited

NSW Teachers Credit Union Ltd

Old Gold Credit Union Co-operative Limited

Orange Credit Union Limited

Phoenix (N.S.W.) Credit Union Limited

Plenty Credit Co-operative Limited

Police & Nurses Credit Society Limited

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Police Association Credit Co-operative Limited

Police Credit Union Limited

Polish Community Credit Union Ltd

PowerState Credit Union Ltd

Pulse Credit Union Limited

Qantas Staff Credit Union Limited

Queensland Country Credit Union Limited

Queensland Police Credit Union Limited

Queensland Professional Credit Union Ltd

Queensland Teachers' Credit Union Limited

Queenslanders Credit Union Limited

R.T.A. Staff Credit Union Limited

Railways Credit Union Limited

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RegionalOne Credit Union Limited

Resources Credit Union Limited

Satisfac Direct Credit Union Limited

Savings and Loans Credit Union (S.A.) Ltd

Select Credit Union Limited


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Service One Credit Union Limited

SGE Credit Union Limited

Shell Employees' Credit Union Limited

South West Slopes Credit Union Ltd

Southern Cross Credit Union Ltd

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South-West Credit Union Co-Operative Limited

St Mary's Swan Hill Co-Operative Credit Society Limited

Sutherland Credit Union Ltd

Sutherland Shire Council Employees' Credit Union Ltd

Sydney Credit Union Ltd

Tartan Credit Union Ltd

The Broken Hill Community Credit Union Ltd

The Gympie Credit Union Ltd

The Police Department Employees' Credit Union Limited

The Summerland Credit Union Limited

The University Credit Society Limited

Traditional Credit Union Limited

Transcomm Credit Co-operative Limited

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Victoria Teachers Credit Union Limited

Wagga Mutual Credit Union Ltd

Warwick Credit Union Ltd

WAW Credit Union Co-Operative Limited

Woolworths Employees' Credit Union Limited

Wyong Council Credit Union Ltd

F.

Other ADIs

Australian Settlements Limited

Cairns Penny Savings & Loans Limited

Cuscal Limited

Indue Ltd


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5

10

15

20

25

30

35

SCHEDULE 2 APPLICATION

40

A.1.1.

An Application for the Guarantee needs to be made using the ADI Application Form
available on www.guaranteescheme.gov.au.

A.1.2.

Applications should be sent by:

a.

post to:

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c/- The Secretary
GPO Box 5367
SYDNEY NSW 2001

OR

b. email to: administrator@guaranteescheme.gov.au.

OR

c. fax to: (02) 9551 8670

B.

Information

The Application needs to contain the following information:

B.1.

Date

B.1.1.

Date of Application

B.2.

Legal Name of Applicant

B.2.1.

Full legal name of the Applicant.

B.3.

Contact Details

B.3.1.

Contact details for the Applicant, including postal and email addresses, telephone and fax
numbers.

B.4.

Credit Rating

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B.4.1.

The long-term credit rating of the Applicant by all major ratings agencies that rate the
Applicant.

B.5.

Statements and Legal Documentation Required

B.5.1.

The following statements and legal documents must be provided:


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10

a.

An executed Counter-Indemnity (see B.6 below);

b.

External legal opinion in respect of the executed Counter-Indemnity (see b.7 below);

c.

Fee Letter signed on behalf of the Applicant by an authorised person (see B.8 below);

d.

Letter of prudential compliance (see B.9 below); and

e.

Details of liabilities for which the guarantee is being sought (see B.10 below).

f.

If applicable, an external legal opinion in respect of the Eligible Scheme Liabilities (see
B.11 below).

g.

If applicable, the statement and external legal opinion referred to in paragraph B.12
below.

B.5.2.

If B.5.1 and B.5.1.b have been submitted as part of a previous Application they do not
need to be submitted again, unless specifically requested.

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B.6. Counter Indemnity

B.6.1.

The Counter-Indemnity should be substantially in the form set out in Schedule 7.

B.7.

External Legal Opinion in respect of the Counter-Indemnity

B.7.1.

A legal opinion from external legal advisers to the Applicant, addressed to the Guarantor,
in respect of the valid, binding and enforceable nature of the executed Counter-Indemnity
substantially in the form set out in Schedule 9.

B.8.

Fee Letter

B.8.1.

The Fee Letter should be substantially in the form set out in Schedule 6.

B.9.

Letter of Prudential Compliance

B.9.1.

The letter of prudential compliance should take the following form:

a.

a statement by the Applicant affirming that it is in compliance in all material respects
with the prudential requirements set by the Australian Prudential Regulation Authority
(APRA) and that it is not aware of anything (at the time the application is made) that
may make it likely that it would breach those prudential requirements in any material
respect; or

b.

If the Applicant is unable to supply such a statement, then a letter from APRA stating
that APRA does not object to the granting of the Guarantee; and


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10

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c.

For foreign ADIs, a statement from the Chief Executive Officer (or equivalent) of the
parent bank that either:

i.

affirms that the parent bank is in compliance in all material respects with prudential
requirements in its home jurisdiction and that it is not aware, as at the time the
Application is made, of circumstances that would make a future material breach
likely; or

ii.

describes the matters of non-compliance with prudential requirements in its home
jurisdiction; and

d.

If a statement is provided under c.ii above, then a letter from APRA stating that APRA
does not object to the granting of the Guarantee.

B.10.

Details of Liabilities

B.10.1.

The statement must include the following details.

Deposit Liabilities

a.

Full legal name of the entity in which the deposits are to be held;

b.

Currency denomination of each deposit account for which the guarantee is being
sought;

c.

Description of each deposit account for which the guarantee is being sought, including
marketing name of each account (eg. Guaranteed Saver Account, Economysaver etc)
and type of each account (e.g. transaction account, term deposit account etc);

d.

Whether or not all of the deposits in each of the deposit accounts specified in
subparagraph c above will be guaranteed. (Yes/No)

e.

If the answer to (d) is no:

i.

what will determine whether an account is guaranteed or not (eg a customer
election to opt in, a customer election to opt out);

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ii.

by what mechanism(s) will the Eligible Institution tag or otherwise distinguish in its
internal systems between accounts (or customers) that will have relevant sums
guaranteed or not (eg database tags, list of guaranteed accounts, matching to
guaranteed list etc).

Short-term Liabilities

a.

Full legal name of the issuing entity;

b.

Currency denomination(s) of the issue;

c.

Name and jurisdiction of depository/registry (state if private placement);

d.

Indicative maturity (ie 1 month, 3 months, 6 months, etc);

e.

Name of issuance program (if applicable);


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10
f.

Approximate size of issuance program (if applicable); and

g.

Security identifiers eg ISIN, Bloomberg identifier (if applicable).

Term-Funding Liabilities

a.

Full legal name of the issuing entity;

b.

Currency denomination(s) of the issue;

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c.

Name and jurisdiction of depository/registry (state if private placement);

d.

Maturity;

e.

Coupon details, including rate, type, frequency of reset and reference rate (if
applicable);

f.

Name of issuance program (if applicable);

g.

Face value of issuance program (if applicable);

h.

Security identifiers eg ISIN, Bloomberg identifier (if applicable); and

i.

Other features of the issue.

B.11.

Additional Requirement for Non-Deposit Liabilities

B.11.1.

For non-deposit liabilities, the Applicant must provide legal opinions from external legal
advisers, addressed to the Guarantor, substantially in the form set out in Parts A and B
of Schedule 10, stating that:

a.

liabilities that are the subject of the Application are valid and binding obligations of,
and enforceable in accordance with their terms against, the Applicant; and.

b.

the liabilities described in the Application satisfy the Eligibility Criteria.

B.12.

Additional Requirements for Foreign ADIs

B.12.1.

For foreign ADIs, a statement covering the following is also required:

a.

that the liabilities are not guaranteed by the government of, or any government agency
or authority in, the foreign ADI's home jurisdiction;

b. that the total value of guaranteed liabilities of the Applicant, including those proposed

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under this Application, do not exceed 110 per cent of the average daily value of short-
term wholesale liabilities and deposits held by Australian Residents in the 30 days up
to and including 24 October 2008. For this calculation short-term wholesale liabilities
refer to certificates of deposit, bank bills and commercial paper. The statement must
specify the value of the 110 per cent cap;

c.

that the guaranteed liabilities will not be used to support directly the foreign ADI
outside Australia or the obligations of the parent or any related entity of the foreign
ADI; and


5

10

d.

acknowledgement that there may be periodic external verification that the conditions in
b) and c) above are being met.

B.12.2.

Foreign ADIs must also provide a legal opinion from external legal advisers in their home
jurisdiction in respect of the application of law in the jurisdiction of incorporation to the
liabilities and in support of the opinion in B.11 above.

B.13.

Eligible Signatory

B.13.1.

The Application form and accompanying statements by the Applicant must be signed by
the Applicant's Treasurer / Chief Financial Officer (or equivalent officer) or a senior
officer of the Applicant appointed by the Applicant's Treasurer / Chief Financial Officer
(or equivalent officer) for the express purpose of signing an Application Form.

15

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10


15

SCHEDULE 3 ELIGIBILITY CRITERIA

A.

Eligible Instruments for Australian-Owned ADIs and Australian-incorporated
ADIs which are Subsidiaries of Foreign Banks

A.1.

Deposit Liabilities in Excess of $1 Million

A.1.1.

New and existing deposit liabilities (including those held in overseas branches of
Australian-owned ADIs) at call or with maturities of up to 60 months in excess of $1
million per customer per ADI held in any currency. A non exhaustive list of sample
accounts can be found at www.guaranteescheme.gov.au.

A.1.2.

There are no restrictions on the types of depositors.

A.2.

Wholesale Funding Liabilities - Short-Term Liabilities

A.2.1.

Senior unsecured debt instruments in any currency with maturities up to
15 months. Subject to applicable law, instruments may be issued in bearer, registered
or dematerialised form. The instruments must also be not complex, and fall in the
categories of:

a. bank bills;

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b.

certificates of deposit (CDs) / transferable deposits (TDs);

c.

debentures, as defined in section 128F of the Income Tax Assessment Act 1936; or

d.

commercial paper.

A.2.2.

Applications may be made for issuance programs.

A.2.3.

Guidance on the meaning of not complex is available at

A.3.

Wholesale Funding Liabilities Term Funding Liabilities

A.3.1.

Senior unsecured debt instruments in any currency with terms to maturity of 15
months up to 60 months. Subject to applicable law, instruments may be issued in
bearer, registered or dematerialised form. The instruments must also be not complex,
and fall in the categories of:

a.

bonds;

b.

notes; or

c.

debentures, as defined in section 128F of the Income Tax Assessment Act 1936.

A.3.2.



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A.3.3.


B.

Eligible Instruments Foreign ADIs

B.1.

Deposit Liabilities

B.1.1.

New and existing deposit liabilities held by Australian Residents in any currency at call
or with maturities up to and including 31 December 2009.

B.2.

Wholesale Funding Liabilities Short-Term Liabilities

B.2.1.

Senior unsecured debt instruments in any currency held by Australian Residents with
maturities up to and including 31 December 2009. Subject to applicable law,
instruments may be issued in bearer, registered or dematerialised form. The
instruments must also be not complex, and fall in the categories of:

a.

bank bills;

b.

certificates of deposit (CDs) / transferable deposits (TDs);

c.

debentures, as defined in section 128F of the Income Tax Assessment Act 1936; or

d.

commercial paper.

B.2.2.


B.2.3.


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C.

Satisfaction of Eligibility Criteria

C.1.1.

A Beneficiary may rely upon the issue of an Eligibility Certificate as conclusive
evidence that the liability described in the Eligibility Certificate satisfies the Eligibility
Criteria.

5


10

15

SCHEDULE 4 ELIGIBILITY CERTIFICATE

A.1.

Certificate no. [ ] Date: [ ]

A.1.1.

The Commonwealth of Australia hereby certifies that the liabilities, the details of which
are specified in the Annex to this Certificate, are Guaranteed Liabilities for the purposes
of the Deed of Guarantee executed on behalf of the Commonwealth of Australia which
takes effect from 28 November 2008.

Signed

Authorised
signatory

B.

Annex
20

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5

10

15

20

SCHEDULE 5 FEE SCHEDULE AND PAYMENT ARRANGEMENTS AND REPORTING
ARRANGEMENTS

A.

Large Deposit Guarantee

A.1.1.

Eligible Institutions offering guaranteed large deposits are required to pay the relevant
Eligibility Certificate Fee on a monthly basis, in arrears.

A.1.2.

Eligible Institutions are required to report monthly to the Scheme Administrator regarding
the average daily value of deposits on which the Eligibility Certificate Fee is payable (see
Guaranteed Deposits Fee Reporting Form available on
www.guaranteescheme.gov.au). The Scheme Administrator may require more frequent
reporting of the value of those guaranteed deposits.

A.1.3.

For Australian-owned ADIs and Australian-incorporated ADIs which are subsidiaries of
foreign banks, no fee applies to the first $1 million held by each entity in accounts with
the institution. As an illustration, if an individual had a single guaranteed deposit of $1.5
million for the entire month, the ADI should report a figure of $0.5 million; if the balance
was $1.5 million for one half of the month and $0.3 million for the remainder of the month,
the reported figure would be $0.25 million. For joint accounts, each account holder is
considered to have an equal share of the balance of that account. As an illustration, if an
individual had a single guaranteed deposit of $1.5 million, and a joint account of

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$0.5 million, the reported figure would be $0.75 million.

A.1.4.

For foreign ADIs, the total value of guaranteed deposits is to be reported (i.e. there is no
fee-free threshold).

A.1.5.

Guaranteed foreign currency deposits are to be converted into Australian dollar
equivalents on a daily basis at 4pm exchange rates published on the RBAs
website. These liabilities are to be shown separately to liabilities in Australian dollars.

A.1.6.

The report must be signed by the Treasurer / Chief Financial Officer (or equivalent
officer) of the Eligible Institution or a senior officer of the Eligible Institution appointed by
the Treasurer / Chief Financial Officer (or equivalent officer) of the Eligible Institution for
the express purpose of signing the report and sent by email to
administrator@guaranteescheme.gov.au.

A.1.7.

The figures reported on the forms must be subject to the Eligible Institution's usual audit
practices and subject to an external audit at least annually. A copy of the external audit
reports must be provided to the Guarantor upon request.

A.1.8.

In calculating the value of guaranteed deposits, the balance of the account at the end of
the day is to be used (i.e. accrued interest, not yet credited to the account, need not be
included).


5

10

A.1.9.

On the day the report is submitted, the Eligible Institution must remit the relevant
Eligibility Certificate Fee to the specified account at the RBA. This payment should
preferably be made through SWIFT, or by direct credit.

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A.1.10.

The report is to be submitted, and the Eligibility Certificate Fee paid, within 7 Business
Days of the last calendar day of each month.

A.1.11.

The Eligibility Certificate Fee is to be calculated by the Eligible Institution using the
following formula:

Eligibility Certificate Fee Payable = Guaranteed deposits Relevant Fee Number of
calendar days in month / 365

where the Relevant Fee is as prescribed below.

B.

Wholesale Funding Guarantee

B.1.

Short-term liabilities (initial maturity <15 months)

B.1.1.

Eligible Institutions issuing guaranteed short-term wholesale liabilities are required to pay
the relevant Eligibility Certificate Fee on a monthly basis, in arrears.

B.1.2.

Eligible Institutions are required to report monthly to the Scheme Administrator the
average daily value of guaranteed short-term wholesale liabilities on issue (see
Guaranteed Short-term Liabilities Fee Reporting Form available on
www.guaranteescheme.gov.au). A separate figure must be reported for each broad
instrument type. The Scheme Administrator may require more frequent reporting.

B.1.3.

Guaranteed foreign currency wholesale liabilities are to be converted into Australian
dollar equivalents on a daily basis at 4pm exchange rates published on the RBAs
website. These liabilities are to be shown separately to liabilities in Australian dollars.

B.1.4.

The report must be signed by the / Chief Financial Officer (or equivalent officer) of the
Eligible Institution or a senior officer of the Eligible Institution appointed by the Treasurer
/ Chief Financial Officer (or equivalent officer) of the Eligible Institution for the express
purpose of signing the report and sent by email
to administrator@guaranteescheme.gov.au.

B.1.5.

The figures reported on the form must be subject to the Eligible Institution's usual audit

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5

10

B.1.6.

In calculating the value of liabilities on which the Eligibility Certificate Fee is payable, the
gross proceeds of the fund raising are to be used.

B.1.7.

Eligibility Certificate Fee to the specified account at the RBA. This payment should

B.1.8.


B.1.9.

The Eligibility Certificate Fee is to be calculated by the Eligible Institutions using the
following formula:

Eligibility Certificate Fee Payable = Guaranteed Short-term Liabilities Relevant Fee
Number of calendar days in month / 365


B.2.

Long-term liabilities (with initial maturities of 15 to 60 months)

B.2.1.

Eligible Institutions issuing guaranteed wholesale liabilities with initial maturities of 15 to
60 months are required to pay the relevant Eligibility Certificate fee on a monthly basis, in
arrears.

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B.2.2.

Institutions are required to report monthly to the Scheme Administrator the average daily
value of guaranteed term wholesale liabilities on issue (see Guaranteed Term Liabilities
Fee Reporting Form available on www.guaranteescheme.gov.au). A separate figure
must be reported for each security for which a guarantee has been issued. The Scheme
Administrator may require more frequent reporting.

B.2.3.

Guaranteed foreign currency long-term wholesale liabilities are to be converted into
Australian dollar equivalents on a daily basis at 4pm exchange rates published on the
RBAs website. These liabilities are to be shown separately to liabilities in Australian
dollars.

B.2.4.

The report must be signed by the Treasurer / Chief Financial Officer (or equivalent
officer) of the Eligible Institution or a senior officer of the Eligible Institution appointed by
the Treasurer / Chief Financial Officer (or equivalent officer) of the Eligible Institution for
the express purpose of signing the report and sent by email
to administrator@guaranteescheme.gov.au.

B.2.5.

The figures reported on the form must be subject to the Eligible Institution's usual audit


5

10

B.2.6.

In calculating the value of liabilities on which the relevant Eligibility Certificate Fee is
payable, the face value of the securities issued is to be used.

B.2.7.

Eligibility Certificate Fee to the specific account at the RBA. This payment should

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B.2.8.


B.2.9.

The Eligibility Certificate Fee is to be calculated by the Eligible Institution using the
following formula.

Eligibility Certificate Fee Payable = Guaranteed Long-term Liabilities Relevant Fee
Number of calendar days in month / 365


B.2.10.

Eligible Institutions that have obtained an Eligibility Certificate for an issuance program
must notify the Scheme Administrator within 5 Business Days of the first issuance under
the program.

C.

Relevant Fees

C.1.1.

Unless otherwise advised by the Scheme Administrator, institutions are required to use
the following Fee Schedule when calculating fees.

Fee Schedule

Long Term Credit Rating of ADI
1

Fee (in basis points per annum)
AAA to AA- 70
A+ to A- 100
BBB+ and below and Unrated 150

C.1.2.

Where an institution has different ratings from two or more rating agencies, the
predominant rating will be used. If there is no predominant rating, the lowest rating is
to be used.

1

The credit ratings expressed are those supplied by Standard & Poors and Fitch. For

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those ADIs rated by Moody's the equivalent rating scale will apply.


5

10

C.1.3.

For deposit and short-term wholesale liabilities, the Eligibility Certificate Fee applying for
each month will be determined by the credit rating as at the last Business Day of the
month.

C.1.4.

For long-term liabilities, the Eligibility Certificate Fee applying will be determined by the
credit rating as at the day of issuance of securities, not the day of Application, with the
Eligibility Certificate Fee being fixed for the term of the securities. As a result, if an
Eligible Institutions rating changes, different fee rates may be applicable to different
securities.

C.1.5.

In the event that the fees were to change, the Scheme Administrator would write to the
Eligible Institution notifying the change.

D.

Reporting and Identification: General Requirements

D.1.1.

The first monthly fee report is due by 12 January 2009. This will cover the period from 28
November to 31 December 2008.

D.1.2.

As an interim reporting requirement, until 21 January 2009, Eligible Institutions must
report the value of all Guaranteed Liabilities on a weekly basis. (The interim report for the
week ending 31 December 2008 is not required as it will be covered in the monthly fee
report). These weekly reports, covering Guaranteed Liabilities as at end Wednesday,
must be submitted within 5 Business Days. This interim arrangement will be reviewed in
January 2009.

D.1.3.

Eligible Institutions must have in place systems to identify separately Guaranteed
Liabilities and other liabilities. For wholesale liabilities, systems must be in place before

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the Guaranteed Liabilities are issued. For deposits, the necessary systems must be in
place before end February 2009. Until that time, existing systems must be able to provide
soundly based estimates of the value of Guaranteed Liabilities on which an Eligibility
Certificate Fee is payable.

E.

Calculations

E.1.1.

The Scheme Administrator will notify an Eligible Institution of any error in the calculation
of the Eligibility Certificate Fee. Such notice may, at the discretion of the Scheme
Administrator:

a.

require payment of any underpayment within 7 Business Days or with the next
monthly report; or

b.

remit any overpayment; or

c.

advise of an overpayment and direct that the overpaid amount be deducted from
future monthly payments.


5

10
SCHEDULE 6 FORM OF FEE LETTER

c/- The Secretary
GPO Box 5367
SYDNEY NSW 2001

We refer to our attached application dated [ ] under the Guarantee Scheme.

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If the application is approved, we undertake to fulfil the reporting requirements and pay
the relevant fees set out in Schedule 5 of the Scheme Rules.

In accordance with the Scheme Rules, the fee currently applying to [name] is [.]
basis points, based on our long term credit rating of [..]. We recognise that this fee
may change over time in accordance with the Scheme Rules.

We understand that the Scheme Administrator will notify us of any error in the calculation
of the Eligibility Certificate Fee. Such notice may, at the discretion of the Scheme
Administrator:

a.

require payment of any underpayment within 7 Business Days or with the next
monthly report; or

b.

remit any overpayment; or

c.

advise of an overpayment and direct that the overpaid amount be deducted from
future monthly payments.

We undertake to comply with the notice.

Yours sincerely

[Authorised Person]


5

SCHEDULE 7 FORM OF COUNTER-INDEMNITY

10

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To the Commonwealth of Australia

A.

A.1.1.

We refer to the Deed of Guarantee executed on behalf of the Commonwealth of Australia
and taking effect from 28 November 2008 (the Guarantee) and to the associated
Scheme Rules (the "Scheme Rules").

B.

Definitions

B.1.1.

Words and expressions defined in the Guarantee and the Scheme Rules have the same
meanings where used in this deed, save that references in this deed to the Guarantee
shall be construed as references to the Guarantee insofar (and only insofar) as it applies
to our Guaranteed Liabilities.

C.

Indemnity

C.1.1.

In consideration of your agreeing at our request to issue one or more Eligibility
Certificates to us, we hereby:-

a.

agree to indemnify you from and against all actions, proceedings, liabilities, claims,
damages, costs and expenses in relation to or arising out of the Guarantee and this
deed, and to pay to you on demand an amount equal to all payments, claims, losses,
costs, charges, damages, taxes, duties and expenses suffered or incurred by you in
consequence thereof or arising therefrom, whether directly or indirectly; and

b.

agree to pay to you upon demand interest on all amounts demanded by you from us
under this deed calculated daily at the rate of the 10-year Treasury Bond yield,
published by the Reserve Bank of Australia, plus 1.5 percentage points, for the period
commencing on the date of your demand until the date of our payment to you; and

c.

irrevocably authorise and direct you to make any payments forthwith and comply with
any demands which may be claimed or made under the Guarantee without any
reference to or further authority, confirmation or verification from us, and agree that
any payment which you shall make in accordance with the Guarantee shall be
binding upon us and shall be accepted by us as conclusive evidence that you were
liable to make such payment or comply with such demand notwithstanding any

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dispute that may exist between us and the Beneficiary as to the validity of any such
demand; and

d.

without prejudice to any other provision of this deed, agree that any demand made
upon you for payment of sums specified in the Guarantee shall, for all purposes
relating to this deed, be deemed to be a valid and effective demand, and you shall be
entitled to treat it as such notwithstanding any actual lack of authority on the part of
the person making the demand if the demand appears on its face to be in order; and


5

10

e.

without prejudice to any other provision of this deed, agree that provided that any
certificate or document delivered in accordance with the provisions of the Guarantee
appears on its face to be in accordance with the terms of the Guarantee, such
certificate or document shall for all purposes relating to this deed be deemed to be
genuine and in accordance with the terms of the Guarantee; and

f.

agree that all sums payable hereunder shall be made free and clear of and without
deduction for or on account of any set-off or counterclaim or any present or future
taxes of any nature. Should any such payment be subject to deduction in respect of
any such matter, we shall pay to you such additional amount as may be necessary to
enable you to receive a net amount equal to the full amount payable hereunder. As
used herein, the term taxes includes all levies, imposts, duties, GST, charges, fee,
deductions, withholdings, stamp duty, and any obligations or conditions resulting in a
charge; and

g.

agree that all payments under this deed shall be made in the currency in which
payments made or liabilities incurred by you under the Guarantee are denominated;
and

h.

agree that our liability hereunder shall also apply to any increase or decrease in the
amount of or extension or renewal of the Guarantee from time to time (whether in the
same terms or otherwise and whether arising with our agreement or by operation of
law or otherwise) to the intent that all agreements, undertakings and authorities
herein shall continue to be binding on us in relation to the Guarantee as so increased,
decreased, extended or renewed; and

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i.

agree that, without prejudice to any other rights, powers or remedies (whether
provided by contract, law or otherwise) which you may have, you may set off any
moneys due and payable (but not paid) by us under this deed against any obligation
whatsoever owed by you to us, regardless of the place of payment or currency of
either obligation, and, if the obligations are in different currencies, you may convert
either obligation at a market rate of exchange selected by you for this purpose; and

j.

agree that, if, under any applicable law and whether pursuant to a judgment being
made or registered against us or for any other reason, any payment under or in
connection with this deed is made or falls to be satisfied by us or on our behalf in a
currency (the other currency) other than that in which the relevant payment is
expressed to be due (the required currency), then to the extent that the payment
actually received by you (when converted into the required currency at the market
rate of exchange selected by you for this purpose on the date of payment or, if it is
not practicable for you to purchase the required currency with the other currency on
the date of payment, at the market rate of exchange selected by you for this purpose
as soon thereafter as it is practicable for you to do so) falls short of the amount due
under the terms of this deed, we shall, as a separate and independent obligation,
indemnify and hold you harmless against the amount of such shortfall; and


5

10

k.

agree to observe, and perform our obligations under, the Scheme Rules in force from
time to time, and to comply with any undertaking given by us to the Guarantor in
connection with the issue of any Eligibility Certificate.

D.

Warranty

D.1.1.

We hereby warrant and represent that we have power to enter into and have duly
authorised the execution and delivery of this deed and that our obligations hereunder
constitute our legal, valid, binding and enforceable obligations.

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D.1.2.

Our obligations hereunder shall not be in any way discharged or impaired by reason of
any time or other indulgence granted to you by the Beneficiary or by any amendment or
variation of the Guarantee or any related agreement, and shall exist irrespective of any
present or future total or partial invalidity, illegality or unenforceability of the Guarantee.

E.

Obligations

E.1.1.

We shall not, and we shall procure that no guarantor of any Guaranteed Liability shall,
without your prior written consent, enforce or seek to enforce in competition with you, any
right of contribution, subrogation or indemnity from or against any other person to which
we or such guarantor may be entitled by reason of the performance of our obligations
hereunder or the guarantors performance of its obligations, in each case, in respect of
the Guaranteed Liability.

E.1.2.

A certificate submitted by you to us as to the amount due from us to you hereunder at the
date of such certificate shall be conclusive and binding on us for all purposes.

E.1.3.

We understand and agree that our liability hereunder will continue until you have notified
us in writing that you have released us from it.

F.

Notification

F.1.1.

We undertake to notify you promptly upon becoming aware that a Beneficiary may make
a demand upon you in respect of our Guaranteed Liabilities.


5

10

G.

Liability

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G.1.1.

To the extent permitted by law, the operation of any legislative proportionate liability
regime is excluded in relation to any claim against us under or in connection with this
indemnity.

H.

Applicable Law

H.1.1.

This deed shall be governed by and construed in accordance with, and any matter
related to it is to be governed by, the law of the State of New South Wales. We submit to
the jurisdiction of the courts of New South Wales.

EXECUTED AS A DEED

[insert appropriate execution block for the Eligible Institution]

5

10

15

20

25

SCHEDULE 8 FORM OF CLAIM

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To:

The Commonwealth of Australia
c/- Scheme Administrator
c/- The Secretary
GPO Box 5367
SYDNEY NSW 2001

A.

Detail of Guaranteed Liability

A.1.1.

We, [INSERT FULL LEGAL NAME OF BENEFICIARY and ABN/ACN if applicable], are
owed the following Guaranteed Liability by [INSERT THE NAME OF THE ELIGIBLE
INSTITUTION OR FOREIGN ADI WHICH IS THE PRINCIPAL DEBTOR] (Debtor):

a.

[INSERT DETAILS: including details of the Liability and whether the Liability claimed
is a Guaranteed Eligible Institution Liability or a Guaranteed Foreign ADI Liability.]

B.

Claim

B.1.1.

We refer to the Deed of Guarantee applicable to the above-mentioned Guaranteed
Liability dated [INSERT Date of Deed of Guarantee] and executed on behalf of the
Commonwealth of Australia. Words and expressions defined in the Deed of Guarantee
have the same meanings where used in this notice.

B.1.2.

We claim payment, in accordance with the Guarantee, of the sum of [..] being
due and payable by the Debtor, but unpaid, to us under or in respect of the Guaranteed
Liability (the Claimed Sum).

B.1.3.

[The due date, after the expiry of the applicable grace period (if any), for the payment of
interest to us under or in respect of the Guaranteed Liability was [.] and such
payment has not been made to us.]

B.1.4.

[The due date for the redemption of the Guaranteed Liability was [..] and, after
the expiry of any applicable grace period for payment, the amount due and payable to us

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in respect of the Guaranteed Liability on such date has not been paid to us.]

B.1.5.

We certify that we have validly claimed payment of the Claimed Sum from the Debtor and
that the Debtor has failed to pay the Claimed Sum to us in accordance with our valid
claim and we attach documentary evidence in support of this certification.


5

10

B.1.6.

We certify that no part of the Claimed Sum is eligible to be claimed by us in accordance
with the Financial Claims Scheme in Division 2AA of the Banking Act 1959.

B.1.7.

[Where the liability claimed is in respect of a branch of a foreign ADI] We certify that we
are Australian Residents within the meaning of the Guarantee and we attach
documentary evidence in support of this certification.

C.

Consent

C.1.1.

We consent to the Guarantor sharing the information provided in and concerning this
claim with the Debtor and other Commonwealth agencies, including but not limited to the
Australian Prudential Regulation Authority and the Reserve Bank of Australia, for the
purposes of assessing the claim or for general administration of the Guarantee.

D.

Release

D.1.1.

Upon payment of the Guaranteed Liability to us by the Guarantor in accordance with the
Guarantee, we hereby release the Guarantor from further liability to us arising from or in
connection with the Guaranteed Liability and this claim.

E.

Contact information

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E.1.1.

[Insert address, email and facsimile details.]

Signed by:

Position:

5


10

15
SCHEDULE 9 FORM OF LEGAL OPINION IN RESPECT OF THE COUNTER-
INDEMNITY

A.

OPINION REGARDING COUNTER-INDEMNITY

A.1.

THIS OPINION IS FOR USE FOR AUSTRALIAN INCORPORATED ELIGIBLE
INSTITUTIONS ONLY IN RESPECT OF THE COUNTER-INDEMNITY

20
c/- The Secretary 25

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GPO Box 5367
SYDNEY NSW 2001

Dear Sirs 5

[insert name of Eligible Institution] (Issuer)

Deed of Counter-Indemnity dated [insert date] (Counter-Indemnity) given in favour of
the Commonwealth of Australia (Commonwealth) 10

We refer to the entry by the Issuer into the Counter-Indemnity in respect of which we have acted
as legal advisers to the Issuer which is an authorised deposit-taking institution under the
Banking Act 1959 of Australia (Banking Act).
15
This opinion relates only to the laws of New South Wales (NSW), [insert a reference to the
jurisdiction in which the Issuer is registered if not NSW] and the Commonwealth of Australia
(together the Relevant Laws) and is given on the basis that it will be construed in accordance
with the laws of NSW. We express no opinion about the laws of any other jurisdiction or factual
matters. 20

Documents
We have examined copies (certified or otherwise identified to our satisfaction) of the following
documents relating to the Counter-Indemnity: 25

a.

the Deed of Guarantee dated [insert date] executed by the Commonwealth (Guarantee);

b.

the Counter-Indemnity;

c.

[insert details of the authorisations and any power of attorney in respect of the entry into,
and performance of obligations under, the Counter-Indemnity];

d.

the certificate of registration and the constitution of the Issuer; and


30

35

e.

the authority to carry on banking business in Australia given in favour of the Issuer dated
[insert date] under the Banking Act.

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In this opinion the expression laws means the common law, principles of equity and laws
constituted or evidenced by documents available to the public generally.

5
Assumptions

We have relied on the assumptions specified in section 129 of the Corporations Act 2001 of
Australia (Corporations Act) and assumed:
10
a.

the authenticity of all signatures, seals, duty stamps and markings;

b.

the completeness, and conformity to originals, of all documents submitted to us;

c.

that all authorisations referred to above remain in full force and effect;

d.

that the Counter-Indemnity has been duly authorised and executed by the Commonwealth;

e.

on, and immediately following, the execution of the Counter-Indemnity, the Issuer was
solvent;

f.

that, if an obligation is to be performed in a jurisdiction outside Australia, its performance
will not be contrary to an official directive, impossible or illegal under the law of that
jurisdiction; and

g.

that no person has been, or will be, engaged in conduct that is unconscionable, dishonest,
misleading or deceptive or likely to mislead or deceive, or any other conduct in
contravention of Parts 2E.1, 5.7B or 7.10 of the Corporations Act or Part 2 of the Australian
Securities and Investment Commission Act 2001 of Australia.

We have not taken any steps to verify these assumptions.

15
Searches

We have examined and relied on an inspection of the public records of the Issuer in extract
which are available to the public and obtained from the Australian Securities and Investments
Commission in [insert place] as at [insert time] local time on [insert date]. These records are not 20
necessarily complete or up to date. We have not examined any documents filed by the Issuer
nor have we made any other searches.

Opinion 25

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On the foregoing basis and subject to the qualifications set out below, we are of the opinion that:

a.

the Issuer:

i.

is incorporated and validly existing under the laws of Australia; and

5

10

ii.

is capable of suing and being sued in its corporate name;

b.

the Issuer has:

iii.

the corporate power to enter into the Counter-Indemnity and to observe its obligations
under it; and

iv.

taken all corporate action required on its part to authorise the execution, delivery and
observance of its obligations under the Counter-Indemnity;

c.

under the Relevant Laws, the obligations of the Issuer in respect of the Counter-Indemnity
are legal, valid, binding and (subject to the terms of the Counter-Indemnity) enforceable.

The expression enforceable means that the relevant obligations are of a type that the
courts enforce and does not mean that the obligations will necessarily be enforced in all
circumstances in accordance with their terms; and

d.

the execution and delivery of the Counter-Indemnity and the observance of obligations
under it has not violated and will not contravene any Relevant Law or its constitution.

Qualifications 15

This opinion is subject to the following qualifications:

a. the nature and enforcement of obligations may be affected by lapse of time, failure to take

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action, laws and defences generally affecting creditors rights, court orders, public policy,
restitution and the discretionary nature of equitable remedies;

b.

the rights of a party to the Counter-Indemnity to enforce its rights may be limited or affected
by:

i.

breaches by that person of its obligations under the Counter-Indemnity, or
misrepresentations made by it in, or in connection with, the Counter-Indemnity, the
Guarantee or an Eligibility Certificate (as defined for the purposes of the Guarantee);

ii.

conduct of that party in relation to the Counter-Indemnity, the Guarantee or an
Eligibility Certificate which is unlawful;

iii.

the invalidity or unenforceability of the Guarantee or an Eligibility Certificate; or

iv.

conduct of that person in relation to the Counter-Indemnity, the Guarantee or an
Eligibility Certificate which gives rise to an estoppel or claim against that person by the
person against whom it is seeking to enforce its rights under the Counter-Indemnity;

c.

the Relevant Laws may require that parties act reasonably and in good faith in their
dealings with each other, discretions are exercised reasonably and opinions and
determinations are based on good faith;

d.

we express no opinion as to:


5

10
i.

the severance of invalid or unenforceable provisions, an indemnity for legal costs,
provisions precluding oral amendments or waivers;

ii.

whether a judgment for a monetary amount would be given in a currency other than
Australian dollars or the date on which a conversion from a foreign currency would be
made for the purpose of enforcing a judgment; or

146
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iii.

whether the Issuer is in compliance with any prudential standard, prudential regulation
or direction made by the Australian Prudential Regulation Authority;

e.

court proceedings may be stayed if the subject of the proceedings is concurrently before
another court and a document may not be admissible in court proceedings unless
applicable stamp duty has been paid; and

f.

claims against the Issuer are subject to the provisions of sections 13A and 16 of the
Banking Act and section 86 of the Reserve Bank Act 1959 of Australia. In addition, under
section 15C of the Banking Act, the fact that an ADI statutory manager (as defined in the
Banking Act) is in control of the Issuers business is not a ground for any other party to a
contract to which the Issuer is a party to deny any obligations under that contract,
accelerate any debt under that contract or close out any transaction relating to that
contract.

Benefit

This opinion is addressed to you personally and may not, without our prior written consent, be:
5
a.

relied on by another person;

b.

disclosed, except to persons who in the ordinary course of government have access to
your papers and records on the basis that they will make no further disclosure; or

c.

quoted or referred to in a public document.

This opinion is strictly limited to the matters stated in it and does not apply by implication to
other matters.

This opinion is given in respect of the Relevant Laws which are in force at 9.00 am on the date
of this letter. 10

Yours faithfully

15

20

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A.2. THIS OPINION IS FOR USE FOR FOREIGN ADI ELIGIBLE INSTITUTIONS ONLY IN
RESPECT OF THE COUNTER-INDEMNITY

c/- Scheme Administrator 5
c/- The Secretary
GPO Box 5367 10
SYDNEY NSW 2001

Dear Sirs

15

Deed of Counter-Indemnity dated [insert date] (Counter-Indemnity) given in favour of
the Commonwealth of Australia (Commonwealth)
20
We refer to the entry by the Issuer into the Counter-Indemnity in respect of which we have acted
as legal advisers to the Issuer which is an authorised deposit-taking institution under the
Banking Act 1959 of Australia (Banking Act).

This opinion relates only to the laws of New South Wales (NSW), [insert a reference to the 25
matters. We have relied upon the attached opinion of [insert details of foreign law counsel]
dated [insert date] in relation to the Issuer and the laws of [insert jurisdiction of incorporation of 30
foreign ADI] (Foreign Law Opinion).

Documents
35
documents relating to the Counter-Indemnity:

a.

the Deed of Guarantee dated [insert date] executed by the Commonwealth (Guarantee);

b.

the Counter-Indemnity; and

c.


40

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5

In this opinion the expression laws means the common law, principles of equity and laws
constituted or evidenced by documents available to the public generally. 10

Assumptions

We have assumed: 15

a.

as confirmed in the Foreign Law Opinion, that the Issuer is duly established and existing
and has status as a legal entity under the laws of [insert jurisdiction of incorporation of
foreign ADI] with full power and authority to enter into and observe its obligations under the
Documents and to own and possess its properties and conduct its business;

b.

that the Foreign Law Opinion is true and correct in all respects and none of the
qualifications made in the Foreign Law Opinion affects the matters opined on in this
opinion;

c.


d.


e.

that the Counter-Indemnity has been, or will be, duly authorised and executed by the Issuer
and the Commonwealth;

f.

on, and immediately following, the execution of the Counter-Indemnity the Issuer was
solvent;

g.

jurisdiction; and

h.

contravention of Parts 5.7B or 7.10 of the Corporations Act 2001 ("Corporations Act") or
Part 2 of the Australian Securities and Investment Commission Act 2001 of Australia.

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Searches
5
Commission in [insert place] as at [insert time] local time on [insert date]. These records are not
nor have we made any other searches. 10

15

20

Opinion 25


a.

the Issuer would be recognised as a legal entity in the Relevant Jurisdictions under either
the common law or the Foreign Corporations (Application of Laws) Act 1989 of Australia
due to the recognition of the Issuer as a legal entity under the laws of [insert jurisdiction of
incorporation of foreign ADI];

b.

the Issuer is registered under the Corporations Act as a foreign company carrying on
business in Australia;

c.

under the Relevant Laws, the obligations of the Issuer in respect of the Counter-Indemnity
are legal, valid, binding and (subject to the terms of the documents) enforceable.


d.

the execution and delivery by, or on behalf of, the Issuer of the Counter-Indemnity and the
observance of its obligations under it has not violated and will not contravene any Relevant

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Law.

Qualifications

5
a.

the nature and enforcement of obligations may be affected by lapse of time, failure to take

b.

the rights of a party to the Counter-Indemnity to enforce its rights may be limited or affected
by:

i.

breaches by that person of its obligations under the Counter-Indemnity, or
misrepresentations made by it in, or in connection with, the Counter-Indemnity, the
Guarantee or an Eligibility Certificate (as defined for the purposes of the Guarantee);

ii.

conduct of that party in relation to the Counter-Indemnity, the Guarantee or an
Eligibility Certificate which is unlawful;

iii.

the invalidity or unenforceability of the Guarantee or an Eligibility Certificate; or

iv.

conduct of that person in relation to the Counter-Indemnity, the Guarantee or an
Eligibility Certificate which gives rise to an estoppel or claim against that person by the
person against whom it is seeking to enforce its rights under the Counter-Indemnity;


10

15
c.


d.


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i.

the severance of invalid or unenforceable provisions, an indemnity for legal costs or
provisions precluding oral amendments or waivers;

ii.


iii.


e.

regulations in Australia restrict or prohibit payments, transactions and dealings with assets
having a prescribed connection with certain countries or named individuals or entities
subject to international sanctions or associated with terrorism;

f.


g.

claims against the Issuer are subject to the provisions of section 11F of the Banking Act
and section 86 of the Reserve Bank Act 1959 of Australia.
1

Benefit

5
a.


b.

disclosed, except to persons who in the ordinary course of government have access to your
papers and records on the basis that they will make no further disclosure; or

c.


other matters.

10

____________________
15
1
If this opinion is being given in respect of the Bank of China this qualification should be replaced with the

152
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following:

claims against the Issuer are subject to the provisions of sections 13A and 16 of the Banking Act and section 86 of the Reserve
Bank Act 1959 of Australia. In addition, under section 15C of the Banking Act, the fact that an ADI statutory manager (as defined in
the Banking Act) is in control of the Issuers business is not a ground for any other party to a contract to which the Issuer is a party to
deny any obligations under that contract, accelerate any debt under that contract or close out any transaction relating to that 5
contract.

10

15

20
of this letter.

Yours faithfully
25

30

35

40

45


50

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SCHEDULE 10 FORM OF LEGAL OPINION IN RESPECT OF ELIGIBLE SCHEME
LIABILITIES
5

A.

OPINION REGARDING VALID, BINDING AND ENFORCEABLE NATURE OF
OBLIGATIONS

A.1.

THIS OPINION IS FOR USE FOR AUSTRALIAN INCORPORATED ELIGIBLE
INSTITUTIONS ONLY IN RESPECT OF ELIGIBLE SCHEME LIABILITIES

10
c/- The Secretary 15
GPO Box 5367
SYDNEY NSW 2001

Dear Sirs 20


[insert description of proposed Eligible Scheme Liabilities] (Liabilities)
25
We refer to the proposed issue of the Liabilities in respect of which we have acted as legal
advisers to the Issuer which is an authorised deposit-taking institution under the Banking Act
1959 of Australia (Banking Act).

This opinion relates only to the laws of New South Wales (NSW), [insert a reference to the 30
matters.
35

Documents

documents: 40

a.

the Deed of Guarantee dated [insert date] executed by the Commonwealth;

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b.

[insert a description of the documents evidencing the proposed Eligible Scheme Liabilities]
(Documents);

c.

[insert details of the authorisations and any power of attorney in respect of the entry into,
and performance of obligations under, the Documents];


5

10

d.

the certificate of registration and the constitution of the Issuer; and

e.


In this opinion, the expression laws means the common law, principles of equity and laws
constituted or evidenced by documents available to the public generally. 15

Assumptions

We have relied on the assumptions specified in section 129 of the Corporations Act 2001 of 20
Australia (Corporations Act) and assumed:

a.


b.


c.

that all authorisations referred to above remain in full force and effect;

d.

that the Documents have been, or will be, duly authorised by all parties to them (other than
the Issuer) and have been, or will be, duly executed by all parties to them;

e.

on, and immediately following, the execution of the Documents, the Issuer was solvent;

155
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f.

jurisdiction; and

g.

contravention of Parts 2E.1, 5.7B or 7.10 of the Corporations Act or Part 2 of the Australian


5
Searches

Commission in [insert place] as at [insert time] local time on [insert date]. These records are not 10

Opinion 15


a.

the Issuer:

i.

is incorporated and validly existing under the laws of Australia; and

20

25

ii.

is capable of suing and being sued in its corporate name;

b.

the Issuer has:

i.

the corporate power to incur the Liabilities and enter into the Documents and to
observe its obligations under them; and

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ii. taken all corporate action required on its part to authorise the incurring of the Liabilities
and the execution, delivery and observance of its obligations under the Documents;

c.

under the Relevant Laws, the obligations of the Issuer in respect of the Liabilities and under
each Document are, or when executed and delivered will be, legal, valid, binding and
(subject to the terms of the documents) enforceable.


d.

the incurring of the Liabilities and the execution and delivery of the Documents and the
observance of obligations under them has not violated and will not contravene any
Relevant Law or its constitution.

Qualifications

5
a.


b.

the rights of a party to a Document to enforce its rights may be limited or affected by:

i.

breaches by that person of its obligations under the Document, or misrepresentations
made by it in, or in connection with, the Document;

ii.

conduct of that party in relation to the document which is unlawful; or

iii.

conduct of that person in relation to the document which gives rise to an estoppel or
claim against that person by the person against whom it is seeking to enforce its rights
under the Document;

c.


d. we express no opinion as to:

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i.

provisions precluding oral amendments or waivers or the accuracy, completeness or
suitability of any formula set out in Document;


5

ii.


iii.


e.


f.


g.

claims against the Issuer are subject to the provisions of sections 13A and 16 of the
Banking Act and section 86 of the Reserve Bank Act 1959 of Australia. In addition, under
section 15C of the Banking Act, the fact that an ADI statutory manager (as defined in the
Banking Act) is in control of the Issuers business is not a ground for any other party to a
contract to which the Issuer is a party to deny any obligations under that contract,
accelerate any debt under that contract or close out any transaction relating to that
contract.

10
Benefit


a.


158
p158 22-9-2014
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b.


c.


other matters.

This opinion is given in respect of the Relevant Laws which are in force at 9.00 am on the date 5
of this letter.

Yours faithfully

10


15

20

A.2.

THIS OPINION IS FOR USE FOR FOREIGN ADI ELIGIBLE INSTITUTIONS ONLY IN
RESPECT OF ELIGIBLE SCHEME LIABILITIES

c/- The Scheme Administrator
Australian Government Guarantee Scheme for Large Deposits
and Wholesale Funding
c/o The Secretary
65 Martin Place
Sydney NSW 2001

Dear Sirs

35


We refer to the proposed issue of the Liabilities in respect of which we have acted as legal 40

159
p159 22-9-2014
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with the laws of NSW. We express no opinion about the laws of any other jurisdiction or factual 5
matters. We have relied upon the attached opinion of [insert details of foreign law counsel]
dated [insert date] in relation to the Issuer and the laws of [insert jurisdiction of incorporation of
foreign ADI] (Foreign Law Opinion).

10
Documents

documents:
15
a.


b.

(Documents); and

c.


20

25

In this opinion, the expression laws means the common law, principles of equity and laws
constituted or evidenced by documents available to the public generally.
30

Assumptions

We have assumed:
35
a.

as confirmed in the Foreign Law Opinion, that the Issuer is duly established and existing
and has status as a legal entity under the laws of [insert jurisdiction of incorporation of
foreign ADI] with full power and authority to enter into and observe its obligations under the
Documents and to own and possess its properties and conduct its business;

b. that the Foreign Law Opinion is true and correct in all respects and none of the

160
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qualifications made in the Foreign Law Opinion affects the matters opined on in this
opinion;

c.


d.


e.

that the Documents have been, or will be, duly authorised and executed by all parties to
them;

f.

on, and immediately following, the execution of the Documents the Issuer was solvent;

g.

jurisdiction; and

h.

contravention of Parts 5.7B or 7.10 of the Corporations Act 2001 or Part 2 of the Australian


Searches 5

Commission in [insert place] as at [insert time] local time on [insert date]. These records are not
necessarily complete or up to date. We have not examined any documents filed by the Issuer 10

Opinion
15

20

161
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5
a.

the Issuer would be recognised as a legal entity under the Relevant Laws under either the
common law or the Foreign Corporations (Application of Laws) Act 1989 of Australia due to
the recognition of the Issuer as a legal entity under the laws of [insert jurisdiction of
incorporation of foreign ADI];

b.

the Issuer is registered under the Corporations Act as a foreign company carrying on
business in Australia;

c.

under the Relevant Laws, the obligations of the Issuer in respect of the Liabilities and under
each Document are, or when executed and delivered will be, legal, valid, binding and
(subject to the terms of the documents) enforceable.


d.

the incurring of the Liabilities and the execution and delivery of the Documents and the
observance of obligations under them has not violated and will not contravene any
Relevant Law.

Qualifications

10
a.


b.

the rights of a party to a Document to enforce its rights may be limited or affected by:

i.

breaches by that person of its obligations under the Document, or misrepresentations
made by it in, or in connection with, the Document;

ii.

conduct of that party in relation to the document which is unlawful; or

iii. conduct of that person in relation to the document which gives rise to an estoppel or

162
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claim against that person by the person against whom it is seeking to enforce its rights
under the Document;

c.


d.


i.

provisions precluding oral amendments or waivers or the accuracy, completeness or
suitability of any formula set out in Document;

ii.



5

10
iii.


e.


f.


g.

claims against the Issuer are subject to the provisions of section 11F of the Banking Act
and section 86 of the Reserve Bank Act 1959 of Australia.
1

Benefit

163
p163 22-9-2014
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st


a.


b.


c.


This opinion is strictly limited to the matters stated in it and does not apply by implication to 5
other matters.

of this letter.
10
Yours faithfully

_______________________ 15

1
If this opinion is being given in respect of the Bank of China this qualification should be replaced with the
following:

claims against the Issuer are subject to the provisions of sections 13A and 16 of the Banking Act and section 86 of the Reserve
Bank Act 1959 of Australia. In addition, under section 15C of the Banking Act, the fact that an ADI statutory manager (as defined in
the Banking Act) is in control of the Issuers business is not a ground for any other party to a contract to which the Issuer is a party to 20
deny any obligations under that contract, accelerate any debt under that contract or close out any transaction relating to that
contract.

25


30

35

B.

SATISFACTION OF THE ELIGIBILITY CRITERIA

B.1.

THIS OPINION IS FOR USE FOR BOTH AUSTRALIAN INCORPORATED AND

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FOREIGN ADI ELIGIBLE INSTITUTIONS IN RESPECT OF THE SATISFACTION
OF THE ELIGIBILITY CRITERIA FOR NON-DEPOSIT ELIGIBLE LIABILITIES
ONLY

c/- The Scheme Administrator
Australian Government Guarantee Scheme for Large Deposits
and Wholesale Funding
c/o The Secretary
65 Martin Place
Sydney NSW 2001

Dear Sirs

15


We refer to the proposed issue of the Liabilities in respect of which we have acted as legal 20

jurisdiction in which the Issuer is registered if not NSW] and the Commonwealth of Australia 25
matters except as expressly stated in this opinion.

This opinion is given only to confirm that the terms and conditions of the Liabilities satisfy the 30
Eligibility Criteria set out in Schedule 3 to the Australian Government Guarantee Scheme For
Large Deposits and Wholesale Funding Rules (Rules).

Documents 35

documents:

40


45

165
p165 22-9-2014
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a.


b.

the version of the Rules dated [] and published on www.guaranteescheme.gov.au as at
the date of this opinion; and

c.

(Documents).

5

Confirmation

On the foregoing basis and subject to the assumptions and qualifications set out below, we 10
confirm that:

a.

the Liabilities [will be / are] unsecured;

b.

the Liabilities [will] have a maturity [of / not exceeding] [] months;

c.

the Liabilities [do not / will not] include any of the features in their terms and conditions
which are set out in the Not Complex guidelines issued under the Rules as being features
that are likely to be regarded by the Commonwealth as complex. In the schedule to this
opinion, we specifically address each of the matters set out in the Not Complex guidelines
issued under the Rules; and

d.

the Liability [will be / is] expressed to be [a bank bill / a certificate of deposit / a transferable
deposit / a debenture / commercial paper / a bond / a note],

and consequently, the terms and conditions of the Liabilities (subject to completion of the
relevant Documents) satisfy the Eligibility Criteria. 15

Assumptions

We have assumed: 20

a.

that any Document in draft form is completed, executed and delivered in a manner that is
consistent with the Eligibility Criteria; and

166
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b.

that the final terms of the Documents have not been, and will not be, varied or waived in a
manner that is inconsistent with the Eligibility Criteria


5

10

15

20
[Qualifications
1
]

[This opinion is subject to the qualification that Rule B.2.1 requires that the Liability be held by
an Australian Resident. This is a matter of fact that can only be determined after the Liability
has been issued or accepted and a claim made.] 25

Benefit

This opinion is addressed to you personally and may not, without our prior written consent, be: 30

a.


b.


c.


other matters.
35
of this letter.

Yours faithfully
40

167
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______________________ 5

1
Only insert this qualification if providing the opinion in connection with a Liability of a foreign ADI.

10


15

20

Schedule

Guidelines as to features that are likely to be
treated as complex

Terms and conditions of the Liabilities

A [insert relevant text from guidelines
available on www.guaranteescheme.gov.au]

[describe terms and conditions relevant to each
guideline]

B

C

D

168
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E

F

G

H

etc

5


10

15
GUARANTEES OF DEPOSITS & WHOLESALE FUNDING ELIGIBLE
ACCOUNTS

SAMPLE LIST OF DEPOSIT ACCOUNTS
20
The following deposits are included in this guarantee:

Conventional cheque accounts

Conventional call accounts

Conventional saving accounts

169
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Conventional term deposits

Farm management deposits

Cash management accounts

Pass-book savings accounts
5
Personal current account bearing interest electronic access (whether or not account also
has cheque access)

Personal current at call account bearing interest with cheque and high transaction
capabilities

Personal basic account

Personal at call account, not earning interest, but with high transaction capabilities

Pensioner deeming accounts
10
At call cash management and savings account (earning high yield with limited transaction
capability)

Internet-based savings accounts

Standard fixed rate term deposit

Bonus incentive investment accounts

Debit card accounts
15
(Separate) mortgage offset accounts. Can be either 100 per cent or partial offset.

Trustee accounts

Other transaction accounts

Retirement savings accounts (at call and term)

First home savers deposit accounts
20
This is not an exhaustive list.

25

GUIDELINES ON INTERPRETATION OF NOT COMPLEX FOR THE PURPOSES OF
SCHEDULE 3 ELIGIBILITY CRITERIA 30

170
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Schedule 3 Eligibility Criteria requires eligible liabilities to be not complex. The purpose of
this note is to provide guidance on what the term not complex means in that context.

Liabilities with one or more of the following features in their terms and conditions are likely to be 5
regarded by the Guarantor as complex
1
:

A. a liability where the principal amount of the liability is not a fixed sum but varies by
reference to, or is derived from, the value of an asset, index or commodity or is linked to the
credit standing of any person;

B. a liability where the principal and interest payments are required to be made in different
currencies;

C. a liability where interest payable in respect of the liability is neither fixed nor determined by
reference to a market interest rate with a fixed margin;

D. a liability where amounts other than principal and interest are payable (other than additional
amounts by way of a gross up for taxes, late fees, break fees and make-whole payments or
similar amounts);

E. a liability that may be converted to equity or may be subordinated (other than by operation
of law);

F. a liability that requires the Eligible Institution to grant security, other than where such a
requirement is triggered only in the event that the Eligible Institution grants a security in
respect of other liabilities;

G. a liability that includes any cross-default or cross-acceleration event of default (however
described); or

H. a liability that includes any right to demand prepayment of principal or permits redemption
prior to the maturity date, except where such rights become operative as a result of one or
more of the following or substantially similar circumstances:

interest withholding taxes or other taxes that have, or will become, payable due to a
change in laws relating to taxation or in the application, or interpretation, of laws
relating to taxation;

the non-payment of principal or interest by the Eligible Institution;

the Eligible Institution entering into any arrangement or composition, suffering
execution against its assets, having its undertaking or assets, in whole or in part, taken
into possession by an encumbrancer, being placed under external administration,
dissolved or becoming the subject of an application for those or similar procedures or
otherwise being insolvent;

the liability becoming illegal;

the Eligible Institution ceasing to carry on a banking business or business generally;

a breach by the Eligible Institution of its obligations set out in the liability where the
breach is not remedied or is unable to be remedied.

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______________________

1
The issue of an Eligibility Certificate is conclusive evidence that the liability the subject of
an Eligibility Certificate has been accepted by the Guarantor as not complex.

END QUOTE 5

http://www.sec.gov/Archives/edgar/data/805157/000134100409000414/exhibith.htm

QUOTE 10
EX-99 5 exhibith.htm EXHIBIT H - CONSENT

EXHIBIT H

CONSENT 15

I hereby consent to the use of my name and the making of the statements with respect to me which are set forth
under the caption "About this ProspectusOfficial Documents and Statements" in the Prospectus included in this
Registration Statement filed by the Commonwealth of Australia with the U.S. Securities and Exchange Commission.
20


25

Dated: 17 February 2009.

30

35

END QUOTE 40

http://www.sec.gov/Archives/edgar/data/805157/000134100409000414/filename9.htm

QUOTE 45
CORRESP 9 filename9.htm

SKADDEN, ARPS, SLATE, MEAGHER & FLOM
LEVEL 13

172
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RESIDENT PARTNER

ADRIAN DEITZ
ADMITTED IN NEW YORK
--------------------------------
REGISTERED FOREIGN LAWYER IN
NEW SOUTH WALES ENTITLED TO
Practive Foreign Law Only

DIRECT DIAL
+61 (0)2 9253 6015
DIRECT FAX
+1 917 777 6005
EMAIL ADDRESS
Adrian.Deitz@SKADDEN.COM

131 MACQUARIE STREET
SYDNEY, NEW SOUTH WALES 2000
______

TEL: (61-2) 9253-6000
FAX: (61-2) 9253-6044
www.skadden.com

February 17, 2009

FIRM/AFFILIATE OFFICES
-----------
BOSTON
CHICAGO
HOUSTON
LOS ANGELES
NEW YORK
PALO ALTO
SAN FRANCISCO
WASHINGTON, D.C.
WILMINGTON
-----------
BEIJING
BRUSSELS
FRANKFURT
HONG KONG
LONDON
MOSCOW
MUNICH
PARIS
SO PAULO
SHANGHAI
SINGAPORE
TOKYO
TORONTO
VIENNA

Office of International Corporate Finance
Division of Corporation Finance
Securities and Exchange Commission 5
100 F Street, N.E.
Washington, D.C. 20549

Attn: Messrs. Paul Dudek and Michael Coco
10
RE: Commonwealth of Australia Registration
Statement on Schedule B

Ladies and Gentlemen:

On behalf of our client, the Commonwealth of Australia (the "Registrant"), we
hereby electronically transmit for filing with the Securities and Exchange Commission (the 15
"Commission") under the Securities Act of 1933, as amended (the "Securities Act"), the
registration statement of the Registrant on Schedule B (the "Registration
Statement"). Concurrently with the transmission of the Registration Statement, on behalf of our
client, we are submitting a written request for a letter of no objection from the staff of the
Commission to permit the Registrant to utilize the shelf offering procedures set forth in SEC 20
Releases No. 33-6240 and 33-6424 with respect to the Registration Statement.

Under the Australian Government Guarantee Scheme for Large Deposits and
Wholesale Funding (the "Guarantee Scheme"), eligible authorised deposit-taking institutions
("ADIs") may apply to have eligible senior unsecured debt securities ("ADI Debt Securities") 25
guaranteed by the Registrant. In its discretion, the Registrant may issue "Eligibility Certificates"
evidencing that ADI Debt Securities are guaranteed under the Guarantee Scheme, creating what
we refer to as the Guarantee. The Registration Statement covers the Guarantee of ADI Debt
Securities under the Guarantee Scheme. Such ADI Debt Securities will be registered under the
Securities Act on a registration statement of the relevant ADI. No separate consideration will be 30
paid for the Guarantee. The Guarantee is not severable from the ADI Debt Securities to which it
applies.

173
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Office of International Corporation Finance
Division of Corporate Finance
Securities and Exchange Commission
February 17, 2009
Page 2 5

Please note that the amount of US$1.00 in payment of the applicable registration
fee was sent by wire transfer to the Commission on February 12, 2009.
10
Please call me at 011-612-9253-6015 should you have any questions or require
any additional information.

Very truly yours,
15
/s/ Adrian J.S. Deitz

Adrian J.S. Deitz

20
cc: John Williams
John Scala
Australian Government Solicitor

Kerstin Wijeyewardene 25
Jacky Rowbotham
Matthew Burston
The Department of the Treasury of the Commonwealth of Australia

END QUOTE 30

QUOTE
S-B 1 scheduleb.htm SCHEDULE B 35

As filed with the Securities and Exchange Commission on 17 February 2009

Registration Statement No. 333-

40
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________

REGISTRATION STATEMENT 45
UNDER
SCHEDULE B OF
THE SECURITIES ACT OF 1933
____________________________
50
(Name of Registrant)
____________________________

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MR. DAVID PEARL
Minister - Counsellor (Economic)
Australian Embassy
1601 Massachusetts Avenue, N.W. 5
Washington, D.C. 20036
(Name and address of Authorised Agent of the Registrant in the United States
to receive notices and communications from the Securities and Exchange Commission)
____________________________
10
It is requested that copies of notices and communications from the Securities and Exchange Commission be sent to:

ADRIAN J.S. DEITZ, ESQ.
Skadden, Arps, Slate, Meagher & Flom
Level 13 15
131 Macquarie Street
Sydney, NSW 2000
Australia
___________________________
20
Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes effective.

The Guarantee of ADI Debt Securities
(1)
continuous basis pursuant to Release Nos. 33-6240 and 33-6424 under the Securities Act of 1933. 25
___________________________

CALCULATION OF REGISTRATION FEE

Title of each class of
securities to
be registered
Amount to be
registered
Proposed maximum
offering
price per Unit
Proposed maximum
aggregate offering
price
Amount of
registration fee

Guarantee of ADI Debt
Securities
(1)

--

--

--

US$1.00
(2)

30
(1) This Registration Statement covers the Guarantee of the Commonwealth of Australia issued under the Australian Government Guarantee
Scheme for Large Deposits and Wholesale Funding (the "Guarantee Scheme") of eligible senior unsecured debt securities ("ADI Debt
Securities") of eligible Australian authorised deposit-taking institutions ("ADIs"). Such ADI Debt Securities will be registered on a
registration statement of the relevant ADI. No separate consideration is being paid for the Guarantee. The Guarantee is not severable from
the ADI Debt Securities to which it applies.
(2) A registration fee of US$1.00 has been paid in respect of the Guarantee of ADI Debt Securities covered by this Registration Statement. A
separate registration fee has been, or will be, paid by each relevant ADI in respect of the ADI Debt Securities guaranteed pursuant to this
Registration Statement.
____________________________

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its
effective date until the Registrant shall file a further amendment which specifically states that this Registration 35
Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

40

45

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CROSS REFERENCE SHEET

Cross reference sheet between Schedule B of the Securities Act of 1933 and the Prospectus:
5
Schedule B Item Heading in Prospectus

1.
Cover Page
2.

Use of Proceeds
3.

Public Debt
4.

Public Debt
5.

Government Finance
6.

**
7.

8.

Use of Proceeds
9.

Use of Proceeds; The Commonwealth of
Australia Guarantee
10.

Plan of Distribution
11.

*
12.

Validity of the Guarantee
13.

Plan of Distribution**
14.

*
__________

* Additional information included in Part II to this Registration Statement or as an exhibit hereto or to be
provided from time to time by one or more amendments to this Registration Statement.

** Additional information to be provided from time to time in the prospectus and any related prospectus
supplement of the relevant ADI offering an issue of ADI Debt Securities and in the registration statement of
which such prospectus and any related prospectus supplement form a part.

10

15


The information in this prospectus is not complete and may be changed. We may not sell these securities until the
registration statement 20

PROSPECTUS 25


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covered by 5
for Large Deposits and Wholesale Funding

10

The Guarantee of ADI Debt Securities is irrevocable and ranks equally with other unsecured debts and
financial obligations of the Commonwealth of Australia.

Debt Securities.


Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or
disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any 15
representation to the contrary is a criminal offence.

This prospectus may not be used to sell the Guarantee of ADI Debt Securities unless accompanied by a
prospectus supplement and a prospectus and any related prospectus supplement of an ADI relating to those
ADI Debt Securities. 20

The date of this prospectus is 2009.

25

TABLE OF CONTENTS
30
Page

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ABOUT THIS PROSPECTUS ii
Official Documents and Statements ii
Forward-Looking Statements iii
Presentation of Financial and Other Information iii
Certain Defined Terms and Conventions iv
USE OF PROCEEDS 1
Enforcement of Civil Liabilities 3
THE COMMONWEALTH OF AUSTRALIA 5
Population and Geography of Australia 5
THE AUSTRALIAN ECONOMY 9
Overview 9
Economic Outlook 15
Major Sectors of the Economy 17
EXTERNAL TRADE AND BALANCE OF PAYMENTS 24
Merchandise Trade 24
Balance Payments 26
Changes in Official Reserve Assets 27
Exchange Rate 28
Foreign Investment Policy 30
CURRENCY, MONETARY AND BANKING SYSTEM 32
Monetary Conditions 32
Regulation of the Financial System 33
The Financial System Regulatory Regime 39
GOVERNMENT FINANCE 40
Federal Government Budget 40
Pensions and Superannuation 44
Taxation 45
Commonwealth-State Financial Relations 49
Domestic Issuance of Government Bonds 50
Guarantees and Other Contingent Liabilities 51
PUBLIC DEBT 53
Debt Record 55
Credit Ratings 55
PLAN OF DISTRIBUTION 56
AUTHORISED AGENT IN THE UNITED STATES 56

i

5

ABOUT THIS PROSPECTUS

The Government of the Commonwealth of Australia has prepared this prospectus in connection with offerings
registered under the Securities Act of 1933 of ADI Debt Securities issued by ADIs that are covered by the Guarantee 10
Scheme.

This prospectus provides you with a general description of the Guarantee. Each time the Commonwealth of
Australia guarantees an issue of ADI Debt Securities to be offered in an offering registered under the Securities Act
of 1933, it will provide a prospectus supplement identifying the issue of ADI Debt Securities to which the Guarantee 15
relates. The prospectus supplement may also add, update or change information contained in this prospectus. If the
information in this prospectus differs from any prospectus supplement, you should rely on the information in the
prospectus supplement. You should read both this prospectus and the accompanying prospectus supplement together
with the additional information described under "Further Information".

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The information contained herein is not to be construed as legal, business or tax advice. This prospectus summarises
material documents and other information, and we refer you to them for a more complete understanding of what we
discuss herein. In making an investment decision, you must rely on your own examination of the Commonwealth of
Australia, the Guarantee and the offering. 5

You should rely only on the information provided in this prospectus and in any prospectus supplement. Neither we,
nor any underwriters or agents, have authorised anyone to provide you with different information. We are not
offering the Guarantee of ADI Debt Securities in any jurisdiction where the offer is prohibited. You should not
assume that the information in the registration statement, this prospectus or any prospectus supplement is truthful or 10
complete at any date other than the date mentioned on the cover page of these documents.

This prospectus and the accompanying prospectus supplement are not, and may not be used in connection with, an
offer or solicitation by anyone in any jurisdiction in which the offer or solicitation is not authorised or in which the
person making the offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make an 15
offer or solicitation. See "Plan of Distribution" in this prospectus.

The Commonwealth of Australia has not participated in the preparation of the registration statement, the prospectus
or any related prospectus supplement of any ADI offering an issue of ADI Debt Securities to which the Guarantee
relates. The Commonwealth of Australia has not approved any such registration statement, prospectus or prospectus 20
supplement and does not assume any responsibility in relation to any such prospectus or prospectus supplement.

Official Documents and Statements

Certain financial and statistical information contained in this prospectus has been derived from official Australian 25
Government sources, including:

the 2008-09 Commonwealth Budget dated 13 May 2008, which we refer to as the 2008-09 Budget
(available at http://www.budget.gov.au);

the Mid-Year Economic and Fiscal Outlook 2008-09 Statement released on 5 November 2008, which we
refer to as the 2008-09 MYEFO (available at http://www.budget.gov.au/2008-
09/content/myefo/html/index.htm);

the February 2009 Updated Economic and Fiscal Outlook Statement released on 3 February 2009, which
we refer to as the 2009 UEFO (available at http://www.budget.gov.au/2008-
09/content/uefo/html/index.htm); and
30

the Final Budget Outcome 2005-06 released on 29 September 2006, which we refer to as the Final Budget
Outcome 2005-06 (available at http://www.budget.gov.au/2005-06/fbo/html/index.htm), the Final Budget
Outcome 2006-07 released on 28 September 2007, which we refer to as the Final Budget Outcome 2006-07
(available at http://www.budget.gov.au/2006-07/fbo/html/index.htm) and the Final Budget Outcome 2007-
08 released on 26 September 2008, which we refer to as the Final Budget Outcome 2007-08 (available at
http://www.budget.gov.au/2007-08/fbo/html/index.htm).

Information available on the websites referenced above is not incorporated by reference in this prospectus.

35
ii

Information included in this prospectus or any prospectus supplement which is identified as being derived from a 40
publication of the Australian Government or one of its agencies or instrumentalities is included in this prospectus or
such prospectus supplement on the authority of such publication as a public official document of the Australian
Government. All other information included in this prospectus and in the Registration Statement is included as a
public official statement and has been reviewed by Dr Ken Henry AC, Secretary of the Treasury of the
Commonwealth of Australia, in his official capacity, and is included herein on his authority. Except as may 45
otherwise be provided in any prospectus supplement, all other information included in such prospectus supplement

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will be included as a public official statement and will be reviewed by Dr Ken Henry AC, in his official capacity,
and will be included therein on his authority.

The address of the Commonwealth of Australia is c/o The Treasury of the Commonwealth of Australia, Treasury
Building, Langton Crescent, Parkes ACT 2600, Australia, and its phone number is +61 2 6263 2111. 5

Forward-Looking Statements

This prospectus contains, and any accompanying prospectus supplement may contain, forward-looking statements as
defined in Section 27A of the Securities Act of 1933. These forward-looking statements can be identified by the use 10
of forward-looking terminology, including the terms "believes", "forecasts", "estimates", "projects", "expects",
"intends", "may", "will", "seeks", "would", "could" or "should" or, in each case, their negative or other variations or
comparable terminology, or in relation to discussions of forecasts, policies, strategy, plans, objectives, goals, future
events or intentions.
15
Forward-looking statements are statements that are not historical facts, including statements about the
Commonwealth of Australia's beliefs and expectations. These statements are based on current plans, estimates and
projections and, therefore, undue reliance should not be placed on them. Forward-looking statements speak only as
of the date they are made. Although the Australian Government believes that the beliefs and expectations reflected
in such forward-looking statements are reasonable, no assurance can be given that such beliefs and expectations will 20
prove to have been correct.

Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause
actual results to differ materially from those expressed in any forward-looking statement. Factors that could cause
the actual outcomes to differ materially from those expressed or implied in forward looking statements include: 25

the international economy, and in particular the rates of growth (or contraction) of Australia's major trading
partners;

the effects of the global financial crisis;

changes in commodity prices and/or global demand for Australia's major export commodities;

increases or decreases in international and domestic interest rates;
30
increases or decreases in domestic consumption;

increases or decreases in Australia's labour force participation and productivity;

exchange rate fluctuations; and

increases or decreases in Australia's rate of inflation.

Presentation of Financial and Other Information 35

The fiscal year of the Commonwealth of Australia is 1 July to 30 June. Annual information presented in this
prospectus is based on fiscal years, unless otherwise indicated. In this prospectus, the fiscal year beginning on 1
July 2007 and ending on 30 June 2008 is referred to as "2007-08" and previous and subsequent fiscal years are
referred to using the same convention. 40

Any discrepancies between totals and sums of components in this prospectus are due to rounding.

45
iii

Statistical information reported herein has been derived from official publications of, and information supplied by, a 50
number of departments and agencies of the Commonwealth of Australia, including the Treasury of the

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Commonwealth of Australia, the Department of Finance and Deregulation, the Reserve Bank of Australia (the
"RBA") and the Australian Bureau of Statistics ("ABS"). Some statistical information has also been derived from
information publicly made available by the International Monetary Fund (the "IMF") and the Organisation for
Economic Co-operation and Development (the "OECD"). Similar statistics may be obtainable from other sources,
but the underlying assumptions, methodology and, consequently, the resulting data may vary from source to 5
source. In addition, statistics and data published by a department or agency of the Commonwealth of Australia may
differ from similar statistics and data produced by other departments or agencies due to differing underlying
assumptions or methodology. Certain historical statistical information contained in this prospectus is based on
estimates that the Commonwealth of Australia and/or its departments or agencies believe to be based on reasonable
assumptions. The Commonwealth of Australia's official financial and economic statistics are subject to review as 10
part of a regular confirmation process. Accordingly, financial and economic information may be subsequently
adjusted or revised. While the Australian Government does not expect revisions to be material, no assurance can be
given that material changes will not be made. The Commonwealth of Australia adheres to the IMF's Special Data
Dissemination Standards, which guide members in the dissemination of economic and financial data to the public.
15
All references in this prospectus to "Australian dollars," "A$," "dollars" or "$" are to the lawful currency of the
Commonwealth of Australia and references in this prospectus to "U.S. dollars" or "US$" are to the lawful currency
of the United States.

Certain Defined Terms and Conventions 20

The terms set forth below have the following meanings for purposes of this prospectus:

APRA means the Australian Prudential Regulation Authority.

ASI C refers to the Australian Securities and Investments Commission.

Basic price refers to the amount receivable by the producer from the purchaser for a unit of a good or
service produced as output, minus any tax payable plus any subsidy receivable on that unit
as a consequence of its production or sale; it excludes any transport charges invoiced
separately by the producer.

Balance of payments refers to the total of all of the amounts transacted between residents of Australia and
residents of the rest of the world (non-residents) over a specific period of time.

Capital account records the values of the non-financial assets that are acquired, or disposed of, by resident
institutional units by engaging in transactions, and shows the change in net worth due to
saving and capital transfers or internal bookkeeping transactions linked to production
(changes in inventories and consumption of fixed capital).

Chain volume
measures
refers to measures derived by linking together (compounding) movements in volumes,
calculated using the average prices of the previous fiscal year, and applying the
compounded movements to the current price estimates of the reference year. Chain
volume measures were introduced in the national accounts in 1998 because, by annually
rebasing, they provide price relativities that reflect the current situation, thereby providing
better real estimates than constant price measures, especially in times of rapidly changing
relative prices.

Consumer price index measures quarterly changes in the price of a 'basket' of goods and services which account
for a high proportion of expenditure by the CPI population group (i.e., metropolitan
households) and is commonly referred to as the headline rate of inflation.

25

iv

30

Current account includes the balance of trade (exports of goods and services minus imports of goods and
services), net factor income (income earned by Australia from the rest of the world minus

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income earned by the rest of the world from Australia) and net transfer payments
(including, for example, net outflows of foreign aid payments). The current account
excludes capital transfers.

Current prices refers to estimates valued at the prices of the period to which the observation relates. For
example, estimates for 200203 are valued using 200203 prices. This contrasts to chain
volume measures where the prices used in valuation refer to the prices of the previous
year.

Fiscal year means each year commencing 1 July and ending 30 June.

Free on board (or
f.o.b.)
The value of goods measured on a free on board basis includes all production and other
costs incurred up until the goods are placed on board the international carrier for export.
Free on board values exclude international insurance and transport costs. They include the
value of the outside packaging in which the product is wrapped, but do not include the
value of the international freight containers used for transporting the goods.

Gross domestic product
(or GDP)
means the total market value of goods and services produced in Australia within a given
period after deducting the cost of goods and services used up in the process of production
but before deducting allowances for the consumption of fixed capital.

GDP per capita means the ratio of the chain volume estimate of GDP to an estimate of the resident
Australian population.

Gross national income (formerly gross national product) refers to the aggregate value of gross primary incomes
for all institutional sectors, including net primary income receivable from non-residents.

Gross value added means the value of output at basic prices minus the value of intermediate consumption at
purchasers' prices.

Household saving ratio refers to the ratio of household net saving (calculated as household net disposable income
less household final consumption expenditure) to household net disposable income
(calculated as household gross disposable income less household consumption of fixed
capital).

I MF means the International Monetary Fund.

I mplicit price deflator is obtained by dividing a current price value by its real counterpart (the chain volume
measure).

I nflation refers to a continuous upward movement in the general level of prices.

Labour force means, for any group, persons who were employed or unemployed.

National net savings is calculated as national net disposable income less final consumption expenditure.

Net domestic product is calculated as GDP less consumption of fixed capital.

Net worth represents the difference between the stock of assets (both financial and non-financial) and
the stock of liabilities. Because it is derived residually, it can be negative.

OECD means the Organisation for Economic Co-operation and Development.

Participation rate means, for any group, the labour force expressed as a percentage of the civilian population
aged 15 years and over in the same group.

RBA means the Reserve Bank of Australia.

v

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Real gross domestic
income
is calculated by:

taking the volume measure of gross national expenditure;

adding exports of goods and services at current prices deflated by the implicit price
deflator for imports of goods and services;

deducting the volume measure of imports of goods and services; and

adding the current price statistical discrepancy for GDP, deflated by the implicit
price deflator for GDP.

Real gross national
income
is calculated by adjusting real gross domestic income for the real impact of primary
income flows (property income and labour income) to and from overseas.

Real net national
disposable income
is calculated by:

taking real gross domestic income;

deducting real incomes payable to the rest of the world;

adding real incomes receivable from the rest of the world; and

deducting the volume measure of consumption of fixed capital.

Real incomes payable and receivable are calculated by dividing the nominal income flows
by the implicit price deflator for gross national expenditure.

Real means adjusted for the effects of inflation.

Seasonal adjustment involves estimation of seasonal factors in data and adjustment of the data to remove the
seasonal effect.

Total gross fixed
capital formation
refers to expenditure on new fixed assets plus expenditure on second-hand fixed assets,
whether for additions or replacements (but not including repairs), where fixed assets are
produced assets that are used repeatedly or continuously in production processes for more
than one year. It includes capital formation undertaken by government, public corporations
and the private sector.

Unemployment rate means, for any group, the number of unemployed persons expressed as a percentage of the
labour force in the same group.

5

vi

10
USE OF PROCEEDS

The Commonwealth of Australia will not receive any proceeds from investors from the issuance of the Guarantee of
ADI Debt Securities. No separate consideration will be payable by investors for the Guarantee of the ADI Debt
Securities. The issuer of any ADI Debt Securities guaranteed by the Commonwealth of Australia under the 15
Guarantee Scheme will receive the proceeds from their offer and sale.

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The Commonwealth of Australia will charge each ADI issuing ADI Debt Securities guaranteed under the Guarantee
Scheme a fee in accordance with the scheme rules governing the Guarantee Scheme.

5
1


In November 2008, in order to promote financial system stability and ensure the continued flow of credit through the
economy at a time of heightened turbulence in international capital markets, the Government of the Commonwealth
of Australia implemented the Guarantee Scheme. The Commonwealth of Australia has executed a Deed of
Guarantee (the "Deed of Guarantee") and adopted the Australian Government Guarantee Scheme for Large Deposits 15
and Wholesale Funding Scheme Rules (the "Scheme Rules") to give effect to the Guarantee Scheme.

Under the Guarantee Scheme, ADIs may apply to the Reserve Bank of Australia as the administrator of the
Guarantee Scheme (the "Scheme Administrator") to have senior unsecured debt instruments with maturities of up to
60 months that satisfy the eligibility criteria set out in the Scheme Rules guaranteed by the Commonwealth of 20
Australia. In its discretion, the Commonwealth of Australia may issue an "Eligibility Certificate", which evidences
that the liability specified therein is guaranteed by the Commonwealth of Australia under the Deed of Guarantee,
creating what we refer to as the Guarantee.

The following is a summary of certain terms of the Deed of Guarantee and the Scheme Rules, and is qualified in its 25
entirety by reference to the full text of those documents, which have been filed as exhibits to the Registration
Statement of which this prospectus forms a part.

Under the Deed of Guarantee, the Commonwealth of Australia irrevocably:
30

guarantees to the persons to whom such liabilities are owed (each, a "beneficiary") the payment by each
ADI of liabilities that are the subject of an Eligibility Certificate (the "Guaranteed Liabilities"); and

undertakes in favour of such persons that, whenever an ADI does not pay a Guaranteed Liability on the date
on which it becomes due and payable, the Commonwealth of Australia shall, upon a claim by a beneficiary
made in accordance with the Scheme Rules, and following the expiry of any applicable grace period, pay
the Guaranteed Liability in accordance with the Scheme Rules.

The Commonwealth of Australia will not be liable under the Deed of Guarantee in respect of any Guaranteed
Liability that has been varied, amended, waived, released, novated, supplemented, extended or restated in any
material respect without the written consent of the Commonwealth of Australia. 35

A holder of securities that benefits from the Guarantee will not receive payment under the Guarantee if they fail to
follow the Scheme Rules for submission of claims. A claim by a beneficiary for payment under the Guarantee must
be in writing and made in the form of Schedule 8 to the Scheme Rules and delivered to the Scheme
Administrator. A claim that is not made in the form of Schedule 8 is not a valid claim and shall be treated as not 40
having been made. A valid claim is one that establishes that the amount claimed:

is due to the beneficiary;

remains unpaid despite the beneficiary having made a claim on the ADI;

is in respect of a Guaranteed Liability with a due date on or before the expiration of the relevant Eligibility
Certificate; and
45

has not been paid, and is not eligible to be claimed by the beneficiary in accordance with the Financial
Claims Scheme in Division 2AA of the Banking Act 1959 (which generally applies to claims in relation to
deposits of eligible ADIs of less than $1,000,000).

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The Commonwealth of Australia shall pay to the beneficiary the amount specified in a valid claim. There is no
designated period within which the Commonwealth of Australia is required to make payments after it receives a
valid claim. All payments will be made in the currency in which the Guaranteed Liability is denominated.

5

2

10
The Commonwealth of Australia may amend the terms of the Deed of Guarantee or the Scheme Rules at any time in
its discretion by publishing the amendment on the website referred to in the Scheme Rules (which is currently
www.guaranteescheme.gov.au), which amendment will be filed as an exhibit to the Registration Statement of which
this prospectus forms a part; provided that (except insofar as such amendment is required by law) such amendment
does not reduce the Commonwealth of Australia's obligations to the beneficiaries in a manner which is prejudicial to 15
the interests of the beneficiaries in respect of any subsisting Guaranteed Liability. The contents of the website are
not incorporated by reference into this prospectus.

ADIs whose liabilities are guaranteed under the Guarantee Scheme are subject to a number of obligations under the
Scheme Rules, including the obligation to: 20

provide a counter-indemnity deed indemnifying the Commonwealth of Australia against all liabilities, costs
and expenses that it may incur in consequence of or arising from guaranteeing the ADIs' obligations;

provide written reports to the Scheme Administrator; and

pay specified fees to the Commonwealth of Australia for the Guarantee.

However, the Scheme Rules provide that a beneficiary's rights in relation to a Guaranteed Liability shall not be 25
prejudiced by the failure of an ADI to comply with the Scheme Rules.

The Deed of Guarantee is governed by, and shall be construed in accordance with, and any matter related to it is to
be governed by, the law of the State of New South Wales, Australia.
30
The Guarantee of ADI Debt Securities is irrevocable and ranks equally with other unsecured debts and financial
obligations of the Commonwealth of Australia.

Each issue of ADI Debt Securities to which the Guarantee relates will be identified in a prospectus supplement that
will accompany this prospectus. No consideration separate from that paid for the ADI Debt Securities will be paid 35
for the Guarantee of ADI Debt Securities. See "Use of Proceeds" in this prospectus.

If the Commonwealth of Australia does not perform its obligations under the Guarantee, beneficiaries may be
required to commence proceedings in Australia to enforce their rights. See "Enforcement of Civil Liabilities" in
this prospectus. 40

Enforcement of Civil Liabilities

The Commonwealth of Australia is a sovereign state. The Commonwealth of Australia has not agreed to waive any
sovereign immunity or immunity from personal jurisdiction in respect to any action brought in the courts of the 45
United States or elsewhere (except the courts of competent jurisdiction in Australia), nor has it appointed an agent in
New York upon which process may be served for any purpose.

As a consequence, it may be that the Commonwealth of Australia's obligations under the Deed of Guarantee can
only be enforced in an Australian court of competent jurisdiction. In any suit in an Australian court of competent 50
jurisdiction relating to the Deed of Guarantee, the Commonwealth of Australia would not be entitled to any defence
based on Crown or sovereign immunity. If investors are able to invoke the jurisdiction of a foreign court in respect
of the Guarantee or any other claim against the Commonwealth of Australia under the Deed of Guarantee or
otherwise, it may be difficult for investors to obtain or realise upon judgments of foreign courts against the
Commonwealth of Australia. Furthermore, it may be difficult for investors to enforce in Australia or elsewhere the 55
judgments of foreign courts against the Commonwealth of Australia. The Deed of Guarantee does not contain any
submission to the jurisdiction of the courts of a foreign jurisdiction or any waiver of any immunity that might be

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available to the Commonwealth of Australia under the law of any foreign jurisdiction or in respect to any claim
brought against the Commonwealth of Australia in any such foreign jurisdiction for any reason.

5
3

Under the applicable provisions of the Judiciary Act 1903 (Cth), no execution or attachment may be issued against 10
the property or revenues of the Commonwealth of Australia pursuant to the Guarantee. However, on receipt of the
certificate of a judgment against the Commonwealth of Australia the Minister for Finance and Deregulation is
obligated to satisfy the judgment out of moneys legally available. Payment could not be made by the
Commonwealth of Australia in satisfaction of any judgment except from monies appropriated by the Australian
Parliament. The Australian Parliament has passed legislation appropriating the Consolidated Revenue Fund for the 15
purposes of paying claims under the Deed of Guarantee in accordance with the Scheme Rules.

4 20

THE COMMONWEALTH OF AUSTRALIA
25
Population and Geography of Australia

Australia is located in the Southern Hemisphere. It has an area of nearly 7.7 million square kilometres. It is the
world's sixth largest nation after Russia, Canada, China, the United States and Brazil. The major portion of
Australia's population lives in the eastern and southern coastal regions. The vast central area of Australia is arid and 30
largely unsuitable for agriculture.

The preliminary estimated resident population of Australia at 30 June 2008 was 21,374,000 persons. This was an
increase of 359,000 persons (1.7%) since 30 June 2007 and 91,400 persons since 31 March 2008.
35
The estimated resident populations of the six States, the Australian Capital Territory and Northern Territory at 30
June 2008 were as follows.

Table 1: Preliminary estimated resident population of States and Territories
State / Territory Population (as at 30 June
2008)

New South Wales 6,967,200
Victoria 5,297,600
Queensland 4,279,400
Western Australia 2,163,200
South Australia 1,601,800
Tasmania 498,200
Australian Capital Territory 344,200
Northern Territory 219,900
Source: ABS Catalogue No. 3101.0. 40

The majority of the population lives in the metropolitan areas of the capital cities of the six States, and in Canberra,
the national capital.

The growth of Australia's population has two components: natural increase (the number of births minus the number 45
of deaths) and net overseas migration.

Natural increase for the year ended 30 June 2008 was estimated to be 145,500 persons, an increase of 4.3% (or 6,000
persons) on the natural increase for the year ended 30 June 2007 (139,500 persons). The preliminary estimate for
births during the year ended 30 June 2008 (287,500) was 4.8% higher than the figure for the year ended 30 June 50
2007 (274,300). The preliminary estimate for deaths during the year ended 30 June 2008 was 142,000.

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For the year ended 30 June 2008, Australia recorded a preliminary net overseas migration ("NOM") estimate of an
increase of 213,500 persons. This was the difference between 443,200 overseas arrivals that were added to the
population and 229,700 overseas departures that were subtracted from the population. Australia's current migration
program allows people from any country to apply to migrate to Australia, regardless of their ethnicity, culture, 5
religion or language, provided that they meet the criteria set out in law. The Australian Government views
Australia's cultural diversity as a source of both social and economic wealth. The contribution made to population
growth by NOM (59.5%) was higher than that of natural increase (40.5%).

10

5

15
The following table sets forth the estimated resident population of Australia by age group as of 30 June 2008:

Table 2: Preliminary estimated resident population by age group
Age group
(years)

Population
(as at 30 June 2008)
Males Females
0-4 703,896 667,155
5-9 689,772 656,156
10-14 718,972 681,661
15-19 753,065 713,132
20-24 771,929 744,681
25-29 759,327 741,516
30-34 732,525 732,183
35-39 791,930 801,116
40-44 753,090 760,073
45-49 767,253 780,987
50-54 698,762 710,347
55-59 638,731 645,880
60-64 564,229 562,960
65-69 412,024 419,816
70-74 319,595 343,575
75-79 253,178 296,135
80-84 178,408 245,080
85-89 89,897 156,248
90-94 26,807 64,554
95-99 5,691 18,293
100 and over 723 2,646
All ages 10,629,804 10,744,194
20
Australia's current total fertility rate (the average number of babies that a woman could expect to bear during her
reproductive lifetime, assuming current age-specific fertility rates apply), is 1.935 births per woman in the year
ended 30 June 2008, a rate higher than the fertility rates in many OECD countries, including Italy, Germany, Japan
and Canada, and higher than the OECD average of 1.63 in 2005. However, Australia's current total fertility rate is
below those for New Zealand (2.0 in 2005) and the United States (2.05 in 2005). Based on recent age-specific 25
fertility trends, Australia's total fertility rate is projected to increase initially, then to fall slowly to 1.7 by 2047.

Average Australian mortality rates have fallen strongly over the past century. As a consequence, life expectancies
have risen for both men and women. Falling mortality rates add to population growth and imply a higher proportion
of aged people in the population. Mortality rates are falling across all age groups and this trend is projected to 30
continue for at least the next four decades.

Australia's NOM helps to reduce population ageing. However, falling fertility and mortality rates are projected to
lead to an overall rise in the average age of the population. The pace of ageing of the population is projected to

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quicken after 2010, as the baby boomer generation starts to reach age 65. While many OECD countries share
Australia's demographic challenges, Australia is in a stronger position to meet them than most.

Form of Government
5
The Commonwealth of Australia was formed as a federal union on 1 January 1901 when the six former British
colonies - now the six States of New South Wales, Victoria, Queensland, South Australia, Western Australia and
Tasmania - were united in a 'Federal Commonwealth' under the authority of the Commonwealth of Australia
Constitution Act enacted by the British Parliament. In addition to the States, there are ten Territories that include the
Australian Capital Territory, which contains the national capital (Canberra), the Northern Territory, Norfolk Island, 10
the Ashmore and Cartier Islands, the Australian Antarctic Territory, Christmas Island, the Cocos (Keeling) Islands,
the Coral Sea Islands, the Jervis Bay Territory and the Territory of Heard Island and McDonald Islands. The
Northern Territory, the Australian Capital Territory and Norfolk Island have been granted forms of self-
government. The remaining Territories are administered by the Commonwealth Government.
15

6

20

Federal legislative powers in Australia are vested in the Federal Parliament (the "Parliament"), which consists of the
Queen as head of state, the Senate and the House of Representatives. The Governor-General represents the Queen
throughout Australia. The Senate and the House of Representatives are both elected by the compulsory vote of all
eligible persons (generally, Australian citizens aged 18 years and older). Twelve senators are elected from each of 25
the six States for a term of six years; half the senators from each State are elected every third year. In addition, two
senators are elected from each of the Australian Capital Territory and the Northern Territory and hold office until the
next general election of the House of Representatives. The House of Representatives consists of 150 members, each
elected for a term not exceeding three years. Each State's representation in the House of Representatives is
approximately proportionate to its population. This representation is reviewed during the life of every Parliament in 30
response to population shifts. In accordance with established practice, the election for members of the Senate is
usually held on the same date as the election for members of the House of Representatives. Under certain
circumstances the Governor-General may simultaneously dissolve the Senate and the House of Representatives.

The Senate has equal power with the House of Representatives except in relation to laws appropriating money or 35
imposing taxes, which must originate in the House of Representatives. Laws imposing taxes and laws appropriating
money for the ordinary annual services of the Government may not be amended by the Senate, but may be rejected
or returned by the Senate to the House of Representatives with a request for amendment. Any member of the House
of Representatives or the Senate may introduce a proposed law (a "bill"). To become law, bills must be passed by
both the House of Representatives and the Senate. 40

Under the Constitution, the Parliament is empowered to make laws on certain specified matters such as defence,
external affairs, interstate and overseas trade and commerce, foreign corporations and trading or financial
corporations formed within the limits of Australia, borrowing money, taxation (including customs and excise taxes),
postal, telegraphic and telephonic services, currency and banking, insurance, immigration, pensions and social 45
services. Some of these powers are given to the Parliament to the exclusion of the State Parliaments. Other powers
are exercised by the Parliament concurrently with the State Parliaments, but any legislation within the limits of its
powers enacted by the Parliament prevails over any inconsistent laws of the States. Powers not conferred on the
Parliament remain with the States, subject to certain Constitutional limitations.
50
The executive power of the Commonwealth of Australia under the Constitution is formally vested in the Queen and
is exercisable by the Governor-General as the Queen's representative. There is a Federal Executive Council to
advise the Governor-General. This Council is composed of the Prime Minister and other Federal Ministers. These
Ministers are members of either the House of Representatives or the Senate and generally belong to the party or
coalition of parties which has a majority in the House of Representatives. Such Ministers form the Government with 55
the practical result that executive power is exercised by the Prime Minister and the other Ministers.

The major Australian political parties are the Australian Labor Party, the Liberal Party of Australia and the
Nationals. Minor parties include the Australian Greens, the Family First Party and the Country Liberal Party. From
March 1996 to November 2007, the Government was formed by a coalition of the Liberal Party of Australia and the 60
Nationals. A Federal election was held on 24 November 2007, following which the Australian Labor Party won a

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majority of the seats in the House of Representatives and became the Government, with the Hon. Kevin Rudd MP
being elected as Prime Minister.

The following tables show the composition of the House of Representatives and the Senate as at 31 December 2008.
5
Table 3: House of Representatives composition
The Nationals 9
Independents 3
Total 150

7 10

Table 4: Senate composition
Australian Greens 5
The Nationals
4
Family First Party 1
Country Liberal Party 1
Independents 1
Total 76
15
Judicial power in Australia is vested in the High Court of Australia, other Federal courts and State and Territory
courts. The High Court is a superior court of record and consists of the Chief Justice and six other Justices who are
appointed by the Governor-General following consultations with the States. The Justices are appointed until they
are 70 years of age and can be removed by the Governor-General in Council in certain circumstances on the grounds
of misbehaviour or incapacity. In certain limited matters the High Court has original jurisdiction. It also has 20
appellate jurisdiction in relation to Federal courts, including the Federal Court of Australia, and the Supreme Court
of each State and the Northern Territory and other courts of the States exercising federal jurisdiction. Appeals from
the Supreme Court of a Territory (other than the Northern Territory) may be taken to the Federal Court of
Australia. The common law system, as developed in the United Kingdom, forms the basis of Australian
jurisprudence. 25

8
30

THE AUSTRALIAN ECONOMY

Overview 35

Australia is a stable, culturally diverse and democratic society with a skilled workforce and a strong, competitive
economy. Between 1990-1991 and 2007-08, Australia's real economy grew by an average of around 3.4% a
year. Australia's GDP in 2007-08 (in value terms) was just over $1 trillion. The IMF estimates that in 2007
Australia was the world's 17th largest economy by GDP. Based on OECD data, Australia's real per capita GDP 40
ranked 11th among OECD nations in 2007.

Principal Economic I ndicators

The following table sets forth Australia's principal economic indicators for each of the 2003-04, 2004-05, 2005-06, 45

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Table 5: Principal Economic Indicators
2003-04 2004-05 2005-06 2006-07 2007-08
GDP, Chain Volume Measure (A$ millions) 956,017 982,786 1,012,269 1,045,674 1,083,942
GDP per capita, Chain Volume Measure (A$) 47,834 48,590 49,337 50,220 51,243
Unemployment Rate (% of labour force)
(a)
5.5 5.1 4.9 4.3 4.3
Consumer Price Index (% change)
(b)
2.5 2.5 4.0 2.1 4.5
Wage Price Index (% change)
(b) (c)
3.5 4.2 4.1 4.0 4.1
Exports, Chain Volume Measure (A$
millions) 197,382 203,407 207,886 215,695 225,060
Imports, Chain Volume Measure (A$
millions) 173,993 195,124 209,246 228,452 257,400
Balance of Payments Current Account (A$
millions)
(d)
-45,590 -56,325 -52,839 -58,999 -70,171
Official Reserve Assets at end of period (A$
millions) 50,342 56,170 63,815 79,682 35,856
Commonwealth Government Net Debt (A$
millions) 23,948 12,453 -2,250 -27,385 -42,918
(b) Percentage change to the June quarter of each period from the previous June quarter.
(c) Seasonally adjusted.
(d) As at release of the September quarter under ABS Catalogue No. 5302.0.
Source: ABS Catalogue No. 5206.0, 6202.0, 6401.0, 5302.0, 6345.0; Mid-Year Economic and Fiscal Outlook 2008-09 Statement. 5

GDP Growth

Australia's GDP expanded by 3.7% in 2007-08. Growth in 2007-08 was broadly-based, with private business
investment growing by 15.5%, total gross fixed capital formation growing by 9.9%, and household consumption 10
expenditure growing by 3.7%. In the 2009 UEFO released on 3 February 2009, GDP growth was forecast to slow to
1% in 2008-09 and % in 2009-10, assuming implementation of the Nation Building and Jobs Plan described under
"Economic Outlook" in this prospectus and contingent on there being no further deterioration in global economic
conditions.
15
Major I ndustries

Australia's major industries include property and business services, mining, manufacturing and construction. Growth
during 2007-08 was recorded in most industries, including agriculture, forestry and fishing (up 8.2%, following a
decline of 17.7% in 2006-07), communication services (7.1%), construction (6.4%), transport and storage (5.4%), 20
property and business services (5.1%) and manufacturing (3.3%).

During 2007-08, the industry accounting for the largest share of GDP (at basic prices, excluding ownership of
dwellings) was property and business services, with a share of 14%. Manufacturing was the second largest industry
with a share of 12%. Prior to 1999-00, manufacturing was the largest industry. 25

9
30

Net Worth

Australia's general government sector net worth, reflecting the difference between total assets and total liabilities, as 35
at 30 June 2008 was estimated to be $71,165 million, an increase of $24,506 million since 30 June 2007.

Budget Balance

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A sustained period of government budget surpluses in the years prior to 2008-09 enabled the Australian Government
to retire large amounts of government debt. Net debt was eliminated for the Australian Government during the year
ended 30 June 2006. In the 2009 UEFO released on 3 February 2009, Australian Government general sector net
debt for 2008-09 was forecast to be -$16.2 billion (-1.3% of GDP). The 2009 UEFO forecast net debt to increase to
5.2% of GDP in 2011-12. 5

The Australian Government underlying cash surplus forecast of $21.7 billion (1.8% of GDP) in the 2008-09 Budget
was reduced to $5.4 billion (0.4% of GDP) in the 2008-09 MYEFO. Since the release of the 2008-09 MYEFO on 5
November 2008, the Australian Government has announced three additional fiscal stimulus packages. See "
Economic Outlook" in this prospectus. In the 2009 UEFO, the underlying cash balance forecast for 2008-09 was 10
further reduced to a deficit of $22.5 billion (-1.9% of GDP). A Government budget underlying cash deficit of $35.5
$25.7 billion (-1.9% of GDP) were projected for 2010-11 and 2011-12, respectively.

Trade 15

Australia's trade in goods and services totalled $489.2 billion in 2007-08, accounting for about 1% of world trade.
Australia's largest trading partners were China, Japan, the United States, Singapore and the United Kingdom.


Gross Domestic Product

The following table shows chain volume GDP and related measures, real income measures and current price
measures for each of the 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08 fiscal years. 25

Table 6: Key National Accounts Aggregates
2003-04 2004-05 2005-06 2006-07 2007-08
Chain volume GDP and related measures
(a)

GDP (A$ millions) 956,017 982,786 1,012,269 1,045,674 1,083,942
GDP per capita (A$) 47,834 48,590 49,337 50,220 51,243
GDP market sector (A$ millions) 615,212 633,888 651,619 674,897 701,863
Net domestic product (A$ millions) 817,422 840,163 861,377 886,572 915,422

Real income measures
(a)

Real gross domestic income (A$ millions) 911,529 953,965 1,000,464 1,045,674 1,095,362
Real gross national income (A$ millions) 885,730 918,562 961,531 999,771 1,047,267
Real net national disposable income (A$
millions) 746,669 775,350 809,914 840,330 878,971
Real net national disposable income per capita
(A$) 37,359 38,334 39,474 40,358 41,553

Current price measures
GDP (A$ millions) 841,351 897,642 967,454 1,045,674 1,131,586
GDP per capita (A$) 42,097 44,380 47,152 50,220 53,495
Gross national income (A$ millions) 817,508 864,310 929,784 999,771 1,083,339
National net saving (A$ millions) 45,844 45,486 62,411 69,250 83,382
Household saving ratio 3.1 2.1 1.9 0.8
Notes: = nil or rounded to zero.
(a) Reference year for chain volume measures and real income measures is 2006-07.
30
10

Following the fall in GDP in volume terms in 1990-91 and a flat result in 1991-92, Australia has experienced 16 35
years of consecutive growth. In 2007-08, GDP increased by 3.7% and GDP per capita increased by 2.0% (chain
volume measures).

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The table below details the expenditure components of GDP on a chain volume measurement basis for each of the
2003-04, 2004-05, 2005-06, 2006-07 and 2007-08 fiscal years.

Table 7: Expenditure Components of Gross Domestic Product (Chain Volume Measures
(a)
)
2003-04 2004-05 2005-06 2006-07 2007-08
(A$ millions)
Final consumption expenditure
General government
Total national 66,792 70,687 71,691 74,360 76,786
State and local 103,259 105,758 109,149 111,846 115,825
Households 524,706 548,015 562,227 584,874 606,295
Total final consumption expenditure 694,686 724,435 743,043 771,080 798,906

Private gross fixed capital formation
Private business investment
New 58,116 66,921 77,007 79,487 92,194
Net purchases of second hand assets 3,015 2,856 3,551 3,969 3,619
Total machinery and equipment 55,086 64,077 73,460 75,518 88,575

New building 27,306 28,535 31,847 34,601 38,978
New engineering construction 18,302 21,136 27,749 32,440 35,585
Net purchases of second hand assets 635 958 642 1,286 478
Total non-dwelling construction 45,013 48,781 58,993 65,755 74,086

Livestock 2,523 2,617 2,658 1,867 2,016
Intangible fixed assets
Computer software 7,520 7,982 8,411 9,247 10,789
Mineral and petroleum exploration 1,922 2,335 2,641 3,940 5,084
Artistic originals 469 522 558 601 646
Total intangible fixed assets 10,035 10,921 11,671 13,788 16,519

Total private business investment 112,715 126,875 147,012 156,928 181,195

Dwellings
New and used dwellings 36,378 35,813 33,874 33,882 34,081
Alterations and additions 29,834 29,849 28,989 30,165 30,889
Total dwellings 66,203 65,657 62,860 64,047 64,969

Ownership transfer costs 21,269 17,733 18,134 17,973 18,017
Total private gross fixed capital formation 198,166 209,562 227,868 238,948 264,182

Public gross fixed capital formation
Public corporations
Commonwealth 3,112 3,678 4,409 2,326 1,011
State and local 10,694 11,880 14,044 16,430 18,925
Total public corporations 13,877 15,659 18,579 18,756 19,935

General government
Total national 4,892 4,828 5,684 6,666 6,739

State and local 16,821 18,249 18,075 20,337 21,992
5

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11

5

2003-04 2004-05 2005-06 2006-07 2007-08
(A$ millions)

Total public gross fixed capital formation 35,314 38,400 42,042 45,758 48,666

Total gross fixed capital formation 233,564 247,997 269,936 284,707 312,848

Domestic final demand 928,399 972,547 1,012,988 1,055,785 1,111,754

Changes in inventories
Private non-farm 6,428 5,959 1,429 2,923 4,836
Farm 116 189 535 327 581
Public authorities 415 75 346 56 883
Total changes in inventories 6,209 6,102 2,298 2,652 4,531

Gross national expenditure 934,108 977,598 1,014,965 1,058,437 1,116,286

Exports of goods and services 197,382 203,407 207,886 215,695 225,060
less Imports of goods and services 173,993 195,124 209,246 228,452 257,400
Statistical discrepancy 4

Gross domestic product 956,017 982,786 1,012,269 1,045,674 1,083,942
(a) Reference year for chain volume measures is 2006-07.

Gross fixed capital formation was a major contributor to GDP growth in 2007-08, increasing by 9.9% and 10
contributing 2.7% to GDP growth.

Household final consumption expenditure increased 3.7%, and contributed 2.0% to GDP growth in 2007-08. Within
household final consumption expenditure, recreation and culture (up 6.1%) and rent and other dwelling services (up
2.6%) were the largest contributors. 15

Growth in private business investment, after slowing to 6.7% in 2006-07, accelerated to 15.5% in 2007-08, similar
to growth in the four years prior to 2006-07. Private business investment contributed 2.3% to GDP growth in 2007-
08, up from 1.1% in 2006-07. Investment in machinery and equipment, and non-dwelling construction increased
17.3% and 12.7%, respectively, and contributed 1.2% and 0.8% to growth in GDP in 2007-08, respectively. 20

From an industry perspective, growth during 2007-08 was recorded in most industries including agriculture, forestry
and fishing (up 8.2% following a decline of 17.7% in 2006-07), communication services (7.1%), construction
(6.4%), transport and storage (5.4%) and property and business services (5.1%). Manufacturing recorded moderate
growth overall of 3.3%, but within the industry there was strong growth in metal products manufacturing (11.1%) 25
and other manufacturing (11.4%).

12 30

The following table identifies the income components of GDP on a current price basis for each of the 2003-04,
2004-05, 2005-06, 2006-07 and 2007-08 fiscal years. 35

Table 8: Income Components of Gross Domestic Product (Current Prices)
2003-04 2004-05 2005-06 2006-07 2007-08
(A$ millions)

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Compensation of employees
Wages and salaries 357,002 383,856 412,808 445,206 479,144
Employers' social contributions
(a)
43,119 47,256 51,708 55,805 59,876
Total compensation of employees 400,121 431,112 464,516 501,011 539,020

Gross operating surplus
Non-financial corporations
Private non-financial corporations 142,661 156,486 178,180 199,494 220,374
Public non-financial corporations 20,874 20,951 20,655 16,551 15,563
Total non-financial corporations 163,535 177,437 198,835 216,045 235,937

Financial corporations 24,919 26,580 28,266 30,408 32,454
Total corporations 188,454 204,017 227,101 246,453 268,391

General government 14,661 15,646 16,770 17,938 19,252
Dwellings owned by persons 60,963 64,805 68,545 74,236 86,273
Total gross operating surplus 264,078 284,467 312,415 338,626 373,917

Gross mixed income 78,358 80,260 83,064 93,151 97,304

Total factor income 742,557 795,840 859,996 932,788 1,010,241

Taxes less subsidies on production and
imports 98,791 101,800 107,458 112,886 122,325
Statistical discrepancy -980

Gross domestic product 841,351 897,642 967,454 1,045,674 1,131,586
(a) Includes contributions to superannuation made by employers and payments of workers' compensation premiums.

For the income components of GDP in 2007-08, there was growth in compensation of employees of 7.6% and
growth in gross operating surplus ("GOS") of 10.4%. The growth in GOS was driven by growth in private non- 5
financial corporations GOS (up 10.5%), partly offset by a fall in public non-financial corporations GOS (-6.0%).

Prices

Inflation was 3.7% through the year to the December quarter 2008, down from 5.0% through the year to the 10
September quarter 2008 and 4.5% through the year to the June quarter 2008. Over the year to the December quarter
2008, the increase in prices was mainly due to increases in the prices of housing and food, partially offset by a fall in
the price of automotive fuel. For further information about the Reserve Bank of Australia's medium-term inflation
target, see "Currency, Monetary and Banking SystemMonetary Conditions" in this prospectus.
15
The following table details the through the year change for the consumer price index and the implicit price deflator
for non-farm gross domestic product to the final (June) quarter of each of the fiscal years 2003-04, 2004-05, 2005-
06, 2006-07 and 2007-08.

The implicit price deflator for non-farm gross domestic product corresponds to a broader set of prices in the 20
economy than the consumer price index, including non-consumption goods and services such as those used by
businesses, and exports.

25
13

Table 9: Prices 30
All Groups
(original)
Implicit Price Deflator for
Non-farm Gross Domestic Product
(seasonally adjusted)
(Percent change through the year)

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Year
(a)
:
2003-04 2.5 4.2
2004-05 2.5 4.6
2005-06 4.0 4.3
2006-07 2.1 3.9
2007-08 4.5 6.7
Source: ABS Catalogue No. 6401.0, 5206.0.

Wages
5
The preferred measure of wages in Australia is the wage price index, which measures changes in the price of a unit
of labour unaffected by changes in the quality or quantity of work performed.

Annual wage growth has been elevated since the beginning of 2005 but has remained contained below 4%
throughout this period. This is despite the fact that wage growth has been strong in industries (mining and 10
construction) and states (Western Australia and Queensland) associated with the resources boom.

The following table details the through the year change for the wage price index to the final (June) quarter of each of
the fiscal years 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08.
15
Table 10: Wages
Wage Price Index
(Percent change through the year, seasonally adjusted)
Year
(a)
:
2003-04 3.5
2004-05 4.2
2005-06 4.1
2006-07 4.0
2007-08 4.1

Labour market 20

Labour market conditions were positive in 2007-08, with strong growth in employment, a low unemployment rate
and a high participation rate of 65%. The worsening global financial crisis has impacted on Australia's growth
prospects, with adverse consequences for the labour market. Australia's labour market conditions are expected to
weaken in line with the significant slowdown in the domestic economy. 25

The 2009 UEFO forecast employment growth to be -% through the year to the June quarter 2009 and 0% by the
June quarter 2010. The 2009 UEFO forecast the unemployment rate to rise to 5% by the June quarter 2009 and 7%
by the June quarter 2010.
30
The following table identifies key labour force statistics as at the June quarter in each of the referenced years.

Table 11: Labour force statistics
(a)

June
quarter
2004
June
quarter
2005
June
quarter
2006
June
quarter
2007
June
quarter
2008
Total Employment ('000) 9,636 9,966 10,143 10,442 10,701
Total Unemployment ('000) 556 534 520 472 477
Unemployment Rate (%) 5.5 5.1 4.9 4.3 4.3

14

40

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Economic Outlook

The outlook for the world economy deteriorated sharply between the release of the 2008-09 MYEFO on 5
November 2008 and the release of the 2009 UEFO on 3 February 2009. Despite intervention to support financial
markets and stimulatory monetary and fiscal policies, the global financial crisis has driven almost all major 5
advanced economies into recession. It has also become clear that emerging economies will be more profoundly
affected by the crisis than originally thought. In particular, the momentum provided to the world from China's rapid
growth has dissipated in recent times. In the 2009 UEFO released on 3 February 2009, forecasts of world growth in
2009 were revised down to %, consistent with forecasts published by the International Monetary Fund.
10
Conditions in financial markets remain very fragile. Spillovers and contagion from further adverse financial market
developments continue to pose significant risks. A further risk is that gathering economic weakness will feed back
into even weaker financial conditions.

Against the backdrop of a weaker world economy, it is inevitable that the Australian economy will be affected. In 15
line with the worsening global outlook, forecasts for Australian growth in the 2009 UEFO have been revised down
significantly from the 2008-09 MYEFO to 1% in 2008-09 and % in 2009-10.

The Government of Australia and the Reserve Bank of Australia have engaged in substantial fiscal and monetary
policy responses. 20

Between September 2008 and February 2009, the Reserve Bank of Australia reduced the cash rate by a cumulative
400 basis points.

The Australian Government has announced a number of fiscal stimulus measures including: 25

the Government's Economic Security Strategy, a $10.4 billion discretionary fiscal stimulus package
announced on 14 October 2008, focused on household consumption and dwelling investment;

the Council of Australian Governments' $15.1 billion job creation stimulus package announced on 29
November 2008;

the Government's $4.7 billion nation building package announced on 12 December 2008, providing for
investment in road, rail and education infrastructure, as well as tax changes encouraging capital investment
by Australian businesses; and

the Government's $42 billion Nation Building and Jobs Plan announced on 3 February 2009, providing for
payments to low- and middle-income Australians, investment in schools, housing, energy efficiency,
community infrastructure and roads and support to small businesses.
30
The Government expects that these measures will provide considerable support to the Australian economy.
However, given the magnitude of the global slowdown now underway, these measures are only partially expected to
offset the impact of the global recession. If the global recession is deeper and more protracted than expected, this
would inevitably cause a more severe slowdown in Australia.
35
The outlook for household consumption softened further between the release of the 2008-09 MYEFO on 5
November 2008 and the release of the 2009 UEFO on 3 February 2009. Households are facing significant falls in
wealth, with asset values falling sharply over the year to December 2008. Australian share markets have fallen by
over 40% over the year to December 2008 and house prices have begun to moderate in the last three quarters of
2008. This has been compounded by uncertainty around the duration and effect of the global financial crisis on 40
wealth and employment, which has had a negative impact on sentiment. Substantial monetary and fiscal policy
stimulus is acting to support consumption.

The 2009 UEFO forecasts a recovery in dwelling investment in 2009-10, although near-term results in 2008-09 are
likely to be subdued in line with recent weak building approvals data. 45

15
50

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The recovery is expected to be supported by recent large interest rate cuts, strong underlying demand and the First
Home Owners Boost, a Government initiative to stimulate housing activity by supplementing the $7,000 grant
available to first home buyers with a further $7,000 for purchases of established homes and a further $14,000 for
purchases of newly constructed homes, with the 2009 UEFO forecasting dwelling investment growth to rise to 4% in 5
2009-10. A downside risk to these forecasts is that confidence in the household sector remains low, exacerbated by
uncertainty around unemployment levels.

There was a marked deterioration in the outlook for business investment between the release of the 2008-09
MYEFO on 5 November 2008 and the release of the 2009 UEFO on 3 February 2009. The weaker outlook for 10
global and domestic demand and a weaker outlook for commodity prices and profits have reduced much of the
stimulus for investment that has prevailed during the period between 2003-04 and 2007-08. The 2009 UEFO
forecasts business investment to fall by 15% in 2009-10. The Government's Nation Building and Jobs Plan aims to
counter some of the effects of this decline in private investment by providing measures to support private investors
through the Small Business and General Business Tax Break described under "Government FinanceTaxation 15
Business tax arrangementsInvestment Allowances" in this prospectus. The Australian Business Investment
Partnership is also expected to provide liquidity support to the commercial property sector.

The Nation Building and Jobs Plan is also anticipated to provide a large boost to public investment, which the
Australian Government expects to support growth across the forecast horizon. The 2009 UEFO forecasts public 20
final demand to grow by 5% in 2008-09 and 7% in 2009-10.

The outlook for the external sector has softened in 2008-09 driven by the deterioration in the outlook for world
growth. The broad based nature of the weakness in the world economy means that demand for Australia's exports is
likewise expected to be weak. Half of Australia's top ten trading partners are already in recession, with seven 25
forecast to contract in 2009. Collectively, Australia's major trading partners are not expected to grow in 2009. The
2009 UEFO forecasts export growth to be % in 2008-09 and 2009-10, despite some support from the depreciation
in the Australian dollar of around 30% in trade-weighted terms since its peak in July 2008. This slowdown in export
growth in 2009-10 is expected to be offset by a weaker outlook for imports, driven by the slowdown in domestic
demand, particularly business investment which relies heavily on imported capital goods. 30

In line with the significant slowdown in the domestic economy, employment is expected to contract through 2009
and remain weak in 2010. This is anticipated to flow through to a rise in the unemployment rate, which the 2009
UEFO forecasts to increase to 5% by the June quarter of 2009 and 7% by the June quarter of 2010.
35
Inflation forecasts decreased significantly between the release of the 2008-09 MYEFO on 5 November 2008 and the
release of the 2009 UEFO on 3 February 2009. The 2009 UEFO forecasts inflation to ease on the back of weaker
global growth and domestic demand, moderating wage growth and substantially lower oil prices. The 2009 UEFO
forecasts headline and underlying inflation to fall to 2% through the year to the June quarter 2010.
40
Table 12: Domestic economy forecasts
(a)

2007-08 2008-09
Outcomes
(b)
Forecasts
MYEFO UEFO
(Percentages)
Panel A - Demand and output
(c)

Household consumption 3.7 2 1
Private investment
Dwellings 1.4 0 -2
Total business investment
(d)
14.2 5
(d)
11.2 -2
(d)
16.0 8 2
Private final demand
(d)
5.5 2
Public final demand
(d)
4.6 3 5
Total final demand 5.3 2 1
Change in inventories
(e)
0.2 - -
Gross national expenditure 5.5 2 1
Exports of goods and services 4.3 6
Imports of goods and services 12.7 7 2
Net exports
(e)
-1.9 - -

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Real gross domestic product 3.7 2 1
Non-farm product 3.6 1 1

16
5

Farm product 8.5 13 11
Nominal gross domestic product 8.2 7 6
Panel B - Other selected economic measures
External accounts
Terms of trade 5.1 10 9
Current account balance (per cent of GDP) -6.2 -4 -3
Labour market
Employment (labour force survey basis)
(f)
2.5 -
Unemployment rate (%)
(g)
4.3 5 5
Participation rate (%)
(g)
65.3 65 64
Prices and wages
(f)
4.5 3 2
Gross non-farm product deflator 4.4 6 5
Wage Price Index
(f)
4.1 4 3
(a) Percentage change on preceding year unless otherwise indicated.
(b) Calculated using original data from ABS Catalogue No. 5206.0 (which does not include revisions from ABS Catalogue No. 5204.0).
(c) Chain volume measures except for nominal gross domestic product, which is in current prices.
(d) Excluding second-hand asset sales from the public sector to the private sector, and adjusted for privatisation of Telstra.
(e) Percentage point contribution to growth in GDP.
(f) Through the year growth rate to the June quarter 2008 and 2009.
(g) Estimate for the June quarter 2008 and 2009.
Source: ABS Catalogue No. 5206.0, 5302.0, 6202.0, 6345.0, 6401.0; unpublished ABS and Treasury data.

The above estimates are based on forecasts of the economic outlook by the Treasury of the Commonwealth of
Australia. Treasury generally conducts two major rounds of forecasting each year, in connection with the budget
each May and the mid-year economic and fiscal outlook issued between October and January. In 2009, an additional 20
forecast update has been released in response to rapid changes in the global economy.

Treasury's forecasting approach encompasses a broad range of information. The national accounts form the
framework for the forecasting exercise. The technical assumptions about interest rates, exchange rates and oil prices
are reset in the light of recent developments: it is assumed that interest rates will move broadly in line with market 25
expectations, and that exchange rates and oil prices will remain around recent average levels. Any changes to fiscal
policy are also incorporated. Insight is also gathered from liaison visits with large, medium and small businesses,
industry organisations and State Treasuries and Treasury's International Economy Division's latest assessment of the
world outlook.
30
Treasury's Domestic Economy Division assesses the implications of these inputs using a mix of single-equation
econometric models, partial indicators, leading indicators, business surveys and advice from specialist
agencies. Forecasting judgments are informed by economic theory and assessments of recent economic
analysis. Forecasts are discussed both within Treasury and with other government agencies.
35
The above estimates assume implementation of the Nation Building and Jobs Plan described under "Economic
Outlook" in this prospectus.

Major Sectors of the Economy
40
In 2007-08, the industry with the largest share of gross value added (at basic prices) was property and business
services (excluding ownership of dwellings), with a share of 13.1%. Manufacturing ranked second with a share of
10.7%.

45

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17

The following table identifies the percentage of gross value added by industry at basic prices for each of the 2003- 5
04, 2004-05, 2005-06, 2006-07 and 2007-08 fiscal years.

Table 13: Percentage of Gross Value Added (Basic Prices)
2003-04 2004-05 2005-06 2006-07 2007-08
(Percentages)

Mining 8.1 8.3 8.1 8.5 8.3
Manufacturing 11.7 11.3 10.9 10.7 10.7
Construction 6.9 7.0 7.4 7.5 7.7
Retail trade 5.9 5.9 5.8 5.9 5.9
Property and business services
(a)
13.3 13.1 13.1 13.0 13.1
Education 4.7 4.6 4.6 4.5 4.4
Ownership of dwellings 8.3 8.4 8.5 8.5 8.4

Gross value added at basic prices 100.0 100.0 100.0 100.0 100.0
(a) Excludes ownership of dwellings.

The table below identifies employment share by industry for each of the 2003-04, 2004-05, 2005-06, 2006-07 and
2007-08 fiscal years.

Table 14: Employment share by industry 15
2003-04 2004-05 2005-06 2006-07 2007-08
(Percentages)

Mining 1.0 1.1 1.3 1.3 1.4
Manufacturing 11.2 11.1 10.6 10.3 10.4
Construction 8.1 8.5 8.7 9.1 9.1
Retail trade 15.1 15.2 14.9 14.5 14.8
Property and business services 11.8 11.5 11.9 12.0 12.0
Education 7.3 6.9 7.2 7.0 7.2

Total 100.0 100.0 100.0 100.0 100.0

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Source: ABS Catalogue No. 6291.0.55.003.

18
5

Property and Business Services

The property and business services industry includes all units mainly engaged in renting and leasing assets as well as 10
units engaged in providing a wide variety of business services. Property and business services (excluding ownership
of dwellings) contributed 13.1% of gross value added (at basic prices) in 2007-08. Gross value added of the
property and business services industry grew by 15.9% (in volume terms) between 2002-03 and 2007-08,
representing average annual growth of 3.0%.
15
In 2007-08, the property and business services industry was the second-largest employer, employing 1.3 million
people (12% of total employment).

Manufacturing
20
The manufacturing industry has historically been the largest industry in Australia. However, the gross value added
contribution of manufacturing (at basic prices) has been decreasing over the past three decades. In the early 1970s,
manufacturing value added contributed almost 25% of gross value added (at basic prices), while in 200708 the
manufacturing industry contributed 10.7% of gross value added (at basic prices). Although the manufacturing
industry currently contributes a smaller percentage of gross value added (at basic prices) than it did twenty years 25
ago, output in the industry has had an upward trend over the same time period.

The manufacturing sector accounted for around 10.4% of total employment in 2007-08.

The following table provides a breakdown of gross value added (chain volume measures) by the manufacturing 30
industry for each of the 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08 fiscal years.

Table 15: Industry Value Added (Chain Volume Measures)
2003-04 2004-05 2005-06 2006-07 2007-08
(A$ millions)
Food, Beverage and tobacco 19,635 19,812 19,668 19,846 19,769
Textiles, clothing and footwear 4,156 3,381 3,152 3,103 2,961
Wood and Paper Products 7,274 7,331 7,044 6,875 6,592
Printing, publishing and recorded media 10,871 10,600 10,399 10,646 10,948
Petroleum, coal, chemical, etc. 15,528 15,528 14,895 14,703 15,061
Non-Metallic mineral products 4,402 4,618 5,148 5,258 5,533
Metal products 17,240 16,751 16,582 18,322 20,350
Machinery and Equipment 19,577 19,682 20,560 20,510 21,020
Other manufacturing 4,850 4,464 4,032 4,030 4,490
Total 103,093 101,846 101,320 103,292 106,724
35
Ownership of Dwellings

Ownership of dwellings consists of landlords and owner-occupiers of dwellings. Owner-occupiers are regarded as
operating a business that generates a gross operating surplus. The imputation of a rent to owner-occupied dwellings
enables the services provided by dwellings to their owner-occupiers to be treated consistently with the marketed 40
services provided by rented dwellings to their tenants. Owner-occupiers are regarded as receiving rents (from
themselves as consumers), paying expenses and making a net contribution to the value of production which accrues
to them as owners. Ownership of dwellings contributed 8.4% of gross value added (at basic prices) in 2007-08.

Mining 45

In 2007-08, mining accounted for 8.3% of gross value added (at basic prices). However, in 2007-08, exports of
mining (non-rural) commodities accounted for around 49% of total exports by value.

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The gross value of mine production for 2007-08 was $111.8 billion, a 10.0% increase over the previous
year. Mineral and petroleum exploration expenditure, after falling over 1997-02 as part of a cyclical and global
downturn, increased to $5.5 billion in 2007-08 (at current prices).
5
In 2007, Australia was the world's largest exporter of metallurgical coal, the second largest exporter of thermal coal,
iron ore, lead, zinc ores and concentrates and zinc metal and the third largest exporter of aluminium.

10
19

Australia's export earnings from non-rural commodities are estimated to have been $115.0 billion in 2007-08 (at 15
current prices).

Private (real) new capital expenditure in the mining sector was $27.4 billion in 2007-08, around 23.7% higher than
in 2006-07. In 2007-08, the mining sector, including services, employed around 146,000 people directly, around
1.4% of the work force. These sectors generate further manufacturing jobs downstream in smelting and refining, 20
basic metal fabrication, non-metallic mineral products, petroleum, coal and basic chemical products and electricity
and gas.

Construction
25
The construction industry contributed 7.7% of gross value added (at basic prices) in 2007-08. Over the last 20 years,
value added in volume terms has grown by around 4% each year. The industry tends to experience peaks and
troughs due to factors such as changing interest rates, property speculation and fiscal policy.

In 2000-01, there was a large fall in output as a substantially large amount of building activity was brought forward 30
to avoid the introduction of the GST. Since 2001-02, value added has grown strongly, buoyed by the terms of trade
boom and strong growth in house prices.

Employment in construction reached 1 million persons in August 2008. Since 2000-01, employment in construction
has grown strongly, with its share in total employment rising from 7.6% to 9.1% over 2007-08, making it the fifth 35
largest employer among industries.

Finance and I nsurance

Companies in the finance and insurance industry provide a range of services, from the provision of credit and 40
financial advice to insurance. The sector contributed 8.1% of gross value added (at basic prices) in 2007-08, a
proportion that has remained generally stable over the past 15 years following deregulation during the 1980s.

However, the stability of the sector's share of gross value added hides rapid change within the industry. The advent
of internet banking, ATM machines and credit scoring have prompted massive investment in computer software and 45
machinery and equipment (computers), and far less construction (new branches and outlets). These innovations most
likely explain a trend decline in the wage share of total finance and insurance income over the past two decades.

Health and Community Services
50
The health and community services industry comprises hospitals, nursing homes, medical and dental services, child
care services and community care services. Health and community services contributed 6.3% of gross value added

Retail Trade 55

Retail trade is one of the larger industries in Australia. The industry comprises food retailing, personal and
household goods retailing and motor vehicle retailing and services. Retail trade is a labour intensive industry, and
the average labour income share of 75% reflects this. The link between the deregulation of shopping hours and
measured hours worked is one of the key issues affecting productivity in this industry. Retail trade contributed 5.9% 60
of gross value added (at basic prices) in 2007-08.

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Transport and Storage

The efficiency and competitiveness of the Australian economy is significantly influenced by the transport system,
which is a strategic network industry. The transport and storage sector accounted for approximately 5.1% of gross 5
value added (at basic prices) in 2007-08. The Bureau of Infrastructure, Transport and Regional Economics estimates
that the Australian freight task will almost double between 2005 and 2020. Passenger transport is also expected to
increase significantly, particularly in urban areas. This will require investment in additional transport infrastructure
and improvements in the utilisation of existing and new infrastructure.
10
The public sector in Australia provides those transport services (operations and infrastructure) that involve public
good characteristics and are generally not commercially attractive. The public sector also provides the regulatory
frameworks to support a safe, fair and efficient transport sector. The major airports have all been privatised. The
private sector also has a significant infrastructure role in rail and ports sectors.
15

20

20

Wholesale Trade

The wholesale trade industry consists of basic material wholesaling, machinery and motor vehicle wholesaling,
which includes computer wholesaling, and personal and household good wholesaling. The 1990s saw strong growth 25
in industry value added. This increase in value added came from substantial rationalisation within the industry, a
wider uptake of technology amongst firms, and the increased use of new inventory management techniques, such as
'just-in-time' processing. Wholesale trade contributed 4.9% of gross value added (at basic prices) in 2007-08.

Education 30

The education industry is a labour intensive, service based sector, with a large and well educated workforce. The
education industry's share of gross value added (at basic prices) was 4.4% in 2007-08 and has remained fairly stable
over the past five years. The education industry is dominated by the public sector, with both Commonwealth and
State governments responsible for key education services across the economy, including the provision of primary, 35
secondary and tertiary education, and, increasingly, early childhood education.

Government Administration and Defence

The government administration and defence industry includes central, state and local government units mainly 40
engaged in government administration and regulatory activities, as well as judicial authorities and commissions,
representatives of overseas governments, and the Army, Navy and Air defence forces and civilian units mainly
engaged in defence administration. Government administration and defence contributed 4.1% of gross value added
45
Agriculture, Forestry and Fishing

The agriculture, forestry & fishing industry contributed 2.5% of gross value added (at basic prices) in 2007-08.
Historically, the contribution of this industry to the Australian economy has been trending downwards, though the
absolute size of the industry continues to grow. The industry is dominated by agriculture, with forestry and fishing 50
making up only around 5% of industry output in 2007-08 based on gross value added (chain volume
measures). Production in the past three years has been impacted by drought conditions.

Agriculture
55
The following table presents production data of Australia's principal rural commodities for each of the 2003-04,
2004-05, 2005-06, 2006-07 and 2007-08 fiscal years.

Table 16: Principal Rural Commodities - Gross values and volumes of Australian production
2003-04 2004-05 2005-06 2006-07 2007-08
Commodities A$m kt A$m kt A$m kt A$m kt A$m kt

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Wool
(a)
2,397 509 2,166 520 2,054 520 2,282 502 2,612 441
Meat 10,896 3,694 12,033 3,892 11,960 3,864 12,336 4,103 12,113 4,029
Wheat 5,636 26,132 4,317 21,905 5,099 25,150 2,619 10,822 5,163 13,039
Cane sugar
(b)
854 36,993 980 37,822 1,032 37,128 1,183 36,397 885 35,011
Cottonseed and lint 689 843 1,222 1,557 1,105 1,441 514 662 273 321
Milk
(c)
2,809 10,076 3,194 10,127 3,341 10,089 3,178 9,583 4,575 9,223
Notes: kt = kilotonne.
NA = Not available.
(a) Value calculated from average auction price (greasy).
(b) Cut for crushing.
(c) Units of measurement: ML. 5
Source: Australian Bureau of Agricultural and Resource Economics, Australian Commodities (pages 762, 763, 765 and 766); ABS Catalogue
No. 7215.0.

Electricity, Gas and Water Supply
10
The electricity, gas and water supply industry contributed 2.2% of gross value added (at basic prices) in 2007
08. Electricity is the largest part of this industry and contributes 63% to industry value added (chain volume
measures). Water, sewerage and drainage account for 30% of gross value added (chain value measures) and gas
contributes 7% to gross value added (chain value measures). Prior to 1990, the industry was highly regulated and
most utilities operated as monopolies. The electricity industry was vertically integrated in most, if not all 15
jurisdictions, with single companies responsible for generation, transmission, distribution and retail. Significant
reforms occurred in the three sectors over the 1990s. However, different jurisdictions approached deregulation on
different time frames. Some of the reforms included corporatisation, privatisation and the structural separation of
electricity utilities. These reforms have continued into the current decade. Value-added in volumes terms grew by
1.7% per year on average between 198586 and 200708. 20

21

25

Electricity

The energy market in Australia has undergone significant reform since the 1990s, which has increased investment
and improved productivity. The reforms have included: disaggregating elements of the electricity supply chain; 30
introducing competition in electricity generation and retailing; and corporatising, and, in some States, privatizing
electricity assets. The creation of the National Electricity Market has also allowed electricity trading between
Queensland, New South Wales, Victoria, South Australia, Tasmania and the Australian Capital Territory through a
wholesale electricity pool.
35
In 2006, the Council of Australian Governments ("COAG") agreed to energy market reforms to enhance
governance, improve transmission planning and assist the development of more effective energy financial
markets. COAG also agreed to establish a national energy market operator for electricity and gas with a national
planning function.
40
Australia's electricity prices, although having risen in recent years, remain low by world standards largely due to
substantial natural resources. In 2006, average electricity prices in capital cities were generally lower than in many
OECD countries, including the United Kingdom, Spain, France and Italy.

Australia has about 244 large electricity generators, of which around 190 are in the National Electricity Market 45
jurisdictions in eastern and southern Australia. The National Electricity Market supplies electricity to approximately
8.7 million residential and business customers using an extensive electricity distribution network covering
approximately 700,000 kilometres. In 2007-08, the market generated around 208 terawatt hours of electricity with a
turnover of almost $11.1 billion. The generation sector uses a variety of fuel sources to produce electricity. Black
and brown coal accounted for around two-thirds of total generation capacity across the National Electricity Market 50
in 2007-08, followed by hydroelectric generation (17%) and gas-fired generation (15%).

Electricity generation in Australia is emissions intensive due to the predominance of coal. The Government has
committed to policies aimed at addressing climate change. In 2007, the Government committed to ensuring 20% of
Australia's electricity supply is derived from renewable sources by 2020. On 15 December 2008, the Australian 55
Government indicated its intention to introduce emissions trading through the Carbon Pollution Reduction Scheme

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from 1 July 2010. The Scheme will cover around 75% of national emissions, including the stationary energy
sector. It will be a 'cap and trade' scheme under which significant emitters of greenhouse gases will need to acquire
and surrender a carbon pollution permit for each tonne of greenhouse gas that they emit during the compliance
year. Permits will be tradable which ensures that emissions are reduced at the lowest possible cost. The price of
permits will be determined by the market. 5

The Australian Government has announced its medium-term target to reduce Australia's greenhouse gas emissions
by between 5% and 15% below 2000 levels by the end of 2020. The top of this range (5% below 2000 levels)
represents an unconditional commitment to reduce emissions by 2020, irrespective of the actions of other
countries. The bottom of this range (15% below 2000 levels) is conditional on a global agreement where all major 10
economies substantially restrain emissions and all developed countries take on comparable reductions to that of
Australia. The Australian Government's long-term target is to reduce emissions by 60% below 2000 levels by 2050.

These policies are expected to lead to significant new investment in electricity generation and transmission.
15
Communication Services

The communication services industry, which comprises postal, courier and telecommunications services, contributed
20
Telecommunications

The Australian telecommunications market has been open to full competition since 1 July 1997. Since that time, the
telecommunications sector has developed into a more dynamic and innovative market, with businesses and
households benefiting from lower prices and more variety of carriers. 25

22
30

The telecommunications sector is subject to a number of regulatory mechanisms at the retail level. A Universal
Service Obligation ("USO") is placed on the telecommunications industry to ensure that all people in Australia have
reasonable access to basic telephone services, on an equitable basis. Funding of the USO is provided by all licensed 35
telecommunications carriers.

Telecommunications-specific competition provisions are contained in Parts XIB and XIC of the Trade Practices Act
1974 (the "TPA"). These provisions are based on, but do not exactly mirror, generic competition laws.
40

Part XIB of the TPA establishes an anti-competitive conduct regime for telecommunications markets,
which applies in addition to the general competition provisions under Part IV of the TPA.

Part XIC of the TPA establishes an industry specific regime for regulated access to bottleneck carriage
services and provides the core access arrangements for the telecommunications industry.

This competition framework has had a number of important benefits for consumers. For example, access to Telstra's
copper local loop network by its competitors has been a key driver of the growth of broadband in Australia. Telstra,
formerly a Government-owned monopoly, was privatised between 1997 and 2006. Tranches of approximately 33% 45
and 16% of Telstra were sold in 1997 and 1999. In 2006, the Government sold a further 34% stake in Telstra, with
the remaining 17% shareholding transferred to the Future Fund in February 2007. For further information with
respect to the Future Fund, see "Government FinancePensions and Superannuation" in this prospectus.

The Government has also committed to provide up to $4.7 billion and to consider necessary regulatory changes to 50
facilitate the roll-out of a new open access, high-speed, fibre-based broadband network the National Broadband
Network.

Accommodation, Cafes and Restaurants
55
The accommodation, cafes and restaurants industry consists of firms primarily engaged in the provision of
hospitality services. This includes accommodation, clubs, pubs, taverns and bars, along with cafes and restaurants.

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The industry's contribution of gross value added (at basic prices) from 2003-04 to 2007-08 has been around 2.1%.
The largest proportion of value added in this industry is from pubs and clubs, while the largest employer is cafes and
restaurants.

Personal and Other Services 5

The personal and other services industry includes all units mainly engaged in providing personal services, and
services provided by religious organisations and other public interest groups. Personal and other services contributed
10
Cultural and Recreational Services

The cultural and recreational services industry comprises libraries, museums, parks and gardens, sporting facilities,
gambling services, radio and television services, and production, distribution and exhibition of film. Cultural and
recreational services contributed 1.6% of gross value added (at basic prices) in 2007-08. 15

Television Services

Free to air television broadcasts reach 100% of the Australian population. Subscription television can reach 100% of
Australia through a mixture of hybrid fibre coaxial cable in major cities and satellite transmission in rural areas. 20

The Government has announced that all free-to-air television broadcasters in Australia will complete the switch from
analog transmission to digital-only transmission by the end of 2013. The switchover process will commence in
2010, and will be progressively carried out on a regional basis across the country.
25

23

30

EXTERNAL TRADE AND BALANCE OF PAYMENTS

Merchandise Trade
35
The value of goods measured on a free on board ("f.o.b.") basis includes all production and other costs incurred up
until the goods are placed on board an international carrier for export from the relevant exporting country.

Australia's merchandise exports (f.o.b.) and imports (f.o.b.) for the past five fiscal years in current prices, calculated
on a balance of payments basis, are shown in the table below. 40

Table 17: Merchandise exports and imports
2003-04 2004-05 2005-06 2006-07 2007-08
(A$ millions)
Exports
Rural Exports
Meat and Meat Preparations 5,758 6,933 6,709 7,078 6,540
Cereal grains and cereal preparations 5,093 5,160 4,852 4,171 4,992
Wool and Sheepskins 2,778 2,838 2,544 3,065 2,796
Other Rural 10,887 10,707 11,161 10,761 11,142
Total Rural 24,516 25,638 25,266 25,075 25,470

Non-rural Exports
Metal Ores and Minerals 14,863 19,852 28,934 35,315 41,641
Mineral Fuels - 19,786 28,394 37,570 37,570 43,354
Coal, coke and briquettes 11,000 17,240 24,352 21,928 24,556
Other mineral fuels 8,786 11,154 13,218 15,642 18,798
Metals (excl non-monetary gold) 7,753 8,670 11,271 14,820 14,036
Machinery 6,830 7,466 8,066 8,422 8,791
Transport equipment 5,156 4,944 5,314 4,648 5,719
Other manufactures 13,338 14,109 14,996 16,268 16,999

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Other non-rural (incl sugar and beverages) 9,257 10,942 12,059 14,770 12,781
Total Non-Rural 76,983 94,377 118,210 131,813 143,321

Repairs on goods 75 67 74 90 103

Total Merchandise Exports 109,473 127,867 154,425 169,514 182,989

Imports
Consumption goods 42,784 47,030 50,221 54,913 59,383
Capital goods 32,134 36,072 40,077 41,765 45,352
Intermediate and other merchandise goods 54,381 63,735 72,737 79,923 90,476
Repairs on goods 219 182 115 131 117

Total Merchandise Imports 133,018 150,873 169,716 184,024 204,964

Balance on Merchandise Trade -23,545 -23,006 -15,291 -14,510 -21,975

24
5

The following table shows the shares of Australian exports and imports directed to and sourced from various
countries and country groups for each of the 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08 fiscal years. These
shares are calculated from values data and on a merchandise trade basis, rather than a balance of payments basis. 10

Table 18: Geographical distribution of Australia's recorded merchandise trade
2003-04 2004-05 2005-06 2006-07 2007-08
(Percentages)
Exports
China 9.1 10.3 11.9 13.6 14.9
Japan 18.2 19.7 20.4 19.4 19.3
New Zealand 7.4 7.2 5.7 5.6 5.3
United Kingdom 4.7 3.8 5.1 3.7 4.6
United States 8.7 7.5 6.4 5.8 5.9
India 4.5 4.8 4.8 6.0 5.2
Singapore 2.8 2.7 2.8 2.8 2.9
Thailand 2.3 3.1 2.8 2.5 2.6
Indonesia 2.7 2.7 2.6 2.5 2.2
Malaysia 2.0 2.0 1.7 1.8 1.9
(a)
7.3 7.2 7.3 7.7 6.7
Other
(b)
22.5 21.3 20.8 20.8 21.0
Total 100.0 100.0 100.0 100.0 100.0

Imports
China 11.7 13.3 13.9 15.0 15.3
Japan 12.3 11.5 10.3 9.6 9.7
New Zealand 3.9 3.6 3.3 3.1 3.5
United Kingdom 4.1 4.0 3.6 4.1 4.2
United States 15.2 14.2 13.6 13.8 12.0
Singapore 3.9 4.8 6.3 5.6 6.8

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Thailand 2.8 2.8 3.2 4.0 4.4
Indonesia 2.9 2.2 2.7 2.6 2.3
Malaysia 3.6 4.0 4.0 3.7 4.0
(a)
19.9 19.5 18.1 17.5 17.2
Other
(b)
16.0 16.8 17.1 17.7 17.6
Total 100.0 100.0 100.0 100.0 100.0
(a) Other European Union refers to trade with all current 27 member states, other than the UK.
(b) Care should be taken in interpreting the Other category, as it includes confidential items that are not classified by country. Thus it is possible
that the export and import shares of the countries or country groups listed above could be understated.

Australia's goods and services exports were valued at $234.3 billion in 2007-08. Australia's top five merchandise
export markets were Japan ($35.0 billion), China ($27.0 billion), Republic of Korea ($14.2 billion), United States 5
($10.6 billion) and New Zealand ($9.5 billion). Merchandise exports to the East-Asia region were valued at $106.0
billion (58.6% of Australia's merchandise exports); to the European Union, $20.5 billion (11.3% of Australia's
merchandise exports); and to North America, $12.8 billion (7.1% of Australia's merchandise exports). Major
merchandise and service exports were coal, iron ore, education services, gold and personal travel.
10
Australia's goods and services imports were valued at $254.9 billion in 2007-08. China was Australia's largest source
of merchandise imports (valued at $31.0 billion or 15.3% of Australia's merchandise imports), followed by the
United States ($24.3 billion or 12.0% of Australia's merchandise imports) and Japan ($19.7 billion or 9.7% of
Australia's merchandise imports). Australia's major import items were crude petroleum, passenger motor vehicles,
personal travel, refined petroleum and freight services. 15

25
20

Balance of Payments

Australia has traditionally been a net importer of capital. This has facilitated the development of its rich endowment 25
of natural resources at a faster pace than would have been possible if domestic savings were the only source of
investment funds. Australia has traditionally run a current account deficit, reflecting the use of a net inflow of capital
to obtain real resources from the rest of the world.

The table below provides Australia's balance of payments details for each of the 2003-04, 2004-05, 2005-06, 2006- 30
07 and 2007-08 fiscal years.

Table 19: Balance of payments
2003-04 2004-05 2005-06 2006-07 2007-08
(A$ million)
CURRENT ACCOUNT -45,590 -56,325 -52,839 -58,999 -70,171

Goods and Services -21,495 -22,626 -14,520 -12,757 -20,619
Credits 147,219 167,562 196,274 215,695 234,308
Debits -168,714 -190,188 -210,794 -228,452 -254,927

Goods -23,545 -23,006 -15,291 -14,510 -21,975
Credits 109,473 127,867 154,425 169,514 182,989
Debits -133,018 -150,873 -169,716 -184,024 -204,964

Services 2,050 380 771 1,753 1,356
Credits 37,746 39,695 41,849 46,181 51,319
Debits -35,696 -39,315 -41,078 -44,428 -49,963

Income -23,840 -33,330 -37,670 -45,903 -49,227
Credits 17,001 21,741 26,474 35,988 41,575
Debits -40,841 -55,071 -64,144 -81,891 -90,802

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Current transfers -255 -369 -649 -339 -325
Credits 4,191 4,268 4,602 5,155 5,272
Debits -4,446 -4,637 -5,251 -5,494 -5,597

CAPITAL AND FINANCIAL ACCOUNT 46,059 57,389 52,643 59,103 69,514

Capital account 1,372 1,594 1,726 2,380 2,176

Capital transfers 1,444 1,523 1,729 1,957 2,168
Credits 2,571 2,674 2,673 2,995 3,382
Debits -1,127 -1,151 -944 -1,038 -1,214

Net acquisition/disposal of non-produced,
non-financial assets -72 71 -3 423 8

26
5

2003-04 2004-05 2005-06 2006-07 2007-08
(A$ million)
Financial account 44,687 55,795 50,915 56,724 67,337

Direct investment -15,926 51,494 -10,942 8,926 18,386
Abroad -26,225 59,307 -31,758 -31,232 -37,489
In Australia 10,299 -7,813 20,817 40,156 55,874

Portfolio investment 82,458 544 63,764 63,814 3,766
Financial derivatives -2,800 961 -1,328 3,575 -9,450
Other investment -13,918 10,919 5,027 537 10,345
Reserve assets -5,127 -8,123 -5,605 -20,127 44,292

NET ERRORS AND OMISSIONS -469 -1,064 196 -104 657
10
In original terms, the balance on current account for 2007-08 was a deficit of $70.2 billion, a 19% increase on the
deficit of $59.0 billion recorded for 2006-07.

The goods and services deficit for 2007-08 was $20.6 billion, an increase of $7.9 billion on the deficit of $12.8
billion recorded in 2006-07. Goods credits increased $13.5 billion or 8% (due to increases in volumes and prices) 15
and goods debits increased $20.9 billion or 11% (due to an increase in volumes) during 2007-08.

The services surplus of $1.4 billion for 2007-08 was a decrease of $0.4 billion on the surplus of $1.8 billion in 2006-
07.
20
The net income deficit for 2007-08 rose $3.3 billion (7%), with an increase in income credits of $5.6 billion (16%)
and an increase in income debits of $8.9 billion (11%).

The balance on financial account recorded a net inflow of $67.3 billion for 2007-08, with a net inflow on debt of
$92.9 billion and a net outflow on equity of $25.6 billion. This result was up $10.6 billion on the net inflow recorded 25
for the previous year as a result of:

a turnaround of $64.4 billion to a net inflow on reserve assets;

a decrease of $60.0 billion on the net inflow on portfolio investment;

a turnaround of $13.0 billion to a net outflow on financial derivatives;

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an increase of $9.8 billion on the net inflow on other investment; and

an increase of $9.5 billion on the net inflow on direct investment.

Changes in Official Reserve Assets
5
The Australian Government meets its foreign exchange requirements from the Reserve Bank of Australia. The RBA
holds Official Reserve Assets ("ORA") primarily to facilitate foreign exchange intervention. The vast majority of
Australia's reserves are held as foreign exchange and are invested primarily in high quality government
securities. The value of ORA held by the RBA changes in response to transactions undertaken in the foreign
exchange market by the RBA, both on its own account and on behalf of its customers (primarily Australian 10
Government agencies), as well as fluctuations in the value of the foreign currencies and underlying assets in which
the reserves are invested. ORA also includes foreign currency that has been borrowed under swap to assist the RBA
to manage domestic liquidity for monetary policy purposes.

15

27

20
The following table shows the composition of Australia's ORA over the past five years. For several years prior to
2007-08, the RBA's gross holdings of foreign currency rose sharply as foreign currency was borrowed under foreign
exchange swaps against Australian dollars. The Australian dollars lent to the market under these swaps helped to
offset the domestic liquidity impact of deposits placed with the RBA by the Australian Government. Over 2007-08,
the Australian Government drew down these deposits to seed the investment program of the Future Fund. As 25
deposits were drawn down, the related swaps were unwound and the gross level of foreign currency held by the
RBA declined. Net holdings of foreign currency rose over the period.

Table 20: Official Reserve Assets
As at 30 June
2004 2005 2006 2007 2008
(A$ millions)
Gold 1,473 1,468 2,117 1,967 2,481
Other 2,753 1,985 1,062 667 604
Foreign Currency 46,117 52,718 60,635 77,049 32,772
Total (gross) 50,343 56,171 63,814 79,682 35,857
Total (net) 24,791 26,405 30,215 32,175 35,862

Exchange Rate

Australia has a free-floating dollar with substantially no exchange controls. Approved non-bank financial
institutions, in addition to banks, are licensed as foreign exchange dealers. Since the floating of the Australian dollar 35
on 12 December 1983, Australia's exchange rate has been determined by the overall supply of and demand for A$ in
the foreign exchange market. The floating of the Australian dollar was part of the deregulation of the financial
system.

There has been considerable variability in the exchange rate. The RBA is prepared to accept substantial fluctuations 40
in the exchange rate, both day-to-day and over the course of the economic cycle. Transactions to influence the
exchange rate or market conditions more generally, usually known as intervention, are relatively infrequent. They
are undertaken only when the value of the Australian dollar is judged to have moved to levels that are inconsistent
with underlying economic developments or when conditions in the foreign exchange market are thin and disorderly.
45
The sharp depreciation in the Australian dollar since July 2008 likely reflects the impacts of the global financial
crisis such as falls in commodity prices, and a narrowing interest rate differential between the U.S. and Australia as
the RBA reduces the official cash rate. The following table sets out the Australian dollar exchange rate against the
U.S. dollar for each of the 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08 fiscal years and each month end since
June 2008. 50

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Table 21: Units of US$ per A$
(a)


Year ended:
30 June 2004 0.6982 0.7133 0.8008 0.6339
30 June 2005 0.7624 0.7530 0.7989 0.6850
30 June 2006 0.7422 0.7474 0.7792 0.7013
30 June 2007 0.8486 0.7861 0.8521 0.7396
30 June 2008 0.9578 0.8964 0.9667 0.7672
Month ended:
31 July 2008 0.9417 0.9617 0.9849 0.9395
31 August 2008 0.8580 0.8810 0.9417 0.8492
30 September 2008 0.7941 0.8176 0.8580 0.7800
31 October 2008 0.6676 0.6866 0.8019 0.6004
30 November 2008 0.6548 0.6564 0.7013 0.6073
31 December 2008 0.7073 0.6727 0.7139 0.6289
31 January 2009 0.6350 0.6774 0.7266 0.6343
5

28

10
The table below details the Australian dollar exchange rate against the UK pound sterling for each of the 2003-04,
2004-05, 2005-06, 2006-07 and 2007-08 fiscal years and each month end since June 2008.

(a)


Year ended:
30 June 2004 0.3837 0.4099 0.4300 0.3696
30 June 2005 0.4254 0.4052 0.4280 0.3818
30 June 2006 0.4016 0.4202 0.4418 0.3971
30 June 2007 0.4223 0.4065 0.4293 0.3920
30 June 2008 0.4805 0.4475 0.4926 0.3897
Month ended:
31 July 2008 0.4747 0.4834 0.4903 0.4740
31 August 2008 0.4710 0.4669 0.4748 0.4533
30 September 2008 0.4453 0.4546 0.4766 0.4318
31 October 2008 0.4154 0.4061 0.4498 0.3689
30 November 2008 0.4255 0.4291 0.4501 0.4106
31 December 2008 0.4835 0.4523 0.4880 0.4204
31 January 2009 0.4377 0.4671 0.4940 0.4371

The following table displays the Australian dollar exchange rate against the Euro for each of the 2003-04, 2004-05,
2005-06, 2006-07 and 2007-08 fiscal years and each month end since June 2008.
20
(a)


Year ended:
30 June 2004 0.5727 0.5976 0.6375 0.5607
30 June 2005 0.6299 0.5917 0.6435 0.5616
30 June 2006 0.5802 0.6139 0.6411 0.5759

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30 June 2007 0.6265 0.6017 0.6338 0.5790
30 June 2008 0.6078 0.6096 0.6460 0.5725
Month ended:
31 July 2008 0.6036 0.6100 0.6170 0.6017
31 August 2008 0.5846 0.5890 0.6038 0.5758
30 September 2008 0.5624 0.5694 0.5853 0.5478
31 October 2008 0.5242 0.5164 0.5674 0.4722
30 November 2008 0.5156 0.5157 0.5405 0.4859
31 December 2008 0.5055 0.4968 0.5193 0.4752
31 January 2009 0.4965 0.5091 0.5372 0.4949

The table below details the trade-weighted index value of the Australian dollar for each of the 2003-04, 2004-05,
2005-06, 2006-07 and 2007-08 fiscal years and each month end since June 2008. The trade-weighted index is a 5
weighted average of a basket of currencies of Australia's major trading partners, with the weight of each foreign
currency equal to its share in trade. The most significant currencies in the trade-weighted index as re-weighted on 1
October 2008 are the Chinese renminbi, the Japanese yen, the Euro and the U.S. dollar. The trade-weighted index is
often used as an indicator of Australia's international competitiveness and is a useful gauge of the value of the
Australian dollar when bilateral exchange rates exhibit diverging trends. 10

29
15

Table 24: Trade-Weighted Index value of the A$
(a)(b)


Year ended:
30 June 2004 59.1 61.4 66.3 57.1
30 June 2005 64.5 62.7 65.3 58.9
30 June 2006 62.2 63.3 65.1 59.9
30 June 2007 68.9 64.8 69.0 62.1
30 June 2008 73.4 69.7 73.4 63.3
Month ended:
31 July 2008 72.2 73.3 74.1 72.2
31 August 2008 67.7 68.6 71.7 67.3
30 September 2008 63.4 64.9 67.2 62.7
31 October 2008 54.7 56.1 63.5 51.0
30 November 2008 54.6 54.4 56.4 52.1
31 December 2008 55.6 54.6 55.9 53.7
31 January 2009 53.2 55.4 58.6 53.2
(a) The trade-weighted index is provided by the Reserve Bank of Australia in respect of each trading day. Period averages are derived from these
rates.
(b) The weights for the trade-weighted index are revised annually to capture changing trade patterns. Changes to the weights are usually
calculated in September, with the re-defined index joined onto the existing trade-weighted index on the first business day in October.

Foreign Investment Policy

The Australian Government's policy approach to foreign investment is to encourage investment flows consistent 25
with economic development and performance and community interests. The Government's foreign investment
policy provides the framework for Government consideration of proposed foreign acquisitions of Australian
businesses and real estate. The vast majority of proposals are approved, with the last proposed business acquisition
that was not approved being in 2001. Where a proposal raises national interest concerns, the Government has the
power under the Foreign Acquisitions and Takeovers Act 1975 (the "FATA") to reject the proposal or to approve it 30
with conditions designed to mitigate the national interest concerns. The FATA and the Foreign Acquisitions and
Takeovers Regulations 1989 provide monetary thresholds below which the FATA does not apply, with separate

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thresholds applying for U.S. investors. Screening under the FATA is not required for acquisitions in businesses
valued below the thresholds or of less than substantial or non-controlling interests.

In the majority of industry sectors smaller proposals are not subject to screening, being exempt from the FATA or
notification under the policy. Specific screening requirements and limited restrictions on foreign investment apply 5
in certain sensitive sectors such as the media, telecommunications, airlines and in relation to acquisitions of
residential real estate.

The screening process is intended to provide advice to the Australian Treasurer, including from the independent
advisory body, the Foreign Investment Review Board, on whether individual foreign investment proposals may be 10
contrary to the national interest. It involves consultation with relevant Government agencies and in some cases with
stakeholders. Under the FATA and the policy, the Treasurer determines what is considered 'contrary to the national
interest'.


Australia is a member of the International Monetary Fund (the "IMF"). As at 31 December 2008, Australia's quota
in the IMF was 3.24 billion Special Drawing Rights ("SDR"). Australia is a participant in the SDR Department and,
as at 31 December 2008, had net cumulative allocations of SDR 470.55 million and actual holdings of SDR 113.02
million. 20

Australia is also a member of the International Bank for Reconstruction and Development ("IBRD") and its affiliates
in the World Bank Group: the International Finance Corporation (the "IFC"); the International Development
Association (the "IDA"); the Multilateral Investment Guarantee Agency (the "MIGA"); and the International Centre
for Settlement of Investment Disputes (the "ICSID"). 25

As at 31 December 2008, Australia held 24,464 shares in the IBRD, with the value of the paid-in portion of these
shares amounting to $259 million.

30

30

35
Australia also held 47,329 fully paid shares in the IFC, valued at $69.1 million, and 3,019 shares in MIGA, with the
value of the paid-in portion of these shares totalling $10.7 million. Each member country is equally represented in
the ICSID, with no system of shareholding.

In December 2007, Australia committed to contribute $583 million to the fifteenth replenishment of the International 40
Development Association.

Australia is also a member of the Asian Development Bank (the "ADB"), holding 204,740 shares. As at 31
December 2008, the value of the paid-in portion of these shares amounted to $287 million. In addition, Australia
contributes to the ADB's concessional lending arm, the Asian Development Fund (the "ADF"). In May 2008, 45
Australia committed to contribute $333 million to the ninth replenishment of the ADF.

Australia is also a member of the European Bank for Reconstruction and Development (the "EBRD"), holding
20,000 shares. As at 31 December 2008, the value of the paid-in portion of these shares was $84.8 million.
50
Australia is a member of the Organisation for Economic Co-operation and Development (the "OECD"), the Asia-
Pacific Economic Co-operation Forum ("APEC") and the East Asia Summit. Australia is also a member of the
Group of Twenty ("G-20") forum.

In addition, Australia is a member of various other regional and international organisations, including the United 55
Nations and many of its affiliated agencies.

31 60

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CURRENCY, MONETARY AND BANKING SYSTEM


Australia's unit of currency is the Australian dollar. Australia's currency comprises both coins and notes. Coins are
issued by the Treasurer of the Commonwealth of Australia under the Currency Act 1965; those intended for
circulation include denominations of 5, 10, 20 and 50 cents and $1 and $2. Numismatic (un-circulating collector)
legal tender coins are also approved for sale by the Treasurer from time to time. Under the Reserve Bank Act 1959, 10
Australia's currency notes are issued by the Reserve Bank of Australia (the "RBA") in five denominations: $5, $10,
$20, $50 and $100.

Monetary Conditions
15
The RBA's monetary policy operates within the framework of a medium-term inflation target of 2 to 3% on average
over the cycle. Given the lags involved in the operation of monetary policy, the RBA sets monetary policy in a
forward-looking manner in order to achieve its medium-term inflation target. Maintaining low inflation, and
therefore low inflation expectations, is vital to ensuring that economic growth is sustained, thereby supporting
productive investment and employment. 20

The RBA carefully monitors a range of domestic and international economic and financial indicators in gauging
inflationary pressures. These indicators cover economic conditions, prices, wages, the labour market and financial
conditions.
25
Movements in interest rates over the 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08 fiscal years and the monthly
periods since June 2008 are provided in the table below.

Table 25: Key interest rates
Period
Target Cash Rate
(%)
90 Day Bank Bill Yield
(%) 10 Year Bond Yield (%)

Year ended:
30 June 2004 5.25 5.50 5.87
30 June 2005 5.50 5.66 5.11
30 June 2006 5.75 5.97 5.79
30 June 2007 6.25 6.43 6.26
30 June 2008 7.25 7.80 6.45
Month ended:
31 July 2008 7.25 7.69 6.23
31 August 2008 7.25 7.23 5.75
30 September 2008 7.00 7.01 5.40
31 October 2008 6.00 5.75 5.18
30 November 2008 5.25 4.51 4.58
31 December 2008 4.25 4.08 3.99
31 January 2009 4.25 3.34 4.10
4 February 2009
(a)
3.25 3.24 4.31
(a) Data as at close of business on 4 February 2009. Effective 4 February 2009, the RBA lowered the target cash rate to 3.25%.

32
35

The following table sets out monetary aggregate data for each of the 2003-04, 2004-05, 2005-06, 2006-07 and 2007-
08 fiscal years.
40
Table 26: Monetary aggregates
2003-04 2004-05 2005-06 2006-07 2007-08
A$b %
(a)
A$b %
(a)
A$b %
(a)
A$b %
(a)
A$b %
(a)

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M1
(b)
163.4 4.1 176.1 7.8 194.2 10.3 226.0 16.4 233.3 3.2
M3
(c)
623.1 11.6 678.4 9.2 747.3 9.7 868.0 16.2 1,032.9 18.0
Broad Money
(d)
686.3 10.5 764.5 11.4 841.2 9.3 962.5 14.4 1,118.8 14.1
(a) 12-month ended percentage change. Where available, growth rates are reported in seasonally adjusted terms and adjusted for the effects of
breaks in the series, as recorded in the technical notes to the tables in the Reserve Bank of Australia Bulletin.
(b) M1 is defined as currency plus bank current deposits of the private non-bank sector.
(c) M3 is defined as M1 plus all other authorised deposit-taking institution deposits of the private non-ADI sector.
(d) Broad money is defined as M3 plus non-deposit borrowings from the private sector by all financial intermediaries, less the holdings of
currency and bank deposits by registered financial corporations and cash management trusts.

Regulation of the Financial System

Australia's financial regulation framework is based on three separate agencies operating on functional lines. These
institutions have prime responsibility for maintaining the safety and soundness of financial institutions, protecting 10
consumers and promoting systemic stability through implementing and administering the regulatory regimes that
apply to the financial sector. Specifically,

the Australian Prudential Regulation Authority ("APRA") is responsible for prudential regulation and
supervision of authorised deposit-taking institutions, general and life insurance companies and
superannuation funds;

the Australian Securities and Investments Commission ("ASIC") is responsible for market conduct and
investor protection; and
15

the Reserve Bank of Australia has responsibility for monetary policy, overseeing financial system stability
and oversight of the payments system.

Figure 1: Key regulatory agencies in Australia

20
Responsibility for the operational or day-to-day supervision of financial institutions and markets lies with these
individual regulators, while accountability for the broad framework for the regulation of the financial sector rests
with the Australian Government, aided by the Council of Financial Regulators and the Australian Treasury.

25

33

30

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The Council of Financial Regulators consists of high-level representatives of the RBA, Treasury, APRA and ASIC.
Given the central role played by each of these entities in the formulation of financial sector policy, in interacting
with foreign counterparts and standard setters and in monitoring and evaluating trends in domestic and international
markets, the Council of Financial Regulators is an important forum for addressing emerging trends and policy
issues. This coordination is crucial especially in the event of a crisis, when the Council would serve as the key 5
coordinating body for developing an official response. The role of the Council in crisis coordination is facilitated by
a Memorandum of Understanding ("MOU") dealing specifically with financial crisis management arrangements
signed in September 2008. The MOU reflects the strong commitment of Australia's regulatory agencies to the open
exchange of information and to a co-ordinated response to potential threats to the stability of Australia's financial
system. The MOU covers the objectives of financial distress management and the principles that guide decisions and 10
actions during times of financial distress, and also sets out the responsibilities of the individual Council members
during such times.

The regulation of the financial sector operates under the following Commonwealth legislation:
15

Australian Securities and Investments Commission Act 2001;

Corporations Act 2001;

Australian Prudential Regulation Authority Act 1998;

Payment Systems (Regulation) Act 1998;

Payment Systems and Netting Act 1998;
20

Financial Sector (Shareholdings) Act 1998;

Financial Sector (Business Transfer and Group Restructure) Act 1999;

Retirement Savings Accounts Act 1997;

Life Insurance Act 1995;

Superannuation Industry (Supervision) Act 1993;
25

Insurance Acquisitions and Takeovers Act 1991;

Insurance Act 1973;

Banking Act 1959; and

Reserve Bank Act 1959.

In addition, the Australian Competition and Consumer Commission (the "ACCC") has responsibility for competition 30
policy under the Trade Practices Act 1974. That responsibility extends across the entire economy, including the
financial sector.

35
The RBA is responsible for maintaining stability of the overall financial system, promoting the safety and efficiency
of the payments system, managing the issuance of banknotes, providing banking services for the Australian
Government, and managing Australia's Official Reserve Assets.

The RBA is also responsible for monetary policy, which is determined by the Board of the Bank and is set in terms 40
of the level of the cash rate (the interest rate on unsecured overnight funds). The RBA undertakes daily operations in
the short-term money markets to ensure that the actual cash rate remains close to the monetary policy target.

45
34

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The RBA's market operations are very flexible, permitting it to deal daily with a wide range of counterparties across
a wide range of maturities, and allowing it to respond rapidly to any tensions in the domestic money market. The 5
RBA has made a number of changes to its arrangements since late 2007 as the financial turmoil has unfolded. These
have included widening the pool of collateral the RBA will accept in its repurchase transactions, dealing on a regular
basis at long maturities and introducing a term deposit facility. In addition, the RBA has significantly increased the
pool of balances held by financial institutions in their exchange settlement accounts at the RBA.
10
In exceptional circumstances, the RBA may provide liquidity support to an individual authorised deposit-taking
institution, if the institution was solvent and its failure to make payments would have systemic implications. In
assessing solvency, the RBA would rely on APRA's judgment.

The statement of financial position of the Reserve Bank of Australia as of each of 30 June 2006, 2007 and 2008 is 15
set out in the table below.

Table 27: Statement of financial position Reserve Bank of Australia

30 June
2006
30 June
2007
30 June
2008
(A$ millions)

ASSETS
Cash and cash equivalents 575 586 862
Australian dollar securities 30,306 34,955 54,702
Foreign exchange 71,689 93,538 42,505
Gold 2,151 2,001 2,509
Property, plant and equipment 329 421 456
Loans, advances and other 397 393 438
Total Assets 105,447 131,894 101,472

LIABILITIES
Deposits 43,204 65,830 39,006
Distribution payable to Australian Government 1,477 1,085 1,403
Other 11,493 16,072 9,786
Australian notes on issue 38,065 40,289 42,064
Total Liabilities 94,239 123,276 92,259

Net Assets 11,208 8,618 9,213

Capital and Reserves
Reserves:
Unrealised profits reserves 2,528 53 80
Asset revaluation reserves 2,354 2,239 2,807
Reserve Bank Reserve Fund 6,286 6,286 6,286
Capital 40 40 40
Total Capital and Reserves 11,208 8,618 9,213
Source: Reserve Bank of Australia Annual Report 2008 and Annual Report 2007.
20
Australian Prudential Regulation Authority

The Government established APRA on 1 July 1998 as the single prudential regulator in the Australian financial
system. APRA oversees authorised deposit-taking institutions, such as banks, building societies and credit unions,
life and general insurance companies (including reinsurers and friendly societies) and most members of the 25
superannuation industry (other than self-managed superannuation funds). The aim was to create a prudential
regulation framework that would not only meet safety and stability objectives, but would increase the
competitiveness and efficiency of the financial system by ensuring that regulation is applied consistently for similar
functions.
30

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35

5
APRA Regulated Institutions

As detailed in the table below, APRA-regulated institutions hold approximately $3.4 trillion in assets for 21 million
Australian depositors, policyholders and superannuation fund members.
10
Table 28: APRA-Regulated Institutions
Number of Institutions Assets (A$ billions)
APRA-Regulated Institutions
30 June
2007
30 June
2008 % Change
30 June
2007
30 June
2008 % Change
ADIs 220 211 -4.1 1,945.5 2,409.0 23.8
Representative offices of
foreign banks 19 18 -5.3 - - -
General insurers 131 130 -0.8 90.5 91.0 0.6
Life insurers 34 32 -5.9 251.4 232.9 -7.4
Friendly societies 25 24 -4.0 6.9 6.6 -4.3
Licensed trustees 306 292 -4.6 - - -
Superannuation entities 6,823 6,252 -8.4 707.9 673.6 -4.8
Non-operating holding
companies 14 18 28.6 - - -
Total 7,572 6,977 -7.9 3,002.2 3,413.1 13.7
Source: APRA Annual Report 2008.

Funding
15
APRA is funded largely by the industries that it supervises through a levy on regulated entities. The Government has
provided APRA with the necessary resources to enable it to manage the effects of the global financial crisis. In
October 2008, the Government agreed to provide additional funding to APRA of $9 million in 2008-09, $18.5
million in 2009-10 and $9 million in 2010-11 and 2011-12 to ensure that APRA continues to have sufficient
resources to fulfil its role in light of global developments. This funding will be provided from the 2008-09 Budget, 20
rather than being recovered from levies on the financial sector. Before this budget measure, APRA's budget was
approximately $100 million (recovered mainly from levies on the financial sector) for around 570 staff.

Governance
25
APRA's governance structure comprises a full-time Executive Group of at least three and no more than five
Members. The Executive Group is responsible and accountable for the operation and performance of APRA. It
currently has a Chairman, a Deputy Chairman and a Member.

APRA's Main Powers 30

Australian legislation provides APRA with strong powers to regulate and intervene in the operations of financial
institutions to protect depositors, policy holders and fund members and to maintain the stability of the financial
system.
35
APRA's main powers are provided by acts relating to each industry sector that it regulates: the Banking Act 1959, the
Insurance Act 1973, the Life Insurance Act 1995 and the Superannuation Industry (Supervision) Act 1993. These
acts provide APRA with the following main types of powers in regulating financial institutions:

authorisation or licensing powers;
40

powers to make, apply and enforce prudential standards;

powers to collect information, to conduct on-site examinations of supervised entities and to require third-
party audits; and

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powers to act in circumstances of financial difficulties to protect depositors, policy holders and
superannuation fund members and to maintain the stability of the financial system, including powers related
to investigating, giving directions and assuming control of supervised entities in difficulty. APRA can
appoint a statutory manager to assume full control of an authorised deposit-taking institution and can apply
to the courts for the appointment of a judicial manager to assume control of a general or life insurer.

36
5

In broad terms, the powers available under each Act are similar but they vary somewhat reflecting the specific
characteristics of each industry sector.
10
In relation to the ADI sector, APRA has wide-ranging powers under the Banking Act 1959 to investigate the affairs
of an ADI and/or issue a direction to an ADI. For example, APRA can direct an ADI:

to comply with a prudential requirement;

to conduct an audit of its affairs;
15

to remove a director, executive officer or employee; or

not to undertake a particular transaction.

APRA also has the power to revoke an ADI's authorisation if it fails to meet its authorisation requirements.

In a situation where an ADI may be unable to meet its obligations or where the interests of depositors or financial 20
system stability are at risk, APRA has the power under the Banking Act 1959 to replace an ADI's Board of Directors
with a statutory manager, which must manage the ADI in a manner that is consistent with interests of depositors and
financial system stability. In addition to the powers of the Board, the statutory manager has powers to deal in the
share capital of the ADI, such as by issuing new shares, and can alter the ADI's governance arrangements including
its constitution. The statutory manager can also sell or dispose of the assets of the ADI. 25

APRA also has the power to compulsorily transfer the business of the ADI to another entity using the Financial
Sector (Transfers of Business) Act 1999. The receiving entity must consent to the transfer.

Prudential Regulation 30

APRA has developed a regulatory framework for ADIs that is based on the banking supervision principles published
by the Basel Committee on Banking Supervision. The framework for prudential regulation includes requirements
regarding capital adequacy, credit risk, market risk, funds management and securitisation, liquidity, credit quality,
large exposures, associations with related entities, outsourcing, business continuity management, risk management 35
of credit card activities, audit and related arrangements for prudential reporting, governance and fit and proper
management.

Prudential regulation is concerned fundamentally with the quality of a financial institution's systems for identifying,
measuring and managing the various risks in its business and, in most cases, with the adequacy of its capital as a 40
buffer against unexpected losses. It promotes prudent behaviour by regulated entities with the objective of reducing
the likelihood of institutional insolvency and consequential losses to policyholders, depositors or members and
financial system instability.

Implementation of Basel II in Australia 45

APRA implemented the Basel II framework on 1 January 2008. This new framework is designed to strengthen risk
management and provide more risk-sensitive capital requirements for deposit-taking institutions.

All ADIs in Australia are subject to Basel II. ADIs can choose to implement the standard approaches or more 50
advanced approaches for credit risk and operational risk. The great majority of ADIs have chosen to use the
standardised Basel II approaches in determining their regulatory capital charge. The largest ADIs have chosen more

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sophisticated approaches under Basel II, which allow them to use some of their own quantitative risk estimates in
calculating regulatory capital.

The new prudential rules under Basel II provide the Australian banking system with an enhanced regulatory
framework for the protection of depositors and the maintenance of systemic stability. 5

Although the intention of the Basel Committee on Banking Supervision was to maintain consistency of capital
adequacy regulation across countries and avoid a significant source of competitive inequality among internationally
active banks, international comparisons need to take into account the particularities of the implementation of the
Basel framework in each country. These include: 10

the use of national discretions within the Basel Framework;

37

the implementation of advanced models;
15
supervisory adjustments imposed under Pillar 2 by local regulators;

other regulatory requirements (e.g., accounting or tax); and

transitional arrangements.

In implementing Basel II, APRA has exercised a number of discretions to make the framework more robust and
relevant in the Australian market. These discretions include: 20

The risk-weights for residential mortgage lending in the standardised approach were made considerably
more granular, adding to the risk-sensitivity of capital. The Basel II approach is that home loans are subject
to a 35% risk weight. APRA instead introduced a grid of risk-weights based upon loan to value ratio,
lenders' mortgage insurance status and product type (e.g., whether the loan is a standard or non-standard
housing loan), which starts at 35% and runs to 100%.

APRA chose not to adopt a lower risk-weight for 'other retail assets' under the standardised approach,
believing it would not provide a sufficient buffer against credit risk and concentration risk.

For banks using the advanced approaches to measure capital adequacy, APRA has established a minimum
capital requirement for interest rate risk in the banking book under Pillar 1.

Australian Securities and I nvestments Commission 25

ASIC is an independent statutory body established under the Australian Securities and Investments Commission Act
2001.

ASIC administers the Corporations Act 2001 (the "Corporations Act"), including the provisions governing the 30
operation of companies in Australia, corporate fundraising, financial reporting, takeovers and compulsory buy outs
and external administration/insolvency.

ASIC is also responsible for registering and supervising the operation of managed investment schemes. The
regulatory framework governing collective investment vehicles was reformed in 1998 through the passage of the 35
Managed Investments Act 1998.

ASIC has responsibility for the investor protection regime that applies to the provision of financial services. The
regime includes licensing, conduct and disclosure provisions that apply to financial services providers, as well as
product disclosure provisions applicable to financial products. 40

Financial markets and clearing and settlement facilities are licensed by the relevant Minister. ASIC is responsible for
monitoring compliance by market and clearing and settlement facility licensees with the relevant legislative
frameworks. The RBA is responsible for issuing financial stability standards for clearing and settlement facilities
and it monitors compliance with those standards. Australia's major licensed financial markets and clearing and 45
settlement facilities are operated by the ASX Limited.

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ASIC is also responsible for administering the market misconduct provisions of the Corporations Act, which cover
market manipulation, insider trading and misleading or deceptive conduct.

Other Regulatory Entities 5

Australian Competition and Consumer Commission

The Australian Competition and Consumer Commission (the "ACCC") has responsibility for competition policy
under the Trade Practices Act 1974 (the "TPA"). This responsibility extends across the entire economy, including 10
the financial sector.

The TPA prohibits anti-competitive arrangements between competitors, such as price fixing, market sharing and
boycotts.
15

38

20

Industry regulation

The Australian Bankers' Association (the "ABA") is the national organisation of licensed banks in Australia. Any
body corporate duly authorised to carry on banking business in Australia and carrying on such banking business may 25
become a member of ABA.

ABA is funded by its 23 member banks ranging from traditional retail, trading bank-style organisations to regional
banks, foreign bank and wholesale banks. Contributions to its operational expenditure are based on individual
member bank's liabilities in Australia. 30

The ABA's revised Code of Banking Practice is the banking industry's customer charter on best banking practice
standards. The Code sets out the banking industry's key commitments and obligations to customers on standards of
practice, disclosure and principles of conduct for banking services. The Code applies to personal and small business
bank customers. 35

AbacusAustralian Mutuals, the industry association for Australian credit unions, mutual building societies and
friendly societies, also keeps industry codes to which its members are signatories. Abacus members subscribe to
codes establishing standards of service to customers. Signatories to the codes are obliged to respond to complaints
about non-compliance, and the relevant external dispute resolution scheme can also hear and resolve such 40
complaints. Abacus is in the process of developing a consolidated Mutual Banking Code of Practice that will apply
to building societies and credit unions as of mid 2009.

The Financial System Regulatory Regime
45
The Australian Government is committed to increasing competition and contestability across the broad spectrum of
financial products, without sacrificing the basic goals of safety and stability in the financial system. The regulatory
system enables the non-bank deposit-taking sector to provide a more effective source of competition for the banks in
the retail market by operating under the same regulatory framework as banks. These institutions are able to maintain
commercial flexibility by retaining different corporate structures, including mutuality, and the terms 'building 50
society' and 'credit union'. The Government is also paving the way for greater future participation by non-traditional
suppliers in financial services markets, where there is demonstrable congruity between financial and non-financial
activities. One example of this is 2002 reforms to credit card schemes, which removed the restriction permitting
only ADIs to provide credit card services. This increased competition on incumbents from both credit card
specialists and large payments-processing institutions. Prudential controls, to ensure these new players do not 55
increase systemic risk, apply.

Australia maintains a stable, competitive and efficient financial system that is not only positioned to compete
strongly in the global economy, but also offers opportunities for those seeking to do business in Australia or to use
Australia as a focal point for regional activities. 60

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There is no restriction on the number of foreign banks that may apply for banking licenses. The blanket ban on the
takeover of domestic institutions has been removed although such applications are still assessed on a case by case
basis under the Foreign Acquisitions and Takeovers Act 1975 and the Financial Sector (Shareholdings) Act 1998.

Foreign banks wishing to establish a retail bank in Australia may enter as a licensed subsidiary, subject to full 5
prudential supervision. They may also establish as a licensed foreign bank branch to conduct wholesale banking, as
branches are restricted from accepting retail deposits below $250,000. They may also establish as an unlicensed
money market corporation or merchant bank. Furthermore, the establishment of new merchant banks involving
investments of less than $10 million is exempt from foreign investment screening. As at 31 December 2008, there
were 45 foreign owned banks operating in Australia, comprising 10 locally incorporated subsidiaries and 35 10
branches of foreign banks.

39 15

GOVERNMENT FINANCE
20
The basic provisions relating to the receipt and payment of public moneys of the Australian Government are set out
in the Constitution and the Financial Management and Accountability Act 1997 (the "FMA Act"). The FMA Act
sets out requirements relating to the collection and custody of public money; accounting, reporting and audit; and
borrowing and investment. The Commonwealth Authorities and Companies Act 1997 sets out separate financial and
corporate governance requirements for corporations controlled by the Australian Government. The general 25
administration of Australian Government finances is the responsibility of the Minister for Finance and Deregulation.

Under the Constitution, all moneys or revenues received by the Australian Government form one Consolidated
Revenue Fund, to be appropriated for the purposes of the Commonwealth of Australia. All disbursements made
from the Consolidated Revenue Fund must be made under appropriation made by the Parliament. 30

The financial statements and accounting records of each Australian Government agency and the consolidated
financial statements of the Government must be audited by the Australian Auditor-General. The Australian National
Audit Office ("ANAO") supports the Auditor-General in conducting financial statement and performance
audits. All financial statements must be tabled in the Parliament by the responsible Minister within the relevant 35
agency's annual report. These financial statements are audited by the Auditor-General, who may also report to the
Parliament on a wide range of other matters relating to public administration.

Federal Government Budget
40
As part of each annual budget, the Treasurer presents annual Appropriation Bills to the Parliament. The Bills detail
the purposes for which funds are to be expended by Government agencies. Additional Appropriation Bills may be
enacted by Parliament during the course of a financial year to provide funds for new expenditures approved by the
Government after the passage of the annual budgetary Appropriation Bills.
45
The major part of the budget is appropriated under 'special' or 'standing' appropriations contained in special
legislation that does not require annual re-enactment. For example, the payment of social security benefits and
pensions are provided for in this manner.

The Australian Government's main fiscal indicators are the 'underlying cash balance' and the 'fiscal balance' 50
(respectively cash and accrual measures of government finance statistics net lending), with the predominant focus on
the underlying cash balance for assessing the Government's fiscal strategy. The move to accrual budgeting now
means that the budget papers contain a complete set of accrual financial statements (i.e., an operating statement, a
statement of assets and liabilities, and a statement of cash flows).
55
The framework within which fiscal policy is conducted is set out in the Charter of Budget Honesty Act 1998. The
Charter provides a framework for the conduct of Government fiscal policy. The purpose of the Charter is to improve
fiscal policy outcomes. The Charter provides for this by requiring fiscal strategy to be based on principles of sound
fiscal management and by facilitating public scrutiny of fiscal policy and performance.
60
The key elements of the Australian Government's medium-term fiscal policy are:

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achieving budget surpluses, on average, over the economic cycle;

keeping taxation as a share of GDP on average below the level for 2007-08; and

improving the Government's net financial worth over the medium term.

The Government's fiscal strategy aims to ensure fiscal sustainability over the economic cycle. A sustainable fiscal 5
position provides greater certainty for decision makers, supports broader economic sustainability, and requires a
focus on policies which strengthen the structure of the economy.

These medium-term fiscal policy objectives also provide sufficient flexibility for the Government to use fiscal policy
to support jobs and growth. The medium-term strategy does not require that the budget remain in surplus in every 10
year of the economic cycle.

To ensure that growth is supported in a way that is consistent with the medium-term fiscal strategy, the
Government's strategy is to:
15

40

20

Support the economy: the fiscal strategy for 2008-09 and 2009-10

As Australia enters an economic slowdown of uncertain extent and duration, it is important that the Government
continues to support the economy by: 25

allowing the variations in revenue and expenditure, which are naturally associated with slower economic
growth, to drive a temporary underlying cash budget deficit; and

using additional spending to deliver timely, targeted and temporary stimulus, with the clear objective of
other budget priorities and new policy proposals being met through a re-prioritisation of existing
expenditure.

Return the budget to surplus: the fiscal strategy as the economy recovers
30
The Government reaffirms its commitment to achieve budget surpluses, on average, over the economic cycle.

As the economy recovers, and grows above trend, the Government will take action to return the budget to surplus
by:
35

allowing the level of tax receipts to recover naturally as the economy improves, while maintaining the
Government's commitment to keep taxation as a share of GDP below the 2007-08 level on average; and

holding real growth in spending to 2% a year until the budget returns to surplus.

In 2006-07 and 2007-08, the underlying cash balance was $17.2 billion and $19.7 billion, respectively. As at 30
June 2008, the Commonwealth of Australia had no overall net debt.
40
The 2009 UEFO released on 3 February 2009 forecast the Australian Government's underlying cash balance for
2008-09 to be a deficit of $22.5 billion (-1.9% of GDP). A Government budget underlying cash deficit of $35.5
$25.7 billion (-1.9% of GDP) were projected for 2010-11 and 2011-12, respectively. The 2009 UEFO estimates the
Australian Government general government sector net debt for 2008-09 to be -$16.2 billion (-1.3% of GDP). The 45
2009 UEFO forecasts net debt to increase across the forward estimates to 5.2% of GDP in 2011-12.

The Government will finance the projected budget deficits by issuing Commonwealth Government Securities. See
"Domestic Issuance of Government Bonds " in this prospectus.
50

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Commonwealth Budget Position as at 30 J une 2008

In 2007-08, the Australian Government general government sector recorded an underlying cash surplus of $19.7
billion, or 1.7% of GDP. The fiscal balance was in surplus by $21.0 billion, or 1.9% of GDP.
5
Table 29: Australian Government general government sector budget aggregates
2005-06
(a)
2006-07
(a)
2007-08
Accrual aggregates
Revenue (A$ billions) 261.0 278.3 303.7
Expenses (A$ billions) 242.1 259.1 280.1
Net operating balance (A$ billions) 19.0 19.2 23.6
Net capital investment (A$ billions) 2.5 2.3 2.6
Fiscal balance (A$ billions) 16.5 16.8 21.0

Cash aggregates
Underlying cash balance (A$ billions) 15.8 17.2 19.7

41 10

2005-06
(a)
2006-07
(a)

2007-08
Balance sheet measures
Net debt (A$ billions) -2.3 -27.4 -42.9
Per cent of GDP -0.2 -2.6 -3.8
Net worth (A$ billions) 18.3 46.7 71.2
(a) Data for 2005-06 and 2006-07 has been adjusted for accounting changes to ensure consistency where relevant. For further information on these
adjustments, see the following: Mid-Year Economic and Fiscal Outlook 2008-09 Statement, Appendix D; 2008-09 Budget, Budget Paper No.
1, Statement 10; and Final Budget Outcome 2007-08, Appendix B.
Source: Mid-Year Economic and Fiscal Outlook 2008-09 Statement.

Total Australian Government general government sector net worth improved by $24.5 billion in 2007-08 to around
$71.2 billion, largely reflecting the strong budget surplus. Net debt also improved, falling by $15.5 billion in 2007-
08 to around -$42.9 billion or -3.8% of GDP. 20

The following table sets out general government sector revenue for each of the 2005-06, 2006-07 and 2007-08 fiscal
years.

Table 30: Australian Government general government sector revenue 25
2005-06 2006-07 2007-08
(A$ millions)
Individuals and other withholding taxes
Gross income tax withholding 103,811 107,809 114,700
Gross other individuals income tax 25,859 26,952 31,036
less: Individuals refunds 15,239 17,147 19,601
Total individuals and other withholding taxes 114,431 117,614 126,135
Fringe benefits tax 4,084 3,754 3,796
Company tax 48,987 58,538 64,790
Superannuation funds 6,705 7,879 11,988
Petroleum resource rent tax 1,991 1,594 1,871
Total income taxation revenue 176,198 189,378 208,579

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Sales taxes 40,086 42,284 45,486
Excise duty
Petroleum and other fuel products and crude oil 14,073 14,653 15,085
Other excise 7,854 8,082 8,441
Total excise duty 21,927 22,734 23,526
Customs duty 4,988 5,644 6,070
Other indirect taxes 2,518 2,470 2,567
Total indirect taxation revenue 69,518 73,132 77,650

Total taxation revenues 245,716 262,510 286,229

Sales of goods and services 4,604 5,064 5,263
Dividends 4,387 2,999 2,848
Interest received 2,680 4,169 5,558
Other non-taxation revenue 3,658 3,520 3,814
Total non-taxation revenue 15,329 15,752 17,484

Total revenue 261,045 278,263 303,713
Source: Data for 2005-06 and 2006-07 fiscal years sourced from 2008-09 Budget, Budget Paper No. 1, Table C1, adjusting for accounting
changes to ensure consistency where relevant. Data for 2007-08 fiscal year sourced from Final Budget Outcome 2007-08.

Total accrual revenue in 2007-08 was around $303.7 billion.
5

42

10

The table below provides information on general government sector expenses by function for each of the 2005-06,

Table 31: Australian Government general government sector expenses by function 15
2005-06 2006-07 2007-08
(A$ millions)
General public services
Legislative and executive affairs 768 870 961
Financial and fiscal affairs 3,958 4,832 6,102
Foreign affairs and economic aid 2,955 3,331 3,881
General research 2,346 2,476 2,146
General services 560 667 925
Governmental superannuation benefits 2,203 2,679 2,600
Defence 14,748 16,729 17,670
Public order and safety 2,558 3,318 3,506
Education 15,685 16,913 18,433
Health 37,549 39,948 44,397
Social security and welfare 86,240 92,083 97,842
Housing and community amenities 2,248 2,909 2,910
Recreation and culture 2,585 2,561 3,207
Fuel and energy 4,046 4,635 5,361
Agriculture, forestry and fishing 2,780 2,831 3,834
Mining, manufacturing and construction 1,905 1,920 1,410
Transport and communications 3,075 3,296 4,129
Other economic affairs
Tourism and area promotion 209 196 207
Labour and employment affairs 3,825 4,041 4,506
Other economic affairs 840 934 1,213
Other purposes
Public debt interest 3,628 3,592 3,544
Nominal superannuation interest 5,602 5,487 6,011

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General purpose intergovernmental transactions 41,531 42,133 45,277
Natural disaster relief 211 115 28
Contingency reserve
(a)
36 589 8
Total expenses 242,087 259,083 280,109
(a) Asset sale related expenses are treated as a component of the contingency reserve.
Source: Data for 2005-06 fiscal year sourced from Final Budget Outcome 2005-06, adjusting for accounting changes to ensure consistency where
relevant. Data for 2006-07 fiscal year sourced from Final Budget Outcome 2006-07, adjusting for accounting changes to ensure consistency
where relevant. Data for 2007-08 fiscal year sourced from Final Budget Outcome 2007-08.
5
Total accrual expenses were around $280.1 billion in 2007-08.

43 10

General government sector net capital investment by function is set out in the table below.
15
Table 32: Australian Government general government sector net capital investment by function
2005-06 2006-07 2007-08
(A$ millions)
General public services 251 332 372
Defence 1,644 1,069 1,478
Public order and safety 90 166 139
Education 11 10 4
Health 72 104 46
Social security and welfare 86 217 175
Housing and community amenities 98 40 159
Recreation and culture 68 83 53
Fuel and energy 1 3 2
Agriculture, forestry and fishing 19 17 49
Mining, manufacturing and construction 24 19 9
Transport and communications -1 1 5
Other economic affairs 118 236 99
Other purposes 16 35 2
Total net capital investment 2,498 2,333 2,593
Source: Data for 2005-06 fiscal year sourced from the Final Budget Outcome 2005-06, adjusting for accounting changes to ensure consistency
where relevant. Data for 2006-07 fiscal year sourced from Final Budget Outcome 2006-07, adjusting for accounting changes to ensure
consistency where relevant. Data for 2007-08 fiscal year sourced from Final Budget Outcome 2007-08.

Total net capital investment for 2007-08 was around $2.6 billion. 20

Pensions and Superannuation

Australia's Retirement I ncome System
25
Australia's retirement income system consists of three "pillars":

a taxpayer-funded means-tested age pension for people who are unable to fully support themselves in
retirement;

a minimum level of compulsory employer superannuation contributions made in respect of those in the
workforce; and

voluntary private superannuation and other savings.
30
The age pension has been the cornerstone of Australia's retirement income system since 1909. The age pension
provides a modest retirement for those people who are unable to fully support themselves. The maximum single rate
age pension is currently $14,615 ($24,414 for a couple). The actual amount an eligible person receives depends on
their other income and assets.

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Employers are currently required to provide a prescribed minimum level of superannuation support each year for
each of their eligible employees. The prescribed minimum level of support is 9% of the employee's earnings. This
minimum prescribed amount is known as the Superannuation Guarantee. Payments under the Superannuation
Guarantee are contributed to a complying superannuation fund or retirement savings account to be accessed by the 5
employee upon retirement.

Voluntary superannuation savings are encouraged through concessional taxation treatment and other incentives.

As of September 30, 2008, APRA estimated that total Australian superannuation assets amounted to $1.15 trillion. 10

Superannuation for Commonwealth Employees

The Commonwealth of Australia operates and administers three main civilian superannuation schemes for
Commonwealth sector employees. The current scheme is the Public Sector Superannuation Accumulation Plan (the 15
"PSSAP") which was established by a trust deed under the provisions of the Superannuation Act 2005.

44 20

PSSAP is a fully funded accumulation scheme. PSSAP commenced on 1 July 2005 upon the closure of the Public
Sector Superannuation Scheme (the "PSS") to new entrants. 25

The PSS commenced on 1 July 1990 upon the closure of the Commonwealth Superannuation Scheme (the "CSS") to
new entrants.

At 30 June 2008, there were 22,162 contributors to the CSS and 132,274 contributors to the PSS and benefits were 30
being paid to 115,431 CSS and 16,453 PSS pensioners.

The Commonwealth of Australia's estimated unfunded liability at 30 June 2008 for the CSS and PSS schemes was
$108 billion.
35
In 2006, the Commonwealth established an investment fund known as the Future Fund to assist future Australian
governments meet the cost of public sector superannuation liabilities by delivering investment returns on
contributions to the Fund. As of 31 December 2008, the value of the assets held by the Future Fund was $59.62
billion.
40
Taxation

Commonwealth, State and Local Governments levy taxes in Australia. Australia has no estate or gift taxes, or
separate social security levy, although taxpayers pay a Medicare levy of 1.5% on taxable income.
45
Australia's Future Tax System

On 13 May 2008, the Treasurer announced a review of Australia's tax and transfer system to recommend how
Australia could deal with the demographic, social, economic and environmental challenges of the 21st century. The
review encompasses Australian Government and state taxes, but must reflect Government policy not to increase the 50
rate or broaden the base of the goods and services tax ("GST"), and interactions with the transfer system. A review
panel oversees the review, consults with the public and is due to report by the end of 2009. The Government has
asked the review panel to bring forward its consideration of retirement income to March 2009, to follow a report to
Government on pensions due in February 2009.
55
Personal income tax

The Australian Government levies personal income tax, generally using the individual as the unit of assessment for
the system. Income subject to tax assessment includes salary and wage income, allowances, dividends, interest,
capital gains, business income, pensions, rents, royalties, partnership income and distributions from trusts. 60

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The personal income tax system is based on self assessment. Under the pay-as-you-go system, individuals pay
instalments of their expected tax liability on their income from employment, business, or investment for the current
income year through withholdings and instalment payments. Australian residents for tax purposes pay tax on
income derived from within Australia and overseas. However, previously taxed income from overseas either is
exempt from Australian tax or attracts a tax credit. 5

From 1 July 2008, personal income tax cuts came into effect, worth $46.7 billion over the next four years. These
income tax cuts target low- and middle-income earners. Income tax rates and thresholds vary for 2008-09, 2009-10
and 2010-11 (Table 33).
10
Table 33: Personal income tax rates and thresholds for residents
1 July 2008 to 30 June 2009 1 July 2009 to 30 June 2010 1 July 2010 to 30 June 2011
Taxable income
(A$)
(A$)
(A$)
Rate (%)
0 6,000 0 0 6,000 0 0 6,000 0
6,001 34,000 15 6,001 35,000 15 6,001 37,000 15
34,001 80,000 30 35,001 80,000 30 37,001 80,000 30
80,001 180,000 40 80,001 180,000 38 80,001 180,000 37
180,001 + 45 180,001 + 45 180,001 + 45
Source: 2008-09 Budget, Budget Paper No. 1.

Most residents also pay a Medicare levy rate of 1.5% of taxable income.
15

45

20

Australian resident taxpayers may be eligible for the low income tax offset (the "LITO") to reduce tax paid by low-
and middle-income earners. As part of the tax cuts, the LITO increased from $750 in 2007-08 to $1,200 from 1 July
2008. From 1 July 2009, the LITO will increase to $1,350 and from 1 July 2010 it will increase to
$1,500. Taxpayers eligible for the full LITO will not pay income tax until their annual income exceeds $14,000 for 25
2008-09, $15,000 for 2009-10 and $16,000 for 2010-11.

Taxpayers ineligible for the full LITO also benefit from its increase. The LITO begins to phase out at a rate of four
cents for each dollar of income over $30,000, so some taxpayers with income over $30,000 may still benefit from
some LITO. For example, taxpayers will be able to receive some LITO on incomes of $60,000 for 2008-09, 30
$63,750 for 2009-10 and $67,500 for 2010-11, thereby reducing their income tax liability.

Superannuation benefits paid from a taxed fund are tax-free for people aged 60 and over.

In general, employers also pay tax (at 46.5%) on the grossed-up (i.e., tax inclusive) value of fringe benefits they 35
provide to employees.

Foreign residents are taxed differently to Australian residents. See "Australia's jurisdiction to tax: source and
residence" in this prospectus.
40
Business tax arrangements

Corporate tax rate

The corporate tax rate is 30%. This applies also to the corporate profits of a branch of an overseas company. 45

Dividend imputation

The dividend imputation system ensures company income distributed to resident individual shareholders is not
double taxed. Franked dividends, effectively paid from previously taxed company income, carry an imputation 50
credit for shareholders.

Capital Gains Tax

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Where assets are held for at least 12 months, capital gains tax applies to 50% of capital gains on the assets for
individuals and trusts, and 66 2/3% for superannuation funds. A range of business restructures, including scrip-for-
scrip takeovers between companies and between trusts, can roll-over their capital gain and several capital gains tax
concessions apply to capital gains on the disposal of active small business assets. The capital gains tax discount does 5
not apply to gains made on assets that are held on revenue account or as trading stock.

Research and Development

Eligible research and development ("R&D") expenditure attracts a 125% deduction and, for eligible companies, a 10
175% tax concession for additional R&D expenditure undertaken above the average level for the previous three
years.

Primary production
15
Special provisions for primary producers include income averaging.

Capital allowances

A uniform capital allowance system, based on the effective life of assets, applies except where specific treatments 20
apply (for example, for primary producers, Australian films, computer software and R&D).

Amortisation at 4% per year applies to the capital costs of income-producing buildings for eligible industrial
activities; hotels, motels and guest houses containing at least ten bedrooms; and apartments, units or flats where the
taxpayer owns at least nine other units in the building. 25

Amortisation at 2.5% per year applies to the capital cost of other income-producing buildings and structural
improvements, including roads, dams, bridges and buildings used for R&D activities.

30

46

35
Investment allowances

Under the Nation Building and Jobs Plan, a temporary investment allowance in the form of an additional tax
deduction of 10% of the asset's cost is expected to be available for investments in tangible assets costing at least
$10,000 (or at least $1,000, in the case of small businesses) where the taxpayer starts to hold or starts to construct 40
the asset between 13 December 2008 and 31 December 2009 and has the asset installed ready for use by 31
December 2010. Where the taxpayer starts to hold or construct the asset before 30 June 2009 and has the asset
installed ready for use by 30 June 2010, the tax deduction is expected to be at the higher rate of 30% of the asset's
cost. The investment allowance is also expected to be available for expenditure above the threshold on existing
assets. 45

Small businesses

Small businesses, with an aggregated annual turnover of less than $2 million, can access concessions covering
income tax (including capital gains tax and simplified capital allowances rules), goods and services tax, pay-as-you- 50
go instalments and fringe benefits tax.

Taxation of Financial Arrangements Stages 3 and 4

As part of the 2008-09 Budget, the Government announced it would proceed with Taxation of Financial 55
Arrangements ("TOFA") Stages 3 and 4 covering, among other matters, accruals and other tax-timing rules as well
as character-hedging rules. The Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2008, which
contains provisions in respect of stages 3 and 4 of the TOFA reforms, was introduced into Parliament on 4
December 2008.
60
I ndirect tax

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Goods and Services Tax

Goods and services tax ("GST") is a broad based value-added tax on most goods and services consumed in
Australia. It applies at a uniform rate of 10% on the supply or importation of taxable goods and services, based on 5
the selling price.

The Australian Government collects GST revenue and distributes it to the States and Territories. The GST rate and
base can only be changed with unanimous support from State and Territory governments.
10
GST is levied on businesses at all stages of the production process. Businesses are generally able to claim a credit
for GST paid on business inputs.

Exemptions from GST include health, education and basic food. GST is not levied on residential rents and financial
services, but suppliers of these products and services generally cannot claim a credit for GST paid on production 15
inputs.

Excise and customs duty

Excises are specific taxes on goods, including liquid fuel, alcohol (except wine products) and tobacco. 20

An excise equivalent customs tariff applies to imports of excisable goods and is collected at the border usually from
importers or owners of the goods. Additionally, customs tariffs apply to a range of imported textiles, clothing and
footwear, passenger motor vehicles and other imported goods including foods, chemicals, industrial supplies,
machinery and equipment, and household electrical items. Businesses are not credited for tariffs paid on their 25
imports.

Excise rates for tobacco and alcohol (except wine products) are indexed twice a year to the consumer price index.

Tobacco is taxed on a per stick basis for cigarettes and cigars, or by overall weight of tobacco for other 30
products. Beer and spirits are taxed on alcohol volume, with different beers attracting different rates. Spirits attract
a higher rate than full strength beer.

Liquid fuels, primarily petrol and diesel, attract an excise of 38.143 cents per litre, which is not indexed. Other fuels
attract different rates. Fuel tax credits apply to fuel used for certain off-road uses and for on-road use in heavy 35
vehicles.

47 40

With the introduction of the Carbon Pollution Reduction Scheme, the rate of fuel tax will be cut on 1 July 2010
based on the effect of pricing the emissions of diesel. The cut will apply to fuels like petrol and diesel that currently 45
attract an excise of 38.143 cents per litre.

Wine equalisation tax

Wine is not subject to excise, but attracts a separate wine equalisation tax ("WET"), which applies as a percentage of 50
the value of wine products. The producer, importer or wholesaler normally pays 29% of the wholesale price of wine
at the last wholesale sale of the wine.

A $500,000 WET producer rebate reduces the WET paid by small wine producers to zero.
55
Luxury car tax

The luxury car tax generally applies to the value of a domestic or imported passenger vehicle exceeding a threshold,
$57,180 (in the year ending 30 June 2009), at a rate of 33% from 1 July 2008.
60

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Luxury car tax concessions are available to certain fuel efficient cars and four wheel drives acquired by primary
producers and eligible tourist operators.

Resource taxes and royalties
5
Specific resource taxes and royalties apply to the extraction of oil and gas.

Other taxes

A range of Australian government departments administer a broad range of smaller taxes, including charges for 10
notional cost recovery, penalties, levies and licence fees.

Agricultural products attract more than 60 separate levies; this revenue funds services and research in specific
agricultural industries.
15
Australia's jurisdiction to tax: source and residence

The taxation of income in Australia is principally determined on the basis of whether the entity is an Australian
resident or a foreign resident for tax purposes. Australian residents are taxed on their worldwide income whereas
foreign residents are taxed only on income sourced in Australia. 20

Double taxation

Double taxation is caused by overlapping tax jurisdictions arising from the application of the source and residence
principles noted above. For example, two countries may seek to tax the same income. Relief from double taxation is 25
typically provided under domestic law by either: (i) exempting the income from domestic tax, or (ii) crediting the
foreign tax paid on that income against domestic tax. Australia also allows a deduction for foreign tax paid under
certain limited circumstances. In addition to domestic law, bilateral tax treaties contain rules designed to eliminate
double taxation.
30
Australia's tax treaties allocate taxing rights between the residence (of the person) and source (of the income)
countries and require the former to eliminate double taxation when there are competing taxing rights. They also
provide an agreed basis for allocating the income and expenses of multinational groups operating in both countries.
In addition, they authorise administrative cooperation to prevent fiscal evasion and to assist in the collection of tax
debts. Australia has 42 bilateral tax treaties, based on the OECD Model Tax Convention on Income and on Capital. 35

I ntegrity rules

Thin capitalisation
40
Thin capitalisation rules aim to prevent undue exploitation by Australian and foreign multinational enterprises of the
different tax treatment that applies to the payment of interest versus dividends; taxpayers can deduct interest but not
dividends. The rules prevent excessive debt financing (as opposed to equity financing) of Australian entities, by
disallowing the interest expense if the debt finance exceeds certain limits. The rules apply to:
45
48

Australian entities that operate internationally and some of their associates;

Australian entities that are foreign controlled; and
50

foreign entities that operate in Australia.

The rules do not apply to entities: (i) with an annual debt deduction of $250,000 or less; (ii) that are outward
investing Australian entities at least 90% of whose assets are Australian assets; or (iii) that are qualifying special
purpose (securitisation) entities.
55
Transfer pricing

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The transfer pricing rules are designed to ensure that Australian and foreign multinational enterprises price their
related party international dealings in accordance with the arm's length principle. The aim is to prevent profit
shifting between associated enterprises located in different jurisdictions to ensure taxable Australian profits are
commensurate with the economic value added in Australia.
5
Foreign source income anti-tax deferral (attribution) regimes

Australia's attribution regimes consist of:

the controlled foreign company rules;
10

the foreign investment fund rules;

the transferor trust rules; and

the deemed present entitlement rules.

These rules are designed to ensure residents cannot defer or avoid Australian tax by accumulating income
offshore. They tax residents on an accruals basis on their share of income accumulating offshore. 15

Tax information exchange agreements

A tax information exchange agreement ("TIEA") is a bilateral agreement to establish a legal basis for the exchange
of taxpayer information, for both civil and criminal tax purposes. Australia has signed four TIEAs with low-tax 20
jurisdictions: Bermuda, Antigua and Barbuda, the Netherlands Antilles and the British Virgin Islands.

Commonwealth-State Financial Relations

Commonwealth-State financial relations involve the provision of Australian Government financial assistance to the 25
States and Territories, which we refer to as the States, and oversight by the Australian Loan Council of government
borrowings.

The States receive significant financial support from the Commonwealth of Australia. As of the 2009 UEFO
released on 3 February 2009, Commonwealth payments to the States for 2008-09 were estimated to total $83.5 30
billion, comprising general revenue assistance, including all GST revenue, of $42.6 billion and payments for specific
purposes of $40.9 billion. These amounts reflect additional Commonwealth funding to the States of $6.0 billion as
part of the three stimulus packages announced since the release of the 2008-09 MYEFO on 5 November 2008. See
"The Australian EconomyEconomic Outlook" in this prospectus.
35
General revenue assistance is a broad category of payments, including GST payments, which are provided to the
States without conditions to spend according to their own budget priorities. As of the 2009 UEFO, general revenue
assistance to the States was estimated to comprise $42.2 billion in GST payments and $359 million of other general
revenue assistance. As agreed by all States in the Intergovernmental Agreement, GST payments are distributed
among the States in accordance with the principle of horizontal fiscal equalisation. Under this principle, States 40
receive funding from the Commonwealth of Australia such that, if each made the same effort to raise revenue from
its own sources and operated at the same level of efficiency, each would have the capacity to provide services at the
same standard level.

The Commonwealth of Australia provides payments to the States for specific purposes in order to pursue important 45
national policy objectives in areas that may be administered by the States.

49 50

The Australian Loan Council
55
The Australian Loan Council is a Commonwealth-State ministerial council that coordinates public sector borrowing.
The Loan Council consists of the Prime Minister of Australia and the Premier/Chief Minister of each State and

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Territory. However, in practice each member is represented by a nominee, usually the Treasurer of that jurisdiction,
with the Australian Treasurer as Chairman.

Current Loan Council arrangements operate on a voluntary basis and emphasise transparency of public sector
financing rather than adherence to strict borrowing limits. These arrangements are designed to enhance financial 5
market scrutiny of public sector borrowing and facilitate informed judgments about each government's financial
performance.

The Loan Council traditionally meets annually in March to consider jurisdictions' nominated borrowings for the
forthcoming year. As part of the agreed arrangements, the Loan Council considers these nominations, having regard 10
to each jurisdiction's fiscal position and the macroeconomic implications of the aggregate figure.

In March 2008, the Australian Government nominated, and the Loan Council endorsed, a Loan Council Allocation
surplus of $18,974 million. In the 2008-09 Budget, the Australian Government estimated a Loan Council Allocation
surplus of $23,641 million. In the 2008-09 MYEFO, the Australian Government's estimate for the 2008-09 Loan 15
Council Allocation surplus was revised to $7,258 million.

Since the release of the 2008-09 MYEFO on 5 November 2008, the Government has announced three additional
stimulus packages. See "The Australian EconomyEconomic Outlook" in this prospectus. As a result, the
Commonwealth of Australia now expects to report a cash deficit with the impact that the Loan Council Allocation 20
estimate will be revised down.

Domestic Issuance of Government Bonds

The defining feature of the Australian Government's debt management in recent years has been the substantial 25
reduction in Australian Government net debt. The face value of Commonwealth Government Securities on issue as
at 30 June 2008, net of financial assets and Commonwealth holdings, stood at around $26.5 billion, down from
$107.3 billion eleven years earlier.

While persistent fiscal surpluses in years prior to 2008-09 removed the need to borrow for budget funding purposes, 30
the Australian Government continued to issue Treasury Bonds in order to maintain an active Treasury Bond market
and to support the market in Treasury Bond futures contracts. These two markets are used in the pricing and hedging
of a wide range of financial instruments and in the management of interest rate risks by market participants. These
markets provide additional diversity to the financial system and contribute to a lower cost of capital in Australia.
35
Treasury Fixed Coupon Bonds were the main debt instrument issued by the Australian Government in 2007-08. The
size of the program in 2007-08, at $5.1 billion, was smaller than the 2006-07 program of $5.3 billion. Twelve
tenders were conducted in 2007-08, the same number as during 2006-07.

Three Treasury Indexed Bond tenders added stock to the market in 2002-03 with an aggregate face value of around 40
$150 million, $50 million less than in 2001-02. The issuance of Treasury Indexed Bonds has been suspended.

The Government successfully conducted its first Treasury Fixed Coupon Bond conversion tender in October 2001;
two more conversion tenders followed. These tenders offered investors the opportunity to consolidate their holdings
of less liquid stocks into the larger, more actively traded, benchmark stocks. 45

The Government also has the power to issue Treasury Notes. Any issuance would be directed primarily towards
meeting the within-year funding task that arises from mismatches in the timing of outlays and revenue. No Treasury
Notes were outstanding as at 30 June 2008.
50
In 2007-08, all borrowing was undertaken in the domestic market. As of 11 February 2009, the Australian
Government had not borrowed directly in foreign currencies since 1987. However, in addition to the $8 million of
outstanding borrowings denominated in foreign currencies, the Australian Government has a foreign currency
exposure achieved by way of swapping out of domestic currency debt. This foreign currency exposure (mainly in
U.S. dollars) is for long term portfolio management reasons. There were no foreign currency swap transactions in 55
2007-08.

50 60

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On 3 February 2009, the Australian Government released updated economic and budget forecasts. Consistent with
these forecasts, the Australian Office of Financial Management, which we refer to as the AOFM, will increase its
issuance of Treasury Bonds over the remainder of 2008-09. 5

The AOFM intends to conduct two Treasury Bond tenders most weeks (generally on a Wednesday and a Friday)
with the amount offered at each tender normally in the range of $500 million to $700 million. Total issuance over
this period is expected to amount to between $22 billion to $24 billion. In selecting bond lines to be offered at
tender the AOFM will consult with bond market participants. 10

There will continue to be a large within-year financing requirement as a result of differences in the timing of Budget
receipts and expenditures. In the period ahead, Treasury Notes will be used to assist with the management of short
term financing requirements. In addition, the AOFM may also use repurchase arrangements on its holdings of term
financial assets for this purpose. 15

Guarantees and Other Contingent Liabilities

Loan Guarantees by the Commonwealth
20
It is current practice for Commonwealth-owned instrumentalities to borrow directly rather than for the Australian
Government to borrow on their behalf. The Financial Management and Accountability Act 1997 (the "FMA Act")
allows all Government Ministers to issue loan guarantees on behalf of the Australian Government using executive
authority under the Australian Constitution, subject to the authorisation of the Minister for Finance and
Deregulation. However, the governing legislation of some Commonwealth statutory authorities provides the 25
Treasurer specifically with the discretionary power to guarantee their borrowings, reflecting legislative arrangements
prior to the introduction of the FMA Act.

The number of new loan guarantees provided by the Australian Government has declined in recent years, reflecting
a policy that Commonwealth instrumentalities engaged in business enterprises should approach capital markets on a 30
basis more comparable with private businesses.

The Australian Government guarantees the due payment by Australia's export credit agency, the Export Finance and
Insurance Corporation ("EFIC"), of money that is, or may at any time become, payable by EFIC to any body other
than the Australian Government. The Australian Government also has in place a $200 million callable facility 35
available to EFIC on request to cover liabilities, losses and claims.

The following table shows, in summary form, information relating to borrowings supported by specific
Commonwealth guarantee and other indemnities and contingencies as at 30 June 2006, 2007 and 2008.
40
Table 34: Quantifiable Contingent Losses
At 30 June 2006 At 30 June 2007 At 30 June 2008
(A$ millions)
Guarantees 1,735 302 284
Indemnities 1,772 581 588
Uncalled shares/capital subscriptions 7,368 6,462 5,720
Claims for damages/costs 326 417 150
Other contingencies 112 96 116
Total quantifiable contingent losses 11,313 7,858 6,858
Less quantifiable contingent gains 138 77 70
Net quantifiable contingencies 11,175 7,781 6,788
Source: Commonwealth Consolidated Financial Statements for the years ended 30 June 2008 and 30 June 2007.

Commonwealth I nitiatives to Enhance the Stability of the Australian Financial System

In order to promote financial system stability and ensure the continued flow of credit throughout the economy at a 45
time of heightened turbulence in the international capital markets, the Australian Government has implemented:

the Financial Claims Scheme establishing measures to protect account holders' deposits made with ADIs,
and interest accrued on such deposits, to a total maximum value of $1,000,000; and

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51

the Guarantee Scheme for Large Deposits and Wholesale Funding, a voluntary scheme allowing eligible
ADIs to apply to have deposit balances of greater than $1,000,000 per customer per ADI and eligible senior
unsecured debt instruments with maturities of up to 60 months that satisfy the eligibility criteria set out in
the Scheme Rules guaranteed by the Commonwealth of Australia.

The key elements of the schemes are as follows: 5

Financial Claims Scheme

Australian-incorporated ADI subsidiaries of foreign banks) up to a limit of $1,000,000 per customer per
ADI for a period of three years with no direct charge to account holders;

Guarantee Scheme for Large Deposits and Wholesale Funding 10

Australian-incorporated ADI subsidiaries of foreign banks) of greater than $1,000,000 during the
continuance of the Guarantee Scheme upon application and for a fee;

The Commonwealth of Australia will guarantee on an issue by issue basis certain non-complex senior
unsecured short term (maturities up to 15 months) and term funding (maturities of 15 months up to 60
months) debt instruments upon application and for a fee;

With respect to foreign ADIs, subject to satisfaction of certain conditions, the Commonwealth of Australia
will guarantee certain deposits held by Australian residents at call or with maturities up to and including 31
December 2009 and certain non-complex senior unsecured short term debt instruments having maturities up
to and including 31 December 2009 held by Australian residents upon application and for a fee.

Reporting under the Guarantee Scheme for Large Deposits and Wholesale Funding 15

The Reserve Bank of Australia will establish and maintain a website, currently www.guaranteescheme.gov.au, to
provide information with respect to the operations of the Guarantee Scheme by identifying Guaranteed Liabilities by
ADI, issue size, date of extension of the Guarantee, liability class, currency, program/product name, security
identifier and maturity. The Reserve Bank of Australia will prepare monthly reports with respect to the operations 20
of the Guarantee Scheme. The Government will also provide six-monthly reports to the Australian Parliament
detailing:

the aggregate amount of Guaranteed Liabilities;

any calls made under the Guarantee Scheme for payment; and
25

any payments by the Commonwealth of Australia under the Guarantee Scheme.

Other Contingent Liabilities and Undertakings

The Australian Government has contingent liabilities with various international financial institutions. As at 31
December 2008, Australia's uncalled capital subscriptions totalled US$2.8 billion for the IBRD, US$2.4 billion for 30
the ADB, US$26.5 million for MIGA and $275 million for EBRD. In addition, the undrawn portion of promissory
notes issued and payable on demand in respect of maintenance-of-value obligations to the capital of the IBRD
amounted to US$42.6 million as at 31 December 2008. Promissory notes have also been issued by the Australian
Government as successive quota subscriptions to the IMF and in order to maintain the value of the IMF's holdings of
Australian dollars. At 31 December 2008, the undrawn portion of lodged promissory notes issued for this purpose 35
amounted to $3.8 billion.

As at 31 December 2008, the Australian Government had liabilities of $1.2 billion to existing replenishments of the
Asian Development Fund, the International Development Association (including with respect to the Heavily
Indebted Poor Countries initiative) and the Global Environment Facility. These liabilities are covered by the 40

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instruments of commitment that were signed at the time of pledging. Promissory notes will be lodged regularly over
the life of the replenishment to enable the draw-downs to occur in line with the agreement timetable for cash
disbursements.

5

52

10
PUBLIC DEBT

The following table provides an account of all Commonwealth Government Securities on issue as of 31 December
2008.
15
Table 35: Government securities repayable in Australian dollars
Date of Issue
Date of
Maturity
Interest Rate
(%
Per Annum)
Outstanding
31 December 2008
(A$ '000)
Treasury Fixed Coupon Bonds
(a)

Oct 1996 15 Sep 2009 7.50 7,009,049
Jan 2005 15 Aug 2010 5.25 6,602,500
Aug 1998 15 Jun 2011 5.75 7,098,687
Dec 2006 15 Apr 2012 5.75 6,152,000
May 2000 15 May 2013 6.50 6,898,400
Jul 2008 15 June 2014 6.25 3,200,000
May 2002 15 Apr 2015 6.25 6,897,000
June 2004 15 Feb 2017 6.00 6,747,000
July 2006 15 Mar 2019 5.25 5,996,500
Sep 2007 15 May 2021 5.75 5,201,000
Total Treasury Fixed Coupon Bonds
(b)
61,802,136

Treasury Indexed Bonds
1985 - 2004 20 Aug 2010
(c)
1,452,000
20 Aug 2015 2,095,800
20 Aug 2020 2,472,200
Total Treasury Indexed Bonds 6,020,000
(d)

Treasury Notes
(a)
Various Various
(e)
0

Miscellaneous Securities
(f)
Various Various Various 20,225
Total Repayable in Australian Dollars 67,842,361
(a) Treasury Bonds and Treasury Notes issued since 1 July 1984 are available only as Inscribed Stock; before then Commonwealth securities
were also available in bearer form.
(b) Since 5 August 1982, Treasury Bonds have been sold by a tender system.
(c) Interest payable is dependent upon the rate of inflation.
(d) Original face value.
(e) Treasury Notes are issued at a discount and are redeemed at par on maturity.
(f) Includes debt assumed by the Commonwealth and various miscellaneous securities.

The tables below show the external debt of the Australian Government, on issue at 31 December 2008. The bonds
issued by Australia which are listed below require the Australian Government, in accordance with their terms, to 25
secure such bonds pari passu with new bonds, loans or borrowings which would otherwise rank in priority to such
bonds.

Table 36: Government securities repayable in Pounds Sterling
Date of Issue
Date of Final
Maturity
Interest Rate
(%
Per Annum)
Outstanding
31 December 2008
( Sterling)
('000)
Commonwealth Government issues

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Various Maturedbonds not yet
presented for payment
(a)

Nil 51
State Government issues
Various At Treasurer's option 3.0 504
Total Repayable in Pounds Sterling 555

53 5

Table 37: Government securities repayable in United States Dollars
Date of Issue
Date of Final
Maturity
Interest Rate
(%
Per Annum)
Outstanding
31 December 2008
(US$)
('000)
March 1987 15 Mar 2017 8.375 5,321
Total Repayable in United States Dollars 5,321
10
Table 38: Government securities repayable in Euro
Interest Rate
(%
Per Annum)
Outstanding
31 December 2008
(Euro '000)
(a)
Nil 6
Total Repayable in Euro
(b)
6
(b) Bonds originally repayable in Deutsche Marks, converted to Euro at the 31 December 1998 rate of 1.95583 Deutsche Marks = 1.0 Euro
irrevocably fixed by the European Central Bank.

Table 39: Government securities repayable in Japanese Yen 15
Interest Rate
(Per Cent
Per Annum)
Outstanding
31 December 2008
( '000)
(a)
Nil 416
Total Repayable in Japanese Yen 416

Table 40: Government securities repayable in Swiss Francs
Interest Rate
(Per Cent
Per Annum)
Outstanding
31 December 2008
(SF '000)
(a)
Nil 51
Total Repayable in Swiss Francs 51
20
The following table shows estimated payments of principal (including contractual prepayments and payments at
maturity) to be made on the direct debt of the Australian Government outstanding on 30 June 2008.

Table 41: Summary of funded debt payment (as at 30 June 2008)
2008-09 2009-10
2010-11
- 2011-12
2012-13
- 2016-17
2017-18
- 2020-21
(A$ millions)
Repayable:
In Australian Dollars
(a)
5,094 5,709 18,047 16,889 10,470
Repayable overseas:
(b)

In United States Dollars 0 0

0 7 0
Total 5,094 5,709

18,047 16,896 10,470
(a) Excludes Treasury Notes and Treasury Bonds held as investment by the Commonwealth of Australia.

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(b) Converted into Australian dollars at rates of exchange prevailing on 30 June 2008.

On 4 February 2009, the Australian Office of Financial Management announced that it will increase its issuance of
Treasury Bonds over the remainder of 2008-09, with total issuance over this period expected to amount to between
$22 billion to $24 billion. In the period ahead, the AOFM will also use Treasury Notes to assist with the
management of short term financing requirements. In addition, the AOFM may also use repurchase arrangements 5
on its holdings of term financial assets for this purpose. See "Government FinanceDomestic Issuance of
Government Bonds" in this prospectus.

10
54

Debt Record 15

The Commonwealth of Australia has paid promptly, when due, the full amount of principal and interest on every
direct external obligation issued by it and has met every indirect external obligation on which it has been required to
implement its guarantee in the lawful currency, and in the country where payable, at the time of payment.
20
Credit Ratings

The Australian Government has a AAA rating for both foreign and domestic currency denominated debt from
Standard and Poor's and Moody's. Fitch rates Australia's domestic currency borrowings as AAA and foreign
currency borrowings as AA+. On 13 January 2009, Standard and Poor's affirmed Australia's AAA rating for both 25
foreign and domestic currency denominated debt, noting that the outlook is 'stable'.

55 30

PLAN OF DISTRIBUTION
35
The Commonwealth of Australia will not participate in the offering or sale of any of the ADI Debt Securities and
will pay no compensation to any underwriters in connection with the issuance of the Guarantee.

The Commonwealth of Australia has not agreed to indemnify any underwriter against civil liabilities under the
Securities Act of 1933 or to contribute payments which the underwriters may be required to make in respect thereof. 40

Except as may otherwise be provided in any prospectus supplement relating to the related ADI Debt Securities, the
Guarantee may be offered in those jurisdictions in the United States, Europe and Asia where it is legal to make such
offers.
45
VALIDITY OF THE GUARANTEE

Except as may otherwise be provided in any prospectus supplement, the validity of the Guarantee of ADI Debt
Securities will be passed upon for the Commonwealth of Australia by the Australian Government Solicitor, Lionel
Murphy Building, 50 Blackall Street, Barton ACT 2600, Australia. As to certain matters of United States federal 50
law, the Commonwealth of Australia is represented by Skadden, Arps, Slate, Meagher & Flom, Level 13, 131
Macquarie Street, Sydney, NSW 2000, Australia.

55
The name and address of the authorised agent of the Commonwealth of Australia in the United States is Mr. David
Pearl, Minister - Counsellor (Economic), Australian Embassy, 1601 Massachusetts Avenue, N.W., Washington,
D.C. 20036.


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This prospectus is part of a Registration Statement that the Commonwealth of Australia filed with the U.S. Securities
and Exchange Commission using a shelf registration process. This prospectus does not contain all of the information
provided in the Registration Statement. For further information, you should refer to the Registration Statement.
5

56

10

PART II

15
INFORMATION NOT REQUIRED IN PROSPECTUS

UNDERTAKINGS
20
The Commonwealth of Australia hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this
Registration Statement:
25
(i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) to reflect in the prospectus any facts or events arising after the effective date of this Registration
Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this Registration Statement; and 30

(iii) to include any material information with respect to the plan of distribution not previously
disclosed in this Registration Statement or any material change to such information in this Registration Statement.

(2) That, for the purposes of determining any liability under the Securities Act of 1933, each such post- 35
effective amendment, that contains a form of prospectus, shall be deemed to be a new registration statement relating
to the securities covered thereby, and the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered 40
which remain unsold at the termination of the offering.

EXPENSES

An itemised statement showing estimated expenses of the Commonwealth of Australia, other than underwriting 45
discounts and commissions, in connection with the sale of the Guarantee of each issue of ADI Debt Securities will
be provided in the post-effective amendment to the Registration Statement relating to such issue.

AGREEMENT TO PROVIDE LEGAL OPINION
50
The Commonwealth of Australia agrees to furnish a copy of the opinion of the Australian Government Solicitor with
respect to the legality of the Guarantee of ADI Debt Securities in the post-effective amendment to this Registration
Statement relating to such issue.

55

II-1

60
CONTENTS OF REGISTRATION STATEMENT

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This Registration Statement comprises:

(1) the facing sheet;
5
(2) the cross-reference sheet;

(3) Part I, consisting of the Prospectus;

(4) Part II, consisting of pages numbered II-1 to II-5; and 10

(5) the following exhibits:


15

D. Form of Agreement for Offering Commonwealth Guaranteed Securities by and among the
Commonwealth, the relevant ADI and representatives of the Underwriters.*



Debt Securities.**
20
H. Consent of Dr. Ken Henry AC, Secretary of the Treasury of the Commonwealth of Australia.


__________

25

II-2
30

SIGNATURES

35

REGISTRANT:

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorised, in the City of Canberra, Australia on 17 40
February 2009.

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p239 22-9-2014
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5

II-3

10

TO RECEIVE NOTICES AND COMMUNICATIONS
FROM THE SECURITIES AND EXCHANGE COMMISSION: 15

Pursuant to the requirements of the Securities Act of 1933, the undersigned, the duly authorised agent of the
Commonwealth of Australia in the United States to receive notices and communications from the Securities and
Exchange Commission, has signed this Registration Statement in Washington, D.C. on 17 February 2009.
20

By: /s/ Mr. David Pearl
Name: Mr. David Pearl
Title: Minister - Counsellor (Economic)
Australian Embassy
Washington, D.C.
to receive notices and communications from
the Securities and Exchange Commission

25

II-4

30
INDEX TO EXHIBITS

Exhibit No. Description




D. Form of Agreement for Offering Commonwealth Guaranteed Securities between the Commonwealth,
the relevant ADI and representatives of the Underwriters.*


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Debt Securities.**

H. Consent of Dr Ken Henry AC, Secretary of the Treasury of the Commonwealth of Australia.

__________



END QUOTE 5
II-5

http://www.sec.gov/Archives/edgar/data/805157/000134100409000414/0001341004-09- 10
000414.txt

QUOTE
<SEC-DOCUMENT>0001341004-09-000414.txt : 20110518
<SEC-HEADER>0001341004-09-000414.hdr.sgml : 20110518 15

<ACCEPTANCE-DATETIME>20090217171740

<PRIVATE-TO-PUBLIC>
20
ACCESSION NUMBER: 0001341004-09-000414

CONFORMED SUBMISSION TYPE: S-B

PUBLIC DOCUMENT COUNT: 8 25

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FILED AS OF DATE: 20090217

DATE AS OF CHANGE: 20090701
5

FILER:

COMPANY DATA: 10

COMPANY CONFORMED NAME: COMMONWEALTH OF
AUSTRALIA

CENTRAL INDEX KEY: 0000805157 15

STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 8880
[8880]

IRS NUMBER: 000000000 20

FISCAL YEAR END: 0630

25
FILING VALUES:

FORM TYPE: S-B

SEC ACT: 1933 Act 30

SEC FILE NUMBER: 333-157373

FILM NUMBER: 09615665
35

BUSINESS ADDRESS:

STREET 1: 1601 MASSACHUSETTS AVE NW 40

STREET 2: C/O AUSTRALIAN EMBASSY

CITY: WASHINGTON
45
STATE: DC

ZIP: 20036

50

</SEC-HEADER>

<DOCUMENT>
<TYPE>S-B 55
<SEQUENCE>1
<FILENAME>scheduleb.htm
<DESCRIPTION>SCHEDULE B
<TEXT>
<html> 60
<head>

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<title>scheduleb.htm</title>


 5
</head>
<body bgcolor="#ffffff" style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-
FAMILY: Times New Roman">
<div><br><br></div>
<div> 10
<table align="center" border="0" cellpadding="0" cellspacing="0"
id="hangingindent" width="100%">
<tr valign="top">
<td style="WIDTH: 36pt">
<div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: 15
Times New Roman">
</font></div>
</td>
<td>
<div align="center"><font style="DISPLAY: inline; FONT-WEIGHT: 20
bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
filed with the Securities and Exchange Commission on 17 February
2009</font></div>
</td>
</tr> 25
</table>
</div>
<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
<div>
<table cellpadding="0" cellspacing="0" width="100%"> 30
<tr>
<td valign="top" width="70%"><font style="DISPLAY: inline; FONT-
SIZE: 10pt; FONT-FAMILY: times new roman">
</font></td>
<td align="left" valign="top" width="30%"> 35
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt;
MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT:
bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Registration
Statement No. 333-</font></div>
</td> 40
</tr>
</table>
</div>
<div> </div>
<div> 45
<hr style="MARGIN-TOP: -5px; COLOR: #000000" noshade size="4">
</div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-
RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; 50
FONT-SIZE: 14pt; FONT-FAMILY: Times New Roman">SECURITIES
AND EXCHANGE COMMISSION</font></div>
RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt;
FONT-FAMILY: Times New Roman">WASHINGTON, 55
D.C. 20549</font></div>
FONT-FAMILY: Times New Roman">____________________________</font></div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN- 60
RIGHT: 0pt" align="justify"> </div>

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FONT-FAMILY: Times New Roman">REGISTRATION
STATEMENT</font></div>
FONT-FAMILY: Times New Roman">UNDER</font></div>
FONT-FAMILY: Times New Roman">SCHEDULE 10
B OF</font></div>
FONT-FAMILY: Times New Roman">THE
SECURITIES ACT OF 1933</font></div> 15
RIGHT: 0pt" align="justify"> </div> 20
RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold;
FONT-SIZE: 14pt; FONT-FAMILY: Times New Roman">Commonwealth
of Australia</font></div>
FONT-STYLE: italic; FONT-FAMILY: Times New Roman">(Name
of Registrant)</font></div>
RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; 30
RIGHT: 0pt" align="center"> </div>
FONT-FAMILY: Times New Roman">MR. DAVID
PEARL</font></div>
FONT-FAMILY: Times New Roman">Minister 40
- Counsellor (Economic)</font></div>
FONT-FAMILY: Times New Roman">Australian
Embassy</font></div> 45
FONT-FAMILY: Times New Roman">1601
Massachusetts Avenue, N.W.</font></div>
FONT-FAMILY: Times New Roman">Washington,
D.C. 20036</font></div>
FONT-STYLE: italic; FONT-FAMILY: Times New Roman">(Name
and address of Authorised Agent of the Registrant in the United
States</font></div>
FONT-STYLE: italic; FONT-FAMILY: Times New Roman">to

244
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receive notices and communications from the Securities and Exchange
Commission)</font></div>
FONT-FAMILY: Times New Roman, serif">____________________________</font></div> 5
FONT-STYLE: italic; FONT-FAMILY: Times New Roman">It 10
is requested that copies of notices and communications from the Securities and
Exchange Commission be sent to:</font></div>
FONT-FAMILY: Times New Roman">ADRIAN
J.S. DEITZ, ESQ.</font></div>
FONT-FAMILY: Times New Roman">Skadden, 20
Arps, Slate, Meagher & Flom</font></div>
FONT-FAMILY: Times New Roman">Level
13</font></div> 25
FONT-FAMILY: Times New Roman">131
Macquarie Street</font></div>
FONT-FAMILY: Times New Roman">Sydney,
NSW 2000</font></div>
FONT-FAMILY: Times New Roman">Australia</font></div>
FONT-FAMILY: Times New Roman, serif">___________________________</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Approximate
date of commencement of proposed sale to the public:</font></div> 45
FONT-FAMILY: Times New Roman">From time
to time after this Registration Statement becomes effective.</font></div>
<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div> 50
FONT-FAMILY: Times New Roman">The
Guarantee of ADI Debt Securities<font style="DISPLAY: inline; FONT-WEIGHT:
bold; FONT-SIZE: 70%; VERTICAL-ALIGN: super; FONT-FAMILY: Times New 55
Roman">(1)</font>
continuous basis pursuant to Release Nos. 33-6240 and 33-6424 under the
Securities Act of 1933.</font></div>

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FONT-FAMILY: Times New Roman, serif">___________________________</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CALCULATION
OF REGISTRATION FEE</font></div>
<div>
<div align="center">
<table cellpadding="0" cellspacing="0" width="100%">
<tr> 15
<td valign="bottom" width="18%" style="BORDER-TOP: black 0.5pt
solid; BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 1px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT:
0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Title 20
of each class of securities to </font></div>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">be
registered</font></div> 25
</td>
0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT- 30
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amount
to be registered</font></div>
</td>
solid; BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 1px solid"> 35
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Proposed
maximum offering </font></div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 40
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">price
per Unit</font></div>
</td>
<td valign="bottom" width="16%" style="BORDER-TOP: black 0.5pt 45
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Proposed
maximum </font></div> 50
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">aggregate
offering price</font></div>
</td> 55
<td valign="bottom" width="16%" style="BORDER-RIGHT: black
0.5pt solid; BORDER-TOP: black 0.5pt solid; BORDER-LEFT: black 0.5pt solid;
BORDER-BOTTOM: black 1px solid">
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amount

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of registration fee</font></div>
</td>
</tr>
<tr>
<td valign="bottom" width="18%" style="BORDER-LEFT: black 5
0.5pt solid; BORDER-BOTTOM: black 1px solid">
<div style="DISPLAY: block; TEXT-INDENT: 0pt"> </div>
SIZE: 10pt; FONT-FAMILY: times new roman">Guarantee 10
of ADI Debt Securities<font style="DISPLAY: inline; FONT-WEIGHT: bold;
FONT-SIZE: 70%; VERTICAL-ALIGN: super; FONT-FAMILY: times new
roman">(1)</font></font></div>
</td> 15
<td valign="bottom" width="14%" style="BORDER-LEFT: black
SIZE: 10pt; FONT-FAMILY: times new roman">--</font></div> 20
</td>
<td valign="bottom" width="16%" style="BORDER-LEFT: black
SIZE: 10pt; FONT-FAMILY: times new roman">--</font></div>
</td>
<td valign="bottom" width="16%" style="BORDER-LEFT: black 30
SIZE: 10pt; FONT-FAMILY: times new roman">--</font></div>
<div style="DISPLAY: block; TEXT-INDENT: 0pt"> </div> 35
</td>
<td valign="bottom" width="16%" style="BORDER-RIGHT: black
0.5pt solid; BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 1px solid">
SIZE: 10pt; FONT-FAMILY: times new roman">US$1.00<font style="DISPLAY: inline;
FONT-WEIGHT: bold; FONT-SIZE: 70%; VERTICAL-ALIGN: super">
(2)</font></font></div>
</td> 45
</tr>
</table>
</div>
</div>
</div> 50
<div>
<tr valign="top"> 55
<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT:
0pt"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New
Roman">(1)</font></div>
</td> 60
<td>

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<div align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt;
FONT-FAMILY: Times New Roman">This
Registration Statement covers the Guarantee of the Commonwealth of
Australia issued under the Australian Government Guarantee Scheme for
Large Deposits and Wholesale Funding (the "Guarantee Scheme") of 5
eligible
senior unsecured debt securities ("ADI Debt Securities") of eligible
Australian authorised deposit-taking institutions
("ADIs").  Such ADI Debt Securities will be registered on a
registration statement of the relevant ADI.  No separate 10
consideration is being paid for the Guarantee.  The Guarantee
is
not severable from the ADI Debt Securities to which it
applies.</font></div>
</td> 15
</tr>
</table>
</div>
<div>
<table align="center" border="0" cellpadding="0" cellspacing="0" 20
<tr valign="top">
0pt"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New 25
Roman">(2)</font></div>
</td>
<td>
FONT-FAMILY: Times New Roman">A 30
registration fee of US$1.00 has been paid in respect of the Guarantee of
ADI Debt Securities covered by this Registration Statement.  A
separate registration fee has been, or will be, paid by each relevant
ADI
in respect of the ADI Debt Securities guaranteed pursuant to this 35
Registration Statement.</font></div>
</td>
</tr>
</table>
</div> 40
<div>
<tr valign="top">
<td style="WIDTH: 18pt"> 45
<div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY:
Times New Roman">
</font></div>
</td>
<td> 50
<div align="center"><font style="DISPLAY: inline; FONT-SIZE:
10pt; FONT-FAMILY: Times New Roman">____________________________</font></div>
</td>
</tr>
</table> 55
</div>
RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT- 60
FAMILY: Times New Roman">The

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Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become 5
effective on such date as the Commission, acting pursuant to said Section
8(a),
may determine.</font></div>
RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold;
FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif"><font style="DISPLAY:
inline">           &#16
0;            &#16 15
0;            &#16
0;            &#16
0;            &#16
0;            &#16
0;            &#16 20
0;            &#16
0;            &#16
0;            &#16
0;            &#16
0;       </font></font></div> 25
<div>
</div>
<div><br></div> 30
<div>
<div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt;
MARGIN-RIGHT: 0pt">
<div id="FTR">
<div id="GLFTR" style="WIDTH: 100%" align="left"><font 35
style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New
Roman">
</font></div>
</div>
<div id="PN" style="PAGE-BREAK-AFTER: always"> 40
<div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY:
inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
</font></div>
<div style="WIDTH: 100%; TEXT-ALIGN: center">
<hr style="COLOR: black" noshade size="2"> 45
</div>
</div>
<div id="HDR">
<div id="GLHDR" style="WIDTH: 100%" align="right"><font
style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New 50
Roman">
</font></div>
</div>
</div>
</div> 55
<div><br></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CROSS
REFERENCE SHEET</font></div> 60

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RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-
FAMILY: Times New Roman">Cross 5
reference sheet between Schedule B of the Securities Act of 1933 and the
Prospectus:</font></div>
<div> 10
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left"> 15
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div
align="left"> 40
<table
cellpadding="0" cellspacing="0" width="100%">
<tr>
<td
align="left" valign="top" width="19%"><font style="DISPLAY: inline; FONT- 45
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new
roman"> </font></td>
<td
align="left" colspan="2" valign="top" width="39%">
<div 50
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"
align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt;
FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold;
FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline;
FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-DECORATION: 55
underline">Schedule
B Item</font></font></font></div>
</td>
<td
align="left" valign="top" width="42%"> 60

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<div
FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold;
FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; 5
FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-DECORATION:
underline">Heading
in Prospectus</font></font></font></div>
</td>
</tr> 10
<tr>
<td
valign="top" width="19%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-
FAMILY: times new roman"> </font></td>
<td 15
FAMILY: times new roman">
</font></td>
<td
valign="top" width="38%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT- 20
<td
</font></td> 25
</tr>
<tr
bgcolor="#cceeff">
<td
align="left" valign="top" width="19%" bgcolor="white"><font style="DISPLAY: 30
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"> </font></td>
<td
align="left" valign="bottom" width="1%">
<div
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; 35
TEXT-ALIGN: left" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt;
FONT-FAMILY: times new roman">1.</font></div>
</td>
<td
align="left" valign="top" width="38%" style="BORDER-BOTTOM: 4px"> </td> 40
<td
align="left" valign="top" width="42%">
<div
align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times 45
new roman">Cover
Page</font></div>
</td>
</tr>
<tr 50
bgcolor="white">
<td
align="left" valign="top" width="19%"><font style="DISPLAY: inline; FONT-SIZE:
10pt; FONT-FAMILY: times new roman"> </font></td>
<td 55
<div
align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times
new roman">2.</font></div> 60
</td>

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<td
align="left" valign="top" width="38%"> </td>
<td
<div 5
new roman">Use
of Proceeds</font></div>
</td> 10
</tr>
<tr
bgcolor="#cceeff">
<td
align="left" valign="top" width="19%" bgcolor="white"><font style="DISPLAY: 15
<td
<div
style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" 20
new roman">3.</font></div>
</td>
<td
align="left" valign="top" width="38%"> </td> 25
<td
<div
new roman">Public
Debt</font></div>
</td>
</tr>
<tr 35
bgcolor="white">
<td
<td 40
<div
</td>
<td
<td
<div
new roman">Public
Debt</font></div> 55
</td>
</tr>
<tr
bgcolor="#cceeff">

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<td
align="left" valign="top" width="19%" bgcolor="white"><font style="DISPLAY:
<td
<div
</td> 10
<td
<td
<div 15
new roman">Government
Finance</font></div>
</td> 20
</tr>
<tr
bgcolor="white">
<td
align="left" valign="top" width="19%"><font style="DISPLAY: inline; FONT-SIZE: 25
<td
<div
</td>
<td
<td
<div
new roman">**</font></div>
</td>
</tr>
<tr
bgcolor="#cceeff"> 45
<td
<td
<div
</td> 55
<td
<td
<div 60

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new roman">Authorised
Agent in the United States</font></div>
</td>
</tr> 5
<tr
bgcolor="white">
<td
10pt; FONT-FAMILY: times new roman"> </font></td> 10
<td
<div
</td>
<td
<td 20
<div
new roman">Use 25
of Proceeds</font></div>
</td>
</tr>
<tr
bgcolor="#cceeff"> 30
<td
<td
<div
</td> 40
<td
<td
<div 45
new roman">Use
of Proceeds; The Commonwealth of Australia Guarantee</font></div>
</td> 50
</tr>
<tr
bgcolor="white">
<td
<td
<div

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</td>
<td
<td
<div
new roman">Plan
of Distribution</font></div>
</td>
</tr>
<tr 15
bgcolor="#cceeff">
<td
<td 20
<div
</td>
<td
<td
<div
new roman">*</font></div>
</td> 35
</tr>
<tr
bgcolor="white">
<td
<td
<div
</td>
<td
<td
<div
new roman">Validity
of the Guarantee</font></div>
</td>
</tr>
<tr 60
bgcolor="#cceeff">

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<td
<td
<div
</td> 10
<td
<td
<div 15
new roman">Plan
of Distribution**</font></div>
</td> 20
</tr>
<tr
bgcolor="white">
<td
<td
<div
</td>
<td
<td
<div
new roman">*</font></div>
</td>
</tr>
</table>
</div> 45
</div>
</div>
</div>
</div>
</div> 50
</div>
</div>
</div>
</div>
</div> 55
</div>
</div>
</div>
</div>
</div> 60
</div>

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</div>
</div>
</div>
</div>
</div> 5
</div>
</div>
</div>
</div>
</div> 10
</div>
</div>
</div>
FAMILY: Times New Roman">__________</font></div>
<div>
id="hangingindent" width="100%"> 20
<tr valign="top">
Roman">*</font></div> 25
</td>
<td>
FONT-FAMILY: Times New Roman">Additional
information included in Part II to this Registration Statement or as an 30
exhibit hereto or to be provided from time to time by one or more
amendments to this Registration
Statement.</font></div>
</td>
</tr> 35
</table>
</div>
<div>
<tr valign="top">
Roman">**</font></div>
</td>
<td>
FONT-FAMILY: Times New Roman">Additional 50
information to be provided from time to time in the prospectus and any
related prospectus supplement of the relevant ADI offering an issue of
ADI
Debt Securities and in the registration statement of which such
prospectus 55
and any related prospectus supplement form a
part.</font></div>
</td>
</tr>
</table> 60
</div>

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<div><br></div>
<div>
<div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; 5
MARGIN-RIGHT: 0pt">
<div id="FTR">
<div id="GLFTR" style="WIDTH: 100%" align="left"><font
Roman"> 10
</font></div>
</div>
<div id="PN" style="PAGE-BREAK-AFTER: always">
inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"> 15
</font></div>
<hr style="COLOR: black" noshade size="2">
</div>
</div> 20
<div id="HDR">
Roman">
</font></div> 25
</div>
</div>
</div>
<div><br></div>
FONT-SIZE: 10pt; COLOR: red; FONT-FAMILY: Times New Roman">Subject
to completion, dated 17 February 2009</font></div>
COLOR: red; FONT-FAMILY: Times New Roman">The
information in this prospectus is not complete and may be
changed.  We
may not sell these </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; 40
COLOR: red; FONT-FAMILY: Times New Roman">securities
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: red; FONT-FAMILY:
Times New Roman">until
the registration statement </font></div>
COLOR: red; FONT-FAMILY: Times New Roman">filed
with the Securities and Exchange Commission is </font><font style="DISPLAY:
inline; FONT-SIZE: 10pt; COLOR: red; FONT-FAMILY: Times New
Roman">effective.  </font><font style="DISPLAY: inline; FONT-SIZE: 50
10pt; COLOR: red; FONT-FAMILY: Times New Roman">This
prospectus is not an offer to sell these securities and it is not
</font></div>
COLOR: red; FONT-FAMILY: Times New Roman">s</font><font style="DISPLAY:
inline; FONT-SIZE: 10pt; COLOR: red; FONT-FAMILY: Times New Roman">oliciting
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: red; FONT-FAMILY:
Times New Roman">an </font><font style="DISPLAY: inline; FONT-SIZE: 10pt;
COLOR: red; FONT-FAMILY: Times New Roman">offer 60
to buy these securities in any jurisdiction where the offer or sale is not

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permitted</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PROSPECTUS</font></div> 5
FONT-SIZE: 24pt; FONT-FAMILY: Times New Roman">Commonwealth 10
RIGHT: 0pt" align="center"><img src="australian_color.jpg" alt=""></div>
FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman">Guarantee
of Debt Securities of</font></div>
FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman">Australian
Authorised Deposit-taking Institutions</font></div>
FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman">covered
by</font></div>
FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman">the 30
Australian Government Guarantee Scheme</font></div>
FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman">for
Large Deposits and Wholesale Funding</font></div> 35
<div>
<table border="0" cellpadding="0" cellspacing="0" id="hangingindent" 40
width="100%">
<tr valign="top">
<td valign="top" style="WIDTH: 36pt">
0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new 45
roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: symbol,
serif">·</font></font></div>
</td>
<td valign="bottom">
<div align="left"><font style="DISPLAY: inline; FONT-SIZE: 50
10pt; FONT-FAMILY: times new roman">Under
the Australian Government Guarantee Scheme for Large Deposits and
Wholesale Funding, which we refer to as the Guarantee Scheme, eligible
authorised deposit-taking institutions, which we refer to as ADIs, may
apply to have eligible senior unsecured debt securities, which we refer 55
to
as ADI Debt Securities, guaranteed by the Commonwealth of
Australia.  In its discretion, the Commonwealth of Australia
may
issue "Eligibility Certificates" evidencing that ADI Debt Securities are 60
guaranteed under the Guarantee Scheme, creating what we refer to as the

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Guarantee.  See "The Commonwealth of Australia Guarantee" in
this prospectus.</font></div>
</td>
</tr>
</table> 5
</div>
</div>
<div> 10
<table border="0" cellpadding="0" cellspacing="0" id="hangingindent"
width="100%">
<tr valign="top">
<td valign="top" style="WIDTH: 36pt"> 15
0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new
</td> 20
<div align="left"><font style="DISPLAY: inline; FONT-SIZE:
10pt; FONT-FAMILY: times new roman">The
Guarantee of ADI Debt Securities is irrevocable and ranks equally with
other unsecured debts and financial obligations of the Commonwealth of 25
Australia.</font></div>
</td>
</tr>
</table>
</div> 30
</div>
<div>
<div align="center"> 35
width="100%">
<tr valign="top">
<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 40
</td>
<td valign="bottom"> 45
Commonwealth of Australia will issue one or more prospectus supplements
separately identifying the ADI Debt Securities to which the Guarantee
relates.  The relevant prospectus supplement will accompany 50
this
prospectus.  The Guarantee of ADI Debt Securities will not be
issued separately from the related ADI Debt
Securities.</font></div>
</td> 55
</tr>
</table>
</div>
</div>

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<div>
width="100%">
<tr valign="top"> 5
serif">·</font></font></div> 10
</td>
terms of each issue of guaranteed ADI Debt Securities will be set forth 15
in
a separate prospectus and any related prospectus supplement of the
relevant ADI offering such issue of ADI Debt
</td> 20
</tr>
</table>
</div>
</div>
RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold;
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Neither
the U.S. Securities and Exchange Commission nor any state securities 30
commission
has approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any representation to the contrary is a criminal
offence.</font></div>
RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold;
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
prospectus may not be used to sell the Guarantee of ADI Debt Securities unless
accompanied by a prospectus supplement and a prospectus and any related 40
prospectus supplement of an ADI relating to those ADI Debt
FONT-FAMILY: Times New Roman">The date
of this prospectus
is            &#16
0;        2009.</font></div>
<div><br></div> 50
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>

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</font></div>
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div>
</div> 15
<div><br></div>
RIGHT: 0pt" align="center">
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">TABLE
OF CONTENTS</font></div>
RIGHT: 0.45pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold;
FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline;
TEXT-DECORATION: underline">Page</font></font><font style="DISPLAY: inline;
FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font
style="DISPLAY: inline">     </font></font></div> 30
<div>
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<table cellpadding="0" cellspacing="0" 45
width="100%">
<tr>
<td align="left" valign="top" width="97%">
<div style="DISPLAY: block; MARGIN-LEFT:
0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: 50
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY:
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">ABOUT
THIS PROSPECTUS</font></font></font></div>
</td> 55
<td align="right" valign="top" width="3%">
0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left"
align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY:
times new roman">ii</font></div> 60
</td>

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</tr>
<tr bgcolor="#cceeff">
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Official
Documents and Statements</font></font></font></div>
</td> 10
times new roman">ii</font></div> 15
</td>
</tr>
<tr bgcolor="white">
<div style="DISPLAY: block; MARGIN-LEFT: 20
36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY:
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font size="+0"><font
size="+0"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times
new roman">Forward-Looking
Stateme</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT- 25
FAMILY: times new roman">nts</font></font></font></font></div>
</td>
0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" 30
times new roman">iii</font></div>
</td>
</tr>
<tr bgcolor="#cceeff"> 35
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: 40
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Presentation
of Financial and Other Information</font></font></font></div>
</td>
times new roman">iii</font></div>
</td>
</tr> 50
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Certain
Defined Terms and Conventions</font></font></font></div>
</td>
<td align="right" valign="top" width="3%"> 60

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times new roman">iv</font></div>
</td> 5
</tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">USE
OF PROCEEDS</font></font></font></div>
</td> 15
times new roman">1</font></div> 20
</td>
</tr>
new roman">THE
COMMONWEALTH OF </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; 30
FONT-FAMILY: times new roman">AUSTRALIA
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times
new roman">GUARANTEE</font></font></font></font></div>
</td>
<td align="right" valign="bottom" 35
width="3%">
</td>
</tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Enforcement
of Civil Liabilities</font></font></font></div> 50
</td>
align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: 55
times new roman">3</font></div>
</td>
</tr>

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new roman">THE 5
COMMONWEALTH OF </font><font style="DISPLAY: inline; FONT-SIZE: 10pt;
FONT-FAMILY: times new roman">AUSTRALIA</font></font></font></font></div>
</td>
<td align="right" valign="bottom"
width="3%"> 10
</td> 15
</tr>
new roman">Population
and Geogra</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-
FAMILY: times new roman">phy 25
of </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY:
times new roman">Australia</font></font></font></font></div>
</td>
width="3%"> 30
</td> 35
</tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Form
of Government</font></font></font></div>
</td> 45
</td>
</tr>
new roman">THE
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times 60
new roman">AUSTRALIAN

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</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times
new roman">ECONOMY</font></font></font></font></div>
</td>
width="3%"> 5
</td> 10
</tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new
roman">Overview</font></font></font></div>
</td> 20
</td>
</tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Domestic
Economic Conditions</font></font></font></div> 35
</td>
</td>
</tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Economic 50
Outlook</font></font></font></div>
</td>
</td>
</tr>

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inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Major 5
Sectors of the Economy</font></font></font></div>
</td>
</td>
</tr>
<tr bgcolor="white"> 15
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">EXTERNAL
TRADE AND BALANCE OF PAYMENTS</font></font></font></div>
</td>
</td>
</tr> 30
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Merchandise
Trade</font></font></font></div>
</td>
</td> 45
</tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Balance
Payments</font></font></font></div>
</td> 55
</td>

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</tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Changes
in Official Reserve Assets</font></font></font></div>
</td> 10
</td>
</tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Exchange
Rate</font></font></font></div> 25
</td>
</td>
</tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Foreign 40
Investment Policy</font></font></font></div>
</td>
</td>
</tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Foreign
Financial Relations</font></font></font></div>
</td>

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</td>
</tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">CURRENCY,
MONETARY AND BANKING SYSTEM</font></font></font></div>
</td>
</td>
</tr> 20
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Australian
Currency</font></font></font></div>
</td>
</td> 35
</tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Monetary
Conditions</font></font></font></div>
</td> 45
</td>
</tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Regulation
of the Financial System</font></font></font></div> 60
</td>

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</td>
</tr>
size="+0"><font size="+0"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-
FAMILY: times new roman">The
Fina</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: 15
times new roman">ncial
System Regulatory Regime</font></font></font></font></font></div>
</td>
width="3%"> 20
</td> 25
</tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">GOVERNMENT
FINANCE</font></font></font></div>
</td> 35
</td>
</tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Federal
Government Budget</font></font></font></div> 50
</td>
</td>
</tr>

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inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Pensions 5
and Superannuation</font></font></font></div>
</td>
</td>
</tr>
roman">Taxation</font></font></font></div>
</td>
</td>
</tr> 30
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Commonwealth-State
Financial Relations</font></font></font></div>
</td>
</td> 45
</tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Domestic
Issuance of Government Bonds</font></font></font></div>
</td> 55
</td>

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</tr>
new roman">Guarantees
and Other Contingent Liabil</font><font style="DISPLAY: inline"><font
style="FONT-SIZE: 10pt; FONT-FAMILY: times new 10
roman">ities</font></font></font></font></font></div>
</td>
width="3%">
</td>
</tr> 20
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">PUBLIC
DEBT</font></font></font></div>
</td>
</td> 35
</tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Debt
Record</font></font></font></div>
</td> 45
</td>
</tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Credit
Ratings</font></font></font></div> 60
</td>

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</td>
</tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">PLAN
OF DISTRIBUTION</font></font></font></div> 15
</td>
</td>
</tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">VALIDITY 30
OF THE GUARANTEE</font></font></font></div>
</td>
</td>
</tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">AUTHORISED
AGENT IN THE UNITED STATES</font></font></font></div>
</td>
</td>
</tr> 55

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inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FURTHER
INFORMATION</font></font></font></div>
</td>
</td> 10
</tr>
</table>
</div>
</div>
</div> 15
</div>
</div>
</div>
</div>
</div> 20
</div>
</div>
</div>
</div>
<div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: left"><br> 25
<div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT:
0pt; MARGIN-RIGHT: 0pt">
<div id="FTR">
<div id="GLFTR" style="WIDTH: 100%; TEXT-ALIGN: left"
align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; 30
FONT-FAMILY: Times New Roman">
</font></div>
</div>
<div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: 35
inline; FONT-SIZE: 10pt">i</font></div>
</div>
</div> 40
<div id="HDR">
Roman">
</font></div> 45
</div>
</div><br></div>
</div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ABOUT
THIS PROSPECTUS</font></div>
Government of the Commonwealth of Australia has prepared this prospectus in
connection with offerings registered under the Securities Act of 1933 of ADI
Debt Securities issued by ADIs that are covered by the Guarantee 60
Scheme.</font></div>

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FAMILY: Times New Roman">This 5
prospectus provides you with a general description of the Guarantee. Each time
the Commonwealth of Australia guarantees an issue of ADI Debt Securities to be
offered in an offering registered under the Securities Act of 1933, it will
provide a prospectus supplement identifying the issue of ADI Debt Securities
to 10
which the Guarantee relates. The prospectus supplement may also add, update or
change information contained in this prospectus. If the information in this
prospectus differs from any prospectus supplement, you should rely on the
information in the prospectus supplement. You should read both this prospectus
and the accompanying prospectus supplement together with the additional 15
information described under "Further Information".</font></div>
information contained herein is not to be construed as legal, business or tax
advice.  This prospectus summarises material documents and other
information, and we refer you to them for a more complete understanding of
what 25
we discuss herein.  In making an investment decision, you must rely
on
your own examination of the Commonwealth of Australia, the Guarantee and the
offering.</font></div>
FAMILY: Times New Roman">You
should rely only on the information provided in this prospectus and in any 35
prospectus supplement.  Neither we, nor any underwriters or agents,
have authorised anyone to provide you with different
information.  We
are not offering the Guarantee of ADI Debt Securities in any jurisdiction
where 40
the offer is prohibited.  You should not assume that the information
in the registration statement, this prospectus or any prospectus supplement is
truthful or complete at any date other than the date mentioned on the cover
page
of these documents.</font></div> 45
FAMILY: Times New Roman">This 50
prospectus and the accompanying prospectus supplement are not, and may not be
used in connection with, an offer or solicitation by anyone in any
jurisdiction
in which the offer or solicitation is not authorised or in which the person
making the offer or solicitation is not qualified to do so or to any person to 55
whom it is unlawful to make an offer or solicitation. See "Plan of
Distribution"
in this prospectus.</font></div>

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Commonwealth of Australia has not participated in the preparation of the
registration statement, the prospectus or any related prospectus supplement of 5
any ADI offering an issue of ADI Debt Securities to which the Guarantee
relates.
The Commonwealth of Australia has not approved any such registration
statement,
prospectus or prospectus supplement and does not assume any responsibility in 10
relation to any such prospectus or prospectus supplement.</font></div>
RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; 15
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Official
Documents and Statements</font></div>
FAMILY: Times New Roman">Certain
financial and statistical information contained in this prospectus has been
derived from official Australian Government sources, including:</font></div>
<div>
width="100%"> 30
<tr valign="top">
roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: symbol, 35
</td>
10pt; FONT-FAMILY: times new roman">the 40
2008-09 Commonwealth Budget dated 13 May 2008, which we refer to as the
2008-09 Budget (available at <font style="DISPLAY: inline; FONT-STYLE:
italic">http://www.budget.gov.au</font>);</font></div>
</td>
</tr> 45
</table>
</div>
</div>
<div>
width="100%">
</td>

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10pt; FONT-FAMILY: times new roman">the
Mid-Year Economic and Fiscal Outlook 2008-09 Statement released on 5
November 2008, which we refer to as the 2008-09 MYEFO (available at 5
<font style="DISPLAY: inline; FONT-STYLE:
italic">http://www.budget.gov.au/2008-
09/content/myefo/html/index.htm</font>);</font></div>
</td>
</tr> 10
</table>
</div>
</div>
<div>
width="100%">
</td>
February 2009 Updated Economic and Fiscal Outlook Statement released on 30
3
February 2009, which we refer to as the 2009 UEFO (available at <font
style="DISPLAY: inline; FONT-STYLE: italic">http://www.budget.gov.au/2008-
09/content/uefo/html/index.htm</font>);
and</font></div> 35
</td>
</tr>
</table>
</div>
</div> 40
<div>
width="100%">
<tr valign="top">
</td>
Final Budget Outcome 2005-06 released on 29 September 2006, which we
refer
to as the Final Budget Outcome 2005-06 (available at <font
style="DISPLAY: inline; FONT-STYLE: italic">http://www.budget.gov.au/2005- 60
06/fbo/html/index.htm</font>),

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the Final Budget Outcome 2006-07 released on 28 September 2007, which we
refer to as the Final Budget Outcome 2006-07 (available at <font
07/fbo/html/index.htm</font>)
and the Final Budget Outcome 2007-08 released on 26 September 2008, 5
which
we refer to as the Final Budget Outcome 2007-08 (available at <font
08/fbo/html/index.htm</font>).</font></div>
</td> 10
</tr>
</table>
</div>
</div>
FAMILY: Times New Roman">Information
available on the websites referenced above is not incorporated by reference in 20
<div><br></div>
<div> 25
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
inline; FONT-SIZE: 10pt">ii</font></div>
</div>
</div> 40
<div id="HDR">
Roman">
</font></div> 45
</div>
</div>
</div>
<div><br></div>
FAMILY: Times New Roman">Information
included in this prospectus or any prospectus supplement which is identified
as
being derived from a publication of the Australian Government or one of its 55
agencies or instrumentalities is included in this prospectus or such
prospectus
supplement on the authority of such publication as a public official document
of
the Australian Government. All other information included in this prospectus 60
and

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in the Registration Statement is included as a public official statement and
has
been reviewed by Dr Ken Henry AC, Secretary of the Treasury of the
Commonwealth
of Australia, in his official capacity, and is included herein on his 5
authority.
Except as may otherwise be provided in any prospectus supplement, all other
information included in such prospectus supplement will be included as a
public
official statement and will be reviewed by Dr Ken Henry AC, in his official 10
capacity, and will be included therein on his authority.</font></div>
address of the Commonwealth of Australia is c/o The Treasury of the
Commonwealth
of Australia, Treasury Building, Langton Crescent, Parkes ACT 2600, Australia,
and its phone number is +61 2 6263 2111.</font></div> 20
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Forward-Looking 25
Statements</font></div>
FAMILY: Times New Roman">This
prospectus contains, and any accompanying prospectus supplement may contain,
forward-looking statements as defined in Section 27A of the Securities Act of
1933. These forward-looking statements can be identified by the use of
forward-looking terminology, including the terms "believes", "forecasts", 35
"estimates", "projects", "expects", "intends", "may", "will", "seeks",
"would",
"could" or "should" or, in each case, their negative or other variations or
comparable terminology, or in relation to discussions of forecasts, policies,
strategy, plans, objectives, goals, future events or intentions.</font></div> 40
FAMILY: Times New Roman">Forward-looking 45
statements are statements that are not historical facts, including statements
about the Commonwealth of Australia's beliefs and expectations. These
statements
are based on current plans, estimates and projections and, therefore, undue
reliance should not be placed on them. Forward-looking statements speak only 50
as
of the date they are made. Although the Australian Government believes that
the
beliefs and expectations reflected in such forward-looking statements are
reasonable, no assurance can be given that such beliefs and expectations will 55
prove to have been correct.</font></div>
FAMILY: Times New Roman">Forward-looking

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statements involve inherent risks and uncertainties. A number of important
factors could cause actual results to differ materially from those expressed
in
any forward-looking statement.  Factors that could cause the actual
outcomes to differ materially from those expressed or implied in forward 5
looking
statements include:</font></div>
<div> 10
width="100%">
<tr valign="top">
</td> 20
international economy, and in particular the rates of growth (or
contraction) of Australia's major trading 25
partners;</font></div>
</td>
</tr>
</table>
</div> 30
</div>
<div>
width="100%">
<tr valign="top">
</td>
effects of the global financial
crisis;</font></div>
</td> 50
</tr>
</table>
</div>
</div>
<div>
width="100%"> 60
<tr valign="top">

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</td>
10pt; FONT-FAMILY: times new roman">changes
in commodity prices and/or global demand for Australia's major export 10
commodities;</font></div>
</td>
</tr>
</table>
</div> 15
</div>
<div>
width="100%">
<tr valign="top">
</td>
10pt; FONT-FAMILY: times new roman">increases
or decreases in international and domestic interest
rates;</font></div>
</td> 35
</tr>
</table>
</div>
</div>
<div>
width="100%"> 45
<tr valign="top">
</td>
10pt; FONT-FAMILY: times new roman">increases 55
or decreases in domestic
consumption;</font></div>
</td>
</tr>
</table> 60
</div>

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</div>
<div>
width="100%">
<tr valign="top">
</td>
or decreases in Australia's labour force participation and
productivity;</font></div>
</td> 20
</tr>
</table>
</div>
</div>
<div>
width="100%"> 30
<tr valign="top">
</td>
10pt; FONT-FAMILY: times new roman">exchange 40
rate fluctuations; and</font></div>
</td>
</tr>
</table>
</div> 45
</div>
<div>
width="100%">
<tr valign="top">
</td>

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or decreases in Australia's rate of
inflation.</font></div>
</td> 5
</tr>
</table>
</div>
</div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Presentation
of Financial and Other Information</font></div> 15
FAMILY: Times New Roman">The 20
fiscal year of the Commonwealth of Australia is 1 July to 30
June.  Annual information presented in this prospectus is based on
fiscal years, unless otherwise indicated.  In this prospectus, the
fiscal year beginning on 1 July 2007 and ending on 30 June 2008 is referred to
as "2007-08" and previous and subsequent fiscal years are referred to using 25
the
same convention.</font></div>
FAMILY: Times New Roman">Any
discrepancies between totals and sums of components in this prospectus are due
to rounding.</font></div>
<div><br></div>
<div>
MARGIN-RIGHT: 0pt"> 40
<div id="FTR">
Roman">
</font></div> 45
</div>
inline; FONT-SIZE: 10pt">iii</font></div>
<div style="WIDTH: 100%; TEXT-ALIGN: center"> 50
</div>
</div>
<div id="HDR">
<div id="GLHDR" style="WIDTH: 100%" align="right"><font 55
Roman">
</font></div>
</div>
</div> 60
</div>

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<div><br></div>
FAMILY: Times New Roman">Statistical
information reported herein has been derived from official publications of, 5
and
information supplied by, a number of departments and agencies of the
Commonwealth of Australia, including the Treasury of the Commonwealth of
Australia, the Department of Finance and Deregulation, the Reserve Bank of
Australia (the "RBA") and the Australian Bureau of Statistics 10
("ABS").  Some statistical information has also been derived from
information publicly made available by the International Monetary Fund (the
"IMF") and the Organisation for Economic Co-operation and Development (the
"OECD").  Similar statistics may be obtainable from other sources,
but 15
the underlying assumptions, methodology and, consequently, the resulting data
may vary from source to source.  In addition, statistics and data
published by a department or agency of the Commonwealth of Australia may
differ
from similar statistics and data produced by other departments or agencies due 20
to differing underlying assumptions or methodology.  Certain
historical statistical information contained in this prospectus is based on
estimates that the Commonwealth of Australia and/or its departments or
agencies
believe to be based on reasonable assumptions.  The Commonwealth of 25
Australia's official financial and economic statistics are subject to review
as
part of a regular confirmation process. Accordingly, financial and economic
information may be subsequently adjusted or revised. While the Australian
Government does not expect revisions to be material, no assurance can be given 30
that material changes will not be made.  The Commonwealth of
Australia
adheres to the IMF's Special Data Dissemination Standards, which guide members
in the dissemination of economic and financial data to the
public.</font></div> 35
FAMILY: Times New Roman">All 40
references in this prospectus to "Australian dollars," "A$," "dollars" or "$"
are to the lawful currency of the Commonwealth of Australia and references in
this prospectus to "U.S. dollars" or "US$" are to the lawful currency of the
United States.</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certain
Defined Terms and Conventions</font></div> 50
FAMILY: Times New Roman">The terms 55
set forth below have the following meanings for purposes of this
prospectus:</font></div>
<div> 60
<div align="left">

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<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<tr>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; 10
TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY:
inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY:
times new roman">APRA</font></div>
</td>
<td align="left" valign="top" width="1%"><font 15
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new
<div style="DISPLAY: block; MARGIN-LEFT: 0pt;
TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: 20
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">means
the Australian Prudential Regulation Authority.</font></div>
</td>
</tr>
<tr> 25
<td align="left" valign="top" width="16%"><font
style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE:
italic; FONT-FAMILY: times new roman"> </font></td>
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new 30
</tr> 35
<tr>
inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: 40
times new roman">ASIC</font></div>
</td>
roman"> </font></td> 45
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">refers
to the Australian Securities and Investments 50
Commission.</font></div>
</td>
</tr>
<tr>

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</tr>
<tr> 5
times new roman">Basic 10
price</font></div>
</td>
to the amount receivable by the producer from the purchaser for a unit 20
of
a good or service produced as output, minus any tax payable plus any
subsidy receivable on that unit as a consequence of its production or
sale; it excludes any transport charges invoiced separately by the
producer.</font></div> 25
</td>
</tr>
<tr>
style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: 30
</tr>
<tr>
times new roman">Balance
of payments</font></div> 45
</td>
to the total of all of the amounts transacted between residents of
Australia and residents of the rest of the world (non-residents) over a 55
specific period of time.</font></div>
</td>
</tr>
<tr>

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</tr> 10
<tr>
inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: 15
times new roman">Capital
account</font></div>
</td>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">records 25
the values of the non-financial assets that are acquired, or disposed
of,
by resident institutional units by engaging in transactions, and shows
the
change in net worth due to saving and capital transfers or internal 30
bookkeeping transactions linked to production (changes in inventories
and
consumption of fixed capital).</font></div>
</td>
</tr> 35
<tr>
</tr>
<tr>
times new roman">Chain
volume measures</font></div>
</td>

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to measures derived by linking together (compounding) movements in
volumes, calculated using the average prices of the previous fiscal
year,
and applying the compounded movements to the current price estimates of
the reference year.  Chain volume measures were introduced in 5
the national accounts in 1998 because, by annually rebasing, they
provide
price relativities that reflect the current situation, thereby providing
better real estimates than constant price measures, especially in times
of 10
rapidly changing relative prices.</font></div>
</td>
</tr>
<tr>
</tr>
<tr> 25
times new roman">Consumer 30
price index</font></div>
</td>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">measures
quarterly changes in the price of a 'basket' of goods and services which 40
account for a high proportion of expenditure by the CPI population group
(i.e., metropolitan households) and is commonly referred to as the
headline rate of
</td> 45
</tr>
</table>
</div>
</div>
</div> 50
</div>
</div>
</div>
</div>
</div> 55
<div><br></div>
<div>
<div id="FTR">

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Roman">
</font></div>
</div> 5
inline; FONT-SIZE: 10pt">iv</font></div>
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div>
</div> 20
<div><br></div>
<div>
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<table cellpadding="0"
cellspacing="0" width="100%">
<tr> 45
<td align="left"
valign="top" width="16%">
<div style="DISPLAY:
block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"
align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; 50
FONT-STYLE: italic; FONT-FAMILY: times new roman">Current
</td>
<td align="left"
<td align="left"
block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" 60

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new roman">includes
the balance of trade (exports of goods and services minus imports of
goods
and services), net factor income (income earned by Australia from the 5
rest
of the world minus income earned by the rest of the world from
Australia)
and net transfer payments (including, for example, net outflows of
foreign 10
aid payments). The current account excludes capital
transfers.</font></div>
</td>
</tr>
<tr> 15
<td align="left"
valign="top" width="16%"><font style="DISPLAY: inline; FONT-WEIGHT: bold;
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new
<td align="left" 20
<td align="left"
FAMILY: times new roman"> </font></td> 25
</tr>
<tr>
<td align="left"
<div style="DISPLAY: 30
FONT-STYLE: italic; FONT-FAMILY: times new roman">Current
prices</font></div>
</td> 35
<td align="left"
<td align="left"
valign="top" width="60%"> 40
new roman">refers
to estimates valued at the prices of the period to which the observation 45
relates. For example, estimates for 2002–03 are valued using
2002–03
prices. This contrasts to chain volume measures where the prices used in
valuation refer to the prices of the previous year.</font></div>
</td> 50
</tr>
<tr>
<td align="left"
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new 55
<td align="left"

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<td align="left"
</tr>
<tr> 5
<td align="left"
FONT-STYLE: italic; FONT-FAMILY: times new roman">Fiscal
year</font></div>
</td>
<td align="left"
<td align="left"
new roman">means
each year commencing 1 July and ending 30 June.</font></div>
</td>
</tr> 25
<tr>
<td align="left"
<td align="left"
<td align="left"
</tr>
<tr>
<td align="left"
FONT-STYLE: italic; FONT-FAMILY: times new roman">Free
on board (or f.o.b.)</font></div> 45
</td>
<td align="left"
<td align="left" 50
new roman">The 55
value of goods measured on a free on board basis includes all production
and other costs incurred up until the goods are placed on board the
international carrier for export. Free on board values exclude
international insurance and transport costs. They include the value of
the 60

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outside packaging in which the product is wrapped, but do not include
the
value of the international freight containers used for transporting the
goods.</font></div>
</td> 5
</tr>
<tr>
<td align="left"
<td align="left"
<td align="left" 15
</tr>
<tr>
<td align="left" 20
FONT-STYLE: italic; FONT-FAMILY: times new roman">Gross 25
domestic product </font></div>
FONT-STYLE: italic; FONT-FAMILY: times new roman">(or 30
GDP)</font></div>
</td>
<td align="left"
<td align="left"
new roman">means
the total market value of goods and services produced in Australia
within
a given period after deducting the cost of goods and services used up in
the process of production but before deducting allowances for the 45
consumption of fixed capital.</font></div>
</td>
</tr>
<tr>
<td align="left" 50
<td align="left"
<td align="left"
</tr> 60
<tr>

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<td align="left"
FONT-STYLE: italic; FONT-FAMILY: times new roman">GDP
per capita</font></div>
</td>
<td align="left"
<td align="left"
new roman">means
the ratio of the chain volume estimate of GDP to an estimate of the
resident Australian population.</font></div>
</td> 20
</tr>
<tr>
<td align="left"
<td align="left"
<td align="left" 30
</tr>
<tr>
<td align="left" 35
FONT-STYLE: italic; FONT-FAMILY: times new roman">Gross 40
national income</font></div>
</td>
<td align="left"
<td align="left"
new roman">(formerly
gross national product) refers to the aggregate value of gross primary
incomes for all institutional sectors, including net primary income
receivable from non-residents.</font></div>
</td> 55
</tr>
<tr>
<td align="left"

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<td align="left"
<td align="left"
</tr>
<tr>
<td align="left"
FONT-STYLE: italic; FONT-FAMILY: times new roman">Gross
value added</font></div> 15
</td>
<td align="left"
<td align="left" 20
new roman">means 25
the value of output at basic prices minus the value of intermediate
consumption at purchasers' prices.</font></div>
</td>
</tr>
<tr> 30
<td align="left"
<td align="left" 35
<td align="left"
</tr>
<tr>
<td align="left"
FONT-STYLE: italic; FONT-FAMILY: times new roman">Household
saving ratio</font></div>
</td> 50
<td align="left"
<td align="left"
new roman">refers
to the ratio of household net saving (calculated as household net 60
disposable income less household final consumption expenditure) to

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household net disposable income (calculated as household gross
disposable
income less household consumption of fixed capital).</font></div>
</td>
</tr> 5
<tr>
<td align="left"
<td align="left"
<td align="left"
</tr>
<tr>
<td align="left"
FONT-STYLE: italic; FONT-FAMILY: times new roman">IMF</font></div>
</td> 25
<td align="left"
<td align="left"
new roman">means
the International Monetary Fund.</font></div> 35
</td>
</tr>
<tr>
<td align="left"
valign="top" width="16%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; 40
<td align="left"
<td align="left"
</tr>
<tr> 50
<td align="left"
FONT-STYLE: italic; FONT-FAMILY: times new roman">Implicit
price deflator</font></div>
</td>
<td align="left"

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<td align="left"
new roman">is
obtained by dividing a current price value by its real counterpart (the
chain volume measure).</font></div>
</td>
</tr> 10
<tr>
<td align="left"
<td align="left"
<td align="left"
</tr>
<tr>
<td align="left"
FONT-STYLE: italic; FONT-FAMILY: times new roman">Inflation</font></div>
</td> 30
<td align="left"
<td align="left"
new roman">refers
to a continuous upward movement in the general level of 40
prices.</font></div>
</td>
</tr>
<tr>
<td align="left" 45
<td align="left"
<td align="left"
</tr> 55
<tr>
<td align="left"

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FONT-STYLE: italic; FONT-FAMILY: times new roman">Labour
force</font></div>
</td>
<td align="left" 5
<td align="left"
new roman">means,
for any group, persons who were employed or unemployed.</font></div>
</td> 15
</tr>
<tr>
<td align="left"
<td align="left"
<td align="left" 25
</tr>
<tr>
<td align="left" 30
FONT-STYLE: italic; FONT-FAMILY: times new roman">National 35
net savings</font></div>
</td>
<td align="left"
<td align="left"
new roman">is
calculated as national net disposable income less final consumption
expenditure.</font></div>
</td>
</tr> 50
<tr>
<td align="left"
<td align="left"
<td align="left"

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</tr>
<tr>
<td align="left"
FONT-STYLE: italic; FONT-FAMILY: times new roman">Net
domestic product</font></div>
</td> 10
<td align="left"
<td align="left"
new roman">is
calculated as GDP less consumption of fixed capital.</font></div> 20
</td>
</tr>
<tr>
<td align="left"
<td align="left"
<td align="left"
</tr>
<tr> 35
<td align="left"
FONT-STYLE: italic; FONT-FAMILY: times new roman">Net
worth</font></div>
</td>
<td align="left"
<td align="left"
new roman">represents
the difference between the stock of assets (both financial and
non-financial) and the stock of liabilities.  Because it is
derived residually, it can be negative.</font></div> 55
</td>
</tr>
<tr>
<td align="left"

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<td align="left"
<td align="left"
</tr>
<tr> 10
<td align="left"
FONT-STYLE: italic; FONT-FAMILY: times new roman">OECD</font></div>
</td>
<td align="left"
<td align="left"
new roman">means
the Organisation for Economic Co-operation and
Development.</font></div>
</td>
</tr> 30
<tr>
<td align="left"
<td align="left"
<td align="left"
</tr>
<tr>
<td align="left"
FONT-STYLE: italic; FONT-FAMILY: times new roman">Participation
rate</font></div> 50
</td>
<td align="left"
<td align="left" 55
new roman">means, 60

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for any group, the labour force expressed as a percentage of the
civilian
population aged 15 years and over in the same group.</font></div>
</td>
</tr> 5
<tr>
<td align="left"
<td align="left"
<td align="left"
</tr>
<tr>
<td align="left"
FONT-STYLE: italic; FONT-FAMILY: times new roman">RBA</font></div>
</td> 25
<td align="left"
<td align="left"
new roman">means
the Reserve Bank of 35
</td>
</tr>
</table>
</div> 40
</div>
</div>
</div>
</div>
</div> 45
</div>
</div>
</div>
</div>
</div> 50
</div>
</div>
</div>
</div>
</div> 55
</div>
</div>
</div>
</div>
<div><br></div>

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<div>
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
inline; FONT-SIZE: 10pt">v</font></div>
</div> 15
</div>
<div id="HDR">
Roman"> 20
</font></div>
</div>
</div>
</div>
<div><br></div> 25
<div>
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<tr> 55
<td align="left"
<div
FONT-STYLE: italic; FONT-FAMILY: times new roman">Real

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gross domestic income</font></div>
</td>
<td align="left"
<td align="left"
colspan="2" valign="top" width="60%">
<div
new roman">is
calculated by:</font></div>
</td>
</tr>
<tr> 15
<td align="left"
<td align="left" 20
<td align="left"
colspan="2" valign="top" width="60%"><font style="DISPLAY: inline; FONT-SIZE:
</tr>
<tr>
<td valign="top"
width="21%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times
new roman"> 30
</font></td>
<td align="left"
<td align="left" 35
valign="middle" width="5%">
<div
align="left">
<div 40
style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: symbol,
</div> 45
</td>
<td align="left"
<div
new roman">taking
the volume measure of gross national expenditure;</font></div>
</td>
</tr> 55
<tr>
<td valign="top"
new roman"> </font></td>

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<td align="left"
<td align="left"
<td align="left"
</tr> 10
<tr>
<td valign="top"
new roman">
</font></td> 15
<td align="left"
<td align="left"
valign="middle" width="5%"> 20
<div
align="left">
<div
style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font 25
</div>
</td> 30
<td align="left"
<div
new roman">adding
exports of goods and services at current prices deflated by the implicit
price deflator for imports of goods and services;</font></div>
</td>
</tr> 40
<tr>
<td valign="top"
<td align="left" 45
<td align="left"
<td align="left"
</tr>
<tr> 55
<td valign="top"
new roman">
</font></td>

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<td align="left"
<td align="left"
<div
align="left">
<div
</div>
</td> 15
<td align="left"
<div
new roman">deducting
the volume measure of imports of goods and services;
and</font></div>
</td>
</tr> 25
<tr>
<td valign="top"
<td align="left" 30
<td align="left"
<td align="left"
</tr>
<tr> 40
<td valign="top"
new roman">
</font></td>
<td align="left" 45
<td align="left"
<div 50
align="left">
<div
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font 55
</div>
</td>
<td align="left" 60

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<div
new roman">adding
the current price statistical discrepancy for GDP, deflated by the 5
implicit price deflator for GDP.</font></div>
</td>
</tr>
<tr>
<td valign="top" 10
<td align="left"
<td align="left"
<td align="left"
</tr>
<tr>
<td align="left"
<div
gross national income</font></div> 30
</td>
<td align="left"
<td align="left" 35
<div
new roman">is 40
calculated by adjusting real gross domestic income for the real impact
of
primary income flows (property income and labour income) to and from
overseas.</font></div>
</td> 45
</tr>
<tr>
<td align="left"
<td align="left"
<td align="left" 55
</tr>
<tr>
<td align="left" 60

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<div
net national disposable income</font></div> 5
</td>
<td align="left"
<td align="left" 10
<div
new roman">is 15
calculated by:</font></div>
</td>
</tr>
<tr>
<td align="left" 20
<td align="left"
<td align="left"
</tr> 30
<tr>
<td valign="top"
new roman">
</font></td> 35
<td align="left"
<td align="left"
<div
align="left">
<div
</div>
</td> 50
<td align="left"
<div
new roman">taking
real gross domestic income;</font></div>
</td>
</tr>
<tr> 60

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<td valign="top"
<td align="left"
<td align="left"
<td align="left" 10
</tr>
<tr>
<td valign="top" 15
new roman">
</font></td>
<td align="left"
<td align="left"
<div
align="left">
<div
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: symbol, 30
</div>
</td>
<td align="left"
<div
real incomes payable to the rest of the world;</font></div> 40
</td>
</tr>
<tr>
<td valign="top"
width="21%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times 45
<td align="left"
<td align="left" 50
<td align="left"
</tr>
<tr>
<td valign="top"
new roman"> 60
</font></td>

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<td align="left"
<td align="left"
<div
align="left">
<div
</div>
</td> 15
<td align="left"
<div
new roman">adding
real incomes receivable from the rest of the world; and</font></div>
</td>
</tr>
<tr> 25
<td valign="top"
<td align="left"
<td align="left"
<td align="left" 35
</tr>
<tr>
<td valign="top" 40
new roman">
</font></td>
<td align="left"
<td align="left"
<div
align="left">
<div
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: symbol, 55
</div>
</td>
<td align="left"

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<div
the volume measure of consumption of fixed capital.</font></div> 5
</td>
</tr>
<tr>
<td valign="top"
<td align="left"
<td align="left" 15
<td align="left"
</tr>
<tr>
<td valign="top"
new roman"> 25
</font></td>
<td align="left"
<td align="left" 30
<div
new roman">Real 35
incomes payable and receivable are calculated by dividing the nominal
income flows by the implicit price deflator for gross national
</td>
</tr> 40
<tr>
<td valign="top"
<td align="left" 45
<td align="left"
</tr>
<tr>
<td align="left"
<div 55
FONT-STYLE: italic; FONT-FAMILY: times new roman">Real</font></div>
</td>

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<td align="left"
<td align="left"
colspan="2" valign="top" width="60%"> 5
<div
new roman">means
adjusted for the effects of inflation.</font></div> 10
</td>
</tr>
<tr>
<td align="left"
<td align="left"
<td align="left"
</tr>
<tr> 25
<td align="left"
<div
FONT-STYLE: italic; FONT-FAMILY: times new roman">Seasonal
adjustment</font></div>
</td>
<td align="left"
<td align="left"
<div
new roman">involves
estimation of seasonal factors in data and adjustment of the data to
remove the seasonal effect.</font></div>
</td> 45
</tr>
<tr>
<td align="left"
<td align="left"
<td align="left" 55
</tr>
<tr>
<td align="left" 60

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<div
FONT-STYLE: italic; FONT-FAMILY: times new roman">Total
gross fixed capital formation</font></div> 5
</td>
<td align="left"
<td align="left" 10
<div
new roman">refers 15
to expenditure on new fixed assets plus expenditure on second-hand fixed
assets, whether for additions or replacements (but not including
repairs),
where fixed assets are produced assets that are used repeatedly or
continuously in production processes for more than one year. It includes 20
capital formation undertaken by government, public corporations and the
private sector.</font></div>
</td>
</tr>
<tr> 25
<td align="left"
<td align="left" 30
<td align="left"
</tr>
<tr>
<td align="left"
<div 40
FONT-STYLE: italic; FONT-FAMILY: times new roman">Unemployment
rate</font></div>
</td> 45
<td align="left"
<td align="left"
colspan="2" valign="top" width="60%"> 50
<div
new roman">means,
for any group, the number of unemployed persons expressed as a 55
percentage
of the labour force in the same group.</font></div>
</td>
</tr>
<tr> 60

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<td align="left"
<td align="left" 5
<td align="left"
</tr>
</table>
</div>
</div>
</div> 15
</div>
</div>
</div>
</div>
</div> 20
</div>
</div>
</div>
</div>
</div> 25
</div>
</div>
</div>
</div>
</div> 30
</div>
</div>
</div>
</div>
</div> 35
</div>
</div>
</div>
<div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman"> 45
</font></div>
</div>
inline; FONT-SIZE: 10pt">vi</font></div> 50
</div>
</div>
<div id="HDR"> 55
Roman">
</font></div>
</div> 60
</div><br></div>

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FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">USE
OF PROCEEDS</font></div>
Commonwealth of Australia will not receive any proceeds from investors from 10
the
issuance of the Guarantee of ADI Debt Securities.  No separate
consideration will be payable by investors for the Guarantee of the ADI Debt
Securities. The issuer of any ADI Debt Securities guaranteed by the
Commonwealth 15
of Australia under the Guarantee Scheme will receive the proceeds from their
offer and sale.</font></div>
Commonwealth of Australia will charge each ADI issuing ADI Debt Securities
guaranteed under the Guarantee Scheme a fee in accordance with the scheme
rules 25
governing the Guarantee Scheme.</font></div>
<div><br></div>
<div> 30
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1</font></div>
</div>
</div> 45
<div id="HDR">
Roman">
</font></div> 50
</div>
</div>
</div>
<div><br></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">THE
COMMONWEALTH OF AUSTRALIA GUARANTEE</font></div>

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FAMILY: Times New Roman">In
November 2008, in order to promote financial system stability and ensure the
continued flow of credit through the economy at a time of heightened 5
turbulence
in international capital markets, the Government of the Commonwealth of
Australia implemented the Guarantee Scheme.  The Commonwealth of
Australia has executed a Deed of Guarantee (the "Deed of Guarantee") and
adopted 10
the Australian Government Guarantee Scheme for Large Deposits and Wholesale
Funding Scheme Rules (the "Scheme Rules") to give effect to the Guarantee
FAMILY: Times New Roman">Under the
Guarantee Scheme, ADIs may apply to the Reserve Bank of Australia as the
administrator of the Guarantee Scheme (the "Scheme Administrator") to have 20
senior unsecured debt instruments with maturities of up to 60 months that
satisfy the eligibility criteria set out in the Scheme Rules guaranteed by the
Commonwealth of Australia.  In its discretion, the Commonwealth of
Australia may issue an "Eligibility Certificate", which evidences that the
liability specified therein is guaranteed by the Commonwealth of Australia 25
under
the Deed of Guarantee, creating what we refer to as the
Guarantee.</font></div>
following is a summary of certain terms of the Deed of Guarantee and the
Scheme 35
Rules, and is qualified in its entirety by reference to the full text of those
documents, which have been filed as exhibits to the Registration Statement of
which this prospectus forms a part.</font></div>
Deed of Guarantee, the Commonwealth of Australia irrevocably:</font></div>
<div>
width="100%"> 50
<tr valign="top">
</td>
<td>
10pt; FONT-FAMILY: times new roman">guarantees 60
to the persons to whom such liabilities are owed (each, a "beneficiary")

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the payment by each ADI of liabilities that are the subject of an
Eligibility Certificate (the "Guaranteed Liabilities");
and</font></div>
</td>
</tr> 5
</table>
</div>
</div>
<div>
width="100%">
</td>
<td>
10pt; FONT-FAMILY: times new roman">undertakes
in favour of such persons that, whenever an ADI does not pay a 25
Guaranteed
Liability on the date on which it becomes due and payable, the
Commonwealth of Australia shall, upon a claim by a beneficiary made in
accordance with the Scheme Rules, and following the expiry of any
applicable grace period, pay the Guaranteed Liability in accordance with 30
the Scheme Rules.</font></div>
</td>
</tr>
</table>
</div> 35
</div>
Commonwealth of Australia will not be liable under the Deed of Guarantee in
respect of any Guaranteed Liability that has been varied, amended, waived,
released, novated, supplemented, extended or restated in any material respect
without the written consent of the Commonwealth of Australia.</font></div> 45
FAMILY: Times New Roman">A holder 50
of securities that benefits from the Guarantee will not receive payment under
the Guarantee if they fail to follow the Scheme Rules for submission of
claims.  A claim by a beneficiary for payment under the Guarantee
must
be in writing and made in the form of Schedule 8 to the Scheme Rules and 55
delivered to the Scheme Administrator.  A claim that is not made in
the form of Schedule 8 is not a valid claim and shall be treated as not having
been made.  A valid claim is one that establishes that the amount
claimed:</font></div>

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<div>
width="100%">
<tr valign="top"> 5
</td>
<td>
10pt; FONT-FAMILY: times new roman">is
due to the beneficiary;</font></div> 15
</td>
</tr>
</table>
</div>
</div> 20
<div>
width="100%">
<tr valign="top">
</td>
<td>
10pt; FONT-FAMILY: times new roman">remains
unpaid despite the beneficiary having made a claim on the
ADI;</font></div>
</td>
</tr> 40
</table>
</div>
</div>
<div>
width="100%">
</td>
<td>
10pt; FONT-FAMILY: times new roman">is
in respect of a Guaranteed Liability with a due date on or before the 60
expiration of the relevant Eligibility Certificate;

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and</font></div>
</td>
</tr>
</table>
</div> 5
</div>
<div>
width="100%">
<tr valign="top">
</td>
<td> 20
10pt; FONT-FAMILY: times new roman">has
not been paid, and is not eligible to be claimed by the beneficiary in
accordance with the Financial Claims Scheme in Division 2AA of the <font
style="DISPLAY: inline; FONT-STYLE: italic">Banking Act 1959 </font>(which 25
generally applies to claims in relation to deposits of eligible ADIs of
less than $1,000,000).</font></div>
</td>
</tr>
</table> 30
</div>
</div>
Commonwealth of Australia shall pay to the beneficiary the amount specified in
a
valid claim.  There is no designated period within which the 40
Commonwealth of Australia is required to make payments after it receives a
valid
claim.  All payments will be made in the currency in which the
Guaranteed Liability is denominated.</font></div>
<div><br></div>
<div>
<div id="FTR">
Roman">
</font></div> 55
</div>

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</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div>
</div> 10
<div><br></div>
Commonwealth of Australia may amend the terms of the Deed of Guarantee or the 15
Scheme Rules at any time in its discretion by publishing the amendment on the
website referred to in the Scheme Rules (which is currently <font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY:
Times New Roman">www.guaranteescheme.gov.au</font>),
which amendment will be filed as an exhibit to the Registration Statement of 20
which this prospectus forms a part; provided that (except insofar as such
amendment is required by law) such amendment does not reduce the Commonwealth
of
Australia's obligations to the beneficiaries in a manner which is prejudicial
to 25
the interests of the beneficiaries in respect of any subsisting Guaranteed
Liability.  The contents of the website are not incorporated by
reference into this prospectus.</font></div>
FAMILY: Times New Roman">ADIs
whose liabilities are guaranteed under the Guarantee Scheme are subject to a
number of obligations under the Scheme Rules, including the obligation 35
to:</font></div>
<div>
width="100%">
<tr valign="top">
</td>
<td> 50
10pt; FONT-FAMILY: times new roman">provide
a counter-indemnity deed indemnifying the Commonwealth of Australia
against all liabilities, costs and expenses that it may incur in
consequence of or arising from guaranteeing the ADIs' 55
obligations;</font></div>
</td>
</tr>
</table>
</div> 60
</div>

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<div>
width="100%">
<tr valign="top">
</td>
<td>
10pt; FONT-FAMILY: times new roman">provide
written reports to the Scheme Administrator;
and</font></div>
</td>
</tr> 20
</table>
</div>
</div>
<div>
width="100%">
</td>
<td>
10pt; FONT-FAMILY: times new roman">pay
specified fees to the Commonwealth of Australia for the 40
Guarantee.</font></div>
</td>
</tr>
</table>
</div> 45
</div>
FAMILY: Times New Roman">However,
the Scheme Rules provide that a beneficiary's rights in relation to a
Guaranteed
Liability shall not be prejudiced by the failure of an ADI to comply with the
Scheme Rules.</font></div> 55
FAMILY: Times New Roman">The Deed 60

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of Guarantee is governed by, and shall be construed in accordance with, and
any
matter related to it is to be governed by, the law of the State of New South
Wales, Australia.</font></div>
Guarantee of ADI Debt Securities is irrevocable and ranks equally with other 10
unsecured debts and financial obligations of the Commonwealth of
FAMILY: Times New Roman">Each
issue of ADI Debt Securities to which the Guarantee relates will be identified
in a prospectus supplement that will accompany this prospectus.  No
consideration separate from that paid for the ADI Debt Securities will be paid 20
for the Guarantee of ADI Debt Securities.  See "Use of Proceeds" in
FAMILY: Times New Roman">If the
Commonwealth of Australia does not perform its obligations under the
Guarantee,
beneficiaries may be required to commence proceedings in Australia to enforce 30
their rights.  See "—Enforcement of Civil Liabilities" in this
prospectus.</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Enforcement
of Civil Liabilities</font></div>
Commonwealth of Australia is a sovereign state.  The Commonwealth of
Australia has not agreed to waive any sovereign immunity or immunity from 45
personal jurisdiction in respect to any action brought in the courts of the
United States or elsewhere (except the courts of competent jurisdiction in
Australia), nor has it appointed an agent in New York upon which process may
be
served for any purpose.</font></div> 50
FAMILY: Times New Roman">As a 55
consequence, it may be that the Commonwealth of Australia's obligations under
the Deed of Guarantee can only be enforced in an Australian court of competent
jurisdiction. In any suit in an Australian court of competent jurisdiction
relating to the Deed of Guarantee, the Commonwealth of Australia would not be
entitled to any defence based on Crown or sovereign immunity. If investors are 60
able to invoke the jurisdiction of a foreign court in respect of the Guarantee

320
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or any other claim against the Commonwealth of Australia under the Deed of
Guarantee or otherwise, it may be difficult for investors to obtain or realise
upon judgments of foreign courts against the Commonwealth of
Australia.  Furthermore, it may be difficult for investors to
enforce 5
in Australia or elsewhere the judgments of foreign courts against the
Commonwealth of Australia.  The Deed of Guarantee does not contain
any
submission to the jurisdiction of the courts of a foreign jurisdiction or any
waiver of any immunity that might be available to the Commonwealth of 10
Australia
under the law of any foreign jurisdiction or in respect to any claim brought
against the Commonwealth of Australia in any such foreign jurisdiction for any
reason.</font></div>
<div><br></div>
<div>
<div id="FTR">
Roman">
</font></div> 25
</div>
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div> 40
</div>
<div><br></div>
FAMILY: Times New Roman">Under the 45
applicable provisions of the <font style="DISPLAY: inline; FONT-SIZE: 10pt;
FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Judiciary
Act 1903</font> (Cth), no execution or attachment may be issued against the
property or revenues of the Commonwealth of Australia pursuant to the
Guarantee.  However, on receipt of the certificate of a judgment 50
against the Commonwealth of Australia the Minister for Finance and
Deregulation
is obligated to satisfy the judgment out of moneys legally
available.  Payment could not be made by the Commonwealth of
Australia 55
in satisfaction of any judgment except from monies appropriated by the
Australian Parliament.  The Australian Parliament has passed
legislation appropriating the Consolidated Revenue Fund for the purposes of
paying claims under the Deed of Guarantee in accordance with the Scheme
Rules.</font></div> 60

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<div><br></div>
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman"> 10
</font></div>
</div>
inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4</font></div> 15
</div>
</div>
<div id="HDR"> 20
Roman">
</font></div>
</div> 25
</div>
</div>
<div><br></div>
COMMONWEALTH OF AUSTRALIA</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Population
and Geography of Australia</font></div>
FAMILY: Times New Roman">Australia
is located in the Southern Hemisphere. It has an area of nearly 7.7 million
square kilometres. It is the world's sixth largest nation after Russia, 45
Canada,
China, the United States and Brazil.  The major portion of
Australia's
population lives in the eastern and southern coastal regions.  The
vast central area of Australia is arid and largely unsuitable for 50
agriculture.</font></div>
preliminary estimated resident population of Australia at 30 June 2008 was
21,374,000 persons.  This was an increase of 359,000 persons (1.7%)
since 30 June 2007 and 91,400 persons since 31 March 2008.</font></div>

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estimated resident populations of the six States, the Australian Capital
Territory and Northern Territory at 30 June 2008 were as follows.</font></div> 5
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Table 10
1:  Preliminary estimated resident population of States and
Territories</font></div>
<div>
<tr> 15
<td valign="top" width="31%" style="BORDER-TOP: black 1pt solid;
MARGIN-RIGHT: 0pt">
0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">State
/ Territory</font></div>
</div>
</td> 25
PADDING-BOTTOM: 1px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-
SIZE: 10pt; FONT-FAMILY: times new roman"> </font></td>
<td colspan="2" valign="top" width="24%" style="BORDER-TOP: black
1pt solid; BORDER-BOTTOM: black 1px solid"> 30
MARGIN-RIGHT: 0pt">
0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="right"><font style="DISPLAY:
inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new 35
roman">Population
(as at 30 June 2008)</font></div>
</div>
</td>
<td align="left" valign="top" width="40%" style="BORDER-TOP: 40
medium none; BORDER-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-WEIGHT:
bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"> </font></td>
</tr>
<tr>
MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt;
FONT-FAMILY: times new roman">New
South Wales</font></div>
</td> 50
<td align="right" valign="top" width="5%"><font style="DISPLAY:
MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 55
10pt; FONT-FAMILY: times new roman">6,967,200</font></div>
</td>
<td align="right" colspan="2" valign="top" width="40%"><font
</tr>

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<tr>
FONT-FAMILY: times new roman">Victoria</font></div> 5
</td>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; 10
MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE:
</td>
</tr>
<tr>
FONT-FAMILY: times new roman">Queensland</font></div>
</td>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"> </font></td> 25
</td> 30
</tr>
<tr> 35
FONT-FAMILY: times new roman">Western
Australia</font></div> 40
</td>
</td>
</tr>
<tr>
FONT-FAMILY: times new roman">South
Australia</font></div>
</td>
<td align="right" valign="top" width="5%"><font style="DISPLAY: 60

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</td> 5
</tr>
<tr> 10
FONT-FAMILY: times new roman">Tasmania</font></div>
</td> 15
10pt; FONT-FAMILY: times new roman">498,200</font></div>
</td>
</tr>
<tr>
MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; 30
FONT-FAMILY: times new roman">Australian
Capital Territory</font></div>
</td>
</td> 40
</tr>
<tr> 45
<td align="left" valign="top" width="31%" style="BORDER-BOTTOM:
black 1px solid">
FONT-FAMILY: times new roman">Northern 50
Territory</font></div>
</td>
<td align="right" valign="top" width="5%" style="BORDER-BOTTOM:
black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY:
times new roman"> </font></td> 55
black 1px solid">
10pt; FONT-FAMILY: times new roman">219,900</font></div> 60
</td>

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<td align="right" colspan="2" valign="top" width="40%"
style="PADDING-BOTTOM: 1px"><font style="DISPLAY: inline; FONT-SIZE: 10pt;
FONT-FAMILY: times new roman"> </font></td>
</tr>
</table> 5
</div>
<div>
<div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-
FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-
FAMILY: Times New Roman"><font style="FONT-SIZE: 8pt; FONT-FAMILY: Times New 10
Roman"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-
FAMILY: Times New Roman">Source:  </font>ABS
Catalogue No.  3101.0.</font></font></font></div>
</div>
<div> </div> 15
majority of the population lives in the metropolitan areas of the capital
cities 20
of the six States, and in Canberra, the national capital.</font></div>
growth of Australia's population has two components: natural increase (the
number of births minus the number of deaths) and net overseas
migration.</font></div>
FAMILY: Times New Roman">Natural
increase for the year ended 30 June 2008 was estimated to be 145,500 persons, 35
an
increase of 4.3% (or 6,000 persons) on the natural increase for the year ended
30 June 2007 (139,500 persons).  The preliminary estimate for births
during the year ended 30 June 2008 (287,500) was 4.8% higher than the figure
for 40
the year ended 30 June 2007 (274,300).  The preliminary estimate for
deaths during the year ended 30 June 2008 was 142,000.</font></div>
FAMILY: Times New Roman">For the
year ended 30 June 2008, Australia recorded a preliminary net overseas
migration
("NOM") estimate of an increase of 213,500 persons. This was the difference 50
between 443,200 overseas arrivals that were added to the population and
229,700
overseas departures that were subtracted from the population. Australia's
current migration program allows people from any country to apply to migrate
to 55
Australia, regardless of their ethnicity, culture, religion or language,
provided that they meet the criteria set out in law. The Australian Government
views Australia's cultural diversity as a source of both social and economic
wealth.  The contribution made to population growth by NOM (59.5%)
was 60
higher than that of natural increase (40.5%).</font></div>

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<div><br></div>
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman"> 10
</font></div>
</div>
</div>
</div>
<div id="HDR"> 20
Roman">
</font></div>
</div> 25
</div>
</div>
<div><br></div>
following table sets forth the estimated resident population of Australia by
age
group as of 30 June 2008:</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Table
2:  Preliminary estimated resident population by age 40
group</font></div>
<div>
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<table cellpadding="0" cellspacing="0"
width="66%">
<tr> 60

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<td align="left" rowspan="2"
valign="bottom" width="41%" style="BORDER-TOP: black 1pt solid; BORDER-BOTTOM:
black 1px solid">
<div style="DISPLAY: block;
MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"> 5
MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center"
FONT-FAMILY: times new roman">Age
group</font></div> 10
FONT-FAMILY: times new roman">(years)</font></div>
</div> 15
</td>
<td valign="bottom" width="7%"
style="BORDER-TOP: black 1pt solid; PADDING-BOTTOM: 2px"><font style="DISPLAY:
inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new
<td align="left" colspan="4"
black 1px solid">
MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"> 25
FONT-FAMILY: times new roman">Population</font></div>
<div style="DISPLAY: block; 30
FONT-FAMILY: times new roman">(as
at 30 June 2008)</font></div>
</div> 35
</td>
<td align="left" valign="bottom"
width="8%" style="BORDER-TOP: black 1pt solid; BORDER-BOTTOM: black 1px
solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-
</tr>
<tr>
style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold;
FONT-SIZE: 10pt; FONT-FAMILY: times new roman"> </font></td> 45
valign="bottom" width="21%" style="BORDER-BOTTOM: black 1px solid">
MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
FONT-FAMILY: times new roman">Males</font></div>
</div>
</td> 55
FONT-SIZE: 10pt; FONT-FAMILY: times new roman"> </font></td>
valign="bottom" width="13%" style="BORDER-BOTTOM: black 1px solid"> 60

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MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
FONT-FAMILY: times new roman">
Females</font></div>
</div>
</td>
</tr> 10
<tr>
<td valign="bottom" width="41%">
MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 20.6pt" align="center"><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0- 15
4</font></div>
</td>
new roman"> </font></td> 20
width="13%">
MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right"
new roman">703,896</font></div>
</td>
valign="bottom" width="17%"><font style="DISPLAY: inline; FONT-SIZE: 10pt;
FONT-FAMILY: times new roman"> </font></td> 30
width="14%">
</td>
</tr>
<tr>
MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 20.6pt" align="center"><font 45
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5-
9</font></div>
</td>
width="13%">
MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" 55
</td>
valign="bottom" width="17%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; 60

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width="14%">
</td>
</tr>
<tr>
14</font></div>
</td>
width="13%">
</td>
width="14%">
</td>
</tr>
<tr>
19</font></div>
</td>
<td align="left" valign="bottom" 50
width="13%">
</td>

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width="14%"> 5
</td> 10
</tr>
<tr> 15
24</font></div> 20
</td>
width="13%">
new roman">771,929</font></div> 30
</td>
width="14%">
</td>
</tr> 45
<tr>
29</font></div>
</td>
width="13%">

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</td>
width="14%">
</td>
</tr> 15
<tr>
34</font></div>
</td>
width="13%">
</td>
width="14%">
</td>
</tr>
<tr>
39</font></div>
</td>
width="13%">

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</td>
width="14%">
</td>
</tr>
<tr>
44</font></div>
</td>
width="13%">
</td>
<td align="left" colspan="2" 35
width="14%">
</td>
</tr>
<tr>
<td valign="bottom" width="41%"> 50
49</font></div>
</td> 55
width="13%"> 60

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</td> 5
width="14%"> 10
</td> 15
</tr>
<tr> 20
54</font></div> 25
</td>
width="13%">
</td>
width="14%">
</td>
</tr> 50
<tr>
59</font></div>
</td>

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width="13%">
</td>
width="14%">
</td>
</tr>
<tr>
64</font></div>
</td>
width="13%">
</td>
width="14%">
</td>
</tr>
<tr>
69</font></div>
</td>

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width="13%"> 5
</td> 10
width="14%"> 15
</td> 20
</tr>
<tr> 25
74</font></div> 30
</td>
width="13%">
</td>
width="14%">
</td>
</tr> 55
<tr>
79</font></div>

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</td>
width="13%">
</td>
width="14%">
</td>
</tr> 25
<tr>
84</font></div>
</td>
width="13%">
</td>
width="14%">
</td>
</tr>
<tr>

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89</font></div>
</td>
width="13%">
</td>
width="14%">
</td>
</tr>
<tr>
94</font></div>
</td>
width="13%">
</td>
<td align="left" colspan="2" 45
width="14%">
</td>
</tr>
<tr>
<td valign="bottom" width="41%"> 60

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99</font></div>
</td> 5
width="13%"> 10
</td> 15
width="14%"> 20
</td> 25
</tr>
<tr> 30
style="BORDER-BOTTOM: black 1px solid">
MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">100
and over</font></div>
</div>
</td> 40
style="BORDER-BOTTOM: black 1px solid"> 45
new roman">723</font></div>
</div>
</td>
width="8%" style="PADDING-BOTTOM: 1px; BORDER-BOTTOM: black 1pt solid"><font 55

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</div>
</td> 10
style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-
</tr>
<tr> 15
MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">All 20
ages</font></div>
</td>
width="7%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY:
width="13%" style="BORDER-BOTTOM: black 1px solid">
new roman">10,629,804</font></div>
</td>
valign="bottom" width="17%" style="BORDER-BOTTOM: black 1px solid"><font
new roman">10,744,194</font></div>
</td>
width="8%" style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: 45
</tr>
</table>
</div>
</div> 50
</div>
</div>
</div>
</div>
</div> 55
</div>
</div>
</div>
</div>
</div> 60
</div>

340
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</div>
</div>
</div>
<div>
<div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT- 5
FAMILY: Times New Roman"><font style="FONT-SIZE: 8pt; FONT-FAMILY: Times New
Catalogue No. 3101.0.</font></font></font></div> 10
</div>
<div>
</div>
</div> 15
FAMILY: Times New Roman">Australia's 20
current total fertility rate (the average number of babies that a woman could
expect to bear during her reproductive lifetime, assuming current age-specific
fertility rates apply), is 1.935 births per woman in the year ended 30 June
2008, a rate higher than the fertility rates in many OECD countries, including
Italy, Germany, Japan and Canada, and higher than the OECD average of 1.63 in 25
2005.  However, Australia's current total fertility rate is below
those for New Zealand (2.0 in 2005) and the United States (2.05 in 2005).
Based
on recent age-specific fertility trends, Australia's total fertility rate is
projected to increase initially, then to fall slowly to 1.7 by 30
2047.</font></div>
FAMILY: Times New Roman">Average
Australian mortality rates have fallen strongly over the past century. As a
consequence, life expectancies have risen for both men and women. Falling
mortality rates add to population growth and imply a higher proportion of aged
people in the population.  Mortality rates are falling across all 40
age
groups and this trend is projected to continue for at least the next four
decades.</font></div>
FAMILY: Times New Roman">Australia's
NOM helps to reduce population ageing. However, falling fertility and
mortality 50
rates are projected to lead to an overall rise in the average age of the
population.  The pace of ageing of the population is projected to
quicken after 2010, as the baby boomer generation starts to reach age
65.  While many OECD countries share Australia's demographic
challenges, Australia is in a stronger position to meet them than 55
most.</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form

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of Government</font></div>
Commonwealth of Australia was formed as a federal union on
1 January 1901 when the six former British colonies - now the six
States of New South Wales, Victoria, Queensland, South Australia, Western
Australia and Tasmania - were united in a 'Federal Commonwealth' under the 10
authority of the Commonwealth of Australia Constitution Act enacted by the
British Parliament.  In addition to the States, there are ten
Territories that include the Australian Capital Territory, which contains the
national capital (Canberra), the Northern Territory, Norfolk Island, the
Ashmore 15
and Cartier Islands, the Australian Antarctic Territory, Christmas Island, the
Cocos (Keeling) Islands, the Coral Sea Islands, the Jervis Bay Territory and
the
Territory of Heard Island and McDonald Islands.  The Northern
Territory, the Australian Capital Territory and Norfolk Island have been 20
granted
forms of self-government.  The remaining Territories are
administered
by the Commonwealth Government.</font></div>
<div><br></div>
<div>
<div id="FTR">
Roman">
</font></div> 35
</div>
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div> 50
</div>
<div><br></div>
FAMILY: Times New Roman">Federal 55
legislative powers in Australia are vested in the Federal Parliament (the
"Parliament"), which consists of the Queen as head of state, the Senate and
the
House of Representatives.  The Governor-General represents the Queen
throughout Australia.  The Senate and the House of Representatives 60
are

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both elected by the compulsory vote of all eligible persons (generally,
Australian citizens aged 18 years and older).  Twelve senators are
elected from each of the six States for a term of six years; half the senators
from each State are elected every third year.  In addition, two
senators are elected from each of the Australian Capital Territory and the 5
Northern Territory and hold office until the next general election of the
House
of Representatives.  The House of Representatives consists of 150
members, each elected for a term not exceeding three years.  Each
State's representation in the House of Representatives is approximately 10
proportionate to its population.  This representation is reviewed
during the life of every Parliament in response to population
shifts.  In accordance with established practice, the election for
members of the Senate is usually held on the same date as the election for
members of the House of Representatives.  Under certain 15
circumstances
the Governor-General may simultaneously dissolve the Senate and the House of
Representatives.</font></div>
Senate has equal power with the House of Representatives except in relation to
laws appropriating money or imposing taxes, which must originate in the House 25
of
Representatives.  Laws imposing taxes and laws appropriating money
for
the ordinary annual services of the Government may not be amended by the
Senate, 30
but may be rejected or returned by the Senate to the House of Representatives
with a request for amendment.  Any member of the House of
Representatives or the Senate may introduce a proposed law (a
"bill").  To become law, bills must be passed by both the House of
Representatives and the Senate.</font></div> 35
Constitution, the Parliament is empowered to make laws on certain specified
matters such as defence, external affairs, interstate and overseas trade and
commerce, foreign corporations and trading or financial corporations formed
within the limits of Australia, borrowing money, taxation (including customs
and 45
excise taxes), postal, telegraphic and telephonic services, currency and
banking, insurance, immigration, pensions and social services.  Some
of these powers are given to the Parliament to the exclusion of the State
Parliaments.  Other powers are exercised by the Parliament
concurrently with the State Parliaments, but any legislation within the limits 50
of its powers enacted by the Parliament prevails over any inconsistent laws of
the States.  Powers not conferred on the Parliament remain with the
States, subject to certain Constitutional limitations.</font></div>
executive power of the Commonwealth of Australia under the Constitution is
formally vested in the Queen and is exercisable by the Governor-General as the 60
Queen's representative.  There is a Federal Executive Council to

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advise the Governor-General.  This Council is composed of the Prime
Minister and other Federal Ministers.  These Ministers are members
of
either the House of Representatives or the Senate and generally belong to the
party or coalition of parties which has a majority in the House of 5
Representatives.  Such Ministers form the Government with the
practical result that executive power is exercised by the Prime Minister and
the
other Ministers.</font></div>
FAMILY: Times New Roman">The major
Australian political parties are the Australian Labor Party, the Liberal Party 15
of Australia and the Nationals.  Minor parties include the
Australian
Greens, the Family First Party and the Country Liberal Party. From March 1996
to
November 2007, the Government was formed by a coalition of the Liberal Party 20
of
Australia and the Nationals.  A Federal election was held on 24
November 2007, following which the Australian Labor Party won a majority of
the
seats in the House of Representatives and became the Government, with the Hon. 25
Kevin Rudd MP being elected as Prime Minister.</font></div>
following tables show the composition of the House of Representatives and the
Senate as at 31 December 2008.</font></div>
3:  House of Representatives composition</font></div>
<div> 40
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<tr>
<td align="left" valign="top" width="52%"
style="BORDER-TOP: black 1pt solid">
Labor Party</font></div>
</td>
style="BORDER-TOP: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE: 60

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TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="left"><font
roman">83
</font></div>
</td>
style="BORDER-TOP: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; 10
</tr>
<tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Liberal
Party of Australia</font></div>
</td>
TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="left"><font 25
roman">55
</font></div>
</td>
</tr>
<tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The
Nationals</font></div>
</td> 40
roman">9
</font></div>
</td> 50
</tr>
<tr> 55
<td valign="top" width="52%" style="BORDER-
BOTTOM: black 1px solid">
TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

345
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roman">Independents</font></div>
</div>
</td>
<td valign="top" width="2%" style="PADDING- 5
BOTTOM: 1px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times
0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right"
new roman">3    15
</font></div>
</div>
</td>
<td valign="top" width="36%" style="PADDING-
BOTTOM: 1px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times 20
</tr>
<tr>
roman">Total</font></div>
</td> 30
<td align="left" valign="top" width="10%" 35
style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times
new roman">150    40
</font></div>
</td>
</tr>
</table>
</div>
</div>
</div> 50
</div>
</div>
</div>
</div>
</div> 55
</div>
</div>
<div><br></div>
<div> 60

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MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
</div>
</div> 15
<div id="HDR">
Roman">
</font></div> 20
</div>
</div>
</div>
<div><br></div>
4:  Senate composition</font></div>
<div>
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<tr> 40
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Australian 45
Labor Party</font></div>
</td>
style="BORDER-TOP: black 1pt solid"><font style="DISPLAY: inline; FONT-SIZE:
roman">32
</font></div>
</td>
style="BORDER-TOP: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; 60

347
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</tr>
<tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Liberal
Party of Australia</font></div>
</td>
roman">32
</font></div>
</td>
</tr>
<tr>
Greens</font></div>
</td>
TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="left"><font 35
roman">5
</font></div>
</td>
</tr>
<tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The
<font size="+0">Nationals</font></font></div>
</td> 50
roman">4
</font></div>
</td> 60

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</tr>
<tr> 5
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Family
First Party</font></div> 10
</td>
roman">1
</font></div> 20
</td>
</tr> 25
<tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Country 30
Liberal Party</font></div>
</td>
roman">1    40
</font></div>
</td>
</tr>
<tr>
roman">Independents</font></div> 55
</div>
</td>

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new roman">1
</font></div>
</div> 10
</td>
new roman">
</font></td> 15
</tr>
<tr>
</td>
new roman">76
</font></div> 35
</td>
</tr> 40
</table>
</div>
</div>
</div>
</div> 45
</div>
</div>
</div>
</div>
</div> 50
</div>
FAMILY: Times New Roman">Judicial 55
power in Australia is vested in the High Court of Australia, other Federal
courts and State and Territory courts.  The High Court is a superior
court of record and consists of the Chief Justice and six other Justices who
are
appointed by the Governor-General following consultations with the 60

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States.  The Justices are appointed until they are 70 years of age
and
can be removed by the Governor-General in Council in certain circumstances on
the grounds of misbehaviour or incapacity.  In certain limited
matters 5
the High Court has original jurisdiction.  It also has appellate
jurisdiction in relation to Federal courts, including the Federal Court of
Australia, and the Supreme Court of each State and the Northern Territory and
other courts of the States exercising federal jurisdiction.  Appeals
from the Supreme Court of a Territory (other than the Northern Territory) may 10
be
taken to the Federal Court of Australia.  The common law system, as
developed in the United Kingdom, forms the basis of Australian
jurisprudence.</font></div>
<div><br></div>
<div>
<div id="FTR">
Roman">
</font></div> 25
</div>
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div> 40
</div>
<div><br></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">THE 45
AUSTRALIAN ECONOMY</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Overview</font></div>
is a stable, culturally diverse and democratic society with a skilled
workforce
and a strong, competitive economy.  Between 1990-1991 and 2007-08,
Australia's real economy grew by an average of around 3.4% a 60
year.  Australia's GDP in 2007-08 (in value terms) was just over $1

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p351 22-9-2014
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trillion.  The IMF estimates that in 2007 Australia was the world's
17th largest economy by GDP.  Based on OECD data, Australia's real
per
capita GDP ranked 11th among OECD nations in 2007.</font></div>
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Principal
Economic Indicators</font></div> 10
following table sets forth Australia's principal economic indicators for each
of
the 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08 fiscal years.</font></div>
<div>
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<table 50
<tr>
<td
align="left" colspan="20" valign="bottom" style="BORDER-BOTTOM: black 1px
solid"> 55
<div
FONT-FAMILY: times new roman"><font size="+0">Table</font> 5: Principal
Economic Indicators</font></div> 60
</td>

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<td
align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 1px; BORDER-BOTTOM:
black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE:
</tr> 5
<tr>
<td
valign="bottom" width="40%" style="PADDING-BOTTOM: 1px"><font style="DISPLAY:
inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman">
</font></td> 10
<td
<td 15
align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 1px"><font
<td
align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 1px 20
solid">
<div
style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold;
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2003-04</font></div>
</td> 25
<td
align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM:
1px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-
<td 30
<td
align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 1px"><font 35
<td
align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 1px
solid"> 40
<div
</td>
<td 45
<td
valign="bottom" width="1%" style="PADDING-BOTTOM: 1px"><font style="DISPLAY: 50
<td
style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times 55
<td
solid">

353
p353 22-9-2014
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<div
</td>
<td 5
<td
<td
<td
solid">
<div 20
</td>
<td
align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 25
<td
<td
<td
solid">
<div
style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; 40
</td>
<td
1px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT- 45
</tr>
<tr>
<td
align="left" valign="bottom" width="40%"> 50
<div
new roman">GDP,
Chain Volume Measure (A$ millions)</font></div> 55
</td>
<td
align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-

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p354 22-9-2014
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<td
align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-
<td
align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT- 5
SIZE: 10pt; FONT-FAMILY: times new roman">956,017</font></td>
<td
align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline;
<td 10
<td
SIZE: 10pt; FONT-FAMILY: times new roman"> </font></td> 15
<td
<td
align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; 20
<td
<td 25
<td
SIZE: 10pt; FONT-FAMILY: times new roman">1,012,269</font></td> 30
<td
<td
<td
<td 40
SIZE: 10pt; FONT-FAMILY: times new roman">1,045,674</font></td>
<td
<td
<td
align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT- 50
<td
SIZE: 10pt; FONT-FAMILY: times new roman">1,083,942</font></td>
<td 55
</tr>
<tr>
<td 60

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<div
align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE:
italic; FONT-FAMILY: times new roman">Percentage
change</font></div> 5
</td>
<td
SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new
<td
<td 15
SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">4.0</font></td>
<td
<td
<td
<td 30
<td
<td
<td
<td 45
<td
<td
<td

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p356 22-9-2014
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<td
<td
<td
SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new 10
<td
<td
<td
</tr>
<tr>
<td 25
<div
new roman">GDP 30
per capita, Chain Volume Measure (A$)</font></div>
</td>
<td
<td
<td
<td
<td 45
<td
<td
<td
<td

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p357 22-9-2014
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<td
<td
<td
<td 10
<td
<td
<td
<td
<td 25
<td
SIZE: 10pt; FONT-FAMILY: times new roman">51,243</font></td> 30
<td
</tr>
<tr> 35
<td
<div
align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: 40
change</font></div>
</td>
<td
<td
<td
<td 55
<td

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p358 22-9-2014
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<td
<td
<td 10
<td
<td
<td
<td 25
<td
<td
<td
<td 40
<td
<td
<td
<td 55
</tr>
<tr> 60

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p359 22-9-2014
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<td
<div
new roman"><font size="+0"><font size="+0"><font style="DISPLAY: inline; FONT-
SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">Unemployment
Rate (% of labour force)</font><font style="DISPLAY: inline; FONT-SIZE:
70%; VERTICAL-ALIGN: super; FONT-FAMILY: times new roman"> </font><font
style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: 10
super">(a)</font></font></font></font></div>
</td>
<td
<td
<td
<td
<td
<td
<td
<td
<td
<td
<td
<td
<td

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<td
<td 5
<td
<td
<td
<td 20
<td
</tr>
<tr>
<td
<div
SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">Consumer 35
Price Index (% change)</font><font style="DISPLAY: inline; FONT-SIZE:
style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN:
super">(b)</font></font></font></font></div>
</td> 40
<td
<td 45
<td
<td
<td
<td 60

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p361 22-9-2014
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<td
SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">2.5</font></td> 5
<td
<td 10
<td
<td
<td
<td 25
<td
<td
<td
<td 40
<td
<td
<td
</tr> 55
<tr>
<td
<div

362
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SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">Wage
Price Index (% change)</font><font style="DISPLAY: inline; FONT-SIZE:
style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">(b) 5
(c)</font></font></font></font></div>
</td>
<td
<td
<td
<td
<td
<td
<td
<td
<td
<td
<td
<td
<td
<td

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p363 22-9-2014
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<td
<td
<td
<td
<td
<td
</tr>
<tr>
<td 25
<div
new roman">Exports, 30
Chain Volume Measure (A$ millions)</font></div>
</td>
<td
<td
<td
<td
<td 45
<td
<td
<td
<td

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p364 22-9-2014
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<td
<td
<td
<td 10
<td
<td
<td
<td
<td 25
<td
<td
</tr>
<tr> 35
<td
<div
change</font></div>
</td>
<td
<td
<td
<td 55
<td

365
p365 22-9-2014
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<td
<td
<td 10
<td
<td
<td
<td 25
<td
<td
<td
<td 40
<td
<td
<td
<td 55
</tr>
<tr> 60

366
p366 22-9-2014
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<td
<div
new roman">Imports,
Chain Volume Measure (A$ millions)</font></div>
</td>
<td
<td
<td 15
<td
<td
<td
<td
<td 30
<td
<td
<td
<td
<td 45
<td
<td
<td
<td

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p367 22-9-2014
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<td
<td
<td
</tr> 10
<tr>
<td
<div
change</font></div>
</td>
<td 20
<td
<td
<td
<td 35
<td
<td
<td
<td 50
<td
<td

368
p368 22-9-2014
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<td
<td 5
<td
<td
<td
<td 20
<td
<td
<td
</tr> 35
<tr>
<td
<div
new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times
new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font
style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman"><font 45
style="FONT-SIZE: 9pt; FONT-FAMILY: times new roman"><font style="FONT-SIZE:
9pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE:
10pt; FONT-FAMILY: times new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY:
times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: 50
times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY:
times new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new
roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font
style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Balance of Payments
– Current Account (A$ millions)<font style="DISPLAY: inline; FONT- 55
SIZE: 70%; VERTICAL-ALIGN: super">

(d)</font></font></font></font></font></font></font></font></font></font></fon
t></font></font></font></font></font></div>
</td> 60

369
p369 22-9-2014
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<td
<td
<td
SIZE: 10pt; FONT-FAMILY: times new roman">-45,590</font></td>
<td 10
<td
<td
<td
<td
<td 25
<td
<td
<td
<td
<td 40
<td
SIZE: 10pt; FONT-FAMILY: times new roman">-58,999</font></td> 45
<td
<td
<td
<td 55
<td
</tr>

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p370 22-9-2014
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<tr>
<td
<div
new roman">Official
Reserve Assets at end of period (A$ millions)</font></div>
</td>
<td 10
<td
<td
<td
<td
<td 25
<td
<td
<td
<td
<td 40
<td
<td
<td
<td
<td 55
<td

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<td
<td
<td
</tr> 10
<tr>
<td
align="left" valign="bottom" width="40%" style="BORDER-BOTTOM: black 1px
solid">
<div 15
new roman">Commonwealth
Government Net Debt (A$ millions)</font></div>
</td> 20
<td
solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new
<td 25
<td
roman">23,948</font></td>
<td
align="left" nowrap valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px
solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new 35
<td
<td
<td 45
<td
align="left" nowrap valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px 50
<td
<td

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<td
roman">-2,250</font></td>
<td 5
<td
<td
<td
roman">-27,385</font></td> 20
<td
<td 25
<td
align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px 30
<td
roman">-42,918</font></td>
<td
align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 1px;
BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt;
</tr>
</table>
</div>
</div>
</div> 45
</div>
</div>
</div>
</div>
</div> 50
</div>
</div>
</div>
</div>
</div> 55
</div>
</div>
</div>
</div>
</div> 60
</div>

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</div>
</div>
</div>
</div>
</div> 5
</div>
</div>
</div>
</div>
</div> 10
<div>
<tr valign="top">
<td style="WIDTH: 12.95pt"> 15
Times New Roman">(a)
</font></div>
</td>
<td> 20
FONT-FAMILY: Times New Roman">As
at the June quarter; calculated as an average over the
quarter.</font></div>
</td> 25
</tr>
</table>
</div>
<div>
<tr valign="top">
<td style="WIDTH: 12.95pt">
Times New Roman">(b) 35
</font></div>
</td>
<td>
FONT-FAMILY: Times New Roman">Percentage 40
change to the June quarter of each period from the previous June
</td>
</tr>
</table> 45
</div>
<div>
Times New Roman">(c)
</font></div>
</td> 55
<td>
FONT-FAMILY: Times New Roman">Seasonally
adjusted.</font></div>
</td> 60
</tr>

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p374 22-9-2014
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</table>
</div>
<div>
<tr valign="top">
Times New Roman">(d)
</font></div> 10
</td>
<td>
FONT-FAMILY: Times New Roman">As
at release of the September quarter under ABS Catalogue No. 15
5302.0.</font></div>
</td>
</tr>
</table>
</div> 20
<div>
Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New 25
Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New
Roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font
style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY:
inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY:
inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><font style="FONT-SIZE: 30
8pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE:
8pt; FONT-FAMILY: Times New Roman"><font style="FONT-SIZE: 8pt; FONT-FAMILY:
Times New Roman"><font style="FONT-SIZE: 8pt; FONT-FAMILY: Times New
Roman"><font style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><font 35
style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: Times
New Roman">Source</font>:
ABS Catalogue No. 5206.0, 6202.0, 6401.0, 5302.0, 6345.0; Mid-Year Economic
and
Fiscal Outlook 2008-09 40
Statement.</font></font></font></font></font></font></font></font></font></fon
t></font></font></font></font></font></div>
</div>
<div> </div>
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">GDP
Growth</font></div>
GDP expanded by 3.7% in 2007-08.  Growth in 2007-08 was broadly-
based, 55
with private business investment growing by 15.5%, total gross fixed capital
formation growing by 9.9%, and household consumption expenditure growing by
3.7%.  In the 2009 UEFO released on 3 February 2009, GDP growth was
forecast to slow to 1% in 2008-09 and ¾% in 2009-10, assuming
implementation of 60

375
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the Nation Building and Jobs Plan described under "—Economic Outlook" in
this
prospectus and contingent on there being no further deterioration in global
economic conditions.</font></div>
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Major
Industries</font></div> 10
major industries include property and business services, mining, manufacturing
and construction. Growth during 2007-08 was recorded in most industries,
including agriculture, forestry and fishing (up 8.2%, following a decline of
17.7% in 2006-07), communication services (7.1%), construction (6.4%),
transport 20
and storage (5.4%), property and business services (5.1%) and manufacturing
(3.3%).</font></div>
FAMILY: Times New Roman">During
2007-08, the industry accounting for the largest share of GDP (at basic
prices,
excluding ownership of dwellings) was property and business services, with a 30
share of 14%. Manufacturing was the second largest industry with a share of
12%.
Prior to 1999-00, manufacturing was the largest industry.</font></div>
<div><br></div>
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR"> 40
Roman">
</font></div>
</div> 45
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div>
</div> 60
<div><br></div>

376
p376 22-9-2014
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FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Net
Worth</font></div>
general government sector net worth, reflecting the difference between total 10
assets and total liabilities, as at 30 June 2008 was estimated to be $71,165
million, an increase of $24,506 million since 30 June 2007.</font></div>
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Budget
Balance</font></div>
FAMILY: Times New Roman">A
sustained period of government budget surpluses in the years prior to 2008-09
enabled the Australian Government to retire large amounts of government debt. 25
Net debt was eliminated for the Australian Government during the year ended 30
June 2006.  In the 2009 UEFO released on 3 February 2009, Australian
Government general sector net debt for 2008-09 was forecast to be -$16.2
billion
(-1.3% of GDP).  The 2009 UEFO forecast net debt to increase to 5.2% 30
of GDP in 2011-12.</font></div>
Australian Government underlying cash surplus forecast of $21.7 billion (1.8%
of
GDP) in the 2008-09 Budget was reduced to $5.4 billion (0.4% of GDP) in the
2008-09 MYEFO.  Since the release of the 2008-09 MYEFO on 5 November 40
2008, the Australian Government has announced three additional fiscal stimulus
packages.  See "—Economic Outlook" in this
prospectus.  In
the 2009 UEFO, the underlying cash balance forecast for 2008-09 was further
reduced to a deficit of $22.5 billion (-1.9% of GDP).  A Government 45
budget underlying cash deficit of $35.5 billion (-2.9% of GDP) was forecast
for
2009-10, and underlying cash deficits of $34.3 billion (-2.7% of GDP) and
$25.7
billion (-1.9% of GDP) were projected for 2010-11 and 2011-12, 50
respectively.</font></div>
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New
Roman">Trade</font></div>

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trade in goods and services totalled $489.2 billion in 2007-08, accounting for
about 1% of world trade. Australia's largest trading partners were China, 5
Japan,
the United States, Singapore and the United Kingdom.</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Domestic
Economic Conditions</font></div>
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Gross
Domestic Product</font></div>
following table shows chain volume GDP and related measures, real income 25
measures and current price measures for each of the 2003-04, 2004-05, 2005-06,
2006-07 and 2007-08 fiscal years.</font></div>
6:  Key National Accounts Aggregates</font></div>
<div>
<div align="left">
<div align="left">
<tr>
<td valign="bottom" width="40%" style="BORDER-TOP: black 1pt 40
solid; PADDING-BOTTOM: 1px"><font style="DISPLAY: inline; FONT-SIZE: 10pt;
</font></td>
<td valign="bottom" width="1%" style="BORDER-TOP: black 1pt
solid; PADDING-BOTTOM: 1px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; 45
<td align="left" valign="bottom" width="1%" style="BORDER-
TOP: black 1pt solid; PADDING-BOTTOM: 1px"><font style="DISPLAY: inline; FONT-
<td align="right" valign="bottom" width="9%" style="BORDER-
TOP: black 1pt solid; BORDER-BOTTOM: black 1px solid">
<div style="TEXT-ALIGN: center"><font style="DISPLAY:
roman">2003-04</font></div> 55
</td>
<td align="left" nowrap valign="bottom" width="1%"

378
p378 22-9-2014
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solid; PADDING-BOTTOM: 1px"><font style="DISPLAY: inline; FONT-WEIGHT: bold;
TOP: black 1pt solid; PADDING-BOTTOM: 1px"><font style="DISPLAY: inline; FONT- 5
<div style="TEXT-ALIGN: center"><font style="DISPLAY: 10
roman">2004-05</font></div>
</td>
style="BORDER-TOP: black 1pt solid; PADDING-BOTTOM: 1px"><font style="DISPLAY: 15
<td align="right" valign="bottom" width="9%" style="BORDER- 25
</td> 30
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new 40
</td>
<td align="left" valign="bottom" width="1%" style="BORDER- 55
TOP: black 1pt solid; BORDER-BOTTOM: black 1px solid"> 60

379
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</td>
<td align="left" nowrap valign="bottom" width="1%" 5
</tr>
<tr> 10
<td align="left" valign="bottom" width="40%">
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font
new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt;
FONT-FAMILY: times new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times
new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Chain 20
volume GDP and
related measures<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-
ALIGN:
super">(a)</font></font></font></font></font></font></font></font></div>
</td> 25
<td valign="bottom" width="1%"><font style="DISPLAY: inline;
<td align="left" valign="bottom" width="1%"><font
<td align="right" valign="bottom" width="9%"><font
<td align="left" nowrap valign="bottom" width="1%"><font
<td align="left" nowrap valign="bottom" width="1%"><font 45
<td align="left" valign="bottom" width="1%"><font 50

380
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<td valign="bottom" width="1%"><font style="DISPLAY: inline; 10
<td align="right" valign="bottom" width="9%"><font 15
</tr>
<tr>
0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 25
10pt; FONT-FAMILY: times new roman">GDP
(A$ millions)</font></div>
</td>
roman">1,012,269</font></td>

381
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roman">1,045,674</font></td>
roman">1,083,942</font></td>
</tr>
<tr>
<td align="left" valign="bottom" width="40%"> 30
0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE:
per capita (A$)</font></div>
</td> 35

382
p382 22-9-2014
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</tr>
<tr>
market sector (A$ millions)</font></div>
</td>

383
p383 22-9-2014
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roman">674,897</font></td> 30
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">Net
domestic product (A$ millions)</font></div>
</td>

384
p384 22-9-2014
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roman">840,163</font></td> 15
</tr> 55
<tr>
<td valign="bottom" width="40%"><font style="DISPLAY:
</font></td>

385
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</tr>
<tr> 55

386
p386 22-9-2014
A 1
st
new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt;
new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Real
income 5
measures<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN:
super">(a)</font></font></font></font></font></font></font></font></div>
</td>

387
p387 22-9-2014
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</tr>
<tr> 5
10pt; FONT-FAMILY: times new roman">Real
gross domestic income (A$ millions)</font></div> 10
</td>
roman">911,529</font></td> 20
roman">1,000,464</font></td>
roman">1,045,674</font></td>

388
p388 22-9-2014
A 1
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roman">1,095,362</font></td>
</tr>
<tr>
gross national income (A$ millions)</font></div>
</td> 20

389
p389 22-9-2014
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roman">1,047,267</font></td>
</tr>
<tr>
net national disposable income (A$ millions)</font></div>
</td>
roman">775,350</font></td> 50

390
p390 22-9-2014
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roman">840,330</font></td> 15
</tr>
<tr>
<div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-
INDENT: -9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; 35
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Real
net national disposable income per capita (A$)</font></div>
</td>

391
p391 22-9-2014
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</tr> 40
<tr>
</font></td>

392
p392 22-9-2014
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</tr> 40
<tr>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current 45
price measures</font></div>
</td>

393
p393 22-9-2014
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</tr>
<tr>
(A$ millions)</font></div>
</td> 50

394
p394 22-9-2014
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roman">1,045,674</font></td>
roman">1,131,586</font></td>
</tr>
<tr>
per capita (A$)</font></div>
</td>

395
p395 22-9-2014
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roman">50,220</font></td> 45
</tr>

396
p396 22-9-2014
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<tr>
10pt; FONT-FAMILY: times new roman">Gross 5
national income (A$ millions)</font></div>
</td>
roman">929,784</font></td> 40

397
p397 22-9-2014
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roman">1,083,339</font></td>
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">National
net saving (A$ millions)</font></div>
</td>
roman">45,486</font></td> 35

398
p398 22-9-2014
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</tr>
<tr>
10pt; FONT-FAMILY: times new roman">Household
saving ratio</font></div>
</td>
<td align="right" valign="bottom" width="1%" style="PADDING- 25
BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline;
BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-
FAMILY: times new roman">–3.1</font></td>
style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font 35
<td align="right" valign="bottom" width="1%" style="PADDING-
BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT- 45
FAMILY: times new roman">–2.1</font></td>
style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font
FAMILY: times new roman">–</font></td>

399
p399 22-9-2014
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FAMILY: times new roman">1.9</font></td>
FAMILY: times new roman">0.8</font></td>
</tr>
</table> 30
</div>
</div>
</div>
</div>
<div> 35
FAMILY: Times New Roman">Notes:  –
= nil or rounded to zero.</font></div>
</div>
<div> 40
<tr valign="top">
<td style="WIDTH: 18px">
Roman">(a)</font></div>
</td>
<td width="1220">
0pt"><font style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">Reference year
for
chain volume measures and real income measures is
2006-07.</font></div> 55
</div>
</td>
</tr>
</table>
</div> 60
<div>

400
p400 22-9-2014
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inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: Times New
Roman">Source</font>:
ABS Catalogue No. 10
5206.0.</font></font></font></font></font></font></font></div>
</div>
<div>
<div id="FTR">
Roman">
</font></div> 20
</div>
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div> 35
</div>
<div><br></div>
FAMILY: Times New Roman">Following 40
the fall in GDP in volume terms in 1990-91 and a flat result in 1991-92,
Australia has experienced 16 years of consecutive growth. In 2007-08, GDP
increased by 3.7% and GDP per capita increased by 2.0% (chain volume
measures).</font></div>
FAMILY: Times New Roman">The table
below details the expenditure components of GDP on a chain volume measurement 50
basis for each of the 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08 fiscal
years.</font></div>
7:  Expenditure Components of Gross Domestic Product (Chain Volume
Measures<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super;
FONT-FAMILY: Times New Roman">(a)</font>)</font></div> 60
<div>

401
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<div>
<div align="left">
<table cellpadding="0" 20
<tr>
<td valign="bottom"
width="40%" style="BORDER-TOP: black 0.75pt solid; PADDING-BOTTOM: 1px"><font
style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman"> 25
</font></td>
<td valign="bottom"
<td align="left"
valign="bottom" width="1%" style="BORDER-TOP: black 0.75pt solid; PADDING-
BOTTOM: 1px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt;
<td align="right" 35
valign="bottom" width="9%" style="BORDER-TOP: black 0.75pt solid; BORDER-
<div style="TEXT-ALIGN:
center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt;
FONT-FAMILY: times new roman">2003-04</font></div> 40
</td>
<td align="left" nowrap
<td valign="bottom"
<td align="left" 50
<td align="right"
valign="bottom" width="9%" style="BORDER-TOP: black 0.75pt solid; BORDER- 55
FONT-FAMILY: times new roman">2004-05</font></div>
</td> 60

402
p402 22-9-2014
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<td valign="bottom" 5
<td align="left"
valign="bottom" width="1%" style="BORDER-TOP: black 0.75pt solid; PADDING- 10
<td align="right"
BOTTOM: black 1px solid"> 15
</td>
<td align="left" nowrap 20
<td valign="bottom"
width="1%" style="BORDER-TOP: black 0.75pt solid; PADDING-BOTTOM: 1px"><font 25
<td align="left"
BOTTOM: 1px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; 30
<td align="right"
<div style="TEXT-ALIGN: 35
</td>
<td valign="bottom"
<td align="left"
<td align="right"
center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; 55
</td>

403
p403 22-9-2014
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</tr>
<tr>
<td valign="bottom"><font
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
</font></td> 5
<td colspan="18"
valign="bottom"> 10
align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE:
10pt; FONT-FAMILY: times new roman">(A$
millions)</font></div> 15
</td>
valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE:
</tr> 20
<tr>
<td align="left"
valign="bottom" width="40%">
new roman">Final
consumption expenditure</font></div>
</td>
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 45
<td align="right"
<td valign="bottom"
<td align="left"

404
p404 22-9-2014
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<td align="right"
<td valign="bottom"
<td align="left" 10
<td align="right"
<td valign="bottom"
<td align="left"
</tr>
<tr>
<td align="left"
new roman">General
government</font></div>
</td> 40
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"

405
p405 22-9-2014
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<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"
</tr> 40
<tr>
<td align="left"
new roman">National—defence</font></div>
</td>
<td align="right"
<td align="left"
FONT-FAMILY: times new roman">16,038</font></td>

406
p406 22-9-2014
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<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left" 40
<td align="right"
FONT-FAMILY: times new roman">17,959</font></td> 45
</tr>
<tr> 50
<td align="left"
new roman">National—<font size="+0">non</font>-defence</font></div>
</td>
<td align="right"

407
p407 22-9-2014
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<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left" 25
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left" 60

408
p408 22-9-2014
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new roman">Total
national</font></div> 5
</td>
<td align="right"
<td align="left" 10
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"

409
p409 22-9-2014
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<td align="right"
</tr>
<tr>
<td align="left"
valign="bottom" width="40%"> 10
new roman">State
and local</font></div> 15
</td>
<td align="right"
<td align="left" 20
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"

410
p410 22-9-2014
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<td align="right"
<td align="left"
</tr>
<tr>
<td align="left"
italic; FONT-FAMILY: times new roman">Total
general government</font></div>
</td> 25
<td align="right"
FONT-STYLE: italic; FONT-FAMILY: times new roman"> </font></td>
<td align="left"
<td align="right"
FONT-STYLE: italic; FONT-FAMILY: times new roman">170,057</font></td>
<td align="right"
FONT-STYLE: italic; FONT-FAMILY: times new roman"> </font></td> 40
<td align="left"
<td align="right"
<td align="left"
<td align="right"

411
p411 22-9-2014
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<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
</tr> 25
<tr>
<td align="left"
new roman">Households</font></div>
</td>
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"

412
p412 22-9-2014
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<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left" 25
<td align="right"
</tr>
<tr> 35
<td align="left"
final consumption expenditure</font></div>
</td>
<td align="right"
<td align="left"
<td align="right"
<td align="left"

413
p413 22-9-2014
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<td align="right"
<td align="right"
<td align="left" 10
<td align="right"
FONT-STYLE: italic; FONT-FAMILY: times new roman">743,043</font></td> 15
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
new roman">
</font></td>
<td valign="bottom"
<td align="left"

414
p414 22-9-2014
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st
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 40
<td align="right"
</tr>
<tr> 50
<td align="left"
new roman">Private
gross fixed capital formation</font></div>
</td>
<td valign="bottom"

415
p415 22-9-2014
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<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 25
<td align="right"
<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left" 60

416
p416 22-9-2014
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st
new roman">Private
business investment</font></div> 5
</td>
<td valign="bottom"
<td align="left" 10
<td align="right"
<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"

417
p417 22-9-2014
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<td align="right"
</tr>
<tr>
<td align="left"
new roman">Machinery
and equipment</font></div> 15
</td>
<td valign="bottom"
<td align="left" 20
<td align="right"
<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"

418
p418 22-9-2014
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<td valign="bottom"
<td align="left"
</tr>
<tr>
<td align="left"
new roman">New</font></div>
</td>
<td align="left"
<td align="right"
<td align="right"
<td align="left" 40
<td align="right"
<td align="right"
<td align="left"

419
p419 22-9-2014
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st
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
</tr> 25
<tr>
<td align="left"
new roman">Net
purchases of second hand assets</font></div>
</td>
<td align="left"
<td align="right"
FONT-FAMILY: times new roman">–3,015</font></td>
<td align="right"
<td align="left" 50
<td align="right"
FONT-FAMILY: times new roman">–2,856</font></td> 55
<td align="right"

420
p420 22-9-2014
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<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left" 25
<td align="right"
FONT-FAMILY: times new roman">–3,619</font></td> 30
</tr>
<tr> 35
<td align="left"
machinery and equipment</font></div>
</td>
<td align="right"
<td align="left"
<td align="right"
<td align="left"

421
p421 22-9-2014
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<td align="right"
<td align="right"
<td align="left" 10
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
new roman">
</font></td>
<td valign="bottom"
<td align="left"

422
p422 22-9-2014
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st
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 40
<td align="right"
</tr>
<tr> 50
<td align="left"
new roman">Non-dwelling
construction</font></div>
</td>
<td valign="bottom"

423
p423 22-9-2014
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<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 25
<td align="right"
<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left" 60

424
p424 22-9-2014
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new roman">New
building</font></div> 5
</td>
<td align="right"
<td align="left" 10
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"

425
p425 22-9-2014
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st
<td align="right"
</tr>
<tr>
<td align="left"
new roman">New
engineering construction</font></div> 15
</td>
<td align="right"
<td align="left" 20
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"

426
p426 22-9-2014
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st
<td align="right"
<td align="left"
</tr>
<tr>
<td align="left"
new roman">Net
purchases of second hand assets</font></div>
</td> 25
<td align="right"
<td align="left"
<td align="right"
FONT-FAMILY: times new roman">–635</font></td>
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"

427
p427 22-9-2014
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st
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
</tr> 25
<tr>
<td align="left"
non-dwelling construction</font></div>
</td>
<td align="left"
<td align="right"
<td align="right"
<td align="left" 50
<td align="right"
<td align="right"

428
p428 22-9-2014
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st
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left" 25
<td align="right"
</tr>
<tr> 35
<td valign="bottom"
new roman">
</font></td>
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 55
<td align="right"

429
p429 22-9-2014
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st
<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"
</tr> 40
<tr>
<td align="left"
new roman">Livestock</font></div>
</td>
<td align="right"
<td align="left"

430
p430 22-9-2014
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st
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left" 40
<td align="right"
</tr>
<tr> 50
<td align="left"
new roman">Intangible
fixed assets</font></div>
</td>
<td valign="bottom"

431
p431 22-9-2014
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st
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 25
<td align="right"
<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left" 60

432
p432 22-9-2014
A 1
st
new roman">Computer
software</font></div> 5
</td>
<td align="right"
<td align="left" 10
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"

433
p433 22-9-2014
A 1
st
<td align="right"
</tr>
<tr>
<td align="left"
new roman">Mineral
and petroleum exploration</font></div> 15
</td>
<td align="right"
<td align="left" 20
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"

434
p434 22-9-2014
A 1
st
<td align="right"
<td align="left"
</tr>
<tr>
<td align="left"
new roman">Artistic
originals</font></div>
</td> 25
<td align="right"
<td align="left"
<td align="right"
FONT-FAMILY: times new roman">469</font></td>
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"

435
p435 22-9-2014
A 1
st
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
</tr> 25
<tr>
<td align="left"
intangible fixed assets</font></div>
</td>
<td align="left"
<td align="right"
<td align="right"
<td align="left" 50
<td align="right"
<td align="right"

436
p436 22-9-2014
A 1
st
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left" 25
<td align="right"
</tr>
<tr> 35
<td valign="bottom"
new roman">
</font></td>
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 55
<td align="right"

437
p437 22-9-2014
A 1
st
<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"
</tr> 40
<tr>
<td align="left"
private business investment</font></div>
</td>
<td align="left"
<td align="right"

438
p438 22-9-2014
A 1
st
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left" 40
<td align="right"
</tr>
<tr> 50
<td valign="bottom"
new roman">
</font></td>
<td align="left"

439
p439 22-9-2014
A 1
st
<td align="right"
<td valign="bottom"
<td align="left" 10
<td align="right"
<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"
</tr> 55
<tr>
<td align="left"

440
p440 22-9-2014
A 1
st
new roman">Dwellings</font></div>
</td>
<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 55
<td align="right"

441
p441 22-9-2014
A 1
st
</tr>
<tr> 5
<td align="left"
new roman">New
and used dwellings</font></div>
</td>
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"

442
p442 22-9-2014
A 1
st
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left" 15
new roman">Alterations 20
and additions</font></div>
</td>
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left" 50
<td align="right"
<td align="right"

443
p443 22-9-2014
A 1
st
<td align="left"
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left"
dwellings</font></div> 30
</td>
<td align="right"
<td align="left" 35
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"

444
p444 22-9-2014
A 1
st
<td align="right"
<td align="right"
<td align="left" 10
<td align="right"
<td align="right"
<td align="left"
</tr>
<tr>
<td valign="bottom"
new roman"> 35
</font></td>
<td valign="bottom"
<td align="left" 40
<td align="right"
<td valign="bottom"
<td align="left"

445
p445 22-9-2014
A 1
st
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left"
new roman">Ownership
transfer costs</font></div> 45
</td>
<td align="right"
<td align="left" 50
<td align="right"
<td align="right"

446
p446 22-9-2014
A 1
st
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left" 25
<td align="right"
<td align="right"
<td align="left"
</tr>
<tr>
<td align="left"
private gross fixed capital formation</font></div>
</td> 55
<td align="right"
<td align="left"

447
p447 22-9-2014
A 1
st
<td align="right"
<td align="right"
<td align="left" 10
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
</tr> 55
<tr>
<td valign="bottom"
new roman">
</font></td> 60

448
p448 22-9-2014
A 1
st
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 40
<td align="right"
<td valign="bottom"
<td align="left"
</tr>

449
p449 22-9-2014
A 1
st
<tr>
<td align="left"
new roman">Public
</td>
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 25
<td align="right"
<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"

450
p450 22-9-2014
A 1
st
<td align="left"
<td align="right"
</tr> 10
<tr>
<td align="left"
new roman">Public
corporations</font></div>
</td>
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 35
<td align="right"
<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"

451
p451 22-9-2014
A 1
st
<td align="right"
<td valign="bottom"
<td align="left" 10
<td align="right"
</tr>
<tr> 20
<td align="left"
new roman">Commonwealth</font></div>
</td>
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left" 55
<td align="right"

452
p452 22-9-2014
A 1
st
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left" 30
new roman">State 35
and local</font></div>
</td>
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"

453
p453 22-9-2014
A 1
st
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left"
public corporations</font></div> 45
</td>
<td align="right"
<td align="left" 50
<td align="right"
<td align="right"

454
p454 22-9-2014
A 1
st
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left" 25
<td align="right"
<td align="right"
<td align="left"
</tr>
<tr>
<td valign="bottom"
new roman"> 50
</font></td>
<td valign="bottom"
<td align="left" 55
<td align="right"

455
p455 22-9-2014
A 1
st
<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left"
new roman">General
government</font></div> 60
</td>

456
p456 22-9-2014
A 1
st
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 40
<td align="right"
<td valign="bottom"
<td align="left"
</tr>

457
p457 22-9-2014
A 1
st
<tr>
<td align="left"
new roman">National—defence</font></div>
</td>
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"

458
p458 22-9-2014
A 1
st
<td align="left"
<td align="right"
</tr> 10
<tr>
<td align="left"
new roman">National—non-defence</font></div>
</td>
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"

459
p459 22-9-2014
A 1
st
<td align="right"
<td align="right"
<td align="left" 10
<td align="right"
</tr>
<tr> 20
<td align="left"
national</font></div>
</td>
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"

460
p460 22-9-2014
A 1
st
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
new roman">
</font></td>
<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"

461
p461 22-9-2014
A 1
st
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 25
<td align="right"
</tr>
<tr> 35
<td align="left"
new roman">State
and local</font></div>
</td>
<td align="right"
<td align="left"
<td align="right"
<td align="left"

462
p462 22-9-2014
A 1
st
<td align="right"
<td align="right"
<td align="left" 10
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left" 45
italic; FONT-FAMILY: times new roman">Total 50
general government</font></div>
</td>
<td align="right"
valign="bottom" width="1%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black
1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; 55
<td align="left"

463
p463 22-9-2014
A 1
st
<td align="right"
times new roman">21,736</font></td>
1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic;
<td align="right"
valign="bottom" width="1%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 10
<td align="left"
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: 15
times new roman"> </font></td>
<td align="right"
times new roman">23,057</font></td> 20
<td align="left"
valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px solid"><font 30
<td align="right"
<td align="right"
<td align="left" 45
<td align="right"
1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; 55
<td align="right"

464
p464 22-9-2014
A 1
st
<td align="left"
<td align="right" 5
</tr>
</table>
</div> 15
</div>
</div>
</div>
</div>
</div> 20
</div>
</div>
</div>
</div>
</div> 25
</div>
</div>
</div>
</div>
</div> 30
</div>
</div>
</div>
</div>
<div><br></div>
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR"> 40
Roman">
</font></div>
</div> 45
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div>
</div> 60
<div><br></div>

465
p465 22-9-2014
A 1
st
<div style="DISPLAY: block; TEXT-INDENT: 0pt">
<div>
<div align="left">
<tr>
<td valign="bottom"
</font></td>
<td valign="bottom"
<td align="left"
<td align="right"
</td>
<td valign="bottom"
<td align="left"
</td>

466
p466 22-9-2014
A 1
st
<td align="left"
<td align="right"
</td>
<td valign="bottom"
<td align="left"
<td align="right"
</td>
<td valign="bottom"
<td align="left"
<td align="right"
</td>

467
p467 22-9-2014
A 1
st
</tr>
<tr>
</font></td> 5
<td colspan="18"
valign="bottom"> 10
</td>
</tr> 20
<tr>
<td valign="bottom"
new roman">
</font></td> 25
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td align="right"

468
p468 22-9-2014
A 1
st
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"
</tr> 25
<tr>
<td align="left"
public gross fixed capital formation</font></div>
</td>
<td align="left"
<td align="right"
FONT-STYLE: italic; FONT-FAMILY: times new roman">35,<font
size="+0">314</font></font></td>
<td align="right"
<td align="left"
<td align="right"

469
p469 22-9-2014
A 1
st
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
<td valign="bottom"
new roman">
</font></td>
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"

470
p470 22-9-2014
A 1
st
<td align="right"
<td valign="bottom"
<td align="left" 10
<td align="right"
<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left" 45
</td>
<td align="right"
<td align="left"
<td align="right"

471
p471 22-9-2014
A 1
st
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
<td valign="bottom"
new roman">
</font></td>
<td valign="bottom"

472
p472 22-9-2014
A 1
st
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 25
<td align="right"
<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left" 60

473
p473 22-9-2014
A 1
st
italic; FONT-FAMILY: times new roman">Domestic
final demand</font></div> 5
</td>
<td align="right"
<td align="left" 10
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
FONT-STYLE: italic; FONT-FAMILY: times new roman">1,012,988</font></td>
<td align="right"
<td align="left"
<td align="right"
<td align="left"

474
p474 22-9-2014
A 1
st
<td align="right"
</tr>
<tr>
<td valign="bottom"
new roman">
</font></td>
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 40
<td align="right"
<td valign="bottom"
<td align="left"

475
p475 22-9-2014
A 1
st
<td valign="bottom"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left" 15
new roman">Changes 20
in inventories</font></div>
</td>
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 50
<td align="right"
<td valign="bottom"

476
p476 22-9-2014
A 1
st
<td align="left"
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left"
new roman">Private
non-farm</font></div> 30
</td>
<td align="right"
<td align="left" 35
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"

477
p477 22-9-2014
A 1
st
<td align="right"
<td align="right"
<td align="left" 10
<td align="right"
<td align="right"
<td align="left"
</tr>
<tr>
<td align="left"
new roman">Farm</font></div>
</td>
<td align="left"
<td align="right"
<td align="right"
<td align="left" 55
<td align="right"
FONT-FAMILY: times new roman">189</font></td> 60

478
p478 22-9-2014
A 1
st
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
</tr> 40
<tr>
<td align="left"
new roman">Public
authorities</font></div>
</td>
<td align="left"
<td align="right"

479
p479 22-9-2014
A 1
st
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left" 40
<td align="right"
FONT-FAMILY: times new roman">–883</font></td> 45
</tr>
<tr> 50
<td align="left"
changes in inventories</font></div>
</td>
<td align="right"

480
p480 22-9-2014
A 1
st
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left" 25
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>

481
p481 22-9-2014
A 1
st
<td valign="bottom"
new roman">
</font></td>
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 20
<td align="right"
<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"

482
p482 22-9-2014
A 1
st
</tr>
<tr> 5
<td align="left"
italic; FONT-FAMILY: times new roman">Gross
national expenditure</font></div>
</td>
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"

483
p483 22-9-2014
A 1
st
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
new roman">
</font></td>
<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"

484
p484 22-9-2014
A 1
st
<td align="right"
<td valign="bottom"
<td align="left" 10
<td align="right"
</tr>
<tr> 20
<td align="left"
new roman">Exports
of goods and services</font></div>
</td>
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"

485
p485 22-9-2014
A 1
st
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left" 30
new roman">less 35
Imports of goods and services</font></div>
</td>
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"

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<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left"
new roman">Statistical
discrepancy</font></div> 45
</td>
<td align="right"
<td align="left" 50
<td align="right"
FONT-FAMILY: times new roman">–</font></td> 55
<td align="right"

487
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<td align="left"
<td align="right"
FONT-FAMILY: times new roman">–</font></td>
<td align="left"
<td align="right"
<td align="right"
<td align="left" 25
<td align="right"
<td align="right"
<td align="left"
</tr>
<tr>
<td valign="bottom"
new roman"> 50
</font></td>
<td valign="bottom"
<td align="left" 55
<td align="right"

488
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<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left"
valign="bottom" width="40%" style="BORDER-BOTTOM: black 1px solid"> 55
FONT-FAMILY: times new roman">Gross
domestic product</font></div> 60
</td>

489
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<td align="right"
1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt;
<td align="left" 5
<td align="right"
new roman">956,017</font></td>
1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; 15
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
new roman">1,012,269</font></td>
<td align="right"
<td align="left"
<td align="right"
new roman">1,045,674</font></td> 60

490
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<td align="right" 5
<td align="left"
<td align="right"
</tr>
</table>
</div>
</div>
</div> 25
</div>
</div>
</div>
</div>
</div> 30
</div>
</div>
</div>
</div>
</div> 35
</div>
</div>
</div>
</div>
</div> 40
</div>
</div>
<div>
<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font
style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: 45
inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">(a)
</font>Reference year for chain volume measures is 2006-07.</font></div>
</div>
<div>
FAMILY: Times New Roman">Source</font>:
ABS Catalogue No. 5206.0.</font></font></font></div> 55
<div align="left"> </div>
</div>
FAMILY: Times New Roman">Gross 60
fixed capital formation was a major contributor to GDP growth in 2007-08,

491
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increasing by 9.9% and contributing 2.7% to GDP growth.</font></div>
FAMILY: Times New Roman">Household
final consumption expenditure increased 3.7%, and contributed 2.0% to GDP
growth
in 2007-08. Within household final consumption expenditure, recreation and
culture (up 6.1%) and rent and other dwelling services (up 2.6%) were the 10
largest contributors.</font></div>
FAMILY: Times New Roman">Growth in
private business investment, after slowing to 6.7% in 2006-07, accelerated to
15.5% in 2007-08, similar to growth in the four years prior to 2006-07.
Private
business investment contributed 2.3% to GDP growth in 2007-08, up from 1.1% in 20
2006-07. Investment in machinery and equipment, and non-dwelling construction
increased 17.3% and 12.7%, respectively, and contributed 1.2% and 0.8% to
growth
in GDP in 2007-08, respectively.</font></div>
FAMILY: Times New Roman">From an
industry perspective, growth during 2007-08 was recorded in most industries 30
including agriculture, forestry and fishing (up 8.2% following a decline of
17.7% in 2006-07), communication services (7.1%), construction (6.4%),
transport
and storage (5.4%) and property and business services
(5.1%).  Manufacturing recorded moderate growth overall of 3.3%, but 35
within the industry there was strong growth in metal products manufacturing
(11.1%) and other manufacturing (11.4%).</font></div>
<div><br></div> 40
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
</div> 55
</div>
<div id="HDR">
Roman"> 60
</font></div>

492
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</div>
</div>
</div>
<div><br></div>
following table identifies the income components of GDP on a current price
basis
for each of the 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08 fiscal 10
years.</font></div>
8:  Income Components of Gross Domestic Product (Current
Prices)</font></div>
<div>
<tr>
<td valign="bottom"
width="40%" style="BORDER-TOP: black 1pt solid; PADDING-BOTTOM: 1px"><font
</font></td>
<td valign="bottom"
<td align="left"
valign="bottom" width="1%" style="BORDER-TOP: black 1pt solid; PADDING-BOTTOM:
black 1px solid">
</td>

493
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<td align="left"
valign="bottom" width="1%" style="BORDER-TOP: black 1pt solid; PADDING-BOTTOM: 10
1px">
center"> </div>
</td>
black 1px solid">
</td>
<td valign="bottom"
<td align="left" 30
<td align="right"
valign="bottom" width="9%" style="BORDER-TOP: black 1pt solid; BORDER-BOTTOM: 35
black 1px solid">
</td> 40
<td align="left"
<td align="right"
black 1px solid"> 55
</td>

494
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<td valign="bottom"
<td align="left"
<td align="right"
black 1px solid">
</td>
</tr>
<tr>
</font></td>
<td colspan="18" 30
valign="bottom">
10pt; FONT-FAMILY: times new roman">(A$ 35
millions)</font></div>
</td>
</tr>
<tr>
<td align="left"
new roman">Compensation
of employees</font></div>
</td> 50
<td valign="bottom"
<td align="left"
<td align="right"

495
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<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left"
new roman">Wages
and salaries</font></div> 60
</td>

496
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<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left" 40
<td align="right"
<td align="right"
<td align="left"
</tr>

497
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<tr>
<td align="left"
new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new
roman">Employers' social
contributions<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL- 10
ALIGN: super">(a)</font></font></font></font></div>
</td>
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left" 40
<td align="right"
<td align="right"
<td align="left"

498
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<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left" 15
compensation of employees</font></div>
</td>
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left" 50
<td align="right"
<td align="right"

499
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<td align="left"
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
<td valign="bottom"
new roman">
</font></td>
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 55
<td align="right"

500
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<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left" 30
new roman">Gross 35
operating surplus</font></div>
</td>
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td align="right"

501
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<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left"
new roman">Non-financial
corporations</font></div> 45
</td>
<td valign="bottom"
<td align="left" 50
<td align="right"
<td valign="bottom"

502
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<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 25
<td align="right"
<td valign="bottom"
<td align="left"
</tr>
<tr>
<td align="left"
new roman">Private
non-financial corporations</font></div>
</td> 55
<td align="right"
<td align="left"

503
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<td align="right"
<td align="right"
<td align="left" 10
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
</tr> 55
<tr>
<td align="left"

504
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new roman">Public
</td>
<td align="right" 5
<td align="left"
<td align="right"
<td align="right"
<td align="left" 20
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"

505
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</tr>
<tr> 5
<td align="left"
</td>
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"

506
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<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
new roman">
</font></td>
<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"

507
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<td align="right"
<td valign="bottom"
<td align="left" 10
<td align="right"
</tr>
<tr> 20
<td align="left"
new roman">Financial
</td>
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"

508
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<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left" 30
</td>
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"

509
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<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
<td valign="bottom"
new roman">
</font></td>
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"

510
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<td align="right"
<td valign="bottom"
<td align="left" 10
<td align="right"
<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left" 45
new roman">General 50
government</font></div>
</td>
<td align="right"
<td align="left"
<td align="right"

511
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<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left"
new roman">Dwellings
owned by persons</font></div> 60
</td>

512
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<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left" 40
<td align="right"
<td align="right"
<td align="left"
</tr>

513
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<tr>
<td align="left"
gross operating surplus</font></div>
</td>
<td align="left"
<td align="right"
<td align="right"
<td align="left" 25
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"

514
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<td align="left"
<td align="right"
</tr> 10
<tr>
<td valign="bottom"
new roman">
</font></td> 15
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 55
<td align="right"

515
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<td valign="bottom"
<td align="left"
</tr>
<tr>
<td align="left"
new roman">Gross
mixed income</font></div>
</td> 25
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"

516
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<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
</tr> 25
<tr>
<td valign="bottom"
new roman">
</font></td> 30
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"

517
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<td align="right"
<td valign="bottom"
<td align="left" 10
<td align="right"
<td valign="bottom"
<td align="left"
</tr>
<tr>
<td align="left"
factor income</font></div>
</td> 40
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"

518
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<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
</tr> 40
<tr>
<td valign="bottom"
new roman">
</font></td> 45
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"

519
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<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 25
<td align="right"
<td valign="bottom"
<td align="left"
</tr>
<tr>
<td align="left"
new roman">Taxes
less subsidies on production and</font></div>
new roman">  imports</font></div>
</td>

520
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<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left" 40
<td align="right"
<td align="right"
<td align="left"
</tr>

521
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<tr>
<td align="left"
new roman">Statistical
discrepancy</font></div>
</td>
<td align="left"
<td align="right"
<td align="right"
<td align="left" 25
<td align="right"
<td align="right"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td align="right"

522
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<td align="left"
<td align="right"
FONT-FAMILY: times new roman">-980</font></td>
</tr> 10
<tr>
<td valign="bottom"
new roman">
</font></td> 15
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 55
<td align="right"

523
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<td valign="bottom"
<td align="left"
</tr>
<tr>
<td align="left"
FONT-FAMILY: times new roman">Gross
domestic product</font></div>
</td> 25
<td align="right"
<td align="left" 30
<td align="right"
<td align="right"
<td align="left"
<td align="right"

524
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<td align="left"
<td align="right" 5
<td align="right"
<td align="left"
<td align="right"
<td align="right"
<td align="left"
<td align="right"
new roman">1,131,586</font></td> 40
</tr> 45
</table>
</div>
</div>
</div>
</div> 50
</div>
</div>
</div>
</div>
</div> 55
</div>
</div>
</div>
</div>
</div> 60
</div>

525
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</div>
</div>
</div>
</div>
</div> 5
</div>
<div>
<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font
inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">(a) 10
</font>Includes contributions to superannuation made by employers and payments
of workers' compensation premiums.</font></div>
</div>
<div>
</div>
<div> </div>
<div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New
Roman">For the
income components of GDP in 2007-08, there was growth in compensation of 25
employees of 7.6% and growth in gross operating surplus ("GOS") of 10.4%. The
growth in GOS was driven by growth in private non-financial corporations GOS
(up
10.5%), partly offset by a fall in public non-financial corporations GOS
(-6.0%).</font></div> 30
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New 35
Roman">Prices</font></div>
FAMILY: Times New Roman">Inflation
was 3.7% through the year to the December quarter 2008, down from 5.0% through
the year to the September quarter 2008 and 4.5% through the year to the June
quarter 2008. Over the year to the December quarter 2008, the increase in
prices 45
was mainly due to increases in the prices of housing and food, partially
offset
by a fall in the price of automotive fuel.  For further information
about the Reserve Bank of Australia's medium-term inflation target, see
"Currency, Monetary and Banking System—Monetary Conditions" in this 50
following table details the through the year change for the consumer price
index
and the implicit price deflator for non-farm gross domestic product to the
final 60
(June) quarter of each of the fiscal years 2003-04, 2004-05, 2005-06, 2006-07

526
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and 2007-08.</font></div>
implicit price deflator for non-farm gross domestic product corresponds to a
broader set of prices in the economy than the consumer price index, including
non-consumption goods and services such as those used by businesses, and
exports.</font></div> 10
<div><br></div>
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman"> 20
</font></div>
</div>
</div>
</div>
<div id="HDR"> 30
Roman">
</font></div>
</div> 35
</div>
</div>
<div><br></div>
9:  Prices</font></div>
<div>
<div align="left">
<tr>
</font></td> 50
<div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: 55
FONT-FAMILY: times new roman">All
Groups</font></div>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Consumer

527
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Price Index</font></div>
roman">(original)</font></div> 5
</div>
</td>
solid; BORDER-BOTTOM: black 1px solid">
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Implicit
Price Deflator for</font></div>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Non-farm
Gross Domestic Product</font></div>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(seasonally 25
adjusted)</font></div>
</div>
</td>
</tr>
<tr> 30
</font></td>
<td colspan="3" valign="top" width="42%">
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Percent
change through the year)</font></div>
</td>
</tr> 40
<tr>
10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 45
times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE:
italic; FONT-FAMILY: times new roman">Year
</font><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN:
super">(a)</font>:</font></font></font></div> 50
</td>
</font></td>
<td valign="top" width="2%"><font style="DISPLAY: inline; FONT- 55
</font></td>
</tr> 60
<tr>

528
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10pt; FONT-FAMILY: times new roman">2003-04</font></div>
</td> 5
0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY:
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2.5</font></div>
</td> 10
<td align="left" valign="top" width="2%"><font style="DISPLAY:
0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: 15
</td>
</tr>
<tr>
</td>
</td>
<td align="left" valign="top" width="2%"><font style="DISPLAY: 30
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4.6</font></div> 35
</td>
</tr>
<tr>
</td>
</td>
</td> 55
</tr>
<tr>

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</td>
</td>
</td>
</tr>
<tr> 15
black 1px solid">
10pt; FONT-FAMILY: times new roman">2007-08</font></div> 20
</td>
black 1px solid">
</td>
black 1px solid">
</td>
</tr>
</table>
</div>
</div> 40
<div>
Roman">(a)
P</font>ercentage change to the June quarter of each period from the previous
June quarter.</font></font></font></div>
</div>
<div> 50
FAMILY: Times New Roman">Source:  </font>ABS 55
Catalogue No. 6401.0, 5206.0.</font></font></font></div>
</div>
<div> </div>
<div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt;
FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Wages</font></div> 60

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preferred measure of wages in Australia is the wage price index, which
measures
changes in the price of a unit of labour unaffected by changes in the quality
or
quantity of work performed.</font></div> 10
FAMILY: Times New Roman">Annual 15
wage growth has been elevated since the beginning of 2005 but has remained
contained below 4¼% throughout this period.  This is despite
the fact
that wage growth has been strong in industries (mining and construction) and
states (Western Australia and Queensland) associated with the resources 20
boom.</font></div>
following table details the through the year change for the wage price index
to
the final (June) quarter of each of the fiscal years 2003-04, 2004-05, 2005-
06, 30
2006-07 and 2007-08.</font></div>
10:  Wages</font></div>
<div>
<div align="left">
<tr>
PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-
</font></td> 45
<td align="left" valign="top" width="31%" style="BORDER-TOP:
black 1pt solid; BORDER-BOTTOM: black 1px solid">
0pt; MARGIN-RIGHT: 0pt" align="left">
inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Wage
Price Index</font></div>
</div>
</td> 55
</tr>
<tr>
</font></td> 60
<td valign="top" width="31%">

531
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WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Percent
change through the year, seasonally adjusted)</font></div>
</td> 5
</tr>
<tr>
italic; FONT-FAMILY: times new roman">Year
</font><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: 15
super">(a)</font>:</font></font></font></div>
</td>
</font></td> 20
</tr>
<tr>
</td>
SIZE: 10pt; FONT-FAMILY: times new roman">3.5</font></div>
</td>
</tr>
<tr>
</td>
<td valign="top" width="31%"> 40
</td>
</tr> 45
<tr>
</td>
SIZE: 10pt; FONT-FAMILY: times new roman">4.1</font></div> 55
</td>
</tr>
<tr>

532
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</td>
</td>
</tr> 10
<tr>
black 1px solid">
</td>
<td valign="top" width="31%" style="BORDER-BOTTOM: black 1px
solid">
</td>
</tr>
</table> 25
</div>
</div>
<div>
FAMILY: Times New Roman">(a) 30
Percentage change to the June quarter of each period from the previous June
</div>
<div>
<div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-
SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Labour
market</font></div>
</div> 45
FAMILY: Times New Roman">Labour 50
market conditions were positive in 2007-08, with strong growth in employment,
a
low unemployment rate and a high participation rate of 65%.  The
worsening global financial crisis has impacted on Australia's growth
prospects, 55
with adverse consequences for the labour market.  Australia's labour
market conditions are expected to weaken in line with the significant slowdown
in the domestic economy.</font></div>

533
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UEFO forecast employment growth to be -¼% through the year to the June
quarter 5
2009 and 0% by the June quarter 2010. The 2009 UEFO forecast the unemployment
rate to rise to 5½% by the June quarter 2009 and 7% by the June quarter
2010.</font></div>
following table identifies key labour force statistics as at the June quarter
in 15
each of the referenced years.</font></div>
11:  Labour force statistics<font style="DISPLAY: inline; FONT-SIZE:
70%; VERTICAL-ALIGN: super">(a)</font></font></div>
<div>
<tr>
<td align="left" valign="bottom" style="BORDER-TOP: black 1pt
FONT-FAMILY: times new roman"> 30
</font></td>
<td valign="bottom" style="BORDER-TOP: black 1pt solid; PADDING-
<td colspan="2" valign="bottom" style="BORDER-TOP: black 1pt 35
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">June
quarter 2004</font></div>
</div>
</td>
<td align="left" nowrap valign="bottom" style="BORDER-TOP: black 45
1pt solid; PADDING-BOTTOM: 1px"><font style="DISPLAY: inline; FONT-WEIGHT:
<td colspan="2" valign="bottom" style="BORDER-TOP: black 1pt
</div>
</td> 60

534
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<td align="left" nowrap valign="bottom" style="BORDER-TOP: black
0pt; MARGIN-RIGHT: 0pt"> 10
</div> 15
</td>
<td valign="bottom" style="BORDER-TOP: black 1pt solid; PADDING- 20
quarter 2007</font></div> 30
</div>
</td>
bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"> </font></td> 35
solid; BORDER-BOTTOM: black 1px solid"> 40
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">June 45
</div>
</td>
1pt solid; PADDING-BOTTOM: 1px"><font style="DISPLAY: inline; FONT-WEIGHT: 50
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">Total
Employment ('000)</font></div>
</td>

535
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roman">10,442</font></td> 45
</tr>

536
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<tr>
10pt; FONT-FAMILY: times new roman">Total 5
Unemployment ('000)</font></div>
</td>
roman">556</font></td>
roman">520</font></td> 40

537
p537 22-9-2014
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</tr>
<tr>
10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">Unemployment
Rate (%)</font></div>
</td> 15
STYLE: italic; FONT-FAMILY: times new roman"> </font></td>
STYLE: italic; FONT-FAMILY: times new roman">5.5</font></td> 25
STYLE: italic; FONT-FAMILY: times new roman">5.1</font></td>
BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; 45
STYLE: italic; FONT-FAMILY: times new roman"> </font></td> 50

538
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</tr> 25
</table>
</div>
</div>
<div>
FAMILY: Times New Roman">(a) As at
the June quarter; calculated as an average over the quarter.</font></div>
</div>
<div>
FAMILY: Times New Roman">Source</font>:  ABS
</div>
<div>
<div id="FTR">
Roman">
</font></div> 50
</div>
</div>
</div>
<div id="HDR">

539
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Roman">
</font></div>
</div> 5
</div>
</div>
<div><br></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Economic
Outlook</font></div>
outlook for the world economy deteriorated sharply between the release of the
2008-09 MYEFO on 5 November 2008 and the release of the 2009 UEFO on 3
February 20
2009. Despite intervention to support financial markets and stimulatory
monetary
and fiscal policies, the global financial crisis has driven almost all major
advanced economies into recession. It has also become clear that emerging
economies will be more profoundly affected by the crisis than originally 25
thought. In particular, the momentum provided to the world from China's rapid
growth has dissipated in recent times. In the 2009 UEFO released on 3 February
2009, forecasts of world growth in 2009 were revised down to ½%,
consistent with
forecasts published by the International Monetary Fund.</font></div> 30
FAMILY: Times New Roman">Conditions 35
in financial markets remain very fragile.  Spillovers and contagion
from further adverse financial market developments continue to pose
significant
risks.  A further risk is that gathering economic weakness will feed
back into even weaker financial conditions.</font></div> 40
FAMILY: Times New Roman">Against 45
the backdrop of a weaker world economy, it is inevitable that the Australian
economy will be affected. In line with the worsening global outlook, forecasts
for Australian growth in the 2009 UEFO have been revised down significantly
from
the 2008-09 MYEFO to 1% in 2008-09 and ¾% in 2009-10.</font></div> 50
Government of Australia and the Reserve Bank of Australia have engaged in
substantial fiscal and monetary policy responses.</font></div>

540
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FAMILY: Times New Roman">Between
September 2008 and February 2009, the Reserve Bank of Australia reduced the
cash 5
rate by a cumulative 400 basis points.</font></div>
Australian Government has announced a number of fiscal stimulus measures
including:</font></div>
<div>
width="100%">
</td>
<td>
Government's Economic Security Strategy, a $10.4 billion discretionary 30
fiscal stimulus package announced on 14 October 2008, focused on
household
consumption and dwelling
investment;</font></div>
</td> 35
</tr>
</table>
</div>
</div>
<div>
width="100%"> 45
<tr valign="top">
</td>
<td>
Council of Australian Governments' $15.1 billion job creation stimulus
package announced on 29 November
2008;</font></div>
</td>
</tr> 60
</table>

541
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</div>
</div>
<div> 5
width="100%">
<tr valign="top">
</td> 15
<td>
Government's $4.7 billion nation building package announced on 12
December 20
2008, providing for investment in road, rail and education
infrastructure,
as well as tax changes encouraging capital investment by Australian
businesses; and</font></div>
</td> 25
</tr>
</table>
</div>
</div>
<div>
width="100%"> 35
<tr valign="top">
</td>
<td>
Government's $42 billion Nation Building and Jobs Plan announced on 3
February 2009, providing for payments to low- and middle-income
Australians, investment in schools, housing, energy efficiency,
community
infrastructure and roads and support to small 50
businesses.  </font></div>
</td>
</tr>
</table>
</div> 55
</div>

542
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Government expects that these measures will provide considerable support to
the
Australian economy. However, given the magnitude of the global slowdown now
underway, these measures are only partially expected to offset the impact of
the 5
global recession.  If the global recession is deeper and more
protracted than expected, this would inevitably cause a more severe slowdown
in
outlook for household consumption softened further between the release of the 15
2008-09 MYEFO on 5 November 2008 and the release of the 2009 UEFO on 3
February
2009. Households are facing significant falls in wealth, with asset values
falling sharply over the year to December 2008. Australian share markets have
fallen by over 40% over the year to December 2008 and house prices have begun 20
to
moderate in the last three quarters of 2008. This has been compounded by
uncertainty around the duration and effect of the global financial crisis on
wealth and employment, which has had a negative impact on sentiment.
Substantial 25
monetary and fiscal policy stimulus is acting to support
consumption.</font></div>
UEFO forecasts a recovery in dwelling investment in 2009-10, although near-
term
results in 2008-09 are likely to be subdued in line with recent weak building 35
approvals data.</font></div>
<div><br></div>
<div> 40
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
</div>
</div> 55
<div id="HDR">
Roman">
</font></div> 60
</div>

543
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</div>
</div>
<div><br></div>
recovery is expected to be supported by recent large interest rate cuts,
strong
underlying demand and the First Home Owners Boost, a Government initiative to
stimulate housing activity by supplementing the $7,000 grant available to 10
first
home buyers with a further $7,000 for purchases of established homes and a
further $14,000 for purchases of newly constructed homes, with the 2009 UEFO
forecasting dwelling investment growth to rise to 4% in 2009-10.  A
downside risk to these forecasts is that confidence in the household sector 15
remains low, exacerbated by uncertainty around unemployment
levels.</font></div>
FAMILY: Times New Roman">There was
a marked deterioration in the outlook for business investment between the
release of the 2008-09 MYEFO on 5 November 2008 and the release of the 2009
UEFO 25
on 3 February 2009.  The weaker outlook for global and domestic
demand
and a weaker outlook for commodity prices and profits have reduced much of the
stimulus for investment that has prevailed during the period between 2003-04
and 30
2007-08. The 2009 UEFO forecasts business investment to fall by 15½% in
2009-10.
The Government's Nation Building and Jobs Plan aims to counter some of the
effects of this decline in private investment by providing measures to support
private investors through the Small Business and General Business Tax Break 35
described under "Government Finance—Taxation—Business tax
arrangements—Investment Allowances" in this prospectus. The Australian
Business
Investment Partnership is also expected to provide liquidity support to the
commercial property sector.</font></div> 40
Nation Building and Jobs Plan is also anticipated to provide a large boost to
public investment, which the Australian Government expects to support growth
across the forecast horizon.  The 2009 UEFO forecasts public final
demand to grow by 5½% in 2008-09 and 7¼% in 2009-10.</font></div>
outlook for the external sector has softened in 2008-09 driven by the 55
deterioration in the outlook for world growth. The broad based nature of the
weakness in the world economy means that demand for Australia's exports is
likewise expected to be weak.  Half of Australia's top ten trading
partners are already in recession, with seven forecast to contract in
2009.  Collectively, Australia's major trading partners are not 60

544
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expected to grow in 2009.  The 2009 UEFO forecasts export growth to
be
½% in 2008-09 and 2009-10, despite some support from the depreciation in
the
Australian dollar of around 30% in trade-weighted terms since its peak in July 5
2008. This slowdown in export growth in 2009-10 is expected to be offset by a
weaker outlook for imports, driven by the slowdown in domestic demand,
particularly business investment which relies heavily on imported capital
goods.</font></div>
FAMILY: Times New Roman">In line
with the significant slowdown in the domestic economy, employment is expected 15
to
contract through 2009 and remain weak in 2010. This is anticipated to flow
through to a rise in the unemployment rate, which the 2009 UEFO forecasts to
increase to 5½% by the June quarter of 2009 and 7% by the June quarter of
2010.</font></div> 20
FAMILY: Times New Roman">Inflation 25
forecasts decreased significantly between the release of the 2008-09 MYEFO on
5
November 2008 and the release of the 2009 UEFO on 3 February 2009. The 2009
UEFO
forecasts inflation to ease on the back of weaker global growth and domestic 30
demand, moderating wage growth and substantially lower oil prices. The 2009
UEFO
forecasts headline and underlying inflation to fall to 2% through the year to
the June quarter 2010.</font></div>
12:  Domestic economy forecasts<font style="DISPLAY: inline; FONT- 40
SIZE: 70%; VERTICAL-ALIGN: super; FONT-FAMILY: Times New
Roman">(a)</font></font></div>
<div>
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<table cellpadding="0" cellspacing="0" 55
width="100%">
<tr>
<td rowspan="2" valign="top" width="66%"
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"> 60
</font></td>

545
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style="BORDER-TOP: black 1pt solid; PADDING-BOTTOM: 1px; BORDER-BOTTOM: black
1px solid">
0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"> 5
0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center"
</div> 10
</td>
<td colspan="3" valign="top" width="21%"
style="BORDER-TOP: black 1pt solid; BORDER-BOTTOM: black 1px solid">
0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY:
</div>
</td> 25
</tr>
<tr>
BOTTOM: 2px">
roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-
FAMILY: times new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new
roman">Outcomes<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: 35
super; FONT-FAMILY: times new roman">(b)</font></font></font></font></div>
</td>
<td colspan="3" valign="top" width="21%"
roman">Forecasts</font></div>
</div>
</td> 50
</tr>
<tr>
new roman"> 55
</font></td>
</font></td> 60

546
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BOTTOM: 1px; BORDER-BOTTOM: black 1px solid"> 5
roman">MYEFO</font></div>
</div>
</td>
BOTTOM: 1px; BORDER-BOTTOM: black 1px solid">
0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"> 20
roman">UEFO</font></div>
</div> 25
</td>
</tr>
<tr>
<td valign="top" width="66%"><font
</font></td>
roman">(Percentages)</font></div>
</td>
</tr>
<tr>
roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-
FAMILY: times new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new 45
roman">Panel A - Demand and
output<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN:
super; FONT-FAMILY: times new roman">(c)</font></font></font></font></div>
</td>
<td valign="top" width="10%"><font 50
</font></td>
</font></td>

547
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</font></td>
</tr>
<tr> 5
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Household
consumption</font></div> 10
</td>
new roman">3.7
</font></div>
</td>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2</font></div> 25
</td>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1¾</font></div>
</td>
</tr> 35
<tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Private 40
investment</font></div>
</td>
</font></td> 45
</font></td>
</font></td>
</tr>
<tr>

548
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inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dwellings</font></div>
</td>
new roman">1.4
</font></div> 10
</td>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0</font></div>
</td>
0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: 25
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-2</font></div>
</td>
</tr>
<tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="FONT-SIZE:
10pt; FONT-FAMILY: times new roman">Total business 35
investment<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN:
super">(d)</font></font></font></font></div>
</td>
new roman">14.2
</font></div>
</td> 45
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5½</font></div>
</td>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">½</font></div> 60
</td>

549
p549 22-9-2014
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</tr>
<tr>
10pt; FONT-FAMILY: times new roman">Non-dwelling
construction<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-
ALIGN: super">(d)</font></font></font></font></div> 10
</td>
new roman">11.2
</font></div>
</td>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">½</font></div> 25
</td>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-2</font></div>
</td>
</tr> 35
<tr>
10pt; FONT-FAMILY: times new roman">Machinery and
equipment<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN:
</td> 45
new roman">16.0        50
</font></div>
</td>
</td> 60

550
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</td>
</tr>
<tr> 10
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="FONT-SIZE: 15
10pt; FONT-FAMILY: times new roman">Private final
demand<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN:
</td>
new roman">5.5
</font></div> 25
</td>
</td>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">¾</font></div>
</td>
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">Public final 50
demand<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN:
</td>
new roman">4.6
</font></div>
</td> 60

551
p551 22-9-2014
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</td>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5½</font></div> 15
</td>
</tr>
<tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
final demand</font></div>
</td>
new roman">5.3
</font></div> 30
</td>
</td>
</td>
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">Change in 55
inventories<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN:
super">(e)</font></font></font></font></div>
</td>

552
p552 22-9-2014
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new roman">0.2
</font></div>
</td>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-¼</font></div>
</td>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-¼</font></div>
</td> 20
</tr>
<tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Gross
national expenditure</font></div>
</td>
new roman">5.5
</font></div>
</td> 35
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2¼</font></div>
</td>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1½</font></div> 50
</td>
</tr>
<tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Exports
</td>

553
p553 22-9-2014
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new roman">4.3
</font></div> 5
</td>
</td>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">½</font></div>
</td>
</tr>
<tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Imports
</td> 30
new roman">12.7        35
</font></div>
</td>
</td> 45
</td>
</tr>
<tr> 55
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="FONT-SIZE: 60

554
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10pt; FONT-FAMILY: times new roman">Net exports<font style="DISPLAY: inline;
FONT-SIZE: 70%; VERTICAL-ALIGN: super">(e)</font></font></font></font></div>
</td>
new roman">-1.9
</font></div>
</td> 10
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-½</font></div>
</td>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-½</font></div> 25
</td>
</tr>
<tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Real
gross domestic product</font></div>
</td>
new roman">3.7
</font></div> 40
</td>
</td>
</td>
</tr>
<tr>

555
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st
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Non-farm
product</font></div>
</td> 5
new roman">3.6
</font></div>
</td>
</td>
</td>
</tr>
</table>
</div>
</div> 35
</div>
</div>
</div>
</div>
</div> 40
</div>
</div>
</div>
</div>
</div> 45
<div><br></div>
<div>
<div id="FTR">
Roman">
</font></div> 55
</div>

556
p556 22-9-2014
A 1
st
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div>
</div> 10
<div><br></div>
<div>
<div align="left">
<div align="left">
<tr>
black 0.75pt solid"> 20
10pt; FONT-FAMILY: times new roman">Farm
product</font></div>
</td> 25
black 0.75pt solid">
0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="left"><font style="DISPLAY:
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new 30
roman">8.5
</font></div>
</td>
<td valign="top" width="3%" style="BORDER-TOP: black 0.75pt
solid">
SIZE: 10pt; FONT-FAMILY: times new roman">13</font></div>
</td>
solid">
SIZE: 10pt; FONT-FAMILY: times new roman">11</font></div> 50
</td>
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">Nominal
gross domestic product</font></div>
</td>

557
p557 22-9-2014
A 1
st
roman">8.2
</font></div> 5
</td>
<td valign="top" width="3%"><font style="DISPLAY: inline;
SIZE: 10pt; FONT-FAMILY: times new roman">7¾</font></div>
</td>
</td> 20
</tr>
<tr>
0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT- 25
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Panel
B - Other selected economic measures</font></div>
</td>
FONT-SIZE: 10pt; FONT-FAMILY: times new roman"> 30
</font></td>
</font></td>
</font></td>
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">External
accounts</font></div>
</td>
<td valign="top" width="10%"><font style="DISPLAY: inline; 50
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
</font></td>
</font></td>

558
p558 22-9-2014
A 1
st
</font></td>
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">Terms
of trade</font></div>
</td>
roman">5.1
</font></div> 15
</td>
</td>
</td> 30
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">Current
account balance (per cent of GDP)</font></div>
</td>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-
6.2
</font></div>
</td> 45
SIZE: 10pt; FONT-FAMILY: times new roman">-4½</font></div>
</td>
SIZE: 10pt; FONT-FAMILY: times new roman">-3¾</font></div>
</td>
</tr> 60
<tr>

559
p559 22-9-2014
A 1
st
10pt; FONT-FAMILY: times new roman">Labour
market</font></div> 5
</td>
</font></td>
</font></td>
</font></td>
</tr> 20
<tr>
times new roman">Employment (labour
force survey basis)<font style="DISPLAY: inline; FONT-SIZE: 70%;
VERTICAL-ALIGN: super">(f)</font></font></font></font></div>
</td> 30
roman">2.5        35
</font></div>
</td>
SIZE: 10pt; FONT-FAMILY: times new roman">½</font></div>
</td>
SIZE: 10pt; FONT-FAMILY: times new roman">-¼</font></div> 50
</td>
</tr>
<tr>
times new roman">Unemployment rate
(%)<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: 60
super">(g)</font></font></font></font></div>

560
p560 22-9-2014
A 1
st
</td>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new 5
roman">4.3
</font></div>
</td>
</td> 15
SIZE: 10pt; FONT-FAMILY: times new roman">5½</font></div>
</td>
</tr>
<tr>
times new roman">Participation rate 30
(%)<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN:
super">(g)</font></font></font></font></div>
</td>
roman">65.3
</font></div>
</td> 40
</td>
</td>
</tr> 55
<tr>
10pt; FONT-FAMILY: times new roman">Prices 60
and wages</font></div>

561
p561 22-9-2014
A 1
st
</td>
</font></td>
</font></td>
</font></td>
</tr> 15
<tr>
times new roman">Consumer Price
Index<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN:
super">(f)</font></font></font></font></div>
</td> 25
roman">4.5        30
</font></div>
</td>
SIZE: 10pt; FONT-FAMILY: times new roman">3½</font></div>
</td>
SIZE: 10pt; FONT-FAMILY: times new roman">2</font></div> 45
</td>
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">Gross
non-farm product deflator</font></div>
</td>
roman">4.4
</font></div> 60
</td>

562
p562 22-9-2014
A 1
st
</td>
</td>
</tr> 15
<tr>
<td align="left" valign="top" width="66%" style="BORDER-
times new roman">Wage Price
Index<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN:
super">(f)</font></font></font></font></div> 25
</td>
0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="left"><font style="DISPLAY: 30
roman">4.1
</font></div>
</td>
<td valign="top" width="3%" style="BORDER-BOTTOM: black 1px 35
solid">
SIZE: 10pt; FONT-FAMILY: times new roman">4¼</font></div>
</td>
solid">
</td>
</tr>
</table>
</div> 55
</div>
</div>
</div>
<div>

563
p563 22-9-2014
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<tr valign="top">
Roman">(a)</font></div> 5
</td>
<td width="1220">
FONT-FAMILY: Times New Roman">Percentage
change on preceding year unless otherwise 10
indicated.</font></div>
</td>
</tr>
</table>
</div> 15
<div>
<tr valign="top">
<td style="WIDTH: 18px"> 20
Roman">(b)</font></div>
</td>
<td width="1220"> 25
FONT-FAMILY: Times New Roman">Calculated
using original data from ABS Catalogue No. 5206.0 (which does not
include
revisions from ABS Catalogue No. 30
5204.0).</font></div>
</td>
</tr>
</table>
</div> 35
<div>
<tr valign="top">
Roman">(c)</font></div>
</td>
<td width="1220"> 45
FONT-FAMILY: Times New Roman">Chain
volume measures except for nominal gross domestic product, which is in
current prices.</font></div>
</td> 50
</tr>
</table>
</div>
<div>
<tr valign="top">
Roman">(d)</font></div>

564
p564 22-9-2014
A 1
st
</td>
<td width="1220">
FONT-FAMILY: Times New Roman">Excluding
second-hand asset sales from the public sector to the private sector, 5
and
adjusted for privatisation of
Telstra.</font></div>
</td>
</tr> 10
</table>
</div>
<div>
<tr valign="top">
Roman">(e)</font></div> 20
</td>
<td width="1220">
FONT-FAMILY: Times New Roman">Percentage
point contribution to growth in 25
GDP.</font></div>
</td>
</tr>
</table>
</div> 30
<div>
<tr valign="top">
Roman">(f)</font></div>
</td>
<td width="1220"> 40
FONT-FAMILY: Times New Roman">Through
the year growth rate to the June quarter 2008 and
2009.</font></div>
</td> 45
</tr>
</table>
</div>
<div>
<tr valign="top">
Roman">(g)</font></div>
</td>
<td width="1220">
FONT-FAMILY: Times New Roman">Estimate 60
for the June quarter 2008 and 2009.</font></div>

565
p565 22-9-2014
A 1
st
</td>
</tr>
</table>
</div>
<div> 5
Roman">Source:  </font>ABS
Catalogue No. 5206.0, 5302.0, 6202.0, 6345.0, 6401.0; unpublished ABS and 15
Treasury data<font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic;
FONT-FAMILY: Times New
Roman">.</font></font></font></font></font></font></font></font></div>
</div>
<div> </div> 20
Roman">The above
estimates are based on forecasts of the economic outlook by the Treasury of
the
Commonwealth of Australia.  Treasury generally conducts two major 25
rounds of forecasting each year, in connection with the budget each May and
the
mid-year economic and fiscal outlook issued between October and January. In
2009, an additional forecast update has been released in response to rapid
changes in the global economy.</font></div> 30
FAMILY: Times New Roman">Treasury's 35
forecasting approach encompasses a broad range of information.  The
national accounts form the framework for the forecasting exercise. The
technical
assumptions about interest rates, exchange rates and oil prices are reset in
the 40
light of recent developments: it is assumed that interest rates will move
broadly in line with market expectations, and that exchange rates and oil
prices
will remain around recent average levels.  Any changes to fiscal
policy are also incorporated.  Insight is also gathered from liaison 45
visits with large, medium and small businesses, industry organisations and
State
Treasuries and Treasury's International Economy Division's latest assessment
of
the world outlook.</font></div> 50
FAMILY: Times New Roman">Treasury's 55
Domestic Economy Division assesses the implications of these inputs using a
mix
of single-equation econometric models, partial indicators, leading indicators,
business surveys and advice from specialist agencies.  Forecasting
judgments are informed by economic theory and assessments of recent economic 60

566
p566 22-9-2014
A 1
st
analysis.  Forecasts are discussed both within Treasury and with
other
government agencies.</font></div>
FAMILY: Times New Roman">The above
estimates assume implementation of the Nation Building and Jobs Plan described
under "—Economic Outlook" in this prospectus.</font></div> 10
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Major 15
Sectors of the Economy</font></div>
2007-08, the industry with the largest share of gross value added (at basic
prices) was property and business services (excluding ownership of dwellings),
with a share of 13.1%. Manufacturing ranked second with a share of
10.7%.</font></div> 25
<div><br></div>
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman"> 35
</font></div>
</div>
</div>
</div>
<div id="HDR"> 45
Roman">
</font></div>
</div> 50
</div>
</div>
<div><br></div>
following table identifies the percentage of gross value added by industry at
basic prices for each of the 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08
fiscal years.</font></div>

567
p567 22-9-2014
A 1
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13:  Percentage of Gross Value Added (Basic Prices)</font></div>
<div> 5
<div align="left">
width="100%">
<tr> 20
</font></td>
<td valign="bottom" width="1%" 25
width="1%" style="BORDER-TOP: black 1pt solid; PADDING-BOTTOM: 2px"><font 30
1px solid"> 35
<div style="TEXT-ALIGN: center"><font
new roman">2003-04</font></div>
</td>
<td align="left" nowrap valign="bottom" 40
1px solid">
<div style="TEXT-ALIGN: center"><font 55
</td>
<td align="left" nowrap valign="bottom"

568
p568 22-9-2014
A 1
st
1px solid">
</td>
<td valign="bottom" width="9%" 30
1px solid">
new roman">2006-07</font></div> 35
</td>
style="BORDER-TOP: black 1pt solid; BORDER-BOTTOM: black 1px solid"> 50
</td>
</tr>
<tr> 60

569
p569 22-9-2014
A 1
st
<td valign="bottom" width="40%"><font
</font></td>
<td colspan="18" valign="bottom"
width="58%">
</td>
width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; 15
</tr>
<tr>
</font></td>

570
p570 22-9-2014
A 1
st
<td valign="bottom" width="1%"><font 10
</tr>
<tr>
width="40%"> 25
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Agriculture,
forestry and fishing</font></div>
</td> 30
new roman">3.0</font></td>

571
p571 22-9-2014
A 1
st
new roman">2.4</font></td> 15
</tr>
<tr>
width="40%">
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Mining</font></div>
</td>

572
p572 22-9-2014
A 1
st
</tr> 40
<tr>
width="40%">
roman">Manufacturing</font></div>
</td>

573
p573 22-9-2014
A 1
st
</tr>
<tr> 50
width="40%">
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Electricity, 55
gas and water supply</font></div>
</td>

574
p574 22-9-2014
A 1
st
</tr>
<tr>
width="40%">

575
p575 22-9-2014
A 1
st
roman">Construction</font></div>
</td> 5

576
p576 22-9-2014
A 1
st
</tr>
<tr>
width="40%"> 10
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Wholesale
trade</font></div>
</td> 15

577
p577 22-9-2014
A 1
st
</tr>
<tr>
width="40%">
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Retail
trade</font></div>
</td>

578
p578 22-9-2014
A 1
st
</tr> 25
<tr>
width="40%">
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Accommodation,
cafes and restaurants</font></div>
</td>

579
p579 22-9-2014
A 1
st
</tr>
<tr> 35
width="40%">
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Transport 40
and storage</font></div>
</td>

580
p580 22-9-2014
A 1
st
</tr>
<tr>
width="40%">
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Communication
services</font></div> 50
</td>

581
p581 22-9-2014
A 1
st
</tr>
<tr>
width="40%"> 55
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Finance
and insurance</font></div>
</td> 60

582
p582 22-9-2014
A 1
st
</tr>

583
p583 22-9-2014
A 1
st
<tr>
width="40%">
10pt; FONT-FAMILY: times new roman">Property and
business services<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-
ALIGN: super">(a)</font></font></font></font></div> 10
</td>

584
p584 22-9-2014
A 1
st
</tr>
<tr>
width="40%">
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Government
administration and defence</font></div> 20
</td>

585
p585 22-9-2014
A 1
st
</tr>
<tr>
width="40%"> 25
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Education</font></div>
</td>

586
p586 22-9-2014
A 1
st
</tr>
<tr>
width="40%">
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Health
and community services</font></div>
</td>

587
p587 22-9-2014
A 1
st
</tr> 40
<tr>
width="40%">
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Cultural
and recreational services</font></div>
</td>

588
p588 22-9-2014
A 1
st
</tr>
<tr> 50
width="40%">
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Personal 55
and other services</font></div>
</td>

589
p589 22-9-2014
A 1
st
</tr>
<tr>
width="40%">

590
p590 22-9-2014
A 1
st
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Ownership
of dwellings</font></div>
</td> 5

591
p591 22-9-2014
A 1
st
</tr>
<tr>
</font></td>

592
p592 22-9-2014
A 1
st
</tr>
<tr>
inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new
roman">Gross 20
value added at basic prices</font></div>
</td>
width="1%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font
roman">100.0</font></td>
width="1%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font 40
inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new 45
roman">100.0</font></td> 50

593
p593 22-9-2014
A 1
st
inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new 5
width="1%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 1px solid"><font 40
</tr>
</table>
</div> 45
</div>
</div>
</div>
</div>
</div> 50
</div>
</div>
</div>
</div>
</div> 55
</div>
</div>
<div>
FAMILY: Times New Roman">(a) 60
Excludes ownership of dwellings.</font></div>

594
p594 22-9-2014
A 1
st
</div>
<div>
below identifies employment share by industry for each of the 2003-04, 2004-
05,
2005-06, 2006-07 and 2007-08 fiscal years.</font></div>
</div> 15
14:  Employment share by industry</font></div>
<div>
<div align="left">
<tr>
<td valign="bottom" width="40%" style="BORDER-TOP: black
1pt solid; PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; 30
</font></td>
<td align="right" valign="bottom" width="9%" 40
1px solid">
</td>
1pt solid; PADDING-BOTTOM: 1px; BORDER-BOTTOM: black 1px solid">

595
p595 22-9-2014
A 1
st
</td>
</td>
<div style="TEXT-ALIGN: center"><font style="DISPLAY: 35
</td>
<td valign="bottom" width="9%" style="BORDER-TOP: black 50
1pt solid; BORDER-BOTTOM: black 1px solid">
</td> 55
</tr> 60
<tr>

596
p596 22-9-2014
A 1
st
<td valign="bottom"><font style="DISPLAY: inline; FONT-
</font></td>
<td valign="bottom"><font style="DISPLAY: inline; FONT-
<td colspan="18" valign="bottom">
INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline;
FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new 10
</td>
<td align="left" nowrap valign="bottom"><font
</tr>
<tr>
</font></td> 20

597
p597 22-9-2014
A 1
st
</tr> 15
<tr>
INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline;
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Agriculture, 20
</td>

598
p598 22-9-2014
A 1
st
</tr>
<tr>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT- 25
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Mining</font></div>
</td>

599
p599 22-9-2014
A 1
st
</tr>
<tr>
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Manufacturing</font></div>
</td>

600
p600 22-9-2014
A 1
st
</tr>
<tr> 35
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Electricity,
gas and water supply</font></div> 40
</td>

601
p601 22-9-2014
A 1
st
</tr>
<tr>
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Construction</font></div>
</td>

602
p602 22-9-2014
A 1
st
</tr>
<tr> 50
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Wholesale
trade</font></div> 55
</td>

603
p603 22-9-2014
A 1
st
</tr>
<tr>

604
p604 22-9-2014
A 1
st
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Retail
trade</font></div>
</td> 5

605
p605 22-9-2014
A 1
st
</tr>
<tr>
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Accommodation,
cafes and restaurants</font></div>
</td>

606
p606 22-9-2014
A 1
st
</tr>
<tr>
INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; 20
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Transport
and storage</font></div>
</td>

607
p607 22-9-2014
A 1
st
</tr> 25
<tr>
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Communication 30
services</font></div>
</td>

608
p608 22-9-2014
A 1
st
</tr>
<tr> 35
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Finance
and insurance</font></div> 40
</td>

609
p609 22-9-2014
A 1
st
</tr>
<tr>
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Property
and business services</font></div>
</td> 50

610
p610 22-9-2014
A 1
st
</tr>
<tr>
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Government
administration and defence</font></div>
</td>

611
p611 22-9-2014
A 1
st
</tr>

612
p612 22-9-2014
A 1
st
<tr>
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Education</font></div> 5
</td>

613
p613 22-9-2014
A 1
st
</tr>
<tr>
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Health
and community services</font></div>
</td>

614
p614 22-9-2014
A 1
st
</tr>
<tr>
INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; 20
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Cultural
and recreational services</font></div>
</td>

615
p615 22-9-2014
A 1
st
</tr> 25
<tr>
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Personal 30
and other services</font></div>
</td>

616
p616 22-9-2014
A 1
st
</tr>
<tr> 35
</font></td>
<td valign="bottom" width="1%"><font style="DISPLAY: 50

617
p617 22-9-2014
A 1
st
</tr>
<tr> 35
<td align="left" valign="bottom" width="40%"
</td>
<td align="right" valign="bottom" width="1%"
<td align="right" valign="bottom" width="9%" 50

618
p618 22-9-2014
A 1
st
style="BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT- 5
</tr>
</table>
</div>
</div> 60
</div>

619
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</div>
</div>
<div>
FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT- 5
Catalogue No. 6291.0.55.003.</font></font></font></div>
</div> 10
<div> </div>
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR"> 15
Roman">
</font></div>
</div> 20
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div>
</div> 35
<div><br></div>
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Property
and Business Services</font></div> 40
property and business services industry includes all units mainly engaged in
renting and leasing assets as well as units engaged in providing a wide
variety
of business services. Property and business services (excluding ownership of
dwellings) contributed 13.1% of gross value added (at basic prices) in 50
2007-08.  Gross value added of the property and business services
industry grew by 15.9% (in volume terms) between 2002-03 and 2007-08,
representing average annual growth of 3.0%.</font></div>
2007-08, the property and business services industry was the second-largest
employer, employing 1.3 million people (12% of total employment).</font></div> 60

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Roman">Manufacturing</font></div>
manufacturing industry has historically been the largest industry in
Australia.
However, the gross value added contribution of manufacturing (at basic prices)
has been decreasing over the past three decades. In the early 1970s, 15
manufacturing value added contributed almost 25% of gross value added (at
basic
prices), while in 2007–08 the manufacturing industry contributed 10.7%
of gross
value added (at basic prices). Although the manufacturing industry currently 20
contributes a smaller percentage of gross value added (at basic prices) than
it
did twenty years ago, output in the industry has had an upward trend over the
same time period.</font></div>
manufacturing sector accounted for around 10.4% of total employment in 30
2007-08.</font></div>
following table provides a breakdown of gross value added (chain volume
measures) by the manufacturing industry for each of the 2003-04, 2004-05,
15: Industry Value Added (Chain Volume Measures)</font></div> 45
<div>
<div align="left">

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<tr>
</font></td>
<td valign="bottom"
<td align="left"
1px"> 20
<div> </div>
</td>
<td align="right"
<div style="TEXT-
ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE:
</td>
<td valign="bottom"
<td align="left"
<td align="right"
black 1px solid">
<div style="TEXT- 45
</td>
<td valign="bottom"
<td align="left"
1px">
<div> </div> 60
</td>

622
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<td align="right"
black 1px solid">
<div style="TEXT-
ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 5
</td>
<td valign="bottom"
<td align="left"
black 1px solid">
<div style="TEXT-
</td>
<td valign="bottom"
<td align="left" 35
<td align="right"
black 1px solid">
<div style="TEXT-
</td> 45
</tr> 50
<tr>
<td valign="bottom"
new roman">
</font></td> 55
<td valign="bottom"
width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt;
<td colspan="18"

623
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</td>
valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold;
</tr> 10
<tr>
<td align="left"
new roman">Food,
Beverage and tobacco</font></div>
</td>
<td align="left" 20
<td align="left"
<td align="right"
FONT-FAMILY: times new roman">19,635
</font></td>
<td align="left"
<td align="left"
<td align="right"
</font></td>
<td align="left"
<td align="left"
<td align="right"
</font></td> 55
<td align="left"

624
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<td align="left"
<td align="right"
</font></td>
<td align="left"
<td align="left"
<td align="right"
</font></td> 20
</tr>
<tr> 25
<td align="left"
new roman">Textiles,
clothing and footwear</font></div>
</td>
<td align="left"
<td align="left"
</font></td>
<td align="left"
<td align="left" 50
<td align="right"
FONT-FAMILY: times new roman">3,381     55
</font></td>

625
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<td align="left"
<td align="left"
<td align="right"
</font></td> 10
<td align="left"
<td align="left"
</font></td>
<td align="left"
<td align="left" 30
<td align="right"
</font></td>
</tr> 40
<tr>
<td align="left"
new roman">Wood
and Paper Products</font></div>
</td>
<td align="left" 50
<td align="left"
<td align="right"
</font></td>

626
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<td align="left"
<td align="left"
</font></td>
<td align="left"
<td align="left" 20
<td align="right"
</font></td>
<td align="left" 30
<td align="left"
<td align="right"
</font></td>
<td align="left"
<td align="left"
<td align="right"
</font></td>
</tr>
<tr>
<td align="left"

627
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new roman">Printing,
publishing and recorded media</font></div>
</td>
<td align="left" 5
<td align="left"
<td align="right"
</font></td>
<td align="left"
<td align="left"
<td align="right"
</font></td>
<td align="left"
<td align="left"
<td align="right"
</font></td> 40
<td align="left"
<td align="left"
</font></td>
<td align="left"

628
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<td align="left"
<td align="right"
</font></td>
</tr>
<tr>
<td align="left"
new roman">Petroleum,
coal, chemical, etc.</font></div>
</td> 20
<td align="left"
<td align="left"
<td align="right"
</font></td> 30
<td align="left"
<td align="left"
</font></td>
<td align="left"
<td align="left" 50
<td align="right"
</font></td>

629
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<td align="left"
<td align="left"
<td align="right"
</font></td> 10
<td align="left"
<td align="left"
</font></td>
</tr>
<tr>
<td align="left"
new roman">Non-Metallic
mineral products</font></div> 35
</td>
<td align="left"
<td align="left" 40
<td align="right"
</font></td>
<td align="left" 50
<td align="left"
<td align="right"
</font></td>

630
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<td align="left"
<td align="left"
</font></td>
<td align="left"
<td align="left" 20
<td align="right"
</font></td>
<td align="left" 30
<td align="left"
<td align="right"
</font></td>
</tr>
<tr>
<td align="left" 45
new roman">Metal 50
products</font></div>
</td>
<td align="left"
<td align="left"
<td align="right"

631
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</font></td>
<td align="left" 5
<td align="left"
<td align="right"
</font></td>
<td align="left"
<td align="left"
<td align="right"
</font></td>
<td align="left"
<td align="left"
<td align="right"
</font></td> 40
<td align="left"
<td align="left"
</font></td>
</tr>
<tr>
<td align="left"

632
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new roman">Machinery
and Equipment</font></div> 5
</td>
<td align="left"
<td align="left" 10
<td align="right"
</font></td>
<td align="left" 20
<td align="left"
<td align="right"
</font></td>
<td align="left"
<td align="left"
<td align="right"
</font></td>
<td align="left"
<td align="left"
<td align="right"
</font></td> 55
<td align="left"

633
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<td align="left"
<td align="right"
</font></td>
</tr>
<tr>
<td align="left"
1pt solid"> 15
block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
new roman">Other
manufacturing</font></div>
</div>
</td>
width="1%" style="PADDING-BOTTOM: 1px"><font style="DISPLAY: inline; FONT-
<td align="left"
<td align="right"
roman">4,850
</font></td> 35
<td valign="bottom"
width="1%" style="PADDING-BOTTOM: 1px"><font style="DISPLAY: inline; FONT- 40
<td align="left"
roman">4,464
</font></td>
<td valign="bottom"
<td align="left"
<td align="right"

634
p634 22-9-2014
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roman">4,032
</font></td>
<td valign="bottom"
<td align="left" 10
<td align="right"
roman">4,030
</font></td>
<td valign="bottom"
<td align="left"
<td align="right"
roman">4,490     30
</font></td>
</tr> 35
<tr>
<td align="left"
new roman">Total</font></div>
</td>
<td align="left"
1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times
<td align="left"
<td align="right"
roman">103,093     55
</font></td>

635
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<td align="left"
<td align="left" 5
<td align="right"
roman">101,846
</font></td>
<td align="left"
1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times 20
<td align="left"
<td align="right"
roman">101,320
</font></td> 30
<td align="left" 35
<td align="left"
<td align="right"
roman">103,292
</font></td>
<td align="left"
<td align="left"

636
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roman">106,724
</font></td>
</tr>
</table>
</div> 10
</div>
</div>
</div>
</div>
</div> 15
</div>
</div>
</div>
</div>
</div> 20
</div>
</div>
</div>
</div>
</div> 25
</div>
</div>
</div>
</div>
</div> 30
</div>
<div>
</div>
RIGHT: 0pt" align="left"> </div>
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Ownership
of Dwellings</font></div> 45
FAMILY: Times New Roman">Ownership 50
of dwellings consists of landlords and owner-occupiers of dwellings.
Owner-occupiers are regarded as operating a business that generates a gross
operating surplus. The imputation of a rent to owner-occupied dwellings
enables
the services provided by dwellings to their owner-occupiers to be treated 55
consistently with the marketed services provided by rented dwellings to their
tenants. Owner-occupiers are regarded as receiving rents (from themselves as
consumers), paying expenses and making a net contribution to the value of
production which accrues to them as owners. Ownership of dwellings contributed
8.4% of gross value added (at basic prices) in 2007-08.</font></div> 60

637
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Roman">Mining</font></div>
2007-08, mining accounted for 8.3% of gross value added (at basic
prices).  However, in 2007-08, exports of mining (non-rural)
commodities accounted for around 49% of total exports by value.</font></div>
FAMILY: Times New Roman">The gross
value of mine production for 2007-08 was $111.8 billion, a 10.0% increase over 20
the previous year.  Mineral and petroleum exploration expenditure,
after falling over 1997-02 as part of a cyclical and global downturn,
increased
to $5.5 billion in 2007-08 (at current prices).</font></div>
FAMILY: Times New Roman">In 2007,
Australia was the world's largest exporter of metallurgical coal, the second 30
largest exporter of thermal coal, iron ore, lead, zinc ores and concentrates
and
zinc metal and the third largest exporter of aluminium.</font></div>
<div><br></div>
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR"> 40
Roman">
</font></div>
</div> 45
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div>
</div> 60
<div><br></div>

638
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export earnings from non-rural commodities are estimated to have been $115.0
billion in 2007-08 (at current prices).</font></div> 5
FAMILY: Times New Roman">Private 10
(real) new capital expenditure in the mining sector was $27.4 billion in
2007-08, around 23.7% higher than in 2006-07. In 2007-08, the mining sector,
including services, employed around 146,000 people directly, around 1.4% of
the
work force. These sectors generate further manufacturing jobs downstream in 15
smelting and refining, basic metal fabrication, non-metallic mineral products,
petroleum, coal and basic chemical products and electricity and
gas.</font></div>
Roman">Construction</font></div>
construction industry contributed 7.7% of gross value added (at basic prices) 30
in
2007-08. Over the last 20 years, value added in volume terms has grown by
around
4% each year. The industry tends to experience peaks and troughs due to
factors 35
such as changing interest rates, property speculation and fiscal
policy.</font></div>
2000-01, there was a large fall in output as a substantially large amount of
building activity was brought forward to avoid the introduction of the GST.
Since 2001-02, value added has grown strongly, buoyed by the terms of trade 45
boom
and strong growth in house prices.</font></div>
FAMILY: Times New Roman">Employment
in construction reached 1 million persons in August 2008. Since 2000-01,
employment in construction has grown strongly, with its share in total
employment rising from 7.6% to 9.1% over 2007-08, making it the fifth largest 55
employer among industries.</font></div>
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Finance

639
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and Insurance</font></div>
FAMILY: Times New Roman">Companies
in the finance and insurance industry provide a range of services, from the
provision of credit and financial advice to insurance. The sector contributed
8.1% of gross value added (at basic prices) in 2007-08, a proportion that has
remained generally stable over the past 15 years following deregulation during 10
the 1980s.</font></div>
FAMILY: Times New Roman">However,
the stability of the sector's share of gross value added hides rapid change
within the industry. The advent of internet banking, ATM machines and credit
scoring have prompted massive investment in computer software and machinery
and 20
equipment (computers), and far less construction (new branches and outlets).
These innovations most likely explain a trend decline in the wage share of
total
finance and insurance income over the past two decades.</font></div>
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Health
and Community Services</font></div> 30
health and community services industry comprises hospitals, nursing homes,
medical and dental services, child care services and community care services.
Health and community services contributed 6.3% of gross value added (at basic
prices) in 2007-08.</font></div>
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Retail
Trade</font></div> 45
FAMILY: Times New Roman">Retail 50
trade is one of the larger industries in Australia. The industry comprises
food
retailing, personal and household goods retailing and motor vehicle retailing
and services. Retail trade is a labour intensive industry, and the average
labour income share of 75% reflects this. The link between the deregulation of 55
shopping hours and measured hours worked is one of the key issues affecting
productivity in this industry. Retail trade contributed 5.9% of gross value
added (at basic prices) in 2007-08.</font></div>

640
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FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Transport
and Storage</font></div>
efficiency and competitiveness of the Australian economy is significantly 10
influenced by the transport system, which is a strategic network
industry.  The transport and storage sector accounted for
approximately 5.1% of gross value added (at basic prices) in
2007-08.  The Bureau of Infrastructure, Transport and Regional
Economics estimates that the Australian freight task will almost double 15
between
2005 and 2020.  Passenger transport is also expected to increase
significantly, particularly in urban areas.  This will require
investment in additional transport infrastructure and improvements in the
utilisation of existing and new infrastructure.</font></div> 20
public sector in Australia provides those transport services (operations and
infrastructure) that involve public good characteristics and are generally not
commercially attractive.  The public sector also provides the
regulatory frameworks to support a safe, fair and efficient transport
sector.  The major airports have all been privatised.  The 30
private sector also has a significant infrastructure role in rail and ports
sectors.</font></div>
<div><br></div> 35
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
</div> 50
</div>
<div id="HDR">
Roman"> 55
</font></div>
</div>
</div>
</div>
<div><br></div> 60

641
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FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Wholesale
Trade</font></div>
wholesale trade industry consists of basic material wholesaling, machinery and 10
motor vehicle wholesaling, which includes computer wholesaling, and personal
and
household good wholesaling. The 1990s saw strong growth in industry value
added.
This increase in value added came from substantial rationalisation within the 15
industry, a wider uptake of technology amongst firms, and the increased use of
new inventory management techniques, such as 'just-in-time'
processing.  Wholesale trade contributed 4.9% of gross value added
(at
basic prices) in 2007-08.</font></div> 20
Roman">Education</font></div>
education industry is a labour intensive, service based sector, with a large
and
well educated workforce. The education industry's share of gross value added
(at 35
basic prices) was 4.4% in 2007-08 and has remained fairly stable over the past
five years.  The education industry is dominated by the public
sector,
with both Commonwealth and State governments responsible for key education
services across the economy, including the provision of primary, secondary and 40
tertiary education, and, increasingly, early childhood education.</font></div>
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Government
Administration and Defence</font></div>
government administration and defence industry includes central, state and
local
government units mainly engaged in government administration and regulatory 55
activities, as well as judicial authorities and commissions, representatives
of
overseas governments, and the Army, Navy and Air defence forces and civilian
units mainly engaged in defence administration. Government administration and
defence contributed 4.1% of gross value added (at basic prices) in 60
2007-08.</font></div>

642
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Roman">Agriculture,
Forestry and Fishing</font></div>
agriculture, forestry & fishing industry contributed 2.5% of gross value
added (at basic prices) in 2007-08. Historically, the contribution of this
industry to the Australian economy has been trending downwards, though the 15
absolute size of the industry continues to grow. The industry is dominated by
agriculture, with forestry and fishing making up only around 5% of industry
output in 2007-08 based on gross value added (chain volume
measures).  Production in the past three years has been impacted by
drought conditions.</font></div> 20
STYLE: italic; FONT-FAMILY: Times New Roman">Agriculture</font></div> 25
following table presents production data of Australia's principal rural
commodities for each of the 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08
fiscal years.</font></div>
16:  Principal Rural Commodities - Gross values and volumes of
Australian production</font></div> 40
<div>
<div align="left">
<tr>
<td valign="top" width="14%" style="BORDER-TOP: black 1pt solid; 45
</font></td>
<td colspan="3" valign="bottom" width="13%" style="BORDER-TOP:
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2003-
04</font></div>
</div> 60
</td>

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black 1pt solid; BORDER-BOTTOM: black 1px solid"> 5
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2004- 10
05</font></div>
</div>
</td>
06</font></div>
</div> 25
</td>
<td colspan="3" valign="bottom" width="13%" style="BORDER-TOP: 30
07</font></div>
</div>
</td>
08</font></div> 50
</div>
</td>
</tr>
<tr>
solid">

644
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roman">Commodities</font></div>
</div>
</td>
<td valign="top" width="1%" style="PADDING-BOTTOM: 1px"><font 5
solid">
SIZE: 10pt; FONT-FAMILY: times new roman">A$m</font></div>
</div> 15
</td>
<td valign="top" width="1%" style="PADDING-BOTTOM: 1px"><font
solid">
SIZE: 10pt; FONT-FAMILY: times new roman">kt</font></div>
</div>
</td>
solid">
</div>
</td> 40
solid"> 45
SIZE: 10pt; FONT-FAMILY: times new roman">kt</font></div> 50
</div>
</td>
solid">

645
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</div>
</td> 5
solid"> 10
SIZE: 10pt; FONT-FAMILY: times new roman">kt</font></div> 15
</div>
</td>
solid">
</div>
</td>
solid">
</div> 40
</td>
solid">
</div>
</td>
solid">

646
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</div>
</td> 5
</tr>
<tr>
times new roman">Wool<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-
</td> 15
<td align="right" valign="bottom" width="6%">
0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 20
</td>
0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE:
10pt; FONT-FAMILY: times new roman">509</font></div>
</td> 30
</td>
10pt; FONT-FAMILY: times new roman">520</font></div> 45
</td>
<td align="right" valign="bottom" width="6%"> 50
</td>

647
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</td>
</td>
</td>
</td> 25
</td>
</tr>
<tr> 35
10pt; FONT-FAMILY: times new roman">Meat</font></div>
</td> 40
</td>
</td>
</td>

648
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</td>
</td>
</td>
</td>
</td> 35
</td>
</td>
</tr> 50
<tr>
10pt; FONT-FAMILY: times new roman">Wheat</font></div> 55
</td>

649
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</td>
</td>
</td>
</td> 25
</td>
</td>
</td>
</td>
</td> 60

650
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</td>
</tr>
<tr>
times new roman">Cane sugar<font style="DISPLAY: inline; FONT-SIZE: 70%; 15
VERTICAL-ALIGN: super">(b)</font></font></font></font></div>
</td>
</td>
</td>
</td> 40
</td>
</td>

651
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</td>
</td>
</td> 20
</td>
</td>
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">Cottonseed
and lint</font></div>
</td>
</td>
</td>

652
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</td>
</td>
</td>
</td> 25
</td>
</td>
</td>
</td>
</tr>
<tr> 55
black 1px solid">

653
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times new roman">Milk<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-
ALIGN: super">(c)</font></font></font></font></div>
</td>
black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: 5
</td>
</td>
</td> 30
</td>
</td>
</td>

654
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</td>
</td> 15
</td>
</td>
</tr>
</table> 35
</div>
</div>
<div>
FAMILY: Times New Roman">Notes:  kt 40
= kilotonne.</font></div>
</div>
<div><font style="FONT-SIZE: 8pt; FONT-FAMILY: Times New
Roman">
<font style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">NA = Not 45
available.</font></font></div>
<div>
FAMILY: Times New Roman">(a)
Value calculated from average auction price (greasy).</font></div> 50
<div align="left">
FAMILY: Times New Roman">(b)
Cut for crushing.</font></div>
</div> 55
<div align="left">
FAMILY: Times New Roman">(c)
Units of measurement: ML.</font></div>
</div> 60

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<div align="left"><font style="FONT-SIZE: 8pt; FONT-FAMILY: Times New
Roman">Source:  </font>Australian 5
Bureau of Agricultural and Resource Economics, Australian Commodities (pages
762, 763, 765 and 766); ABS Catalogue No. 7215.0.</font></font></font></div>
</div>
Roman">Electricity,
Gas and Water Supply</font></div>
electricity, gas and water supply industry contributed 2.2% of gross value 20
added
(at basic prices) in 2007–08.  Electricity is the largest part
of this
industry and contributes 63% to industry value added (chain volume
measures).  Water, sewerage and drainage account for 30% of gross 25
value added (chain value measures) and gas contributes 7% to gross value added
(chain value measures). Prior to 1990, the industry was highly regulated and
most utilities operated as monopolies. The electricity industry was vertically
integrated in most, if not all jurisdictions, with single companies
responsible 30
for generation, transmission, distribution and retail.  Significant
reforms occurred in the three sectors over the 1990s.  However,
different jurisdictions approached deregulation on different time frames. Some
of the reforms included corporatisation, privatisation and the structural
separation of electricity utilities. These reforms have continued into the 35
current decade.  Value-added in volumes terms grew by 1.7% per year
on
average between 1985–86 and 2007–08.</font></div>
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
</div> 55
</div>
<div id="HDR">
Roman"> 60
</font></div>

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</div>
</div>
</div>
<div> </div>
STYLE: italic; FONT-FAMILY: Times New Roman">Electricity</font></div>
energy market in Australia has undergone significant reform since the 1990s,
which has increased investment and improved productivity.  The
reforms 15
have included: disaggregating elements of the electricity supply chain;
introducing competition in electricity generation and retailing; and
corporatising, and, in some States, privatizing electricity
assets.  The creation of the National Electricity Market has also
allowed electricity trading between Queensland, New South Wales, Victoria, 20
South
Australia, Tasmania and the Australian Capital Territory through a wholesale
electricity pool.</font></div>
FAMILY: Times New Roman">In 2006,
the Council of Australian Governments ("COAG") agreed to energy market reforms
to enhance governance, improve transmission planning and assist the 30
development
of more effective energy financial markets.  COAG also agreed to
establish a national energy market operator for electricity and gas with a
national planning function.</font></div>
electricity prices, although having risen in recent years, remain low by world 40
standards largely due to substantial natural resources.  In 2006,
average electricity prices in capital cities were generally lower than in many
OECD countries, including the United Kingdom, Spain, France and
Italy.</font></div>
has about 244 large electricity generators, of which around 190 are in the 50
National Electricity Market jurisdictions in eastern and southern
Australia.  The National Electricity Market supplies electricity to
approximately 8.7 million residential and business customers using an
extensive
electricity distribution network covering approximately 700,000 55
kilometres.  In 2007-08, the market generated around 208 terawatt
hours of electricity with a turnover of almost $11.1 billion.  The
generation sector uses a variety of fuel sources to produce
electricity.  Black and brown coal accounted for around two-thirds
of 60
total generation capacity across the National Electricity Market in 2007-08,

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followed by hydroelectric generation (17%) and gas-fired generation
(15%).</font></div>
FAMILY: Times New Roman">Electricity
generation in Australia is emissions intensive due to the predominance of
coal.  The Government has committed to policies aimed at addressing
climate change.  In 2007, the Government committed to ensuring 20% 10
of
Australia's electricity supply is derived from renewable sources by
2020.  On 15 December 2008, the Australian Government indicated its
intention to introduce emissions trading through the Carbon Pollution
Reduction 15
Scheme from 1 July 2010.  The Scheme will cover around 75% of
national
emissions, including the stationary energy sector.  It will be a
'cap
and trade' scheme under which significant emitters of greenhouse gases will 20
need
to acquire and surrender a carbon pollution permit for each tonne of
greenhouse
gas that they emit during the compliance year.  Permits will be
tradable which ensures that emissions are reduced at the lowest possible 25
cost.  The price of permits will be determined by the
market.</font></div>
Australian Government has announced its medium-term target to reduce
Australia's
greenhouse gas emissions by between 5% and 15% below 2000 levels by the end of 35
2020.  The top of this range (5% below 2000 levels) represents an
unconditional commitment to reduce emissions by 2020, irrespective of the
actions of other countries.  The bottom of this range (15% below
2000
levels) is conditional on a global agreement where all major economies 40
substantially restrain emissions and all developed countries take on
comparable
reductions to that of Australia.  The Australian Government's
long-term target is to reduce emissions by 60% below 2000 levels by
2050.</font></div> 45
FAMILY: Times New Roman">These 50
policies are expected to lead to significant new investment in electricity
generation and transmission.</font></div>
Roman">Communication
Services</font></div>

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communication services industry, which comprises postal, courier and
telecommunications services, contributed 2.6% of gross value added (at basic 5
prices) in 2007-08.</font></div>
STYLE: italic; FONT-FAMILY: Times New Roman">Telecommunications</font></div>
Australian telecommunications market has been open to full competition since 1
July 1997. Since that time, the telecommunications sector has developed into a
more dynamic and innovative market, with businesses and households benefiting
from lower prices and more variety of carriers.</font></div> 20
<div><br></div>
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman"> 30
</font></div>
</div>
</div>
</div>
<div id="HDR"> 40
Roman">
</font></div>
</div> 45
</div>
</div>
<div><br></div>
telecommunications sector is subject to a number of regulatory mechanisms at
the
retail level. A Universal Service Obligation ("USO") is placed on the
telecommunications industry to ensure that all people in Australia have 55
reasonable access to basic telephone services, on an equitable
basis.  Funding of the USO is provided by all licensed
telecommunications carriers.</font></div>

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FAMILY: Times New Roman">Telecommunications-specific
competition provisions are contained in Parts XIB and XIC of the <font
style="DISPLAY: inline; FONT-STYLE: italic">Trade Practices Act 1974</font> 5
(the
"TPA"). These provisions are based on, but do not exactly mirror, generic
competition laws.</font></div>
<div>
width="100%">
</td>
<td>
10pt; FONT-FAMILY: times new roman">Part
XIB of the TPA establishes an anti-competitive conduct regime for 25
telecommunications markets, which applies in addition to the general
competition provisions under Part IV of the
TPA.</font></div>
</td>
</tr> 30
</table>
</div>
</div>
<div>
width="100%">
</td>
<td>
10pt; FONT-FAMILY: times new roman">Part
XIC of the TPA establishes an industry specific regime for regulated 50
access to bottleneck carriage services and provides the core access
arrangements for the telecommunications
industry.</font></div>
</td>
</tr> 55
</table>
</div>
</div>

660
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competition framework has had a number of important benefits for consumers.
For 5
example, access to Telstra's copper local loop network by its competitors has
been a key driver of the growth of broadband in Australia.  Telstra,
formerly a Government-owned monopoly, was privatised between 1997 and
2006.  Tranches of approximately 33% and 16% of Telstra were sold in
1997 and 1999.  In 2006, the Government sold a further 34% stake in 10
Telstra, with the remaining 17% shareholding transferred to the Future Fund in
February 2007.  For further information with respect to the Future
Fund, see "Government Finance—Pensions and Superannuation" in this
Government has also committed to provide up to $4.7 billion and to consider 20
necessary regulatory changes to facilitate the roll-out of a new open access,
high-speed, fibre-based broadband network — the National Broadband
Network.</font></div>
Roman">Accommodation,
Cafes and Restaurants</font></div> 30
accommodation, cafes and restaurants industry consists of firms primarily
engaged in the provision of hospitality services. This includes accommodation,
clubs, pubs, taverns and bars, along with cafes and restaurants. The
industry's
contribution of gross value added (at basic prices) from 2003-04 to 2007-08 40
has
been around 2.1%. The largest proportion of value added in this industry is
from
pubs and clubs, while the largest employer is cafes and
restaurants.</font></div> 45
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Personal 50
and Other Services</font></div>
personal and other services industry includes all units mainly engaged in
providing personal services, and services provided by religious organisations
and other public interest groups. Personal and other services contributed 2.0%
of gross value added (at basic prices) in 2007-08.</font></div> 60

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FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Cultural 5
and Recreational Services</font></div>
cultural and recreational services industry comprises libraries, museums,
parks
and gardens, sporting facilities, gambling services, radio and television
services, and production, distribution and exhibition of film. Cultural and 15
recreational services contributed 1.6% of gross value added (at basic prices)
in
2007-08.</font></div>
STYLE: italic; FONT-FAMILY: Times New Roman">Television
Services</font></div>
FAMILY: Times New Roman">Free to
air television broadcasts reach 100% of the Australian population. 30
Subscription
television can reach 100% of Australia through a mixture of hybrid fibre
coaxial
cable in major cities and satellite transmission in rural areas.</font></div>
Government has announced that all free-to-air television broadcasters in 40
Australia will complete the switch from analog transmission to digital-only
transmission by the end of 2013.  The switchover process will
commence
in 2010, and will be progressively carried out on a regional basis across the
country.</font></div> 45
<div><br></div>
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman"> 55
</font></div>
</div>

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</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div> 10
</div>
<div><br></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">EXTERNAL 15
TRADE AND BALANCE OF PAYMENTS</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Merchandise
Trade</font></div>
FAMILY: Times New Roman">The value
of goods measured on a free on board ("f.o.b.") basis includes all production
and other costs incurred up until the goods are placed on board an
international 30
carrier for export from the relevant exporting country.</font></div>
merchandise exports (f.o.b.) and imports (f.o.b.) for the past five fiscal
years
in current prices, calculated on a balance of payments basis, are shown in the
table below.</font></div> 40
17:  Merchandise exports and imports</font></div>
<div>
<div align="left">

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<div align="left">
<tr>
<td valign="bottom"
</font></td>
<td valign="bottom"
<td align="left"
black 1px solid">
<div style="TEXT-
</td>
<td align="left"
nowrap valign="bottom" width="1%" style="BORDER-TOP: black 1pt solid; PADDING-
<td valign="bottom"
<td align="left" 40
<td align="right"
black 1px solid">
<div style="TEXT-
</td> 50
<td align="left"
<td align="left"

664
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<td align="right"
black 1px solid"> 5
<div style="TEXT-
</td>
<td align="left" 10
<td valign="bottom"
<td align="left"
<td align="right"
black 1px solid">
<div style="TEXT- 25
</td>
<td align="left"
nowrap valign="bottom" width="1%" style="BORDER-TOP: black 1pt solid; PADDING- 30
<td valign="bottom"
<td align="left"
<td align="right"
black 1px solid">
<div style="TEXT-
ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 45
</td>
<td align="left"
</tr>
<tr>
<td valign="bottom"
new roman">
</font></td>
<td valign="bottom"

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<td colspan="18"
<div
align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 5
</td>
<td align="left"
nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: 10
</tr>
<tr>
<td align="left"
<div
FONT-FAMILY: times new roman">Exports</font></div>
</td> 20
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left" 30
nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE:
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td align="left"
<td align="right"
<td align="left"
nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 55
<td valign="bottom"

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<td align="left"
<td align="right"
<td align="left"
<td align="left"
<td align="right"
<td align="left"
</tr>
<tr>
<td align="left"
<div
new roman">Rural
Exports</font></div> 30
</td>
<td valign="bottom"
<td align="left" 35
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="left"
<td valign="bottom"
<td align="left"

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<td align="right"
<td align="left"
<td valign="bottom"
<td align="left" 10
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="left"
</tr>
<tr>
<td align="left"
<div 35
new roman">   Meat
and Meat Preparations</font></div>
</td> 40
<td align="left"
<td align="left"
<td align="right"
<td align="left" 50
<td align="left"
<td align="left"
<td align="right"

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<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="right"
<td align="left" 25
<td align="left"
<td align="left"
<td align="right"
<td align="left"
</tr> 40
<tr>
<td align="left"
<div
new roman">   Cereal
grains and cereal preparations</font></div>
</td>
<td align="left" 50
<td align="left"
<td align="right"
<td align="left"

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<td align="left"
<td align="left"
<td align="right"
<td align="left" 10
<td align="left"
<td align="left"
<td align="right"
<td align="left"
<td align="left" 25
<td align="left"
<td align="right"
<td align="left"
<td align="left"
<td align="left" 40
<td align="right"
<td align="left"
</tr>
<tr> 50
<td align="left"
<div
new roman">   Wool
and Sheepskins</font></div>
</td>
<td align="left"

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<td align="left"
<td align="right"
<td align="left"
<td align="left" 10
<td align="left"
<td align="right"
<td align="left"
<td align="left"
<td align="left" 25
<td align="right"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="right"
<td align="left" 55
</tr>
<tr>
<td align="left" 60
valign="bottom" width="44%" style="PADDING-BOTTOM: 1px">

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<div
new roman">   Other
Rural</font></div> 5
</td>
<td valign="bottom"
<td align="left" 10
<td align="right"
<td align="left"
nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 1px"><font
<td valign="bottom"
<td align="left"
<td align="right"
roman">10,707</font></td> 30
<td align="left"
<td align="left"
<td align="right"
<td align="left" 45
<td valign="bottom"
<td align="left"
<td align="left"
nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 1px"><font 60

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<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
</tr>
<tr>
<td align="left"
valign="bottom" width="44%" style="PADDING-BOTTOM: 1px"> 20
<div
new
roman">           &#160 25
;  Total
Rural</font></div>
</td>
<td valign="bottom"
<td align="left"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td valign="bottom"

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<td align="left"
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left" 15
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
roman">25,470</font></td> 35
<td align="left"
</tr> 40
<tr>
<td valign="bottom"
new roman">
</font></td> 45
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left" 55
<td valign="bottom"

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<td align="left"
<td align="right"
<td align="left"
<td align="left"
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left" 25
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="left"
</tr>
<tr>
<td align="left"
<div 50
new roman">Non-rural
Exports</font></div>
</td> 55
<td valign="bottom"
<td align="left"

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<td align="right"
<td align="left"
<td valign="bottom"
<td align="left" 10
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left" 40
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
</tr> 55
<tr>
<td align="left"
<div

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new roman">   Metal
Ores and Minerals</font></div>
</td>
<td align="left" 5
<td align="left"
<td align="right"
<td align="left"
<td align="left"
<td align="left" 20
<td align="right"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="right"
<td align="left" 50
<td align="left"
<td align="left"
<td align="right"

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<td align="left"
</tr>
<tr> 5
<td align="left"
<div
new roman">   Mineral
Fuels -</font></div>
</td>
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="right"
<td align="left" 35
<td align="left"
<td align="left"
<td align="right"
<td align="left"
<td align="left" 50
<td align="left"
<td align="right"
<td align="left"

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<td align="left"
<td align="left"
<td align="right"
<td align="left" 10
</tr>
<tr>
<td align="left" 15
<div
new roman">          Coal, 20
coke and briquettes</font></div>
</td>
<td align="left"
<td align="left"
<td align="right"
<td align="left"
<td align="left" 35
<td align="left"
<td align="right"
<td align="left"
<td align="left"
<td align="left" 50
<td align="right"
<td align="left"
<td align="left"

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<td align="left"
<td align="right"
<td align="left"
<td align="left" 10
<td align="left"
<td align="right"
<td align="left"
</tr>
<tr>
<td align="left"
<div
new roman">          Other
mineral fuels</font></div> 30
</td>
<td align="left"
<td align="left" 35
<td align="right"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"

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<td align="right"
<td align="left"
<td align="left"
<td align="left" 10
<td align="right"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
</tr>
<tr>
<td align="left"
<div 35
new roman">   Metals
(excl non-monetary gold)</font></div>
</td> 40
<td align="left"
<td align="left"
<td align="right"
<td align="left" 50
<td align="left"
<td align="left"
<td align="right"

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<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="right"
<td align="left" 25
<td align="left"
<td align="left"
<td align="right"
<td align="left"
</tr> 40
<tr>
<td align="left"
<div
new roman">   Machinery</font></div>
</td>
<td align="left"
<td align="left"
<td align="left"

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<td align="left"
<td align="left"
<td align="right"
<td align="left" 10
<td align="left"
<td align="left"
<td align="right"
<td align="left"
<td align="left" 25
<td align="left"
<td align="right"
<td align="left"
<td align="left"
<td align="left" 40
<td align="right"
<td align="left"
</tr>
<tr> 50
<td align="left"
<div
new roman">   Transport
equipment</font></div>
</td>
<td align="left"

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<td align="left"
<td align="right"
<td align="left"
<td align="left" 10
<td align="left"
<td align="right"
<td align="left"
<td align="left"
<td align="left" 25
<td align="right"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="right"
<td align="left" 55
</tr>
<tr>
<td align="left" 60

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<div
new roman">   Other
manufactures</font></div> 5
</td>
<td align="left"
<td align="left" 10
<td align="right"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="right"
<td align="left" 40
<td align="left"
<td align="left"
<td align="right"
<td align="left"
<td align="left" 55
<td align="left"

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<td align="right"
<td align="left"
</tr>
<tr>
<td align="left"
valign="bottom" width="44%" style="PADDING-BOTTOM: 1px"> 10
<div
new roman">   Other
non-rural (incl sugar and beverages)</font></div> 15
</td>
<td valign="bottom"
<td align="left" 20
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
roman">10,942</font></td> 40
<td align="left"
<td align="left"
<td align="right"
<td align="left" 55
<td valign="bottom"

686
p686 22-9-2014
A 1
st
<td align="left"
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left" 15
<td align="right"
<td align="left"
</tr>
<tr>
<td align="left"
<div 30
new roman">          Total
Non-Rural</font></div>
</td> 35
<td valign="bottom"
<td align="left"
<td align="right"
roman">76,983</font></td> 45
<td align="left"
<td align="left"
<td align="right"
<td align="left" 60

687
p687 22-9-2014
A 1
st
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left" 20
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
roman">143,321</font></td> 40
<td align="left"
</tr> 45
<tr>
<td valign="bottom"
new roman">
</font></td> 50
<td valign="bottom"
<td align="left"
<td align="right"

688
p688 22-9-2014
A 1
st
<td align="left"
<td valign="bottom"
<td align="left"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left" 25
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td align="left"
<td align="right"
<td align="left"
</tr>
<tr>
<td align="left"
<div
new roman">Goods
for processing</font></div> 60
</td>

689
p689 22-9-2014
A 1
st
<td align="left"
<td align="left"
<td align="right"
<td align="left" 10
<td align="left"
<td align="left"
<td align="right"
<td align="left"
<td align="left" 25
<td align="left"
<td align="right"
<td align="left"
<td align="left"
<td align="left" 40
<td align="right"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
</tr>

690
p690 22-9-2014
A 1
st
<tr>
<td align="left"
<div
new roman">Repairs
on goods</font></div>
</td>
<td align="left" 10
<td align="left"
<td align="right"
<td align="left"
<td align="left"
<td align="left" 25
<td align="right"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="right"
<td align="left" 55
<td align="left"

691
p691 22-9-2014
A 1
st
<td align="left"
<td align="right"
<td align="left"
</tr> 10
<tr>
<td align="left"
<div
new roman">Goods
procured in ports by carriers</font></div>
</td>
<td align="left" 20
<td align="left"
<td align="right"
<td align="left"
<td align="left"
<td align="left" 35
<td align="right"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"

692
p692 22-9-2014
A 1
st
<td align="right"
<td align="left"
<td align="left"
<td align="left" 10
<td align="right"
<td align="left"
</tr>
<tr> 20
<td align="left"
<div
new roman">Non-monetary
gold</font></div>
</td>
<td valign="bottom"
<td align="left"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td valign="bottom"

693
p693 22-9-2014
A 1
st
<td align="left"
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left" 15
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
roman">12,272</font></td> 35
<td align="left"
</tr> 40
<tr>
<td valign="bottom"
new roman">
</font></td> 45
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left" 55
<td valign="bottom"

694
p694 22-9-2014
A 1
st
<td align="left"
<td align="right"
<td align="left"
<td align="left"
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left" 25
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="left"
</tr>
<tr>
<td align="left"
<div 50
new roman">         Total
Merchandise Exports</font></div>
</td> 55
<td valign="bottom"
<td align="left"

695
p695 22-9-2014
A 1
st
<td align="right"
<td align="left" 5
<td valign="bottom"
<td align="left"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left" 40
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
roman">182,989</font></td> 60

696
p696 22-9-2014
A 1
st
<td align="left"
</tr> 5
<tr>
<td valign="bottom"
new roman">
</font></td> 10
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left" 20
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td align="left"
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left" 50
<td align="right"
<td align="left"
<td valign="bottom"

697
p697 22-9-2014
A 1
st
<td align="left"
<td align="right"
<td align="left"
</tr> 10
<tr>
<td align="left"
<div
FONT-FAMILY: times new roman">Imports</font></div>
</td>
<td valign="bottom"
<td align="left"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left" 40
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td align="left"

698
p698 22-9-2014
A 1
st
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left" 10
<td align="right"
<td align="left"
</tr>
<tr> 20
<td align="left"
<div
new roman">Consumption
goods</font></div>
</td>
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="right"
<td align="left" 50
<td align="left"
<td align="left"
<td align="right"

699
p699 22-9-2014
A 1
st
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="right"
<td align="left" 25
</tr>
<tr>
<td align="left" 30
<div
new roman">Capital 35
goods</font></div>
</td>
<td align="left"
<td align="left"
<td align="right"
<td align="left"
<td align="left" 50
<td align="left"
<td align="right"
<td align="left"

700
p700 22-9-2014
A 1
st
<td align="left"
<td align="left"
<td align="right"
<td align="left" 10
<td align="left"
<td align="left"
<td align="right"
<td align="left"
<td align="left" 25
<td align="left"
<td align="right"
<td align="left"
</tr>
<tr>
<td align="left"
<div
new roman">Intermediate
and other merchandise goods</font></div> 45
</td>
<td align="left"
<td align="left" 50
<td align="right"
<td align="left"
<td align="left"

701
p701 22-9-2014
A 1
st
<td align="left"
<td align="right"
<td align="left"
<td align="left" 10
<td align="left"
<td align="right"
<td align="left"
<td align="left"
<td align="left" 25
<td align="right"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
</tr>
<tr>
<td align="left"
<div 50
new roman">Goods
for processing</font></div>
</td> 55
<td align="left"
<td align="left"

702
p702 22-9-2014
A 1
st
<td align="right"
<td align="left"
<td align="left"
<td align="left" 10
<td align="right"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="right"
<td align="left" 40
<td align="left"
<td align="left"
<td align="right"
<td align="left"
</tr> 55
<tr>
<td align="left"
<div

703
p703 22-9-2014
A 1
st
new roman">Repairs
on goods</font></div>
</td>
<td align="left" 5
<td align="left"
<td align="right"
<td align="left"
<td align="left"
<td align="left" 20
<td align="right"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="right"
<td align="left" 50
<td align="left"
<td align="left"
<td align="right"

704
p704 22-9-2014
A 1
st
<td align="left"
</tr>
<tr> 5
<td align="left"
<div
new roman">Goods
procured in ports by carriers</font></div>
</td>
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="right"
<td align="left" 35
<td align="left"
<td align="left"
<td align="right"
<td align="left"
<td align="left" 50
<td align="left"
<td align="right"
<td align="left"

705
p705 22-9-2014
A 1
st
<td align="left"
<td align="left"
<td align="right"
<td align="left" 10
</tr>
<tr>
<td align="left" 15
<div
new roman">Non-monetary 20
gold</font></div>
</td>
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left" 40
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
roman">4,715</font></td> 60

706
p706 22-9-2014
A 1
st
<td align="left"
<td align="left"
<td align="right"
<td align="left" 15
<td valign="bottom"
<td align="left"
<td align="left"
</tr>
<tr>
new roman">
</font></td>
<td valign="bottom"
<td align="left"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"

707
p707 22-9-2014
A 1
st
<td align="left"
<td valign="bottom"
<td align="left"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left" 25
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
</tr> 40
<tr>
<td align="left"
<div
new roman">          Total
Merchandise Imports</font></div>
</td>
<td align="left"
<td align="right"
<td align="left" 60

708
p708 22-9-2014
A 1
st
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left" 20
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
roman">184,024</font></td> 40
<td align="left"
<td align="left"
<td align="right"
<td align="left" 55
</tr>
<tr> 60

709
p709 22-9-2014
A 1
st
<td valign="bottom"
new roman">
</font></td>
<td align="left"
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left" 20
<td align="right"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left" 50
<td valign="bottom"
<td align="left"
<td align="right"

710
p710 22-9-2014
A 1
st
<td align="left"
</tr>
<tr> 5
<td align="left"
<div
new roman">Balance
on Merchandise Trade</font></div>
</td>
<td align="left"
<td align="left"
<td align="right"
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-
23,545</font></td> 25
<td align="left"
nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM:
<td align="left" 30
<td align="left"
<td align="right"
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">- 40
23,006</font></td>
<td align="left"
<td align="left"
<td align="left" 50
<td align="right"
15,291</font></td>
<td align="left"

711
p711 22-9-2014
A 1
st
<td align="left"
<td align="left" 5
<td align="right"
14,510</font></td>
<td align="left"
<td align="left"
<td align="left"
21,975</font></td>
<td align="left"
nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: 30
</tr>
</table>
</div> 35
</div>
</div>
</div>
</div>
</div> 40
</div>
</div>
</div>
</div>
</div> 45
</div>
</div>
</div>
</div>
</div> 50
</div>
</div>
</div>
</div>
</div> 55
</div>
</div>
</div>
<div>

712
p712 22-9-2014
A 1
st
FAMILY: Times New Roman">Source:
</font>ABS Catalogue No. 5302.0.</font></font></font></div>
<div align="left"> </div> 5
<div align="left">
<div id="FTR">
Roman">
</font></div>
</div>
</div> 20
</div>
<div id="HDR">
Roman"> 25
</font></div>
</div>
</div>
</div>
<div align="left"><br></div> 30
</div>
following table shows the shares of Australian exports and imports directed to 35
and sourced from various countries and country groups for each of the 2003-04,
2004-05, 2005-06, 2006-07 and 2007-08 fiscal years.  These shares
are
calculated from values data and on a merchandise trade basis, rather than a
balance of payments basis.</font></div> 40
18:  Geographical distribution of Australia's recorded merchandise
trade</font></div>
<div>
<div align="left">

713
p713 22-9-2014
A 1
st
<div 15
align="center">
<div
align="center">
<div
align="center"> 20
<div
align="center">
<div
align="center">
<div 25
align="center">
<div
align="center">
<div
align="center"> 30


35




45




55



714
p714 22-9-2014
A 1
st


5




15




25




35




45



<tr>

<td valign="bottom" width="40%" style="BORDER-TOP: black 1pt solid; PADDING-
new roman">
</font></td>


715
p715 22-9-2014
A 1
st

<td align="left" valign="bottom" width="1%" style="BORDER-TOP: black 1pt
5
<td align="right" valign="bottom" width="9%" style="BORDER-TOP: black 1pt

<div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT:
bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2003-04</font></div> 10

</td>

<td align="left" nowrap valign="bottom" width="1%" style="BORDER-TOP: black


25


</td>



45


</td>



716
p716 22-9-2014
A 1
st

5


</td>



25


</td>


</tr>

<tr> 40

<td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-
</font></td>
45
<td valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-

50
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT:
0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-
(Percentages)</font></div>
55
</td>

<td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-

717
p717 22-9-2014
A 1
st

</tr>

<tr>
5

0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE:
10pt; FONT-FAMILY: times new roman">Exports</font></div> 10

</td>

<td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt;

<td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline;

<td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; 20

<td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY:
25


<td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline;

<td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: 35

40



<td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; 50

55


718
p718 22-9-2014
A 1
st


<td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; 5

10

</tr>
15
<tr>


<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 20
0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY:
times new roman">      China</font></div>

</td>
25


FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9.1</font></td>


40

FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.3</font></td> 45



55


719
p719 22-9-2014
A 1
st



10




25
</tr>

<tr>


times new roman">      Japan</font></div>
35
</td>

40




55


720
p720 22-9-2014
A 1
st



10




25




</tr>

<tr> 40


0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: 45
times new roman">      Korea,
Republic of</font></div>

</td>
50




721
p721 22-9-2014
A 1
st



10




25




40



</tr> 50

<tr>

55
times new roman">      New
Zealand</font></div>
60
</td>

722
p722 22-9-2014
A 1
st



10




25




40




55


723
p723 22-9-2014
A 1
st

</tr>

<tr>
5

times new roman">      United 10
Kingdom</font></div>

</td>


20




35




50




724
p724 22-9-2014
A 1
st



10

</tr>
15
<tr>


times new roman">      United
States</font></div>

</td> 25



35




50




725
p725 22-9-2014
A 1
st



10




25
</tr>

<tr>


times new roman">      India</font></div>
35
</td>

40




55


726
p726 22-9-2014
A 1
st



10




25




</tr>

<tr> 40


times new roman">      Singapore</font></div>

</td>


55


727
p727 22-9-2014
A 1
st



10




25




40



</tr> 50

<tr>

55
times new roman">      Thailand</font></div>

</td> 60

728
p728 22-9-2014
A 1
st



10




25




40




55


729
p729 22-9-2014
A 1
st

</tr>

<tr>
5

times new roman">      Indonesia</font></div> 10

</td>




25




40




55


730
p730 22-9-2014
A 1
st



10

</tr>
15
<tr>


times new roman">      Malaysia</font></div>

</td>
25




40




55


731
p731 22-9-2014
A 1
st



10




25
</tr>

<tr>


times new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new 35
roman">      Other
European Union<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-

</td> 40



50




732
p732 22-9-2014
A 1
st



10




25




40
</tr>

<tr>

<td align="left" valign="bottom" width="40%" style="PADDING-BOTTOM: 1px"> 45

roman">      Other<font style="DISPLAY: inline;
FONT-SIZE: 70%; VERTICAL-ALIGN: super">(b)</font></font></font></font></div>

</td>
55
<td valign="bottom" width="1%" style="PADDING-BOTTOM: 1px"><font

<td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 1px"><font 60

733
p733 22-9-2014
A 1
st

<td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 1px

<td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM:
1px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new

15
<td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 1px"><font

<td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 1px 20

1px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new 25


35

<td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 40



55

<td valign="bottom" width="1%" style="PADDING-BOTTOM: 1px"><font 60

734
p734 22-9-2014
A 1
st



15
</tr>

<tr>


times new
roman">           &#160 25
;            Total
</font></div>

</td>
30




50



735
p735 22-9-2014
A 1
st

5




25




45

</tr> 50

<tr>

</font></td>


736
p736 22-9-2014
A 1
st



10




25




40




55

</tr>
60
<tr>

737
p737 22-9-2014
A 1
st


0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 5
10pt; FONT-FAMILY: times new roman">Imports</font></div>

</td>


15




30




45





738
p738 22-9-2014
A 1
st



10
</tr>

<tr>


times new roman">     China</font></div>
20
</td>

25




40




55


739
p739 22-9-2014
A 1
st



10




</tr>

<tr> 25


times new roman">     Japan</font></div>

</td>


40




55


740
p740 22-9-2014
A 1
st



10




25



</tr> 35

<tr>

40
times new roman">     Korea,
Republic of</font></div>
45
</td>

50




741
p741 22-9-2014
A 1
st



10




25




40


</tr>

<tr>
50

times new roman">     New 55
Zealand</font></div>

</td>


742
p742 22-9-2014
A 1
st



10




25




40




55

</tr>
60
<tr>

743
p743 22-9-2014
A 1
st


Kingdom</font></div>

</td>
10




25




40




55


744
p744 22-9-2014
A 1
st



10
</tr>

<tr>


States</font></div> 20

</td>




35




50




745
p745 22-9-2014
A 1
st



10




</tr>

<tr> 25


times new roman">     Singapore</font></div>

</td>


40




55


746
p746 22-9-2014
A 1
st



10




25



</tr> 35

<tr>

40
times new roman">     Thailand</font></div>

</td> 45



55


747
p747 22-9-2014
A 1
st



10




25




40


</tr>

<tr>
50

times new roman">     Indonesia</font></div> 55

</td>


748
p748 22-9-2014
A 1
st



10




25




40




55

</tr>
60
<tr>

749
p749 22-9-2014
A 1
st


times new roman">     Malaysia</font></div>

</td>


15




30




45





750
p750 22-9-2014
A 1
st



10
</tr>

<tr>


roman">     Other
European Union<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-

</td> 25



35




50




751
p751 22-9-2014
A 1
st



10




25
</tr>

<tr>


roman">     Other<font style="DISPLAY: inline; FONT-
SIZE: 70%; VERTICAL-ALIGN: super">(b)</font></font></font></font></div>

</td>
40




60

752
p752 22-9-2014
A 1
st



15




35




55

</tr> 60

753
p753 22-9-2014
A 1
st

<tr>

<td align="left" valign="bottom" width="40%" style="BORDER-BOTTOM: black 1px
solid"> 5

times new
roman">           &#160 10
;            &#160
;Total</font></div>

</td>
15
<td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px;

<td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px 20


<td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px;

35


BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; 45


55

<td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px; 60

754
p754 22-9-2014
A 1
st



15

<td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px; 20



35
</tr>

</table>

</div> 40

</div>

</div>
45
</div>

</div>

</div> 50

</div>

</div>
55
</div>

</div>

</div> 60

755
p755 22-9-2014
A 1
st

</div>

</div>
5
</div>

</div>

</div> 10

</div>

</div>
15
</div>

</div>

</div> 20

</div>

</div>
25
</div>

</div>

</div> 30

</div>

</div>
35
</div>

</div>

</div> 40

</div>

</div>
45
</div>

</div>

</div> 50

</div>

</div>
55
</div>

</div>
</div>
</div> 60
</div>

756
p756 22-9-2014
A 1
st
</div>
</div>
</div>
</div>
</div> 5
</div>
</div>
</div>
</div>
</div> 10
</div>
</div>
</div>
</div>
</div> 15
</div>
</div>
</div>
</div>
</div> 20
</div>
</div>
</div>
</div>
</div> 25
</div>
</div>
</div>
</div>
</div> 30
</div>
</div>
<div><font style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">(a)
</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New
Roman">Other 35
European Union refers to trade with all current 27 member states, other than
the
UK.</font></div>
<div>
</div>
</div>
<div>
<tr valign="top">
Times New Roman">(b)  </font></div>
</td> 50
<td>
FONT-FAMILY: Times New Roman">Care
should be taken in interpreting the Other category, as it includes
confidential items that are not classified by country.  Thus 55
it
is possible that the export and import shares of the countries or
country
groups listed above could be
understated.</font></div> 60
</td>

757
p757 22-9-2014
A 1
st
</tr>
</table>
</div>
<div>
FAMILY: Times New Roman">Source</font>:  ABS
goods and services exports were valued at $234.3 billion in 2007-08.
Australia's 15
top five merchandise export markets were Japan ($35.0 billion), China ($27.0
billion), Republic of Korea ($14.2 billion), United States ($10.6 billion) and
New Zealand ($9.5 billion). Merchandise exports to the East-Asia region were
valued at $106.0 billion (58.6% of Australia's merchandise exports); to the
European Union, $20.5 billion (11.3% of Australia's merchandise exports); and 20
to
North America, $12.8 billion (7.1% of Australia's merchandise exports). Major
merchandise and service exports were coal, iron ore, education services, gold
and personal travel.</font></div>
</div> 25
goods and services imports were valued at $254.9 billion in 2007-08. China was
Australia's largest source of merchandise imports (valued at $31.0 billion or
15.3% of Australia's merchandise imports), followed by the United States
($24.3
billion or 12.0% of Australia's merchandise imports) and Japan ($19.7 billion 35
or
9.7% of Australia's merchandise imports). Australia's major import items were
crude petroleum, passenger motor vehicles, personal travel, refined petroleum
and freight services.</font></div>
<div><br></div>
<div>
<div id="FTR">
Roman">
</font></div> 50
</div>
</div>
</div>
<div id="HDR">

758
p758 22-9-2014
A 1
st
Roman">
</font></div>
</div> 5
</div>
</div>
<div><br></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Balance
of Payments</font></div>
has traditionally been a net importer of capital. This has facilitated the
development of its rich endowment of natural resources at a faster pace than
would have been possible if domestic savings were the only source of 20
investment
funds. Australia has traditionally run a current account deficit, reflecting
the
use of a net inflow of capital to obtain real resources from the rest of the
world.</font></div> 25
FAMILY: Times New Roman">The table 30
below provides Australia's balance of payments details for each of the 2003-
04,
2004-05, 2005-06, 2006-07 and 2007-08 fiscal years.</font></div>
19:  Balance of payments</font></div>
<div> 40
<div align="left">

759
p759 22-9-2014
A 1
st
<div
align="center">
<div
align="center"> 10
<div
align="center">
<div
align="center">
<div 15
align="center">
<div
align="center">
<div
align="center"> 20
<div
align="center">

25




35




45




55



760
p760 22-9-2014
A 1
st


5


<tr> 10

new roman">
</font></td> 15

20

<td align="right" valign="bottom" width="9%" style="BORDER-TOP: black 1pt 25

bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2003-04</font></div>
30
</td>


40

<td align="right" valign="bottom" width="9%" style="BORDER-TOP: black 1pt 45

50
</td>


60

761
p761 22-9-2014
A 1
st



</td> 10

15

<td align="left" valign="bottom" width="1%" style="BORDER-TOP: black 1pt 20



</td> 30

35

<td align="left" valign="bottom" width="1%" style="BORDER-TOP: black 1pt 40



</td> 50

55
</tr>

<tr>

<td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT- 60

762
p762 22-9-2014
A 1
st
</font></td>

5

SIZE: 10pt; FONT-FAMILY: times new roman">       10
(A$ million)</font></div>

</td>

<td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT- 15

</tr>
20
<tr>

<td align="left" valign="bottom" width="40%" style="PADDING-BOTTOM: 1px">

10pt; FONT-FAMILY: times new roman">CURRENT
ACCOUNT</font></div>

</td> 30

35

FAMILY: times new roman">-45,590</font></td>



55


763
p763 22-9-2014
A 1
st



15



FAMILY: times new roman">-58,999</font></td> 30

35


solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT- 45


</tr>

<tr>
55
</font></td>


764
p764 22-9-2014
A 1
st



10




25




40




55

</tr>
60
<tr>

765
p765 22-9-2014
A 1
st


10pt; FONT-FAMILY: times new roman">Goods
and Services</font></div>

</td>
10


FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-21,495</font></td>


25

FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-22,626</font></td> 30



40




55


766
p766 22-9-2014
A 1
st



10
</tr>

<tr>


times new roman">  Credits</font></div>
20
</td>

25

FONT-SIZE: 10pt; FONT-FAMILY: times new roman">147,219</font></td> 30



40
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">167,562</font></td>




55


767
p767 22-9-2014
A 1
st



10




</tr>

<tr> 25


times new roman">  Debits</font></div>

</td>


40




55


768
p768 22-9-2014
A 1
st



10




25



</tr> 35

<tr>

</font></td>

45





769
p769 22-9-2014
A 1
st



10




25




40

</tr>
45
<tr>


times new roman">Goods</font></div>

</td>
55


770
p770 22-9-2014
A 1
st



10




25




40




55
</tr>

<tr>


771
p771 22-9-2014
A 1
st

5
</td>

10




25




40




55


772
p772 22-9-2014
A 1
st



</tr>

<tr> 10



</td>


25




40




55


773
p773 22-9-2014
A 1
st



10



</tr> 20

<tr>

</font></td>

30




45





774
p774 22-9-2014
A 1
st



10




25

</tr>
30
<tr>


times new roman">Services</font></div>

</td>
40




55

FONT-SIZE: 10pt; FONT-FAMILY: times new roman">380</font></td> 60

775
p775 22-9-2014
A 1
st



10
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">771</font></td>




25




40
</tr>

<tr>


50
</td>

55


776
p776 22-9-2014
A 1
st



10




25




40




</tr>

<tr> 55



777
p777 22-9-2014
A 1
st

</td>




15




30




45





778
p778 22-9-2014
A 1
st


</tr> 5

<tr>

</font></td>

15




30




45





779
p779 22-9-2014
A 1
st



10

</tr>
15
<tr>


times new roman">Income</font></div>

</td>
25




40




55


780
p780 22-9-2014
A 1
st



10




25
</tr>

<tr>


35
</td>

40




55


781
p781 22-9-2014
A 1
st



10




25




</tr>

<tr> 40



</td>


55


782
p782 22-9-2014
A 1
st



10




25




40



</tr> 50

<tr>

</font></td>


783
p783 22-9-2014
A 1
st



10




25




40




55

</tr>
60
<tr>

784
p784 22-9-2014
A 1
st


10pt; FONT-FAMILY: times new roman">Current
transfers</font></div>

</td>
10


FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-255</font></td>


25

FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-369</font></td> 30



40




55


785
p785 22-9-2014
A 1
st



10
</tr>

<tr>


20
</td>

25




40




55


786
p786 22-9-2014
A 1
st



10




</tr>

<tr> 25



</td>


40




55


787
p787 22-9-2014
A 1
st



10




25



</tr> 35

<tr>

</font></td>

45





788
p788 22-9-2014
A 1
st



10




25




40

</tr>
45
<tr>


10pt; FONT-FAMILY: times new roman">CAPITAL
AND FINANCIAL ACCOUNT</font></div>

</td> 55

60

789
p789 22-9-2014
A 1
st



15




35




55


790
p790 22-9-2014
A 1
st


roman">69,514</font></td> 10

15
</tr>

<tr>

</font></td>




35




50




791
p791 22-9-2014
A 1
st



10




</tr>

<tr> 25


10pt; FONT-FAMILY: times new roman">Capital

</td>
35




50




792
p792 22-9-2014
A 1
st



10




25



</tr> 35

<tr>

</font></td>

45





793
p793 22-9-2014
A 1
st



10




25




40

</tr>
45
<tr>


times new roman">Capital
transfers</font></div>

</td> 55



794
p794 22-9-2014
A 1
st



10




25




40




55
</tr>

<tr>


795
p795 22-9-2014
A 1
st

5
</td>

10




25




40




55


796
p796 22-9-2014
A 1
st



</tr>

<tr> 10



</td>


25




40




55


797
p797 22-9-2014
A 1
st



10



</tr> 20

<tr>

</font></td>

30




45





798
p798 22-9-2014
A 1
st



10




25

</tr>
30
<tr>

solid">
35
times new roman">Net
acquisition/disposal of non-produced, non-financial assets</font></div>
40
</td>


50
roman">-72</font></td>

<td align="left" nowrap valign="bottom" width="1%" style="BORDER-BOTTOM: black 55


799
p799 22-9-2014
A 1
st

5

<td align="left" nowrap valign="bottom" width="1%" style="BORDER-BOTTOM: black 10



roman">-3</font></td>
25
<td align="left" nowrap valign="bottom" width="1%" style="BORDER-BOTTOM: black




45




800
p800 22-9-2014
A 1
st

</tr>

</table>
5
</div>

</div>

</div> 10

</div>

</div>
15
</div>

</div>

</div> 20

</div>

</div>
25
</div>

</div>

</div> 30

</div>

</div>
35
</div>

</div>

</div> 40

</div>

</div>
45
</div>

</div>

</div> 50
</div>
</div>
</div>
</div>
</div> 55
</div>
</div>
</div>
</div>
</div> 60
</div>

801
p801 22-9-2014
A 1
st
</div>
</div>
</div>
</div>
</div> 5
</div>
</div>
</div>
</div>
</div> 10
</div>
</div>
</div>
</div>
</div> 15
</div>
</div>
</div>
</div>
</div> 20
</div>
</div>
</div>
</div>
<div><br></div>
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR"> 30
Roman">
</font></div>
</div> 35
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div>
</div> 50
<div><br></div>
<div>
<div align="left">

802
p802 22-9-2014
A 1
st
<tr> 15
<td valign="bottom"
</font></td>
<td align="left"
<td align="right"
</td>
<td valign="bottom"
<td align="left"
<td align="right"
</td>
<td valign="bottom"

803
p803 22-9-2014
A 1
st
<td align="left"
<td align="right" 5
</td>
<td valign="bottom"
<td align="left" 20
<td align="right"
valign="bottom" width="9%" style="BORDER-TOP: black 0.5pt solid; BORDER- 25
</td> 30
<td align="left"
<td align="right"
</td>
</tr>
<tr> 55
</font></td>

804
p804 22-9-2014
A 1
st
<td colspan="18"
valign="bottom">
align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 5
million)</font></div>
</td>
valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10
</tr>
<tr>
<td align="left"
FONT-FAMILY: times new roman">Financial
account</font></div> 20
</td>
<td align="left"
<td align="left" 25
<td align="right"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="right"
<td align="left"

805
p805 22-9-2014
A 1
st
<td align="left"
<td align="right"
<td align="left" 10
<td align="left"
<td align="right"
</tr>
<tr>
<td valign="bottom"
new roman">
</font></td>
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 55
<td align="right"

806
p806 22-9-2014
A 1
st
<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left" 30
new roman">Direct 35
</td>
<td align="left"
<td align="left"
<td align="right"
FONT-FAMILY: times new roman">-15,926</font></td>
<td align="left" 50
<td align="left"
<td align="right"

807
p807 22-9-2014
A 1
st
<td align="left"
<td align="left"
<td align="right"
<td align="left"
<td align="left"
<td align="right"
<td align="left" 25
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left"
new roman">  Abroad</font></div>
</td> 45
<td align="left"
<td align="left"
<td align="right"
<td align="left"

808
p808 22-9-2014
A 1
st
<td align="left"
<td align="right"
<td align="left" 10
<td align="left"
<td align="right"
<td align="left"
<td align="left" 25
<td align="right"
FONT-FAMILY: times new roman">-31,232</font></td> 30
<td align="left"
<td align="left"
</tr>
<tr>
<td align="left"
new roman">  In
</td> 55
<td align="left"
<td align="left"

809
p809 22-9-2014
A 1
st
<td align="right"
<td align="left"
<td align="left" 10
<td align="right"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="right"
<td align="left"
<td align="left"
<td align="right"
</tr> 55
<tr>
<td valign="bottom"
new roman">
</font></td> 60

810
p810 22-9-2014
A 1
st
<td valign="bottom"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"
<td align="right"
<td valign="bottom"
<td align="left" 40
<td align="right"
<td valign="bottom"
<td align="left"
</tr>

811
p811 22-9-2014
A 1
st
<tr>
<td align="left"
new roman">Portfolio
</td>
<td align="left" 10
<td align="left"
<td align="right"
<td align="left"
<td align="left" 25
<td align="right"
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="right"
<td align="left"

812
p812 22-9-2014
A 1
st
<td align="left"
<td align="right"
</tr> 10
<tr>
<td align="left"
new roman">Financial
derivatives</font></div>
</td>
<td align="left" 20
<td align="left"
<td align="right"
<td align="left"
<td align="left" 35
<td align="right"
<td align="left"
<td align="left"
<td align="left"
<td align="left"

813
p813 22-9-2014
A 1
st
<td align="right"
<td align="left"
<td align="left" 10
<td align="right"
</tr>
<tr> 20
<td align="left"
new roman">Other
</td>
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="right"
<td align="left"
<td align="left"
<td align="right"

814
p814 22-9-2014
A 1
st
<td align="left"
<td align="left"
<td align="left"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left" 30
new roman">Reserve 35
assets</font></div>
</td>
<td align="left"
<td align="left"
<td align="right"
<td align="left" 50
<td align="left"
<td align="right"

815
p815 22-9-2014
A 1
st
<td align="left"
<td align="left"
<td align="right"
<td align="left"
<td align="left"
<td align="right"
<td align="left" 25
<td align="left"
<td align="right"
</tr>
<tr>
<td valign="bottom"
new roman">
</font></td>
<td valign="bottom"
<td align="left"
<td align="right"
<td align="left"

816
p816 22-9-2014
A 1
st
<td align="right"
<td valign="bottom"
<td align="left" 10
<td align="right"
<td valign="bottom"
<td align="left"
<td valign="bottom"
<td align="left"
<td align="right"
</tr>
<tr>
<td align="left" 45
FONT-FAMILY: times new roman">NET 50
ERRORS AND OMISSIONS</font></div>
</td>
<td align="left"
<td align="left"

817
p817 22-9-2014
A 1
st
<td align="right"
469</font></td>
<td align="left"
<td align="left"
<td align="right"
1,064</font></td> 20
<td align="left" 25
<td align="left"
<td align="right"
<td align="left"
<td align="left" 45
<td align="right"
104</font></td>
<td align="left"

818
p818 22-9-2014
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st
<td align="left"
<td align="right" 5
</tr>
</table>
</div> 15
</div>
</div>
</div>
</div>
</div> 20
</div>
</div>
</div>
</div>
</div> 25
</div>
</div>
</div>
</div>
</div> 30
</div>
</div>
</div>
</div>
</div> 35
<div>
Roman"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT- 40
</div>
<div>
</div>
</div>
original terms, the balance on current account for 2007-08 was a deficit of
$70.2 billion, a 19% increase on the deficit of $59.0 billion recorded for
2006-07.</font></div> 55
FAMILY: Times New Roman">The goods 60

819
p819 22-9-2014
A 1
st
and services deficit for 2007-08 was $20.6 billion, an increase of $7.9
billion
on the deficit of $12.8 billion recorded in 2006-07. Goods credits increased
$13.5 billion or 8% (due to increases in volumes and prices) and goods debits
increased $20.9 billion or 11% (due to an increase in volumes) during 5
2007-08.</font></div>
services surplus of $1.4 billion for 2007-08 was a decrease of $0.4 billion on
the surplus of $1.8 billion in 2006-07.</font></div>
FAMILY: Times New Roman">The net
income deficit for 2007-08 rose $3.3 billion (7%), with an increase in income
credits of $5.6 billion (16%) and an increase in income debits of $8.9 billion 20
(11%).</font></div>
balance on financial account recorded a net inflow of $67.3 billion for 2007-
08,
with a net inflow on debt of $92.9 billion and a net outflow on equity of
$25.6 30
billion. This result was up $10.6 billion on the net inflow recorded for the
previous year as a result of:</font></div>
<div> 35
width="100%">
<tr valign="top">
0pt">
<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-
RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times
new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: symbol, 45
</div>
</td>
<td>
10pt; FONT-FAMILY: Times New Roman">a
turnaround of $64.4 billion to a net inflow on reserve
assets;</font></div>
</td>
</tr> 55
</table>
</div>
</div>
<div>

820
p820 22-9-2014
A 1
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width="100%">
<tr valign="top">
0pt">
new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: symbol, 10
</div>
</td>
<td>
decrease of $60.0 billion on the net inflow on portfolio
investment;</font></div>
</td>
</tr> 20
</table>
</div>
</div>
<div>
width="100%">
0pt">
RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times 35
new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: symbol,
</div>
</td>
<td> 40
turnaround of $13.0 billion to a net outflow on financial
derivatives;</font></div>
</td> 45
</tr>
</table>
</div>
</div>
<div>
width="100%"> 55
<tr valign="top">
0pt">
<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN- 60

821
p821 22-9-2014
A 1
st
</div>
</td>
<td> 5
10pt; FONT-FAMILY: Times New Roman">an
increase of $9.8 billion on the net inflow on other investment;
and</font></div>
</td> 10
</tr>
</table>
</div>
</div>
<div>
width="100%"> 20
<tr valign="top">
0pt">
<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN- 25
</div>
</td> 30
<td>
10pt; FONT-FAMILY: Times New Roman">an
increase of $9.5 billion on the net inflow on direct
investment.</font></div> 35
</td>
</tr>
</table>
</div>
</div> 40
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Changes 45
in Official Reserve Assets</font></div>
Australian Government meets its foreign exchange requirements from the Reserve
Bank of Australia.  The RBA holds Official Reserve Assets ("ORA")
primarily to facilitate foreign exchange intervention.  The vast
majority of Australia's reserves are held as foreign exchange and are invested 55
primarily in high quality government securities.  The value of ORA
held by the RBA changes in response to transactions undertaken in the foreign
exchange market by the RBA, both on its own account and on behalf of its
customers (primarily Australian Government agencies), as well as fluctuations
in 60

822
p822 22-9-2014
A 1
st
the value of the foreign currencies and underlying assets in which the
reserves
are invested.  ORA also includes foreign currency that has been
borrowed under swap to assist the RBA to manage domestic liquidity for
monetary 5
policy purposes.</font></div>
<div><br></div>
<div> 10
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
</div>
</div> 25
<div id="HDR">
Roman">
</font></div> 30
</div>
</div>
</div>
<div><br></div>
following table shows the composition of Australia's ORA over the past five
years.  For several years prior to 2007-08, the RBA's gross holdings
of foreign currency rose sharply as foreign currency was borrowed under 40
foreign
exchange swaps against Australian dollars. The Australian dollars lent to the
market under these swaps helped to offset the domestic liquidity impact of
deposits placed with the RBA by the Australian Government. Over 2007-08, the
Australian Government drew down these deposits to seed the investment program 45
of
the Future Fund.  As deposits were drawn down, the related swaps
were
unwound and the gross level of foreign currency held by the RBA declined. Net
holdings of foreign currency rose over the period.</font></div> 50
20:  Official Reserve Assets</font></div>
<div>
<div>
<div align="left">

823
p823 22-9-2014
A 1
st
<div
align="center"> 25
<div
align="center">
<div
align="center">
<div 30
align="center">
<div
align="center">
<div
align="center"> 35
<div
align="center">
<div
align="center">
40




50




60

824
p824 22-9-2014
A 1
st


5

<tr bgcolor="#ffffff">

<td valign="bottom" width="40%" style="BORDER-TOP: black 1px solid; PADDING- 10
new roman">
</font></td>

<td valign="bottom" width="1%" style="BORDER-TOP: black 1px solid; PADDING- 15

<td colspan="18" valign="bottom" width="58%" style="BORDER-TOP: black 1px

SIZE: 10pt; FONT-FAMILY: times new roman">As
at 30 June</font></div> 25

</td>

1px solid; PADDING-BOTTOM: 1px"><font style="DISPLAY: inline; FONT-WEIGHT: 30

</tr>

<tr bgcolor="#ffffff"> 35

</font></td>
40

<td align="left" colspan="2" valign="bottom" width="10%" style="BORDER-BOTTOM: 45
black 1px solid">

0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2004</font></div> 50

</td>



825
p825 22-9-2014
A 1
st

<td align="left" colspan="2" valign="bottom" width="10%" style="BORDER-BOTTOM:
black 1px solid">

WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2005</font></div>

</td>
10



25
</td>


35
black 1px solid">

0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT- 40

</td>



black 1px solid">
55

</td> 60

826
p826 22-9-2014
A 1
st

5
</tr>


</font></td>

<td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT:

<td colspan="18" valign="bottom" width="58%">

0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT- 20
SIZE: 10pt; FONT-FAMILY: times new roman">(A$

</td>
25

</tr> 30


35
times new roman">Gold</font></div>

</td> 40



50




827
p827 22-9-2014
A 1
st



10




25




40
</tr>



times new roman">Other</font></div>
50
</td>

55


828
p828 22-9-2014
A 1
st



10




25




40




</tr>

<tr bgcolor="#ffffff"> 55


times new roman">Foreign

829
p829 22-9-2014
A 1
st
Currency</font></div>

</td>



roman">46,117</font></td> 15

20




40




60

830
p830 22-9-2014
A 1
st



15


</tr>
25

<td valign="bottom" width="40%" style="BORDER-BOTTOM: black 1px solid">

0pt">

times new roman">Total 35
(gross)</font></div>

</div>

</td> 40

45




831
p831 22-9-2014
A 1
st

5




25



roman">79,682</font></td> 40

45




832
p832 22-9-2014
A 1
st

</tr>

5
solid">

times new roman">Total
(net)</font></div>

</td>
15




35




55


833
p833 22-9-2014
A 1
st



15

<td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px; 20


roman">35,862</font></td> 30

35
</tr>

</table>

</div> 40

</div>

</div>
45
</div>

</div>

</div> 50

</div>

</div>
55
</div>

</div>

</div> 60

834
p834 22-9-2014
A 1
st

</div>

</div>
5
</div>
</div>
</div>
</div>
</div> 10
</div>
</div>
</div>
</div>
</div> 15
</div>
</div>
</div>
</div>
</div> 20
</div>
</div>
</div>
</div>
</div> 25
</div>
</div>
</div>
</div>
</div> 30
</div>
</div>
</div>
</div>
</div> 35
</div>
</div>
</div>
</div>
</div> 40
</div>
<div>
FAMILY: Times New Roman">Source:  </font>Reserve
Bank of Australia <font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE:
italic; FONT-FAMILY: Times New
Roman">Bulletin</font>.</font></font></font></div> 50
</div>
<div>
</div>
</div> 55
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exchange 60
Rate</font></div>

835
p835 22-9-2014
A 1
st
FAMILY: Times New Roman">Australia 5
has a free-floating dollar with substantially no exchange controls. Approved
non-bank financial institutions, in addition to banks, are licensed as foreign
exchange dealers.  Since the floating of the Australian dollar on 12
December 1983, Australia's exchange rate has been determined by the overall
supply of and demand for A$ in the foreign exchange market. The floating of 10
the
Australian dollar was part of the deregulation of the financial
system.</font></div>
FAMILY: Times New Roman">There has
been considerable variability in the exchange rate.  The RBA is
prepared to accept substantial fluctuations in the exchange rate, both 20
day-to-day and over the course of the economic cycle.  Transactions
to
influence the exchange rate or market conditions more generally, usually known
as intervention, are relatively infrequent. They are undertaken only when the
value of the Australian dollar is judged to have moved to levels that are 25
inconsistent with underlying economic developments or when conditions in the
foreign exchange market are thin and disorderly.</font></div>
FAMILY: Times New Roman">The sharp
depreciation in the Australian dollar since July 2008 likely reflects the
impacts of the global financial crisis such as falls in commodity prices, and
a 35
narrowing interest rate differential between the U.S. and Australia as the RBA
reduces the official cash rate.  The following table sets out the
Australian dollar exchange rate against the U.S. dollar for each of the 2003-
04,
2004-05, 2005-06, 2006-07 and 2007-08 fiscal years and each month end since 40
June
2008.</font></div>
21:  Units of US$ per A$<font style="DISPLAY: inline; FONT-SIZE:
70%; VERTICAL-ALIGN: super; FONT-FAMILY: Times New
Roman">(a)</font></font></div> 50
<div>
<div align="left">
<tr>

836
p836 22-9-2014
A 1
st
roman">Period</font></div>
</div>
</td>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">At
Period End</font></div> 15
</div>
</td>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Average
Rate</font></div>
</div>
</td> 30
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">High</font></div> 40
</div>
</td>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Low</font></div>
</div>
</td>
</tr> 55
<tr>
</font></td>

837
p837 22-9-2014
A 1
st
</font></td>
</font></td>
</font></td>
</font></td>
</tr>
<tr> 20
10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">Year
ended:</font></div> 25
</td>
</font></td>
</font></td>
</font></td>
</font></td>
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">30
June 2004</font></div>
</td>
</td>

838
p838 22-9-2014
A 1
st
</td>
</td>
</td>
</tr>
<tr>
</td>
</td>
</td>
</td> 50
</td>
</tr>
<tr>

839
p839 22-9-2014
A 1
st
</td> 5
</td>
</td>
</td>
</td>
</tr>
<tr> 35
June 2007</font></div> 40
</td>
</td>
</td> 55

840
p840 22-9-2014
A 1
st
</td>
</td>
</tr>
<tr> 10
</td>
</td>
</td> 30
</td>
</td>
</tr> 45
<tr>
italic; FONT-FAMILY: times new roman">Month
ended</font>:</font></font></font></div>
</td> 55
</font></td> 60

841
p841 22-9-2014
A 1
st
</font></td> 5
</font></td> 10
</font></td> 15
</tr>
<tr>
July 2008</font></div>
</td>
</td> 30
</td>
</td>
</td>
</tr>
<tr>
August 2008</font></div>
</td>

842
p842 22-9-2014
A 1
st
</td> 5
</td>
</td>
</td>
</tr>
<tr>
September 2008</font></div>
</td>
</td>
</td>
</td> 55

843
p843 22-9-2014
A 1
st
</td>
</tr>
<tr>
October 2008</font></div>
</td>
</td>
</td>
</td> 30
</td>
</tr>
<tr>
November 2008</font></div>
</td> 45
</td>
</td>

844
p844 22-9-2014
A 1
st
</td> 5
</td>
</tr>
<tr>
December 2008</font></div>
</td> 20
</td>
</td>
</td>
</td>
</tr>
<tr> 50
black 1px solid">
10pt; FONT-FAMILY: times new roman">31 55
January 2009</font></div>
</td>

845
p845 22-9-2014
A 1
st
solid">
</td>
solid">
</td> 15
solid"> 20
</td>
solid">
</td>
</tr>
</table> 35
</div>
</div>
<div>
<tr valign="top">
</td>
<td width="1220">
FONT-FAMILY: Times New Roman">Exchange
rate data are provided by Thomson Reuters in respect of each trading 50
day.  Period averages are derived from these
rates.  Highs and lows for these periods refer to intra-day
data.</font></div>
</td>
</tr> 55
</table>
</div>
<div>

846
p846 22-9-2014
A 1
st
FAMILY: Times New Roman">Source:  </font>Thomson
Reuters.</font></font></font></div>
</div>
<div> 5
<div align="center"><br>
<div id="FTR">
Roman">
</font></div>
</div>
</div> 20
</div>
<div id="HDR">
Roman"> 25
</font></div>
</div>
</div><br></div>
</div>
below details the Australian dollar exchange rate against the UK pound
sterling
for each of the 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08 fiscal years 35
and
each month end since June 2008.</font></div>
22:  Units of £ per A$<font style="DISPLAY: inline; FONT-SIZE:
<div>
<div align="left">
<tr>
</div>
</td>

847
p847 22-9-2014
A 1
st
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">At 10
Period End</font></div>
</div>
</td>
Rate</font></div>
</div> 25
</td>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">High</font></div>
</div>
</td>
</div>
</td> 50
</tr>
<tr>
</font></td> 55
</font></td> 60

848
p848 22-9-2014
A 1
st
</font></td> 5
</font></td> 10
</font></td> 15
</tr>
<tr>
ended:</font></div>
</td>
</font></td>
</font></td>
</font></td>
</font></td>
</tr>
<tr> 45
</td>
</td>

849
p849 22-9-2014
A 1
st
</td>
</td>
</td>
</tr>
<tr> 20
</td>
</td>
</td> 40
</td>
</td>
</tr> 55
<tr>

850
p850 22-9-2014
A 1
st
</td>
</td>
</td> 15
</td>
</td>
</tr> 30
<tr>
</td>
</td>
</td>
</td>

851
p851 22-9-2014
A 1
st
</td>
</tr> 5
<tr>
</td>
</td>
</td>
</td>
</td> 40
</tr>
<tr>
ended</font>:</font></font></font></div> 50
</td>
</font></td>
</font></td>

852
p852 22-9-2014
A 1
st
</font></td> 5
</font></td> 10
</tr>
<tr>
</td>
</td> 25
</td>
</td>
</td>
</tr>
<tr>
</td>
</td>

853
p853 22-9-2014
A 1
st
</td>
</td>
</td>
</tr>
<tr>
</td>
</td>
</td>
</td> 50
</td>
</tr>
<tr>

854
p854 22-9-2014
A 1
st
</td> 5
</td>
</td>
</td>
</td>
</tr>
<tr> 35
November 2008</font></div> 40
</td>
</td>
</td> 55

855
p855 22-9-2014
A 1
st
</td>
</td>
</tr>
<tr> 10
December 2008</font></div> 15
</td>
</td>
</td> 30
</td>
</td>
</tr> 45
<tr>
black 1px solid">
</td>
solid">

856
p856 22-9-2014
A 1
st
</td>
solid">
</td> 10
solid"> 15
</td>
solid">
</td>
</tr>
</table> 30
</div>
</div>
<div>
<tr valign="top">
</td>
<td width="1220">
rate data are provided by Thomson Reuters in respect of each trading 45
rates.  Highs and lows for these periods refer to intra-day
data.</font></div>
</td>
</tr> 50
</table>
</div>
<div>
style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: 60

857
p857 22-9-2014
A 1
st
Roman">Source:  </font>Thomson
Reuters.</font></font></font></font></font></font></font></div>
</div>
<div> 5
</div>
</div>
following table displays the Australian dollar exchange rate against the Euro
for each of the 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08 fiscal years 15
and
each month end since June 2008.</font></div>
23:  Units of € per A$<font style="DISPLAY: inline; FONT-SIZE:
<div>
<div align="left">
<tr>
</div>
</td>
Period End</font></div> 50
</div>
</td>

858
p858 22-9-2014
A 1
st
Rate</font></div>
</div> 5
</td>
</div>
</td>
</div>
</td> 30
</tr>
<tr>
</font></td> 35
</font></td> 40
</font></td> 45
</font></td> 50
</font></td> 55
</tr>
<tr>

859
p859 22-9-2014
A 1
st
ended:</font></div>
</td>
</font></td>
</font></td>
</font></td>
</font></td>
</tr>
<tr>
</td> 30
</td>
</td>
</td>
</td>
</tr>
<tr> 60

860
p860 22-9-2014
A 1
st
</td> 5
</td>
</td>
</td>
</td>
</tr>
<tr> 35
</td>
</td>
</td> 55

861
p861 22-9-2014
A 1
st
</td>
</td>
</tr>
<tr> 10
</td>
</td>
</td> 30
</td>
</td>
</tr> 45
<tr>
</td>
</td>

862
p862 22-9-2014
A 1
st
</td> 5
</td>
</td>
</tr> 20
<tr>
</td> 30
</font></td> 35
</font></td> 40
</font></td> 45
</font></td> 50
</tr>
<tr>
</td>

863
p863 22-9-2014
A 1
st
</td>
</td>
</td>
</td> 25
</tr>
<tr>
</td>
</td> 40
</td>
</td>
</td>

864
p864 22-9-2014
A 1
st
</tr>
<tr>
</td>
</td> 15
</td>
</td>
</td>
</tr>
<tr>
</td>
</td>
</td>

865
p865 22-9-2014
A 1
st
</td>
</td>
</tr>
<tr>
</td>
</td>
</td>
</td> 40
</td>
</tr>
<tr>
</td> 55

866
p866 22-9-2014
A 1
st
</td>
</td>
</td> 15
</td>
</tr>
<tr>
<td align="left" valign="top" width="15%" style="BORDER-BOTTOM: 25
black 1px solid">
January 2009</font></div> 30
</td>
solid">
</td> 40
solid"> 45
</td>
solid">
</td>

867
p867 22-9-2014
A 1
st
solid">
</td>
</tr>
</table>
</div>
</div> 10
<div>
<tr valign="top">
</td>
<td width="1220"> 20
rate data are provided by Thomson Reuters in respect of each trading
rates.  Highs and lows for these periods refer to intra-day 25
data.</font></div>
</td>
</tr>
</table>
</div> 30
<div>
Roman">Source:  </font>Thomson 40
Reuters.</font></font></font></font></font></font></font></div>
</div>
<div>
</div> 45
</div>
below details the trade-weighted index value of the Australian dollar for each
of the 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08 fiscal years and each
month end since June 2008.  The trade-weighted index is a weighted
average of a basket of currencies of Australia's major trading partners, with 55
the weight of each foreign currency equal to its share in
trade.  The
most significant currencies in the trade-weighted index as re-weighted on 1
October 2008 are the Chinese renminbi, the Japanese yen, the Euro and the U.S.
dollar.  The trade-weighted index is often used as an indicator of 60

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Australia's international competitiveness and is a useful gauge of the value
of
the Australian dollar when bilateral exchange rates exhibit diverging
trends.</font></div>
<div><br></div>
<div>
<div id="FTR">
Roman">
</font></div> 15
</div>
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div> 30
</div>
<div><br></div>
24:  Trade-Weighted Index value of the A$<font style="DISPLAY:
inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super; FONT-FAMILY: Times New
Roman">(a)(b)</font></font></div>
<div>
<tr>
roman">Period</font></div> 50
</div>
</td>

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Period End</font></div>
</div> 5
</td>
Rate</font></div>
</div>
</td>
</div> 30
</td>
</div>
</td>
</tr>
<tr> 45
</font></td>
</font></td>
</font></td>

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</font></td>
</font></td>
</tr>
<tr> 10
ended:</font></div> 15
</td>
</font></td>
</font></td>
</font></td>
</font></td>
</tr>
<tr>
</td>
</td>
</td>

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</td>
</td>
</tr>
<tr>
</td>
</td>
</td>
</td> 40
</td>
</tr>
<tr>
</td> 55

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</td>
</td>
</td> 15
</td>
</tr>
<tr>
</td> 30
</td>
</td>
</td>
</td>
</tr>
<tr> 60

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</td> 5
</td>
</td>
</td>
</td>
</tr>
<tr> 35
10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-STYLE:
italic">Month 40
ended</font>:</font></div>
</td>
</font></td>
</font></td>
</font></td>

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</font></td>
</tr>
<tr>
</td>
</td>
</td>
</td> 30
</td>
</tr>
<tr>
</td> 45
</td>
</td>

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</td> 5
</td>
</tr>
<tr>
</td> 20
</td>
</td>
</td>
</td>
</tr>
<tr> 50
October 2008</font></div> 55
</td>

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</td>
</td>
</td>
</td> 25
</tr>
<tr>
</td>
</td> 40
</td>
</td>
</td>

877
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</tr>
<tr>
</td>
</td> 15
</td>
</td>
</td>
</tr>
<tr>
</td> 45
solid"> 50
</td>
solid">

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</td>
solid">
</td>
solid">
</td>
</tr>
</table>
</div> 25
</div>
<div>
</td> 35
<td width="1220">
trade-weighted index is provided by the Reserve Bank of Australia in
respect of each trading day. Period averages are derived from these 40
rates.</font></div>
</td>
</tr>
</table>
</div> 45
<div>
<tr valign="top">
</td>
<td width="1220"> 55
weights for the trade-weighted index are revised annually to capture
changing trade patterns.  Changes to the weights are usually
calculated in September, with the re-defined index joined onto the 60
existing trade-weighted index on the first business day in

879
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October.</font></div>
</td>
</tr>
</table>
</div> 5
<div>
Bank of Australia<font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE:
italic; FONT-FAMILY: Times New Roman">
Bulletin.</font></font></font></font></div>
</div> 15
<div>
</div>
</div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Foreign
Investment Policy</font></div> 25
Australian Government's policy approach to foreign investment is to encourage
investment flows consistent with economic development and performance and
community interests.  The Government's foreign investment policy
provides the framework for Government consideration of proposed foreign
acquisitions of Australian businesses and real estate.  The vast 35
majority of proposals are approved, with the last proposed business
acquisition
that was not approved being in 2001.  Where a proposal raises
national
interest concerns, the Government has the power under the <font 40
style="DISPLAY: inline; FONT-STYLE: italic">Foreign Acquisitions and Takeovers
Act 1975</font> (the "FATA") to reject the proposal or to approve it with
conditions designed to mitigate the national interest concerns.  The
FATA and the Foreign Acquisitions and Takeovers Regulations 1989 provide
monetary thresholds below which the FATA does not apply, with separate 45
thresholds applying for U.S. investors.  Screening under the FATA is
not required for acquisitions in businesses valued below the thresholds or of
less than substantial or non-controlling interests.</font></div>
FAMILY: Times New Roman">In the
majority of industry sectors smaller proposals are not subject to screening,
being exempt from the FATA or notification under the 55
policy.  Specific
screening requirements and limited restrictions on foreign investment apply in
certain sensitive sectors such as the media, telecommunications, airlines and
in
relation to acquisitions of residential real estate.</font></div> 60

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screening process is intended to provide advice to the Australian Treasurer,
including from the independent advisory body, the Foreign Investment Review
Board, on whether individual foreign investment proposals may be contrary to
the
national interest.  It involves consultation with relevant 10
Government
agencies and in some cases with stakeholders.  Under the FATA and
the
policy, the Treasurer determines what is considered 'contrary to the national
interest'.</font></div> 15
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Foreign 20
Financial Relations</font></div>
is a member of the International Monetary Fund (the "IMF").  As at
31
December 2008, Australia's quota in the IMF was 3.24 billion Special Drawing
Rights ("SDR").  Australia is a participant in the SDR Department 30
and,
as at 31 December 2008, had net cumulative allocations of SDR 470.55 million
and
actual holdings of SDR 113.02 million.</font></div>
is also a member of the International Bank for Reconstruction and Development 40
("IBRD") and its affiliates in the World Bank Group:  the
International Finance Corporation (the "IFC"); the International Development
Association (the "IDA"); the Multilateral Investment Guarantee Agency (the
"MIGA"); and the International Centre for Settlement of Investment Disputes
(the 45
"ICSID").</font></div>
FAMILY: Times New Roman">As at 31
December 2008, Australia held 24,464 shares in the IBRD, with the value of the
paid-in portion of these shares amounting to $259 million.</font></div>
<div><br></div>
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR"> 60

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Roman">
</font></div>
</div> 5
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div>
</div> 20
<div><br></div>
also held 47,329 fully paid shares in the IFC, valued at $69.1 million, 25
and
3,019 shares in MIGA, with the value of the paid-in portion of these shares
totalling $10.7 million. Each member country is equally represented in the
ICSID, with no system of shareholding.</font></div>
December 2007, Australia committed to contribute $583 million to the fifteenth 35
replenishment of the International Development Association.</font></div>
is also a member of the Asian Development Bank (the "ADB"), holding 204,740
shares.  As at 31 December 2008, the value of the paid-in portion of
these shares amounted to $287 million.  In addition, Australia
contributes to the ADB's concessional lending arm, the Asian Development Fund 45
(the "ADF").  In May 2008, Australia committed to contribute $333
million to the ninth replenishment of the ADF.</font></div>
is also a member of the European Bank for Reconstruction and Development (the
"EBRD"), holding 20,000 shares.  As at 31 December 2008, the value
of 55
the paid-in portion of these shares was $84.8 million.</font></div>

882
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is a member of the Organisation for Economic Co-operation and Development (the
"OECD"), the Asia-Pacific Economic Co-operation Forum ("APEC") and the East
Asia
Summit.  Australia is also a member of the Group of Twenty ("G-20")
forum.</font></div> 5
FAMILY: Times New Roman">In 10
addition, Australia is a member of various other regional and international
organisations, including the United Nations and many of its affiliated
agencies.</font></div>
<div><br></div>
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR"> 20
Roman">
</font></div>
</div> 25
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div>
</div> 40
<div><br></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CURRENCY,
MONETARY AND BANKING SYSTEM</font></div> 45
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Australian 50
Currency</font></div>
unit of currency is the Australian dollar.  Australia's currency
comprises both coins and notes.  Coins are issued by the Treasurer
of
the Commonwealth of Australia under the <font style="DISPLAY: inline; FONT- 60
STYLE: italic">Currency Act 1965</font>; those

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intended for circulation include denominations of 5, 10, 20 and 50 cents and
$1
and $2.  Numismatic (un-circulating collector) legal tender coins
are
also approved for sale by the Treasurer from time to time.  Under 5
the
<font style="DISPLAY: inline; FONT-STYLE: italic">Reserve Bank Act
1959</font>,
Australia's currency notes are issued by the Reserve Bank of Australia (the
"RBA") in five denominations:  $5, $10, $20, $50 and 10
$100.</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Monetary
Conditions</font></div>
FAMILY: Times New Roman">The RBA's
monetary policy operates within the framework of a medium-term inflation
target
of 2 to 3% on average over the cycle.  Given the lags involved in 25
the
operation of monetary policy, the RBA sets monetary policy in a forward-
looking
manner in order to achieve its medium-term inflation
target.  Maintaining low inflation, and therefore low inflation 30
expectations, is vital to ensuring that economic growth is sustained, thereby
supporting productive investment and employment.</font></div>
FAMILY: Times New Roman">The RBA
carefully monitors a range of domestic and international economic and
financial
indicators in gauging inflationary pressures.  These indicators 40
cover
economic conditions, prices, wages, the labour market and financial
conditions.</font></div>
FAMILY: Times New Roman">Movements
in interest rates over the 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08
fiscal years and the monthly periods since June 2008 are provided in the table 50
below.</font></div>
25:  Key interest rates</font></div>
<div>
<div align="left">
<tr>

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</div>
</td> 10
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Target 20
Cash Rate</font></div>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(%)</font></div>
</div> 25
</td>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">90
Day Bank Bill Yield (%)</font></div>
</div>
</td>
Year Bond Yield (%)</font></div> 50
</div>
</td>
</tr>
<tr>
</font></td>

885
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</font></td>
</font></td>
</font></td>
</tr>
<tr>
italic; FONT-FAMILY: times new roman">Year 20
</td>
</font></td>
</font></td>
</font></td>
</tr>
<tr>
</td> 45
</td>
</td>

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</td> 5
</tr>
<tr>
</td>
</td> 20
</td>
</td>
</tr> 35
<tr>
</td>
</td>
</td>

887
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</td>
</tr> 5
<tr>
</td>
</td>
</td>
</td>
</tr>
<tr> 35
</td>
</td>
</td> 55

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</td>
</tr>
<tr>
italic; FONT-FAMILY: times new roman">Month 10
</td>
</font></td>
<div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-
</font></div>
</td>
</font></div> 30
</td>
</tr>
<tr>
</td>
</td>
</td>
</td> 60
</tr>

889
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<tr>
</td>
</td>
</td>
</td>
</tr>
<tr> 30
September 2008</font></div> 35
</td>
</td>
</td> 50
</td>
</tr>
<tr>

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</td> 5
</td>
</td>
</td>
</tr>
<tr>
</td>
</td>
</td>
</td> 55
</tr>
<tr>

891
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</td>
</td>
</td>
</td>
</tr>
<tr> 25
January 2009</font></div> 30
</td>
</td>
</td> 45
</td>
</tr>
<tr>
black 1px solid">
0pt; MARGIN-RIGHT: 0pt" align="left"><font style="FONT-SIZE: 10pt; FONT-
FAMILY: times new roman">4
February 2009<font style="DISPLAY: inline; FONT-STYLE: italic"> 60

892
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</font><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN:
super">(a)</font></font></div>
</td>
black 1px solid">
</td>
solid">
</td>
solid">
</td> 30
</tr>
</table>
</div>
</div>
<div> 35
<tr valign="top">
</td>
<td width="1220">
<div align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; 45
FONT-FAMILY: Times New Roman">Data
as at close of business on 4 February 2009.  Effective 4
February 2009, the RBA lowered the target cash rate to
3.25%.</font></div>
</td> 50
</tr>
</table>
</div>
<div>
Bank of Australia<font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: 60

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</div>
<div>
<div align="center"><br>
<div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 5
<div id="FTR">
Roman"> 10
</font></div>
</div>
</div>
</div>
<div id="HDR"> 20
Roman">
</font></div>
</div> 25
</div><br></div>
</div>
following table sets out monetary aggregate data for each of the 2003-04,
2004-05, 2005-06, 2006-07 and 2007-08 fiscal years.</font></div>
26:  Monetary aggregates</font></div>
<div>
<tr>
</font></td> 45
MARGIN-RIGHT: 0pt">
04</font></div>
</div>
</td> 55
1pt solid; BORDER-BOTTOM: black 1px solid"> 60

894
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MARGIN-RIGHT: 0pt">
05</font></div>
</div>
</td>
PADDING-BOTTOM: 1px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT- 10
06</font></div>
</div> 20
</td>
<td colspan="3" valign="top" width="13%" style="BORDER-TOP: black 25
MARGIN-RIGHT: 0pt">
07</font></div>
</div>
</td>
MARGIN-RIGHT: 0pt">
08</font></div> 45
</div>
</td>
</tr>
<tr>
</font></td>
solid">
MARGIN-RIGHT: 0pt">
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">A$b</font></div>
</div> 60
</td>

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solid"> 5
MARGIN-RIGHT: 0pt">
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font 10
new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%<font
</div> 15
</td>
solid">
MARGIN-RIGHT: 0pt">
</div>
</td>
solid">
new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%<font 40
</div>
</td>
solid">
MARGIN-RIGHT: 0pt">
</div> 55
</td>
solid">

896
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MARGIN-RIGHT: 0pt">
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font 5
</div> 10
</td>
solid">
MARGIN-RIGHT: 0pt">
</div>
</td>
solid">
new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%<font 35
</div>
</td>
solid">
MARGIN-RIGHT: 0pt">
</div> 50
</td>
solid">
MARGIN-RIGHT: 0pt">

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</div> 5
</td>
</font></td>
</tr> 10
<tr>
FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; 15
new roman">M1<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN:
</td>
10pt; FONT-FAMILY: times new roman">163.4</font></div>
</td>
10pt; FONT-FAMILY: times new roman">4.1</font></div> 30
</td>
</td>
</td> 45
</td>
</td>

898
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</td> 5
</td>
</td>
</td>
</font></td>
</tr> 30
<tr>
new roman">M3<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN:
super">(c)</font></font></font></font></div>
</td>
</td>
</td>
</td>

899
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</td>
</td>
</td>
</td> 25
</td>
10pt; FONT-FAMILY: times new roman">1,032.9</font></div>
</td>
</td>
</font></td>
</tr> 50
<tr>
black 1px solid">
FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt;
new roman">Broad Money<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-
ALIGN: super">(d)</font></font></font></font></div>
</td> 60

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black 1px solid">
</td>
<td align="right" valign="top" width="6%" style="BORDER-BOTTOM: 10
black 1px solid">
</td> 15
</td>
black 1px solid">
</td>
black 1px solid">
</td>
black 1px solid">
</td>
black 1px solid">
</td> 60

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black 1px solid"> 5
</td>
black 1px solid">
10pt; FONT-FAMILY: times new roman">1,118.8</font></div>
</td>
black 1px solid">
</td>
roman"> 30
</font></td>
</tr>
</table>
</div>
<div> 35
<tr valign="top">
</td>
<td width="1220">
FONT-FAMILY: Times New Roman">12-month
ended percentage change. Where available, growth rates are reported in
seasonally adjusted terms and adjusted for the effects of breaks in the
series, as recorded in the technical notes to the tables in the Reserve
Bank of Australia <font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT- 50
STYLE: italic; FONT-FAMILY: Times New Roman">Bulletin</font>.</font></div>
</td>
</tr>
</table>
</div> 55
<div>
<tr valign="top">

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</td>
<td width="1220"> 5
FONT-FAMILY: Times New Roman">M1
is defined as currency plus bank current deposits of the private non-
bank
sector.</font></div> 10
</td>
</tr>
</table>
</div>
<div> 15
<tr valign="top">
<div><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: 20
Times New Roman">(c) </font></div>
</td>
<td width="1220">
FONT-FAMILY: Times New Roman">M3 25
is defined as M1 plus all other authorised deposit-taking institution
deposits of the private non-ADI
sector.</font></div>
</td>
</tr> 30
</table>
</div>
<div>
<tr valign="top">
Roman">(d)</font></div> 40
</td>
<td width="1220">
FONT-FAMILY: Times New Roman">Broad
money is defined as M3 plus non-deposit borrowings from the private 45
sector
by all financial intermediaries, less the holdings of currency and bank
deposits by registered financial corporations and cash management
trusts.</font></div>
</td> 50
</tr>
</table>
</div>
<div>
Bank of Australia<font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: 60

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</div>
<div>
</div> 5
</div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Regulation
of the Financial System</font></div>
financial regulation framework is based on three separate agencies operating
on
functional lines. These institutions have prime responsibility for maintaining 20
the safety and soundness of financial institutions, protecting consumers and
promoting systemic stability through implementing and administering the
regulatory regimes that apply to the financial sector.
Specifically,</font></div>
<div>
width="100%"> 30
<tr valign="top">
</td>
<td>
Australian Prudential Regulation Authority ("APRA") is responsible for
prudential regulation and supervision of authorised deposit-taking
institutions, general and life insurance companies and superannuation
funds;</font></div>
</td> 45
</tr>
</table>
</div>
</div>
<div>
width="100%"> 55
<tr valign="top">

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</td>
<td>
Australian Securities and Investments Commission ("ASIC") is responsible 5
for market conduct and investor protection;
and</font></div>
</td>
</tr>
</table> 10
</div>
</div>
<div> 15
width="100%">
<tr valign="top">
</td> 25
<td>
Reserve Bank of Australia has responsibility for monetary policy,
overseeing financial system stability and oversight of the payments 30
</td>
</tr>
</table>
</div> 35
</div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Figure
1:  Key regulatory agencies in Australia</font></div>
RIGHT: 0pt" align="center"><img src="agencies.jpg" alt=""></div>
FAMILY: Times New Roman">Responsibility
for the operational or day-to-day supervision of financial institutions and
markets lies with these individual regulators, while accountability for the
broad framework for the regulation of the financial sector rests with the
Australian Government, aided by the Council of Financial Regulators and the 55
Australian Treasury.</font></div>
<div><br></div>
<div> 60

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MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
</div>
</div> 15
<div id="HDR">
Roman">
</font></div> 20
</div>
</div>
</div>
<div><br></div>
Council of Financial Regulators consists of high-level representatives of the
RBA, Treasury, APRA and ASIC. Given the central role played by each of these
entities in the formulation of financial sector policy, in interacting with 30
foreign counterparts and standard setters and in monitoring and evaluating
trends in domestic and international markets, the Council of Financial
Regulators is an important forum for addressing emerging trends and policy
issues. This coordination is crucial especially in the event of a crisis, when
the Council would serve as the key coordinating body for developing an 35
official
response. The role of the Council in crisis coordination is facilitated by a
Memorandum of Understanding ("MOU") dealing specifically with financial crisis
management arrangements signed in September 2008.  The MOU reflects
the strong commitment of Australia's regulatory agencies to the open exchange 40
of
information and to a co-ordinated response to potential threats to the
stability
of Australia's financial system. The MOU covers the objectives of financial
distress management and the principles that guide decisions and actions during 45
times of financial distress, and also sets out the responsibilities of the
individual Council members during such times.</font></div>
regulation of the financial sector operates under the following Commonwealth
legislation:</font></div>
<div>

906
p906 22-9-2014
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0pt; TEXT-ALIGN: left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-
FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt;"
face="Symbol, serif">·</font></font></div>
</td> 5
<td>
FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE:
italic">Australian Securities and
Investments Commission Act 10
2001</font>;</font></div>
</td>
</tr>
</table>
</div> 15
<div>
<tr valign="top">
FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt;" 25
</td>
<td>
FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: 30
italic">Corporations Act
</td>
</tr>
</table> 35
</div>
<div>
<tr valign="top">
0pt; TEXT-ALIGN: left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT- 45
</td>
<td>
italic">Australian Prudential
Regulation Authority Act
</td> 55
</tr>
</table>
</div>
<div>

907
p907 22-9-2014
A 1
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<tr valign="top">
</td>
<td> 10
italic">Payment Systems (Regulation)
Act 1998</font>;</font></div>
</td> 15
</tr>
</table>
</div>
RIGHT: 0pt; TEXT-ALIGN: left" align="justify"> </div> 20
<div>
<tr valign="top">
</td> 30
<td>
italic">Payment Systems and Netting
Act 1998</font>;</font></div> 35
</td>
</tr>
</table>
</div>
<div>
face="Symbol, serif">·</font></font></div> 50
</td>
<td>
italic">Financial Sector 55
(Shareholdings) Act 1998</font>;</font></div>
</td>
</tr>
</table>
</div> 60

908
p908 22-9-2014
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st
<div>
width="100%">
<tr valign="top">
FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-
FAMILY: symbol, serif">·</font></font></div>
</td>
<td>
italic">Financial Sector (Business
Transfer and Group Restructure) Act
1999;</font></font></div>
</td> 20
</tr>
</table>
</div>
</div>
<div>
width="100%"> 30
<tr valign="top">
</td>
<td>
10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-STYLE: 40
italic">Retirement Savings Accounts
Act 1997</font>;</font></div>
</td>
</tr>
</table> 45
</div>
</div>
<div> 50
width="100%">
<tr valign="top">
</td> 60
<td>

909
p909 22-9-2014
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italic">Life Insurance Act
</td> 5
</tr>
</table>
</div>
</div>
<div>
width="100%"> 15
<tr valign="top">
</td>
<td>
italic">Superannuation Industry
(Supervision) Act
</td>
</tr> 30
</table>
</div>
</div>
<div>
width="100%">
</td>
<td>
italic">Insurance Acquisitions and 50
Takeovers Act 1991</font>;</font></div>
</td>
</tr>
</table>
</div> 55
</div>
<div>

910
p910 22-9-2014
A 1
st
width="100%">
<tr valign="top">
</td>
<td> 10
italic">Insurance Act
</td> 15
</tr>
</table>
</div>
</div>
<div>
width="100%"> 25
<tr valign="top">
</td>
<td>
italic">Banking Act 1959</font>;
and</font></div>
</td>
</tr>
</table> 40
</div>
</div>
<div> 45
width="100%">
<tr valign="top">
</td> 55
<td>
italic">Reserve Bank Act
1959</font>.</font></div> 60
</td>

911
p911 22-9-2014
A 1
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</tr>
</table>
</div>
</div>
addition, the Australian Competition and Consumer Commission (the "ACCC") has 10
responsibility for competition policy under the <font style="DISPLAY: inline;
FONT-STYLE: italic">Trade Practices Act
1974</font>.  That responsibility extends across the entire economy,
including the financial sector.</font></div>
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Reserve
Bank of Australia</font></div> 20
FAMILY: Times New Roman">The RBA 25
is responsible for maintaining stability of the overall financial system,
promoting the safety and efficiency of the payments system, managing the
issuance of banknotes, providing banking services for the Australian
Government,
and managing Australia's Official Reserve Assets.</font></div> 30
FAMILY: Times New Roman">The RBA 35
is also responsible for monetary policy, which is determined by the Board of
the
Bank and is set in terms of the level of the cash rate (the interest rate on
unsecured overnight funds). The RBA undertakes daily operations in the
short-term money markets to ensure that the actual cash rate remains close to 40
the monetary policy target.</font></div>
<div><br></div>
<div> 45
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
</div>
</div> 60
<div id="HDR">

912
p912 22-9-2014
A 1
st
Roman">
</font></div>
</div> 5
</div>
</div>
<div><br></div>
FAMILY: Times New Roman">The RBA's
market operations are very flexible, permitting it to deal daily with a wide
range of counterparties across a wide range of maturities, and allowing it to
respond rapidly to any tensions in the domestic money market.  The
RBA 15
has made a number of changes to its arrangements since late 2007 as the
financial turmoil has unfolded.  These have included widening the
pool
of collateral the RBA will accept in its repurchase transactions, dealing on a
regular basis at long maturities and introducing a term deposit 20
facility.  In addition, the RBA has significantly increased the pool
of balances held by financial institutions in their exchange settlement
accounts
at the RBA.</font></div>
exceptional circumstances, the RBA may provide liquidity support to an 30
individual authorised deposit-taking institution, if the institution was
solvent
and its failure to make payments would have systemic implications. In
assessing
solvency, the RBA would rely on APRA's judgment.</font></div> 35
statement of financial position of the Reserve Bank of Australia as of each of
30 June 2006, 2007 and 2008 is set out in the table below.</font></div>
27:  Statement of financial position – Reserve Bank of
<div> 50
<div align="left">
<tr>
new roman">
</font></td>

913
p913 22-9-2014
A 1
st
</div>
</td> 10
</div> 25
</td>
<td valign="bottom" style="BORDER-TOP: black 1pt solid; PADDING- 30
</div>
</td>
</tr>
<tr>
<td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE:
10pt; FONT-FAMILY: times new roman">
</font></td> 50
<td valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT:
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(A$
</td>
<td align="left" nowrap valign="bottom"><font style="DISPLAY:

914
p914 22-9-2014
A 1
st
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">
</font></td> 5
<td colspan="10" valign="bottom"><font style="DISPLAY: inline;
<td align="left" nowrap valign="bottom"><font style="DISPLAY: 10
</tr>
<tr>
<td align="left" valign="bottom">
roman">ASSETS</font></div>
</td>
<td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 20
<td align="left" nowrap valign="bottom"><font style="DISPLAY: 30
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">Cash
and cash equivalents</font></div>
</td> 45

915
p915 22-9-2014
A 1
st
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">Australian
dollar securities</font></div>
</td>
roman">34,955</font></td> 50

916
p916 22-9-2014
A 1
st
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">Foreign
exchange</font></div>
</td>
roman">93,538</font></td> 35
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">Gold</font></div>
</td>

917
p917 22-9-2014
A 1
st
</tr>
<tr> 35
10pt; FONT-FAMILY: times new roman">Property,
plant and equipment</font></div> 40
</td>

918
p918 22-9-2014
A 1
st
</tr>
<tr> 20
<td align="left" valign="bottom" width="64%" style="PADDING-
BOTTOM: 1px">
10pt; FONT-FAMILY: times new roman">Loans, 25
advances and other</font></div>
</td>
FAMILY: times new roman">397</font></td>
style="PADDING-BOTTOM: 1px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; 50
FAMILY: times new roman">438</font></td> 60

919
p919 22-9-2014
A 1
st
</tr>
<tr> 5
BOTTOM: 1px">
Assets</font></div>
</td>
FAMILY: times new roman">105,447</font></td>
FAMILY: times new roman">101,472</font></td> 45
</tr>
<tr> 50
roman">LIABILITIES</font></div>
</td>

920
p920 22-9-2014
A 1
st
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">Deposits</font></div>
</td>

921
p921 22-9-2014
A 1
st
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">Distribution
payable to Australian Government</font></div>
</td>
</tr> 60
<tr>

922
p922 22-9-2014
A 1
st
10pt; FONT-FAMILY: times new roman">Other</font></div>
</td> 5
</tr>
<tr>
BOTTOM: 1px"> 45
notes on issue</font></div>
</td> 50

923
p923 22-9-2014
A 1
st
</tr>
<tr>
<td align="left" valign="bottom" width="64%" style="PADDING- 30
BOTTOM: 1px">
Liabilities</font></div> 35
</td>

924
p924 22-9-2014
A 1
st
</tr>
<tr>
</font></td>
</tr>
<tr>
BOTTOM: 1px">
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
Assets</font></div>
</td>

925
p925 22-9-2014
A 1
st
</tr>
<tr>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Capital
and Reserves</font></div>
</td> 45

926
p926 22-9-2014
A 1
st
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">Reserves:</font></div>
</td>
</tr>
<tr>

927
p927 22-9-2014
A 1
st
10pt; FONT-FAMILY: times new roman">Unrealised
profits reserves</font></div>
</td> 5
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">Asset
revaluation reserves</font></div>
</td>

928
p928 22-9-2014
A 1
st
</tr> 25
<tr>
10pt; FONT-FAMILY: times new roman">Reserve 30
Bank Reserve Fund</font></div>
</td>

929
p929 22-9-2014
A 1
st
</tr> 10
<tr>
BOTTOM: 1px">
10pt; FONT-FAMILY: times new roman">Capital</font></div>
</td>
FAMILY: times new roman">40</font></td> 50
</tr>
<tr> 55
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total 60
Capital and Reserves</font></div>

930
p930 22-9-2014
A 1
st
</td>
</tr>
</table>
</div>
</div>
<div> 45
FAMILY: Times New Roman"><font style="FONT-STYLE:
italic">Source:</font>  Reserve Bank of Australia
<font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY:
Times New Roman">Annual 50
Report 2008</font> and <font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-
STYLE: italic; FONT-FAMILY: Times New Roman">Annual
Report 2007</font>.</font></div>
</div>
<div> 55
</div>
</div>

931
p931 22-9-2014
A 1
st
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Australian
Prudential Regulation Authority</font></div>
Government established APRA on 1 July 1998 as the single prudential regulator 10
in
the Australian financial system. APRA oversees authorised deposit-taking
institutions, such as banks, building societies and credit unions, life and
general insurance companies (including reinsurers and friendly societies) and
most members of the superannuation industry (other than self-managed 15
superannuation funds).  The aim was to create a prudential
regulation
framework that would not only meet safety and stability objectives, but would
increase the competitiveness and efficiency of the financial system by
ensuring 20
that regulation is applied consistently for similar functions.</font></div>
<div><br></div>
<div> 25
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
</div>
</div> 40
<div id="HDR">
Roman">
</font></div> 45
</div>
</div>
</div>
<div><br></div>
STYLE: italic; FONT-FAMILY: Times New Roman">APRA
Regulated Institutions</font></div>
FAMILY: Times New Roman">As
detailed in the table below, APRA-regulated institutions hold approximately
$3.4 60
trillion in assets for 21 million Australian depositors, policyholders and

932
p932 22-9-2014
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superannuation fund members.</font></div>
28:  APRA-Regulated Institutions</font></div>
<div>
<div align="left">
<tr>
<td align="left" valign="bottom" width="28%" style="BORDER-TOP:
black 1pt solid; PADDING-BOTTOM: 1px"><font style="DISPLAY: inline; FONT-
black 1pt solid; BORDER-BOTTOM: black 1px solid"> 20
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Number 25
of Institutions</font></div>
</div>
</td>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Assets
(A$ billions)</font></div>
</div>
</td> 45
style="BORDER-TOP: black 1pt solid; BORDER-BOTTOM: black 1px solid"><font
</tr> 50
<tr>
<td align="left" valign="bottom" width="28%" style="BORDER-TOP:
medium none; BORDER-BOTTOM: black 1px solid">
0pt; MARGIN-RIGHT: 0pt" align="left"> 55
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">APRA-Regulated
Institutions</font></div>
</div> 60
</td>

933
p933 22-9-2014
A 1
st
<td colspan="2" valign="bottom" width="10%" style="BORDER-
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">30 10
</div>
</td>
style="PADDING-BOTTOM: 1px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; 15
<td colspan="2" valign="bottom" width="10%" style="BORDER- 20
</div>
</td>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%
Change</font></div>
</div>
</td> 45
</div> 60
</td>

934
p934 22-9-2014
A 1
st
</div> 15
</td>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">%
Change</font></div> 30
</div>
</td>
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">ADIs</font></div>
</td>

935
p935 22-9-2014
A 1
st
times new roman">-4.1</font></td> 15
roman">1,945.5</font></td>
roman">2,409.0</font></td>
times new roman">23.8</font></td>
</tr> 55
<tr>
10pt; FONT-FAMILY: times new roman">Representative 60
offices of foreign banks</font></div>

936
p936 22-9-2014
A 1
st
</td>
times new roman">-5.3</font></td>
</font></td>
</font></td>

937
p937 22-9-2014
A 1
st
times new roman">-</font></td>
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">General
insurers</font></div>
</td> 20

938
p938 22-9-2014
A 1
st
times new roman">0.6</font></td> 30
</tr>
<tr> 35
10pt; FONT-FAMILY: times new roman">Life
insurers</font></div> 40
</td>

939
p939 22-9-2014
A 1
st
</tr> 55
<tr>
10pt; FONT-FAMILY: times new roman">Friendly 60
societies</font></div>

940
p940 22-9-2014
A 1
st
</td>

941
p941 22-9-2014
A 1
st
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">Licensed
trustees</font></div>
</td> 20

942
p942 22-9-2014
A 1
st
</font></td>
</font></td>
times new roman">-</font></td> 30
</tr>
<tr> 35
10pt; FONT-FAMILY: times new roman">Superannuation
entities</font></div> 40
</td>

943
p943 22-9-2014
A 1
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</tr> 55
<tr>
BOTTOM: 1px">
10pt; FONT-FAMILY: times new roman">Non-operating

944
p944 22-9-2014
A 1
st
holding companies</font></div>
</td>
FAMILY: times new roman">-</font></td>
FAMILY: times new roman">-</font></td>

945
p945 22-9-2014
A 1
st
STYLE: italic; FONT-FAMILY: times new roman">-</font></td>
</tr>
<tr>
</td>
FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new
BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; 30
BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold;
FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new 55

946
p946 22-9-2014
A 1
st
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">-
7.9</font></td>
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3,002.2</font></td>
FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new 25
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3,413.1</font></td>
FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new
</tr>
</table>
</div> 55
</div>
<div>

947
p947 22-9-2014
A 1
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FAMILY: Times New Roman">Source</font>:  APRA
Annual Report 2008.</font></font></font></div>
</div>
<div> 5
</div>
</div>
STYLE: italic; FONT-FAMILY: Times New Roman">Funding</font></div>
FAMILY: Times New Roman">APRA is
funded largely by the industries that it supervises through a levy on
regulated 20
entities. The Government has provided APRA with the necessary resources to
enable it to manage the effects of the global financial crisis. In October
2008,
the Government agreed to provide additional funding to APRA of $9 million in
2008-09, $18.5 million in 2009-10 and $9 million in 2010-11 and 2011-12 to 25
ensure that APRA continues to have sufficient resources to fulfil its role in
light of global developments. This funding will be provided from the 2008-09
Budget, rather than being recovered from levies on the financial sector.
Before
this budget measure, APRA's budget was approximately $100 million (recovered 30
mainly from levies on the financial sector) for around 570 staff.</font></div>
STYLE: italic; FONT-FAMILY: Times New Roman">Governance</font></div>
FAMILY: Times New Roman">APRA's
governance structure comprises a full-time Executive Group of at least three
and
no more than five Members. The Executive Group is responsible and accountable
for the operation and performance of APRA. It currently has a Chairman, a 45
Deputy
Chairman and a Member.</font></div>
STYLE: italic; FONT-FAMILY: Times New Roman">APRA's
Main Powers</font></div>
FAMILY: Times New Roman">Australian
legislation provides APRA with strong powers to regulate and intervene in the
operations of financial institutions to protect depositors, policy holders and 60

948
p948 22-9-2014
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st
fund members and to maintain the stability of the financial
FAMILY: Times New Roman">APRA's
main powers are provided by acts relating to each industry sector that it
regulates: the <font style="DISPLAY: inline; FONT-STYLE: italic">Banking Act
1959</font>, the <font style="DISPLAY: inline; FONT-STYLE: italic">Insurance 10
Act
1973</font>, the <font style="DISPLAY: inline; FONT-STYLE: italic">Life
Insurance Act 1995</font> and the <font style="DISPLAY: inline; FONT-STYLE:
italic">Superannuation Industry
(Supervision) Act 1993</font>.  These acts provide APRA with the 15
following main types of powers in regulating financial
institutions:</font></div>
<div> 20
width="100%">
<tr valign="top">
</td> 30
<td>
10pt; FONT-FAMILY: times new roman">authorisation
or licensing powers;</font></div>
</td> 35
</tr>
</table>
</div>
</div>
<div>
width="100%"> 45
<tr valign="top">
</td>
<td>
10pt; FONT-FAMILY: times new roman">powers 55
to make, apply and enforce prudential
standards;</font></div>
</td>
</tr>
</table> 60
</div>

949
p949 22-9-2014
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</div>
<div>
width="100%">
<tr valign="top">
</td>
<td> 15
10pt; FONT-FAMILY: times new roman">powers
to collect information, to conduct on-site examinations of supervised
entities and to require third-party audits;
and</font></div> 20
</td>
</tr>
</table>
</div>
</div> 25
<div>
width="100%">
<tr valign="top">
</td>
<td>
10pt; FONT-FAMILY: times new roman">powers
to act in circumstances of financial difficulties to protect depositors,
policy holders and superannuation fund members and to maintain the
stability of the financial system, including powers related to
investigating, giving directions and assuming control of supervised 45
entities in difficulty.  APRA can appoint a statutory manager
to
assume full control of an authorised deposit-taking institution and can
apply to the courts for the appointment of a judicial manager to assume
control of a general or life 50
insurer.</font></div>
</td>
</tr>
</table>
</div> 55
</div>
<div><br></div>
<div> 60

950
p950 22-9-2014
A 1
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MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
</div>
</div> 15
<div id="HDR">
Roman">
</font></div> 20
</div>
</div>
</div>
<div><br></div>
FAMILY: Times New Roman">In broad
terms, the powers available under each Act are similar but they vary somewhat
reflecting the specific characteristics of each industry sector.</font></div>
relation to the ADI sector, APRA has wide-ranging powers under the <font 35
style="DISPLAY: inline; FONT-STYLE: italic">Banking Act 1959</font> to
investigate the affairs of an ADI and/or issue a direction to an
ADI.  For example, APRA can direct an ADI:</font></div>
<div>
width="100%">
</td>
<td>
10pt; FONT-FAMILY: times new roman">to
comply with a prudential 55
requirement;</font></div>
</td>
</tr>
</table>
</div> 60
</div>

951
p951 22-9-2014
A 1
st
<div>
width="100%">
<tr valign="top">
</td>
<td>
conduct an audit of its
affairs;</font></div>
</td>
</tr> 20
</table>
</div>
</div>
<div>
width="100%">
</td>
<td>
remove a director, executive officer or employee; 40
or</font></div>
</td>
</tr>
</table>
</div> 45
</div>
<div>
width="100%">
<tr valign="top">
</td>
<td> 60

952
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10pt; FONT-FAMILY: times new roman">not
to undertake a particular
transaction.</font></div>
</td> 5
</tr>
</table>
</div>
</div>
FAMILY: Times New Roman">APRA also
has the power to revoke an ADI's authorisation if it fails to meet its 15
authorisation requirements.</font></div>
FAMILY: Times New Roman">In a
situation where an ADI may be unable to meet its obligations or where the
interests of depositors or financial system stability are at risk, APRA has
the
power under the <font style="DISPLAY: inline; FONT-STYLE: italic">Banking Act 25
1959</font> to replace an ADI's Board of Directors with a statutory manager,
which must manage the ADI in a manner that is consistent with interests of
depositors and financial system stability.  In addition to the
powers
of the Board, the statutory manager has powers to deal in the share capital of 30
the ADI, such as by issuing new shares, and can alter the ADI's governance
arrangements including its constitution.  The statutory manager can
also sell or dispose of the assets of the ADI.</font></div>
FAMILY: Times New Roman">APRA also
has the power to compulsorily transfer the business of the ADI to another
entity 40
using the <font style="DISPLAY: inline; FONT-STYLE: italic">Financial Sector
(Transfers of Business) Act 1999</font>.  The receiving entity must
consent to the transfer.</font></div>
STYLE: italic; FONT-FAMILY: Times New Roman">Prudential
Regulation</font></div>
FAMILY: Times New Roman">APRA has
developed a regulatory framework for ADIs that is based on the banking 55
supervision principles published by the Basel Committee on Banking
Supervision.  The framework for prudential regulation includes
requirements regarding capital adequacy, credit risk, market risk, funds
management and securitisation, liquidity, credit quality, large exposures,
associations with related entities, outsourcing, business continuity 60
management,

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risk management of credit card activities, audit and related arrangements for
prudential reporting, governance and fit and proper management.</font></div>
FAMILY: Times New Roman">Prudential
regulation is concerned fundamentally with the quality of a financial
institution's systems for identifying, measuring and managing the various
risks 10
in its business and, in most cases, with the adequacy of its capital as a
buffer
against unexpected losses.  It promotes prudent behaviour by
regulated
entities with the objective of reducing the likelihood of institutional 15
insolvency and consequential losses to policyholders, depositors or members
and
financial system instability.</font></div>
STYLE: italic; FONT-FAMILY: Times New Roman">Implementation
of Basel II in Australia</font></div>
FAMILY: Times New Roman">APRA
implemented the Basel II framework on 1 January 2008. This new framework is 30
designed to strengthen risk management and provide more risk-sensitive capital
requirements for deposit-taking institutions.</font></div>
FAMILY: Times New Roman">All ADIs
in Australia are subject to Basel II. ADIs can choose to implement the
standard
approaches or more advanced approaches for credit risk and operational risk. 40
The
great majority of ADIs have chosen to use the standardised Basel II approaches
in determining their regulatory capital charge. The largest ADIs have chosen
more sophisticated approaches under Basel II, which allow them to use some of
their own quantitative risk estimates in calculating regulatory 45
capital.</font></div>
FAMILY: Times New Roman">The new
prudential rules under Basel II provide the Australian banking system with an
enhanced regulatory framework for the protection of depositors and the
maintenance of systemic stability.</font></div>
FAMILY: Times New Roman">Although
the intention of the Basel Committee on Banking Supervision was to maintain 60
consistency of capital adequacy regulation across countries and avoid a

954
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significant source of competitive inequality among internationally active
banks,
international comparisons need to take into account the particularities of the
implementation of the Basel framework in each country. These
include:</font></div> 5
<div>
width="100%">
<tr valign="top">
</td>
use of national discretions within the Basel
Framework;</font></div>
</td>
</tr> 25
</table>
</div>
</div>
<div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT:
0pt">
<div id="FTR">
<div id="GLFTR" style="WIDTH: 100%" align="left">
</div> 35
</div>
</div>
</div>
<div id="HDR">
<div id="GLHDR" style="WIDTH: 100%" align="right"> 45
</div>
</div>
</div>
<div>
width="100%">
<tr valign="top">
<div> 55
10pt; FONT-FAMILY: symbol, serif"><font style="DISPLAY: inline; FONT-SIZE:
10pt">·</font></font>
</div>
</div> 60
</td>

955
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implementation of advanced <font size="+0" style="FONT-SIZE: 10pt; FONT-
FAMILY: Times New Roman">models</font>;</font></font></font></div>
</td>
</tr>
</table> 10
</div>
</div>
<div> 15
width="100%">
<tr valign="top">
</td> 25
10pt; FONT-FAMILY: times new roman">supervisory
adjustments imposed under Pillar 2 by local
regulators;</font></div> 30
</td>
</tr>
</table>
</div>
</div> 35
<div>
width="100%">
<tr valign="top">
</td>
10pt; FONT-FAMILY: times new roman">other
regulatory requirements (e.g., accounting or tax);
and</font></div>
</td>
</tr> 55
</table>
</div>
</div>
<div>

956
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width="100%">
<tr valign="top">
</td> 10
10pt; FONT-FAMILY: times new roman">transitional
arrangements.</font></div>
</td> 15
</tr>
</table>
</div>
</div>
implementing Basel II, APRA has exercised a number of discretions to make the 25
framework more robust and relevant in the Australian market. These discretions
include:</font></div>
<div> 30
width="100%">
<tr valign="top">
</td> 40
<td>
risk-weights for residential mortgage lending in the standardised
approach 45
were made considerably more granular, adding to the risk-sensitivity of
capital. The Basel II approach is that home loans are subject to a 35%
risk weight. APRA instead introduced a grid of risk-weights based upon
loan to value ratio, lenders' mortgage insurance status and product type
(e.g., whether the loan is a standard or non-standard housing loan), 50
which
starts at 35% and runs to
100%.</font></div>
</td>
</tr> 55
</table>
</div>
</div>
<div>

957
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width="100%">
<tr valign="top">
</td> 10
<td>
10pt; FONT-FAMILY: times new roman">APRA
chose not to adopt a lower risk-weight for 'other retail assets' under
the 15
standardised approach, believing it would not provide a sufficient
buffer
against credit risk and concentration
risk.</font></div>
</td> 20
</tr>
</table>
</div>
</div>
<div>
width="100%"> 30
<tr valign="top">
</td>
10pt; FONT-FAMILY: times new roman">For 40
banks using the advanced approaches to measure capital adequacy, APRA
has
established a minimum capital requirement for interest rate risk in the
banking book under Pillar 1.</font></div>
</td> 45
</tr>
</table>
</div>
</div>
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Australian
Securities and Investments Commission</font></div> 55
FAMILY: Times New Roman">ASIC is 60

958
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an independent statutory body established under the <font style="DISPLAY:
inline; FONT-STYLE: italic">Australian Securities and
Investments Commission Act 2001</font>.</font></div>
FAMILY: Times New Roman">ASIC
administers the <font style="DISPLAY: inline; FONT-STYLE: italic">Corporations
Act 2001</font> (the "Corporations Act"), including the provisions governing 10
the
operation of companies in Australia, corporate fundraising, financial
reporting,
takeovers and compulsory buy outs and external
administration/insolvency.</font></div> 15
FAMILY: Times New Roman">ASIC is 20
also responsible for registering and supervising the operation of managed
investment schemes.  The regulatory framework governing collective
investment vehicles was reformed in 1998 through the passage of the <font
style="DISPLAY: inline; FONT-STYLE: italic">Managed Investments Act
1998</font>.</font></div> 25
FAMILY: Times New Roman">ASIC has 30
responsibility for the investor protection regime that applies to the
provision
of financial services.  The regime includes licensing, conduct and
disclosure provisions that apply to financial services providers, as well as
product disclosure provisions applicable to financial products.</font></div> 35
FAMILY: Times New Roman">Financial 40
markets and clearing and settlement facilities are licensed by the relevant
Minister. ASIC is responsible for monitoring compliance by market and clearing
and settlement facility licensees with the relevant legislative
frameworks.  The RBA is responsible for issuing financial stability
standards for clearing and settlement facilities and it monitors compliance 45
with
those standards.  Australia's major licensed financial markets and
clearing and settlement facilities are operated by the ASX
Limited.</font></div>
FAMILY: Times New Roman">ASIC is
also responsible for administering the market misconduct provisions of the 55
Corporations Act, which cover market manipulation, insider trading and
misleading or deceptive conduct.</font></div>

959
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FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Other
Regulatory Entities</font></div>
STYLE: italic; FONT-FAMILY: Times New Roman">Australian
Competition and Consumer Commission</font></div> 10
Australian Competition and Consumer Commission (the "ACCC") has responsibility
for competition policy under the <font style="DISPLAY: inline; FONT-STYLE:
italic">Trade Practices Act 1974</font> (the
"TPA").  This responsibility extends across the entire economy,
including the financial sector.</font></div> 20
FAMILY: Times New Roman">The TPA 25
prohibits anti-competitive arrangements between competitors, such as price
fixing, market sharing and boycotts.</font></div>
<div><br></div> 30
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
</div> 45
</div>
<div id="HDR">
Roman"> 50
</font></div>
</div>
</div>
</div>
<div><br></div> 55
STYLE: italic; FONT-FAMILY: Times New Roman">Industry
regulation</font></div>

960
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Australian Bankers' Association (the "ABA") is the national organisation of
licensed banks in Australia. Any body corporate duly authorised to carry on 5
banking business in Australia and carrying on such banking business may become
a
member of ABA.</font></div>
FAMILY: Times New Roman">ABA is
funded by its 23 member banks ranging from traditional retail, trading
bank-style organisations to regional banks, foreign bank and wholesale 15
banks.  Contributions to its operational expenditure are based on
individual member bank's liabilities in Australia.</font></div>
FAMILY: Times New Roman">The ABA's
revised Code of Banking Practice is the banking industry's customer charter on
best banking practice standards. The Code sets out the banking industry's key
commitments and obligations to customers on standards of practice, disclosure 25
and principles of conduct for banking services. The Code applies to personal
and
small business bank customers.</font></div>
FAMILY: Times New Roman">Abacus–Australian
Mutuals, the industry association for Australian credit unions, mutual
building 35
societies and friendly societies, also keeps industry codes to which its
members
are signatories.  Abacus members subscribe to codes establishing
standards of service to customers.  Signatories to the codes are
obliged to respond to complaints about non-compliance, and the relevant 40
external
dispute resolution scheme can also hear and resolve such complaints. Abacus is
in the process of developing a consolidated Mutual Banking Code of Practice
that
will apply to building societies and credit unions as of mid 45
2009.</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Financial System Regulatory Regime</font></div>
Australian Government is committed to increasing competition and
contestability
across the broad spectrum of financial products, without sacrificing the basic 60

961
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goals of safety and stability in the financial system.  The
regulatory
system enables the non-bank deposit-taking sector to provide a more effective
source of competition for the banks in the retail market by operating under
the 5
same regulatory framework as banks.  These institutions are able to
maintain commercial flexibility by retaining different corporate structures,
including mutuality, and the terms 'building society' and 'credit
union'.  The Government is also paving the way for greater future
participation by non-traditional suppliers in financial services markets, 10
where
there is demonstrable congruity between financial and non-financial
activities.  One example of this is 2002 reforms to credit card
schemes, which removed the restriction permitting only ADIs to provide credit
card services.  This increased competition on incumbents from both 15
credit card specialists and large payments-processing
institutions.  Prudential controls, to ensure these new players do
not
increase systemic risk, apply.</font></div>
maintains a stable, competitive and efficient financial system that is not 25
only
positioned to compete strongly in the global economy, but also offers
opportunities for those seeking to do business in Australia or to use
Australia
as a focal point for regional activities.</font></div> 30
FAMILY: Times New Roman">There is 35
no restriction on the number of foreign banks that may apply for banking
licenses.  The blanket ban on the takeover of domestic institutions
has been removed although such applications are still assessed on a case by
case
basis under the <font style="DISPLAY: inline; FONT-STYLE: italic">Foreign 40
Acquisitions and Takeovers Act 1975</font> and the <font style="DISPLAY:
inline; FONT-STYLE: italic">Financial Sector (Shareholdings) Act
1998</font>.</font></div>
FAMILY: Times New Roman">Foreign
banks wishing to establish a retail bank in Australia may enter as a licensed
subsidiary, subject to full prudential supervision.  They may also 50
establish as a licensed foreign bank branch to conduct wholesale banking, as
branches are restricted from accepting retail deposits below
$250,000.  They may also establish as an unlicensed money market
corporation or merchant bank.  Furthermore, the establishment of new
merchant banks involving investments of less than $10 million is exempt from 55
foreign investment screening.  As at 31 December 2008, there were 45
foreign owned banks operating in Australia, comprising 10 locally incorporated
subsidiaries and 35 branches of foreign banks.</font></div>
<div><br></div>

962
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<div>
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
</div> 15
</div>
<div id="HDR">
Roman"> 20
</font></div>
</div>
</div>
</div>
<div><br></div> 25
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">GOVERNMENT
FINANCE</font></div>
FAMILY: Times New Roman">The basic
provisions relating to the receipt and payment of public moneys of the 35
Australian Government are set out in the Constitution and the <font
style="DISPLAY: inline; FONT-STYLE: italic">Financial Management and
Accountability Act 1997</font> (the "FMA Act").  The FMA Act sets
out
requirements relating to the collection and custody of public money; 40
accounting,
reporting and audit; and borrowing and investment.  The <font
style="DISPLAY: inline; FONT-STYLE: italic">Commonwealth Authorities and
Companies Act 1997</font> sets out separate financial and corporate
governance requirements for corporations controlled by the Australian 45
Government.  The general administration of Australian Government
finances is the responsibility of the Minister for Finance and
Deregulation.</font></div>
Constitution, all moneys or revenues received by the Australian Government
form 55
one Consolidated Revenue Fund, to be appropriated for the purposes of the
Commonwealth of Australia.  All disbursements made from the
Consolidated Revenue Fund must be made under appropriation made by the
Parliament.</font></div>

963
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financial statements and accounting records of each Australian Government
agency 5
and the consolidated financial statements of the Government must be audited by
the Australian Auditor-General.  The Australian National Audit
Office
("ANAO") supports the Auditor-General in conducting financial statement and
performance audits.  All financial statements must be tabled in the 10
Parliament by the responsible Minister within the relevant agency's annual
report.  These financial statements are audited by the
Auditor-General, who may also report to the Parliament on a wide range of
other
matters relating to public administration.</font></div> 15
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Federal 20
Government Budget</font></div>
FAMILY: Times New Roman">As part
of each annual budget, the Treasurer presents annual Appropriation Bills to
the
Parliament.  The Bills detail the purposes for which funds are to be
expended by Government agencies.  Additional Appropriation Bills may 30
be enacted by Parliament during the course of a financial year to provide
funds
for new expenditures approved by the Government after the passage of the
annual
budgetary Appropriation Bills.</font></div> 35
FAMILY: Times New Roman">The major 40
part of the budget is appropriated under 'special' or 'standing'
appropriations
contained in special legislation that does not require annual
re-enactment.  For example, the payment of social security benefits
and pensions are provided for in this manner.</font></div> 45
Australian Government's main fiscal indicators are the 'underlying cash
balance'
and the 'fiscal balance' (respectively cash and accrual measures of government
finance statistics net lending), with the predominant focus on the underlying
cash balance for assessing the Government's fiscal strategy.  The 55
move
to accrual budgeting now means that the budget papers contain a complete set
of
accrual financial statements (i.e., an operating statement, a statement of
assets and liabilities, and a statement of cash flows).</font></div> 60

964
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framework within which fiscal policy is conducted is set out in the <font
style="DISPLAY: inline; FONT-STYLE: italic">Charter of Budget Honesty Act
1998</font>.  The Charter provides a framework for the conduct of
Government fiscal policy. The purpose of the Charter is to improve fiscal
policy 10
outcomes. The Charter provides for this by requiring fiscal strategy to be
based
on principles of sound fiscal management and by facilitating public scrutiny
of
fiscal policy and performance.</font></div> 15
FAMILY: Times New Roman">The key 20
elements of the Australian Government's medium-term fiscal policy
are:</font></div>
<div> 25
width="100%">
<tr valign="top">
</td> 35
<td>
10pt; FONT-FAMILY: times new roman">achieving
budget surpluses, on average, over the economic
cycle;</font></div> 40
</td>
</tr>
</table>
</div>
</div> 45
<div>
width="100%">
<tr valign="top">
</td>
<td>
10pt; FONT-FAMILY: times new roman">keeping

965
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taxation as a share of GDP on average below the level for 2007-08;
and</font></div>
</td>
</tr>
</table> 5
</div>
</div>
<div> 10
width="100%">
<tr valign="top">
</td> 20
<td>
10pt; FONT-FAMILY: times new roman">improving
the Government's net financial worth over the medium
term.</font></div> 25
</td>
</tr>
</table>
</div>
</div> 30
Government's fiscal strategy aims to ensure fiscal sustainability over the
economic cycle. A sustainable fiscal position provides greater certainty for
decision makers, supports broader economic sustainability, and requires a
focus
on policies which strengthen the structure of the economy.</font></div> 40
FAMILY: Times New Roman">These 45
medium-term fiscal policy objectives also provide sufficient flexibility for
the
Government to use fiscal policy to support jobs and growth. The medium-term
strategy does not require that the budget remain in surplus in every year of
the 50
economic cycle.</font></div>
FAMILY: Times New Roman">To ensure
that growth is supported in a way that is consistent with the medium-term
fiscal
strategy, the Government's strategy is to:</font></div>

966
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<div><br></div>
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR"> 5
Roman">
</font></div>
</div> 10
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div>
</div> 25
<div><br></div>
STYLE: italic; FONT-FAMILY: Times New Roman">Support
the economy: the fiscal strategy for 2008-09 and 2009-10</font></div> 30
FAMILY: Times New Roman">As 35
Australia enters an economic slowdown of uncertain extent and duration, it is
important that the Government continues to support the economy
by:</font></div>
<div>
width="100%">
</td>
<td>
10pt; FONT-FAMILY: times new roman">allowing
the variations in revenue and expenditure, which are naturally 55
associated
with slower economic growth, to drive a temporary underlying cash budget
deficit; and</font></div>
</td>
</tr> 60
</table>

967
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</div>
</div>
<div> 5
width="100%">
<tr valign="top">
</td> 15
<td>
10pt; FONT-FAMILY: times new roman">using
additional spending to deliver timely, targeted and temporary stimulus,
with the clear objective of other budget priorities and new policy 20
proposals being met through a re-prioritisation of existing
</td>
</tr>
</table> 25
</div>
</div>
STYLE: italic; FONT-FAMILY: Times New Roman">Return
the budget to surplus: the fiscal strategy as the economy
recovers</font></div>
Government reaffirms its commitment to achieve budget surpluses, on average, 40
over the economic cycle.</font></div>
FAMILY: Times New Roman">As the
economy recovers, and grows above trend, the Government will take action to
return the budget to surplus by:</font></div>
<div>
width="100%">
</td>

968
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<td>
10pt; FONT-FAMILY: times new roman">allowing
the level of tax receipts to recover naturally as the economy improves,
while maintaining the Government's commitment to keep taxation as a 5
share
of GDP below the 2007-08 level on average;
and</font></div>
</td>
</tr> 10
</table>
</div>
</div>
<div>
width="100%">
</td>
<td>
10pt; FONT-FAMILY: times new roman">holding
real growth in spending to 2% a year until the budget returns to 30
surplus.</font></div>
</td>
</tr>
</table>
</div> 35
</div>
2006-07 and 2007-08, the underlying cash balance was $17.2 billion and $19.7
billion, respectively.  As at 30 June 2008, the Commonwealth of
Australia had no overall net debt.</font></div>
UEFO released on 3 February 2009 forecast the Australian Government's 50
underlying
cash balance for 2008-09 to be a deficit of $22.5 billion (-1.9% of
GDP).  A Government budget underlying cash deficit of $35.5 billion
(-2.9% of GDP) was forecast for 2009-10, and underlying cash deficits of $34.3
billion (-2.7% of GDP) and $25.7 billion (-1.9% of GDP) were projected for 55
2010-11 and 2011-12, respectively.  The 2009 UEFO estimates the
Australian Government general government sector net debt for 2008-09 to be
-$16.2 billion (-1.3% of GDP). The 2009 UEFO forecasts net debt to increase
across the forward estimates to 5.2% of GDP in 2011-12.</font></div>

969
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Government will finance the projected budget deficits by issuing Commonwealth
Government Securities.  See "—Domestic Issuance of Government 5
Bonds "
in this prospectus.</font></div>
Roman">Commonwealth
Budget Position as at 30 June 2008</font></div>
2007-08, the Australian Government general government sector recorded an 20
underlying cash surplus of $19.7 billion, or 1.7% of GDP. The fiscal balance
was
in surplus by $21.0 billion, or 1.9% of GDP.</font></div>
29:  Australian Government general government sector budget
aggregates</font></div> 30
<div>
<div align="left">
<tr>
</font></td>
PADDING-BOTTOM: 1px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT- 40
10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT:
bold">2005-06</font><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-
ALIGN: super">(a)</font></font></div> 50
</div>
</td>

970
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ALIGN: super">(a)</font></font></div>
</div>
</td> 5
0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-
08</font></div>
</div>
</td>
</tr>
<tr> 20
10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-
DECORATION: underline">Accrual 25
aggregates</font></font></div>
</td>
</font></td>
</font></td>
</font></td>
</tr>
<tr>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Revenue
</td> 50
roman">261.0</font></div>
</td>

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</td>
0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT- 15
</td>
</tr>
<tr> 20
10pt; FONT-FAMILY: times new roman">Per
cent of GDP</font></div> 25
</td>
</td>
</td> 40
</td>
</tr>
<tr>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Expenses
</td> 55

972
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</td>
</td>
roman">280.1</font></div> 20
</td>
</tr>
<tr>
cent of GDP</font></div>
</td>
</td>
</td>
</td> 50
</tr>
<tr>
operating balance (A$ billions)</font></div>
</td>

973
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</td>
</td>
</td>
</tr>
<tr> 20
capital investment (A$ billions)</font></div> 25
</td>
</td>
</td> 40
</td>
</tr>
<tr>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Fiscal
balance (A$ billions)</font></div>
</td> 55

974
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WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">16.5</font></div>
</td>
</td>
</td> 20
</tr>
<tr>
</td>
</td> 35
</td>
</td>
</tr> 50
<tr>
</font></td>
</font></td>

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st
</font></td>
</font></td>
</tr>
<tr> 10
DECORATION: underline">Cash 15
aggregates</font></font></div>
</td>
</font></td>
</font></td>
</font></td>
</tr>
<tr>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Underlying
cash balance (A$ billions)</font></div>
</td> 40
</td>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">17.2</font></div> 55
</td>

976
p976 22-9-2014
A 1
st
</td>
</tr> 5
<tr>
10pt; FONT-FAMILY: times new roman">Per 10
</td>
</td>
</td>
</td>
</tr>
<tr> 35
</font></td>
</font></td>
</font></td>
</font></td>
</tr>
</table> 55
</div>
</div>
<div><br></div>
<div> 60

977
p977 22-9-2014
A 1
st
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
</div>
</div> 15
<div id="HDR">
Roman">
</font></div> 20
</div>
</div>
</div>
<div><br></div>
<div>
<div align="left">
<tr>
<td valign="top" width="43%" style="BORDER-TOP: black 0.75pt 30
</font></td>
0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="center">
10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: 45
</div>
</div>
</td> 50
0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="center">

978
p978 22-9-2014
A 1
st
bold">2006-07</font><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-
SIZE: 70%; VERTICAL-ALIGN: super">(a)</font></font></div>
</div>
</div> 5
</td>
FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="FONT-SIZE: 85%;
VERTICAL-ALIGN: text-top"> </font></font></td> 10
0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="center"><font
</div>
</td> 20
</tr>
<tr>
DECORATION: underline">Balance sheet
measures</font></font></div>
</td>
</font></td>
</font></td>
</font></td>
</tr> 45
<tr>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net 50
debt (A$ billions)</font></div>
</td>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-2.3</font></div>
</td> 60

979
p979 22-9-2014
A 1
st
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-
27.4</font></div>
</td>
42.9</font></div>
</td>
</tr>
<tr> 20
cent of GDP</font></div> 25
</td>
10pt; FONT-FAMILY: times new roman">-0.2</font></div>
</td>
</td> 40
</td>
</tr>
<tr>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
worth (A$ billions)</font></div>
</td> 55

980
p980 22-9-2014
A 1
st
</td>
</td>
</td> 20
</tr>
<tr>
black 1px solid">
</td>
black 1px solid">
</td>
black 1px solid">
</td>
black 1px solid">
</td>
</tr>
</table>
</div>
</div> 60
<div>

981
p981 22-9-2014
A 1
st
</div>
<div>
<div>
<tr> 5
8pt; FONT-FAMILY: times new roman">(a)</font></div>
</td> 10
8pt; FONT-FAMILY: times new roman">Data
for 2005-06 and 2006-07 has been adjusted for accounting changes to 15
ensure
consistency where relevant. For further information on these
adjustments,
see the following: Mid-Year Economic and Fiscal Outlook 2008-09
Statement, 20
Appendix D; 2008-09 Budget, Budget Paper No. 1, Statement 10; and Final
Budget Outcome 2007-08, Appendix
B.</font></div>
</td>
</tr> 25
</table>
</div>
</div>
style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; FONT-FAMILY: Times
New Roman">Source:  </font>Mid-Year
Economic and Fiscal Outlook 2008-09 Statement.</font></font></font></div>
FAMILY: Times New Roman">Total
Australian Government general government sector net worth improved by $24.5 40
billion in 2007-08 to around $71.2 billion, largely reflecting the strong
budget
surplus. Net debt also improved, falling by $15.5 billion in 2007-08 to
around -$42.9 billion or -3.8% of GDP.</font></div>
following table sets out general government sector revenue for each of the 50
30:  Australian Government general government sector
revenue</font></div>
<div>

982
p982 22-9-2014
A 1
st
<div
align="center">
<div
align="center">
<div 30
align="center">
<div
align="center">
<div
align="center"> 35
<div
align="center">
<div
align="center">
<div 40
align="center">




50




60

983
p983 22-9-2014
A 1
st


5




15




25




35




45




55



984
p984 22-9-2014
A 1
st


5




15




25




35




45




55



985
p985 22-9-2014
A 1
st


5




15




25




35




45




55



986
p986 22-9-2014
A 1
st


5




15




25




35




45




55



987
p987 22-9-2014
A 1
st


5




15




25




35




45




55



988
p988 22-9-2014
A 1
st


5




15




25




35



<tr>

new roman">
</font></td>




<div style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-WEIGHT: 60

989
p989 22-9-2014
A 1
st

</td>



15

<div style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-WEIGHT:

</td>



35

<div style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-WEIGHT:

</td>


</tr>

<tr> 50

<td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-
</font></td>
55

60

990
p990 22-9-2014
A 1
st
SIZE: 10pt; FONT-FAMILY: times new roman">(A$

</td> 5

<td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-
10
</tr>

<tr>


times new roman">Individuals
and other withholding taxes</font></div> 20

</td>




35




50



</tr> 60

991
p991 22-9-2014
A 1
st

<tr>

5
times new roman">Gross
income tax withholding</font></div>
10
</td>

15




30




45

</tr>
50
<tr>


times new roman">Gross
other individuals income tax</font></div>

</td> 60

992
p992 22-9-2014
A 1
st



10




25




</tr>

<tr> 40


italic; FONT-FAMILY: times new roman">less:  Individuals 50
refunds</font></font></font></font></font></div>

</td>



993
p993 22-9-2014
A 1
st

5



roman">17,147</font></td> 20

25




</tr>

<tr>
45

individuals and other withholding taxes</font></div>

</td>



994
p994 22-9-2014
A 1
st

5



roman">117,614</font></td> 20

25




</tr>

<tr>
45

times new roman">Fringe 50
benefits tax</font></div>

</td>



995
p995 22-9-2014
A 1
st

5




25




</tr>

<tr>
45

times new roman">Company 50
tax</font></div>

</td>



996
p996 22-9-2014
A 1
st

5



roman">58,538</font></td> 20

25




</tr>

<tr>
45

times new roman">Superannuation 50
funds</font></div>

</td>



997
p997 22-9-2014
A 1
st

5




25




</tr>

<tr>
45

times new roman">Petroleum 50
resource rent tax</font></div>

</td>



998
p998 22-9-2014
A 1
st

5




25




</tr>

<tr>
45

income taxation revenue</font></div>

</td>



999
p999 22-9-2014
A 1
st

5




25




</tr>

<tr>
45
</font></td>


55


1000
p1000 22-9-2014
A 1
st



10




25
</tr>

<tr>


times new roman">Sales
taxes</font></div> 35

</td>




50




1001
p1001 22-9-2014
A 1
st



10

</tr>
15
<tr>


times new roman">Excise
duty</font></div>

</td> 25



35




50




1002
p1002 22-9-2014
A 1
st

</tr>

<tr>
5

times new roman">Petroleum 10
and other fuel products and crude oil</font></div>

</td>


20




35




50
</tr>

<tr>


times new roman">Other
excise</font></div> 60

1003
p1003 22-9-2014
A 1
st

</td>



15




35




</tr>

<tr>
55

excise duty</font></div>

1004
p1004 22-9-2014
A 1
st

</td>



15



roman">22,734</font></td> 30

35




</tr>

<tr>
55

times new roman">Customs 60
duty</font></div>

1005
p1005 22-9-2014
A 1
st

</td>




15




30



</tr> 40

<tr>

45
indirect taxes</font></div>
50
</td>


60

1006
p1006 22-9-2014
A 1
st



15




35

</tr> 40

<tr>

45
indirect taxation revenue</font></div>
50
</td>


60

1007
p1007 22-9-2014
A 1
st



15




35

</tr> 40

<tr>

</font></td>

50




1008
p1008 22-9-2014
A 1
st



10




</tr>

<tr> 25


taxation revenues</font></div>

</td>
35




55


1009
p1009 22-9-2014
A 1
st



15


</tr>
25
<tr>

</font></td> 30



40




55


1010
p1010 22-9-2014
A 1
st



</tr>

<tr> 10


times new roman">Sales

</td>
20




40




60

1011
p1011 22-9-2014
A 1
st


</tr>

<tr> 10


times new roman">Dividends</font></div>

</td>




35




55


1012
p1012 22-9-2014
A 1
st


</tr>

<tr> 10


times new roman">Interest
received</font></div>

</td>
20




40




60

1013
p1013 22-9-2014
A 1
st


</tr>

<tr> 10


non-taxation revenue</font></div>

</td>
20




35




50


</tr>

<tr>
60

1014
p1014 22-9-2014
A 1
st

non-taxation revenue</font></div> 5

</td>



20




40




</tr>

<tr>

1015
p1015 22-9-2014
A 1
st

</font></td>
5




20




35


</tr>

<tr>
45
solid">

revenue</font></div>

</td>
55
<td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px;
BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT:


1016
p1016 22-9-2014
A 1
st



15


BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: 25


35


</tr>
45
</table>

</div>

</div> 50

</div>

</div>
55
</div>

</div>

</div> 60

1017
p1017 22-9-2014
A 1
st

</div>

</div>
5
</div>

</div>

</div> 10

</div>

</div>
15
</div>

</div>

</div> 20

</div>

</div>
25
</div>

</div>

</div> 30

</div>

</div>
35
</div>

</div>

</div> 40

</div>

</div>
45
</div>

</div>

</div> 50

</div>

</div>
55
</div>

</div>

</div> 60

1018
p1018 22-9-2014
A 1
st

</div>

</div>
5
</div>

</div>

</div> 10

</div>

</div>
15
</div>

</div>

</div> 20

</div>

</div>
25
</div>

</div>

</div> 30

</div>

</div>
35
</div>

</div>

</div> 40

</div>

</div>
45
</div>

</div>

</div> 50

</div>

</div>
55
</div>

</div>

</div> 60

1019
p1019 22-9-2014
A 1
st

</div>

</div>
5
</div>

</div>

</div> 10

</div>

</div>
15
</div>

</div>

</div> 20

</div>

</div>
25
</div>

</div>

</div> 30

</div>

</div>
35
</div>

</div>

</div> 40

</div>

</div>
45
</div>

</div>

</div> 50

</div>

</div>
55
</div>

</div>

</div> 60

1020
p1020 22-9-2014
A 1
st

</div>

</div>
5
</div>

</div>

</div> 10

</div>

</div>
15
</div>

</div>

</div> 20

</div>

</div>
25
</div>

</div>

</div> 30

</div>

</div>
35
</div>

</div>

</div> 40

</div>

</div>
45
</div>

</div>

</div> 50

</div>

</div>
55
</div>

</div>

</div> 60

1021
p1021 22-9-2014
A 1
st

</div>

</div>
5
</div>

</div>

</div> 10

</div>

</div>
15
</div>

</div>

</div> 20

</div>

</div>
25
</div>

</div>

</div> 30

</div>

</div>
35
</div>

</div>

</div> 40

</div>

</div>
45
</div>

</div>

</div> 50

</div>

</div>
55
</div>

</div>

</div> 60

1022
p1022 22-9-2014
A 1
st

</div>

</div>
5
</div>

</div>

</div> 10

</div>

</div>
15
</div>

</div>

</div> 20

</div>

</div>
25
</div>

</div>

</div> 30

</div>

</div>
35
</div>

</div>

</div> 40

</div>

</div>
45
</div>
</div>
</div>
</div>
</div> 50
</div>
</div>
</div>
</div>
</div> 55
</div>
</div>
</div>
</div>
</div> 60
</div>

1023
p1023 22-9-2014
A 1
st
</div>
</div>
</div>
</div>
</div> 5
</div>
</div>
</div>
</div>
</div> 10
</div>
</div>
</div>
</div>
</div> 15
</div>
</div>
</div>
</div>
</div> 20
FAMILY: Times New Roman">Source:  </font>Data
for 2005-06 and 2006-07 fiscal years sourced from 2008-09 Budget, Budget Paper
No. 1, Table C1, adjusting for accounting changes to ensure consistency where
relevant.  Data for 2007-08 fiscal year sourced from Final Budget
Outcome 2007-08.</font></font></font></div> 30
FAMILY: Times New Roman">Total 35
accrual revenue in 2007-08 was around $303.7 billion.</font></div>
<div><br></div>
<div> 40
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
</div>
</div> 55
<div id="HDR">
Roman">
</font></div> 60
</div>

1024
p1024 22-9-2014
A 1
st
</div>
</div>
<div><br></div>
below provides information on general government sector expenses by function
for
each of the 2005-06, 2006-07 and 2007-08 fiscal years.</font></div>
31:  Australian Government general government sector expenses by 15
function</font></div>
<div>
<div align="left">
<table
cellpadding="0" cellspacing="0" width="100%"> 45
<tr>
<td
FAMILY: times new roman"> 50
</font></td>
<td
<td
align="left" valign="bottom" width="1%" style="BORDER-TOP: black 0.5pt solid;

1025
p1025 22-9-2014
A 1
st
<td
align="right" valign="bottom" width="9%" style="BORDER-TOP: black 0.5pt solid;
<div
style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; 5
</td>
<td
align="left" nowrap valign="bottom" width="1%" style="BORDER-TOP: black 0.5pt
<td
<td
<td 20
align="right" valign="bottom" width="9%" style="BORDER-TOP: black 0.5pt solid;
<div
style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-WEIGHT: bold;
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2006-07</font></div> 25
</td>
<td
<td
<td 35
<td
align="right" valign="bottom" width="9%" style="BORDER-TOP: black 0.5pt solid; 40
<div
</td> 45
<td
</tr> 50
<tr>
<td
</font></td> 55
<td
valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold;
<td
colspan="10" valign="bottom" width="34%"> 60

1026
p1026 22-9-2014
A 1
st
<div
</td>
<td
</tr>
<tr>
<td
<div 15
FONT-FAMILY: times new roman">General
public services</font></div>
</td> 20
<td
<td
<td
<td 30
<td
<td
<td
<td
<td 45
<td
<td
<td
</tr>
<tr>
<td

1027
p1027 22-9-2014
A 1
st
<div
new roman">Legislative
and executive affairs</font></div> 5
</td>
<td
<td 10
<td
SIZE: 10pt; FONT-FAMILY: times new roman">768</font></td> 15
<td
<td
<td
<td 25
SIZE: 10pt; FONT-FAMILY: times new roman">870</font></td>
<td
<td
<td
<td
<td 40
</tr>
<tr>
<td 45
<div
new roman">Financial 50
and fiscal affairs</font></div>
</td>
<td
<td
<td

1028
p1028 22-9-2014
A 1
st
<td
<td
<td
<td 10
<td
<td
<td
<td
<td 25
</tr>
<tr>
<td 30
<div
new roman">Foreign 35
affairs and economic aid</font></div>
</td>
<td
<td
<td
<td
<td 50
<td
<td
<td

1029
p1029 22-9-2014
A 1
st
<td
<td
<td
<td 10
</tr>
<tr>
<td 15
<div
new roman">General 20
research</font></div>
</td>
<td
<td
<td
<td
<td 35
<td
<td
<td
<td
<td 50
<td
<td
</tr>
<tr> 60

1030
p1030 22-9-2014
A 1
st
<td
<div
new roman">General
services</font></div>
</td>
<td
<td
<td 15
<td
<td
<td
<td
<td 30
<td
<td
<td
<td
</tr> 45
<tr>
<td
<div
new roman">Governmental
superannuation benefits</font></div>
</td>
<td 55
<td

1031
p1031 22-9-2014
A 1
st
<td
<td
<td
<td 10
<td
<td
<td
<td
<td 25
<td
</tr>
<tr>
<td
<div 35
FONT-FAMILY: times new roman">Defence</font></div>
</td>
<td 40
<td
<td
<td
<td
<td 55
<td

1032
p1032 22-9-2014
A 1
st
<td
<td
<td
<td 10
<td
</tr>
<tr>
<td
<div 20
FONT-FAMILY: times new roman">Public
order and safety</font></div>
</td> 25
<td
<td
<td
<td 35
<td
<td
<td
<td
<td 50
<td
<td
<td

1033
p1033 22-9-2014
A 1
st
</tr>
<tr>
<td
<div 5
FONT-FAMILY: times new roman">Education</font></div>
</td>
<td 10
<td
<td
<td
<td
<td 25
<td
<td
<td
<td
<td 40
<td
</tr>
<tr>
<td
<div 50
FONT-FAMILY: times new roman">Health</font></div>
</td>
<td 55
<td

1034
p1034 22-9-2014
A 1
st
<td
<td
<td
<td 10
<td
<td
<td
<td
<td 25
<td
</tr>
<tr>
<td
<div 35
FONT-FAMILY: times new roman">Social
security and welfare</font></div>
</td> 40
<td
<td
<td
<td 50
<td
<td
<td

1035
p1035 22-9-2014
A 1
st
<td
<td
<td
<td 10
<td
</tr>
<tr>
<td
<div 20
FONT-FAMILY: times new roman">Housing
and community amenities</font></div>
</td> 25
<td
<td
<td
<td 35
<td
<td
<td
<td
<td 50
<td
<td
<td

1036
p1036 22-9-2014
A 1
st
</tr>
<tr>
<td
<div 5
FONT-FAMILY: times new roman">Recreation
and culture</font></div>
</td> 10
<td
<td
<td
<td 20
<td
<td
<td
<td
<td 35
<td
<td
<td
</tr>
<tr>
<td
<div
FONT-FAMILY: times new roman">Fuel
and energy</font></div> 55
</td>
<td

1037
p1037 22-9-2014
A 1
st
<td
<td
<td
<td 10
<td
<td
<td
<td
<td 25
<td
<td
</tr>
<tr> 35
<td
<div
FONT-FAMILY: times new roman">Agriculture,
</td>
<td
<td
<td 50
<td
<td
<td

1038
p1038 22-9-2014
A 1
st
<td
<td
<td
<td 10
<td
<td
</tr>
<tr> 20
<td
<div
FONT-FAMILY: times new roman">Mining,
manufacturing and construction</font></div>
</td>
<td
<td
<td 35
<td
<td
<td
<td
<td 50
<td
<td
<td

1039
p1039 22-9-2014
A 1
st
<td
</tr>
<tr> 5
<td
<div
FONT-FAMILY: times new roman">Transport
and communications</font></div>
</td>
<td
<td
<td 20
<td
<td
<td
<td
<td 35
<td
<td
<td
<td
</tr> 50
<tr>
<td
<div
FONT-FAMILY: times new roman">Other
economic affairs</font></div>
</td>

1040
p1040 22-9-2014
A 1
st
<td
<td
<td
<td 10
<td
<td
<td
<td
<td 25
<td
<td
<td
</tr>
<tr>
<td
<div
new roman">Tourism
and area promotion</font></div> 45
</td>
<td
<td 50
<td
<td
<td

1041
p1041 22-9-2014
A 1
st
<td
<td
<td
<td 10
<td
<td
<td
</tr>
<tr>
<td
<div
new roman">Labour
and employment affairs</font></div> 30
</td>
<td
<td 35
<td
<td
<td
<td
<td 50
<td
<td
<td

1042
p1042 22-9-2014
A 1
st
<td
<td
</tr>
<tr>
<td
<div
new roman">Other
economic affairs</font></div> 15
</td>
<td
<td 20
<td
<td
<td
<td
<td 35
<td
<td
<td
<td
<td 50
</tr>
<tr>
<td 55
<div
FONT-FAMILY: times new roman">Other 60
purposes</font></div>

1043
p1043 22-9-2014
A 1
st
</td>
<td
<td 5
<td
<td
<td
<td
<td 20
<td
<td
<td
<td
<td 35
</tr>
<tr>
<td 40
<div
new roman">Public 45
debt interest</font></div>
</td>
<td
<td
<td
<td

1044
p1044 22-9-2014
A 1
st
<td
<td
<td
<td 10
<td
<td
<td
<td
</tr> 25
<tr>
<td
<div
new roman">Nominal
superannuation interest</font></div>
</td>
<td 35
<td
<td
<td
<td
<td 50
<td
<td
<td

1045
p1045 22-9-2014
A 1
st
<td
<td
<td
</tr> 10
<tr>
<td
<div
new roman">General
purpose intergovernmental transactions</font></div>
</td>
<td 20
<td
<td
<td
<td
<td 35
<td
<td
<td
<td
<td 50
<td
</tr>
<tr>
<td
<div 60

1046
p1046 22-9-2014
A 1
st
new roman">Natural
disaster relief</font></div>
</td>
<td 5
<td
<td
<td
<td
<td 20
<td
<td
<td
<td
<td 35
<td
</tr>
<tr>
<td
align="left" valign="bottom" width="64%" style="PADDING-BOTTOM: 1px">
<div 45
new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new
roman">Contingency 50
reserve<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN:
</td>
<td
<td

1047
p1047 22-9-2014
A 1
st
<td
<td 5
<td
<td
<td
<td 20
<td
<td
<td
<td 35
</tr>
<tr> 40
<td
solid">
<div
FONT-FAMILY: times new roman">Total
expenses</font></div>
</td>
<td 50
align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px; BORDER-
<td
<td

1048
p1048 22-9-2014
A 1
st
<td
<td 5
<td
<td
<td
<td
<td 25
<td
<td
BORDER-BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: 35
</tr>
</table>
</div>
</div> 40
</div>
</div>
</div>
</div>
</div> 45
</div>
</div>
</div>
</div>
</div> 50
</div>
</div>
</div>
</div>
</div> 55
</div>
</div>
</div>
</div>
</div> 60
</div>

1049
p1049 22-9-2014
A 1
st
</div>
</div>
</div>
</div>
<div> 5
<div>
<div align="left">
<div align="left">
<div align="left">
<tr>
TOP: medium none; PADDING-LEFT: 0pt">
INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="left"><font
roman">(a)</font></div>
</td>
<td align="left" valign="top" width="98%" style="BORDER- 20
TOP: medium none">
FONT-SIZE: 8pt; FONT-FAMILY: times new roman">Asset
sale related expenses are treated as a component of the contingency 25
reserve.</font></div>
</td>
</tr>
</table>
</div> 30
</div>
</div>
</div>
</div>
</div> 35
RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt;
FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 8pt;
FONT-FAMILY: Times New Roman"><font style="FONT-SIZE: 8pt; FONT-FAMILY: Times
New Roman"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-STYLE: italic; 40
FONT-FAMILY: Times New Roman">Source:  </font>Data
for 2005-06 fiscal year sourced from Final Budget Outcome 2005-06, adjusting
for
accounting changes to ensure consistency where relevant.  Data for
2006-07 fiscal year sourced from Final Budget Outcome 2006-07, adjusting for 45
2007-08 fiscal year sourced from Final Budget Outcome
2007-08.</font></font></font></div>
FAMILY: Times New Roman">Total
accrual expenses were around $280.1 billion in 2007-08.</font></div>
<div><br></div>
<div>
<div id="FTR">

1050
p1050 22-9-2014
A 1
st
Roman">
</font></div>
</div> 5
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div>
</div> 20
<div><br></div>
FAMILY: Times New Roman">General
government sector net capital investment by function is set out in the table 25
below.</font></div>
<div>
<div align="justify">
<div align="justify"> 35
<div
align="justify">
<table
<tr> 60

1051
p1051 22-9-2014
A 1
st
<td
colspan="12" valign="bottom" style="BORDER-BOTTOM: black 1px solid">
<div
align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 5
10pt; FONT-FAMILY: times new roman">Table
32: Australian Government general government sector net capital
investment by function</font></div>
</td>
<td 10
align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM:
black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE:
</tr>
<tr> 15
<td
</font></td>
<td 20
<td
align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 1px"><font 25
<td
solid"> 30
<div
</td>
<td 35
<td
<td
<td
solid">
<div 50
</td>
<td
<td

1052
p1052 22-9-2014
A 1
st
<td
<td 5
solid">
<div
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007-08</font></div> 10
</td>
<td
</tr>
<tr>
<td
valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY:
times new roman"> 20
</font></td>
<td
<td 25
colspan="10" valign="bottom">
<div
10pt; FONT-FAMILY: times new roman">(A$ 30
</td>
<td
align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-WEIGHT:
</tr>
<tr>
<td
<div 40
new roman">General
public services</font></div>
</td> 45
<td
<td
<td
<td 55
<td

1053
p1053 22-9-2014
A 1
st
<td
<td
<td
<td 10
<td
<td
<td
</tr>
<tr>
<td
<div
new roman">Defence</font></div>
</td> 30
<td
<td
<td
<td 40
<td
<td
<td
<td
<td 55
<td

1054
p1054 22-9-2014
A 1
st
<td
<td
</tr>
<tr>
<td
<div
new roman">Public
order and safety</font></div> 15
</td>
<td
<td 20
<td
<td
<td
<td
<td 35
<td
<td
<td
<td
<td 50
</tr>
<tr>
<td 55
<div
new roman">Education</font></div> 60
</td>

1055
p1055 22-9-2014
A 1
st
<td
<td
<td
<td 10
<td
<td
<td
<td
<td 25
<td
<td
<td
</tr>
<tr>
<td
<div
new roman">Health</font></div>
</td> 45
<td
<td
<td
<td 55
<td

1056
p1056 22-9-2014
A 1
st
<td
<td
<td
<td 10
<td
<td
<td
</tr>
<tr>
<td
<div
new roman">Social
security and welfare</font></div> 30
</td>
<td
<td 35
<td
<td
<td
<td
<td 50
<td
<td
<td

1057
p1057 22-9-2014
A 1
st
<td
<td
</tr>
<tr>
<td
<div
new roman">Housing
and community amenities</font></div> 15
</td>
<td
<td 20
<td
<td
<td
<td
<td 35
<td
<td
<td
<td
<td 50
</tr>
<tr>
<td 55
<div
new roman">Recreation 60
and culture</font></div>

1058
p1058 22-9-2014
A 1
st
</td>
<td
<td 5
<td
<td
<td
<td
<td 20
<td
<td
<td
<td
<td 35
</tr>
<tr>
<td 40
<div
new roman">Fuel 45
and energy</font></div>
</td>
<td
<td
<td
<td

1059
p1059 22-9-2014
A 1
st
<td
<td
<td
<td 10
<td
<td
<td
<td
</tr> 25
<tr>
<td
<div
new roman">Agriculture,
</td>
<td 35
<td
<td
<td
<td
<td 50
<td
<td
<td

1060
p1060 22-9-2014
A 1
st
<td
<td
<td
</tr> 10
<tr>
<td
<div
new roman">Mining,
manufacturing and construction</font></div>
</td>
<td 20
<td
<td
<td
<td
<td 35
<td
<td
<td
<td
<td 50
<td
</tr>
<tr>
<td
<div 60

1061
p1061 22-9-2014
A 1
st
new roman">Transport
and communications</font></div>
</td>
<td 5
<td
<td
SIZE: 10pt; FONT-FAMILY: times new roman">-1</font></td>
<td
<td
<td 20
<td
<td
<td
<td
<td 35
<td
</tr>
<tr>
<td
<div 45
new roman">Other
economic affairs</font></div>
</td> 50
<td
<td
<td

1062
p1062 22-9-2014
A 1
st
<td
<td
<td
<td 10
<td
<td
<td
<td
<td 25
</tr>
<tr>
<td 30
align="left" valign="bottom" width="64%" style="PADDING-BOTTOM: 1px">
<div
new roman">Other 35
purposes</font></div>
</td>
<td
<td
<td 45
<td
<td
<td
<td 60

1063
p1063 22-9-2014
A 1
st
<td
<td
<td 10
<td
<td
</tr>
<tr>
<td
solid">
<div
FONT-FAMILY: times new roman">Total 30
net capital investment</font></div>
</td>
<td
BOTTOM: black 1px solid"><font style="DISPLAY: inline; FONT-WEIGHT: bold; 35
<td
<td
<td 45
<td
align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px; BORDER- 50
<td
<td

1064
p1064 22-9-2014
A 1
st
<td
<td 5
<td
<td
<td
</tr>
</table>
</div>
</div>
</div> 25
</div>
</div>
</div>
</div>
</div> 30
</div>
</div>
</div>
</div>
</div> 35
</div>
</div>
</div>
</div>
</div> 40
</div>
</div>
</div>
</div>
</div> 45
</div>
</div>
</div>
</div>
</div> 50
FAMILY: Times New Roman">Source:  </font>Data
for 2005-06 fiscal year sourced from the Final Budget Outcome 2005-06,
adjusting
for accounting changes to ensure consistency where relevant.  Data
for 60
2006-07 fiscal year sourced from Final Budget Outcome 2006-07, adjusting for

1065
p1065 22-9-2014
A 1
st
2007-08 fiscal year sourced from Final Budget Outcome
2007-08.</font></font></font></div>
FAMILY: Times New Roman">Total net
capital investment for 2007-08 was around $2.6 billion.</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pensions
and Superannuation</font></div> 15
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Australia's 20
Retirement Income System</font></div>
retirement income system consists of three "pillars":</font></div>
<div> 30
width="100%">
<tr valign="top">
</td> 40
<td>
10pt; FONT-FAMILY: times new roman">a
taxpayer-funded means-tested age pension for people who are unable to
fully support themselves in 45
retirement;</font></div>
</td>
</tr>
</table>
</div> 50
</div>
<div>
width="100%">
<tr valign="top">

1066
p1066 22-9-2014
A 1
st
</td>
<td>
10pt; FONT-FAMILY: times new roman">a
minimum level of compulsory employer superannuation contributions made
in
respect of those in the workforce;
and</font></div> 10
</td>
</tr>
</table>
</div>
</div> 15
<div>
width="100%">
<tr valign="top">
</td>
<td>
10pt; FONT-FAMILY: times new roman">voluntary
private superannuation and other
savings.</font></div>
</td>
</tr> 35
</table>
</div>
</div>
FAMILY: Times New Roman">The age
pension has been the cornerstone of Australia's retirement income system since
1909.  The age pension provides a modest retirement for those people 45
who are unable to fully support themselves.  The maximum single rate
age pension is currently $14,615 ($24,414 for a couple).  The actual
amount an eligible person receives depends on their other income and
assets.</font></div>
FAMILY: Times New Roman">Employers
are currently required to provide a prescribed minimum level of superannuation 55
support each year for each of their eligible employees. The prescribed minimum
level of support is 9% of the employee's earnings. This minimum prescribed
amount is known as the Superannuation Guarantee.  Payments under the
Superannuation Guarantee are contributed to a complying superannuation fund or
retirement savings account to be accessed by the employee upon 60
retirement.</font></div>

1067
p1067 22-9-2014
A 1
st
FAMILY: Times New Roman">Voluntary 5
superannuation savings are encouraged through concessional taxation treatment
and other incentives.</font></div>
FAMILY: Times New Roman">As of
September 30, 2008, APRA estimated that total Australian superannuation assets
amounted to $1.15 trillion.</font></div>
Roman">Superannuation 20
for Commonwealth Employees</font></div>
Commonwealth of Australia operates and administers three main civilian
superannuation schemes for Commonwealth sector employees. The current scheme
is
the Public Sector Superannuation Accumulation Plan (the "PSSAP") which was 30
established by a trust deed under the provisions of the <font style="FONT-
STYLE: italic">Superannuation Act 2005</font>.</font></div>
<div><br></div> 35
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
</div> 50
</div>
<div id="HDR">
Roman"> 55
</font></div>
</div>
</div>
</div>
<div><br></div> 60

1068
p1068 22-9-2014
A 1
st
FAMILY: Times New Roman">PSSAP is
a fully funded accumulation scheme.  PSSAP commenced on 1 July 2005
upon the closure of the Public Sector Superannuation Scheme (the "PSS") to new 5
entrants.</font></div>
FAMILY: Times New Roman">The PSS
commenced on 1 July 1990 upon the closure of the Commonwealth Superannuation
Scheme (the "CSS") to new entrants.</font></div>
FAMILY: Times New Roman">At 30
June 2008, there were 22,162 contributors to the CSS and 132,274 contributors
to 20
the PSS and benefits were being paid to 115,431 CSS and 16,453 PSS
pensioners.</font></div>
Commonwealth of Australia's estimated unfunded liability at 30 June 2008 for
the
CSS and PSS schemes was $108 billion.</font></div> 30
FAMILY: Times New Roman">In 2006, 35
the Commonwealth established an investment fund known as the Future Fund to
assist future Australian governments meet the cost of public sector
superannuation liabilities by delivering investment returns on contributions
to
the Fund.  As of 31 December 2008, the value of the assets held by 40
the
Future Fund was $59.62 billion.</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Taxation</font></div>
FAMILY: Times New Roman">Commonwealth,
State and Local Governments levy taxes in Australia.  Australia has
no
estate or gift taxes, or separate social security levy, although taxpayers pay 55
a
Medicare levy of 1.5% on taxable income.</font></div>

1069
p1069 22-9-2014
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st
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Australia's
Future Tax System</font></div>
FAMILY: Times New Roman">On 13 May
2008, the Treasurer announced a review of Australia's tax and transfer system 10
to
recommend how Australia could deal with the demographic, social, economic and
environmental challenges of the 21st century.  The review
encompasses
Australian Government and state taxes, but must reflect Government policy not 15
to
increase the rate or broaden the base of the goods and services tax ("GST"),
and
interactions with the transfer system.  A review panel oversees the
review, consults with the public and is due to report by the end of 20
2009.  The Government has asked the review panel to bring forward
its
consideration of retirement income to March 2009, to follow a report to
Government on pensions due in February 2009.</font></div>
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Personal
income tax</font></div> 30
Australian Government levies personal income tax, generally using the
individual
as the unit of assessment for the system.  Income subject to tax
assessment includes salary and wage income, allowances, dividends, interest,
capital gains, business income, pensions, rents, royalties, partnership income 40
and distributions from trusts.</font></div>
personal income tax system is based on self assessment.  Under the
pay-as-you-go system, individuals pay instalments of their expected tax
liability on their income from employment, business, or investment for the
current income year through withholdings and instalment 50
payments.  Australian residents for tax purposes pay tax on income
derived from within Australia and overseas.  However, previously
taxed
income from overseas either is exempt from Australian tax or attracts a tax
credit.</font></div> 55
FAMILY: Times New Roman">From 1 60
July 2008, personal income tax cuts came into effect, worth $46.7 billion over

1070
p1070 22-9-2014
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st
the next four years.  These income tax cuts target low- and
middle-income earners.  Income tax rates and thresholds vary for
2008-09, 2009-10 and 2010-11 (Table 33).</font></div>
33:  Personal income tax rates and thresholds for
residents</font></div> 10
<div>
<div align="left">
<tr>
<td colspan="3" valign="top" width="20%" style="BORDER-TOP: 15
July 2008 to 30 June 2009</font></div>
</div>
</td>
<td colspan="3" valign="top" width="20%" style="BORDER-TOP:
July 2009 to 30 June 2010</font></div> 35
</div>
</td>
<td colspan="3" valign="top" width="20%" style="BORDER-TOP:
July 2010 to 30 June 2011</font></div>
</div>
</td> 50
</tr>
<tr>
solid">
roman">Taxable 60
income (A$)</font></div>

1071
p1071 22-9-2014
A 1
st
</div>
</td>
solid">
inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Rate
(%)</font></div>
</div>
</td> 15
solid"> 20
roman">Taxable
</div>
</td>
solid">
inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Rate
(%)</font></div> 40
</div>
</td>
solid">
roman">Taxable
</div> 55
</td>
solid">

1072
p1072 22-9-2014
A 1
st
inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Rate 5
(%)</font></div>
</div>
</td>
</tr>
<tr> 10
10pt; FONT-FAMILY: times new roman">0 –
6,000</font></div> 15
</td>
</td>
10pt; FONT-FAMILY: times new roman">0 –
6,000</font></div> 30
</td>
</td>
– 6,000</font></div> 45
</td>
</td>
</tr>
<tr> 55
10pt; FONT-FAMILY: times new roman">6,001
– <font style="DISPLAY: inline; FONT-WEIGHT: 60
bold">34,000</font></font></div>

1073
p1073 22-9-2014
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st
</td>
</td>
– <font style="DISPLAY: inline; FONT-WEIGHT: 15
</td>
</td>
10pt; FONT-FAMILY: times new roman">6,001 30
– <font style="DISPLAY: inline; FONT-WEIGHT:
</td>
</td> 40
</tr>
<tr>
bold">34,001</font> –
80,000</font></div>
</td>
</td>

1074
p1074 22-9-2014
A 1
st
bold">35,001</font> –
80,000</font></div>
</td>
</td>
bold">37,001</font> –
80,000</font></div>
</td> 20
</td>
</tr>
<tr>
– 180,000</font></div>
</td> 35
</td>
– 180,000</font></div>
</td> 50
roman">38</font></div>
</td>

1075
p1075 22-9-2014
A 1
st
– 180,000</font></div> 5
</td>
roman">37</font></div>
</td> 15
</tr>
<tr>
black 1px solid">
+</font></div>
</td>
black 1px solid">
</td>
black 1px solid">
+</font></div>
</td>
black 1px solid">
</td>
black 1px solid">
10pt; FONT-FAMILY: times new roman">180,001 60
+</font></div>

1076
p1076 22-9-2014
A 1
st
</td>
black 1px solid">
</td> 10
</tr>
</table>
</div>
</div>
<div> 15
FAMILY: Times New Roman">Source</font>:  2008-09 20
Budget, Budget Paper No. 1.</font></font></font></div>
</div>
<div>
</div> 25
</div>
FAMILY: Times New Roman">Most
residents also pay a Medicare levy rate of 1.5% of taxable
income.</font></div>
<div><br></div>
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR"> 40
Roman">
</font></div>
</div> 45
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div>
</div> 60
<div><br></div>

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FAMILY: Times New Roman">Australian
resident taxpayers may be eligible for the low income tax offset (the "LITO")
to 5
reduce tax paid by low- and middle-income earners.  As part of the
tax
cuts, the LITO increased from $750 in 2007-08 to $1,200 from 1 July
2008.  From 1 July 2009, the LITO will increase to $1,350 and from 1
July 2010 it will increase to $1,500.  Taxpayers eligible for the 10
full
LITO will not pay income tax until their annual income exceeds $14,000 for
2008-09, $15,000 for 2009-10 and $16,000 for 2010-11.</font></div>
FAMILY: Times New Roman">Taxpayers
ineligible for the full LITO also benefit from its increase.  The
LITO 20
begins to phase out at a rate of four cents for each dollar of income over
$30,000, so some taxpayers with income over $30,000 may still benefit from
some
LITO.  For example, taxpayers will be able to receive some LITO on
incomes of $60,000 for 2008-09, $63,750 for 2009-10 and $67,500 for 2010-11, 25
thereby reducing their income tax liability.</font></div>
FAMILY: Times New Roman">Superannuation
benefits paid from a taxed fund are tax-free for people aged 60 and
over.</font></div>
general, employers also pay tax (at 46.5%) on the grossed-up (i.e., tax
inclusive) value of fringe benefits they provide to employees.</font></div> 40
FAMILY: Times New Roman">Foreign 45
residents are taxed differently to Australian residents.  See
"—Australia's jurisdiction to tax:  source and residence" in
this
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Business
tax arrangements</font></div> 55
STYLE: italic; FONT-FAMILY: Times New Roman">Corporate 60
tax rate</font></div>

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corporate tax rate is 30%.  This applies also to the corporate
profits
of a branch of an overseas company.</font></div>
STYLE: italic; FONT-FAMILY: Times New Roman">Dividend
imputation</font></div>
dividend imputation system ensures company income distributed to resident 20
individual shareholders is not double taxed.  Franked dividends,
effectively paid from previously taxed company income, carry an imputation
credit for shareholders.</font></div>
STYLE: italic; FONT-FAMILY: Times New Roman">Capital
Gains Tax</font></div>
FAMILY: Times New Roman">Where
assets are held for at least 12 months, capital gains tax applies to 50% of 35
capital gains on the assets for individuals and trusts, and 66 2/3% for
superannuation funds.  A range of business restructures, including
scrip-for-scrip takeovers between companies and between trusts, can roll-over
their capital gain and several capital gains tax concessions apply to capital
gains on the disposal of active small business assets. The capital gains tax 40
discount does not apply to gains made on assets that are held on revenue
account
or as trading stock.</font></div>
STYLE: italic; FONT-FAMILY: Times New Roman">Research
and Development</font></div>
FAMILY: Times New Roman">Eligible
research and development ("R&D") expenditure attracts a 125% deduction 55
and,
for eligible companies, a 175% tax concession for additional R&D
expenditure
undertaken above the average level for the previous three years.</font></div>

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STYLE: italic; FONT-FAMILY: Times New Roman">Primary
production</font></div>
FAMILY: Times New Roman">Special
provisions for primary producers include income averaging.</font></div> 10
STYLE: italic; FONT-FAMILY: Times New Roman">Capital 15
allowances</font></div>
FAMILY: Times New Roman">A uniform
capital allowance system, based on the effective life of assets, applies
except
where specific treatments apply (for example, for primary producers,
Australian 25
films, computer software and R&D).</font></div>
FAMILY: Times New Roman">Amortisation
at 4% per year applies to the capital costs of income-producing buildings for
eligible industrial activities; hotels, motels and guest houses containing at
least ten bedrooms; and apartments, units or flats where the taxpayer owns at
least nine other units in the building.</font></div> 35
FAMILY: Times New Roman">Amortisation 40
at 2.5% per year applies to the capital cost of other income-producing
buildings
and structural improvements, including roads, dams, bridges and buildings used
for R&D activities.</font></div>
<div><br></div>
<div>
<div id="FTR">
Roman">
</font></div> 55
</div>

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</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div>
</div> 10
<div><br></div>
STYLE: italic; FONT-FAMILY: Times New Roman">Investment
allowances</font></div> 15
Nation Building and Jobs Plan, a temporary investment allowance in the form of
an additional tax deduction of 10% of the asset's cost is expected to be
available for investments in tangible assets costing at least $10,000 (or at
least $1,000, in the case of small businesses) where the taxpayer starts to
hold 25
or starts to construct the asset between 13 December 2008 and 31 December 2009
and has the asset installed ready for use by 31 December
2010.  Where
the taxpayer starts to hold or construct the asset before 30 June 2009 and has
the asset installed ready for use by 30 June 2010, the tax deduction is 30
expected
to be at the higher rate of 30% of the asset's cost.  The investment
allowance is also expected to be available for expenditure above the threshold
on existing assets.</font></div>
STYLE: italic; FONT-FAMILY: Times New Roman">Small
businesses</font></div> 40
FAMILY: Times New Roman">Small 45
businesses, with an aggregated annual turnover of less than $2 million, can
access concessions covering income tax (including capital gains tax and
simplified capital allowances rules), goods and services tax, pay-as-you-go
instalments and fringe benefits tax.</font></div>
STYLE: italic; FONT-FAMILY: Times New Roman">Taxation
of Financial Arrangements Stages 3 and 4</font></div> 55
FAMILY: Times New Roman">As part 60
of the 2008-09 Budget, the Government announced it would proceed with Taxation

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of Financial Arrangements ("TOFA") Stages 3 and 4 covering, among other
matters,
accruals and other tax-timing rules as well as character-hedging rules. The
<font style="DISPLAY: inline; FONT-STYLE: italic">Tax Laws Amendment (Taxation
of Financial Arrangements) Bill 2008</font>, which contains provisions in 5
respect of stages 3 and 4 of the TOFA reforms, was introduced into Parliament
on
4 December 2008.</font></div>
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Indirect
tax</font></div>
STYLE: italic; FONT-FAMILY: Times New Roman">Goods
and Services Tax</font></div> 20
FAMILY: Times New Roman">Goods and 25
services tax ("GST") is a broad based value-added tax on most goods and
services
consumed in Australia.  It applies at a uniform rate of 10% on the
supply or importation of taxable goods and services, based on the selling
price.</font></div> 30
Australian Government collects GST revenue and distributes it to the States
and
Territories.  The GST rate and base can only be changed with
unanimous
support from State and Territory governments.</font></div> 40
FAMILY: Times New Roman">GST is 45
levied on businesses at all stages of the production
process.  Businesses are generally able to claim a credit for GST
paid
on business inputs.</font></div>
FAMILY: Times New Roman">Exemptions
from GST include health, education and basic food.  GST is not 55
levied
on residential rents and financial services, but suppliers of these products
and
services generally cannot claim a credit for GST paid on production
inputs.</font></div> 60

1082
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STYLE: italic; FONT-FAMILY: Times New Roman">Excise 5
and customs duty</font></div>
FAMILY: Times New Roman">Excises
are specific taxes on goods, including liquid fuel, alcohol (except wine
products) and tobacco.</font></div>
FAMILY: Times New Roman">An excise
equivalent customs tariff applies to imports of excisable goods and is
collected 20
at the border usually from importers or owners of the
goods.  Additionally, customs tariffs apply to a range of imported
textiles, clothing and footwear, passenger motor vehicles and other imported
goods including foods, chemicals, industrial supplies, machinery and
equipment, 25
and household electrical items.  Businesses are not credited for
tariffs paid on their imports.</font></div>
FAMILY: Times New Roman">Excise
rates for tobacco and alcohol (except wine products) are indexed twice a year
to
the consumer price index.</font></div> 35
FAMILY: Times New Roman">Tobacco 40
is taxed on a per stick basis for cigarettes and cigars, or by overall weight
of
tobacco for other products.  Beer and spirits are taxed on alcohol
volume, with different beers attracting different rates.  Spirits
attract a higher rate than full strength beer.</font></div> 45
FAMILY: Times New Roman">Liquid 50
fuels, primarily petrol and diesel, attract an excise of 38.143 cents per
litre,
which is not indexed.  Other fuels attract different
rates.  Fuel tax credits apply to fuel used for certain off-road
uses 55
and for on-road use in heavy vehicles.</font></div>
<div><br></div>
<div> 60

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MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
</div>
</div> 15
<div id="HDR">
Roman">
</font></div> 20
</div>
</div>
</div>
<div><br></div>
FAMILY: Times New Roman">With the
introduction of the Carbon Pollution Reduction Scheme, the rate of fuel tax
will
be cut on 1 July 2010 based on the effect of pricing the emissions of diesel. 30
The cut will apply to fuels like petrol and diesel that currently attract an
excise of 38.143 cents per litre.</font></div>
STYLE: italic; FONT-FAMILY: Times New Roman">Wine
equalisation tax</font></div>
FAMILY: Times New Roman">Wine is
not subject to excise, but attracts a separate wine equalisation tax ("WET"),
which applies as a percentage of the value of wine products.  The 45
producer, importer or wholesaler normally pays 29% of the wholesale price of
wine at the last wholesale sale of the wine.</font></div>
FAMILY: Times New Roman">A
$500,000 WET producer rebate reduces the WET paid by small wine producers to
zero.</font></div>
STYLE: italic; FONT-FAMILY: Times New Roman">Luxury
car tax</font></div> 60

1084
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luxury car tax generally applies to the value of a domestic or imported
passenger vehicle exceeding a threshold, $57,180 (in the year ending 30 June
2009), at a rate of 33% from 1 July 2008.</font></div>
FAMILY: Times New Roman">Luxury
car tax concessions are available to certain fuel efficient cars and four
wheel 15
drives acquired by primary producers and eligible tourist
operators.</font></div>
STYLE: italic; FONT-FAMILY: Times New Roman">Resource
taxes and royalties</font></div>
FAMILY: Times New Roman">Specific
resource taxes and royalties apply to the extraction of oil and
gas.</font></div> 30
STYLE: italic; FONT-FAMILY: Times New Roman">Other 35
taxes</font></div>
FAMILY: Times New Roman">A range
of Australian government departments administer a broad range of smaller
taxes,
including charges for notional cost recovery, penalties, levies and licence
fees.</font></div> 45
FAMILY: Times New Roman">Agricultural 50
products attract more than 60 separate levies; this revenue funds services and
research in specific agricultural industries.</font></div>
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Australia's
jurisdiction to tax: source and residence</font></div>

1085
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taxation of income in Australia is principally determined on the basis of
whether the entity is an Australian resident or a foreign resident for tax 5
purposes. Australian residents are taxed on their worldwide income whereas
foreign residents are taxed only on income sourced in Australia.</font></div>
STYLE: italic; FONT-FAMILY: Times New Roman">Double
taxation</font></div>
FAMILY: Times New Roman">Double
taxation is caused by overlapping tax jurisdictions arising from the
application 20
of the source and residence principles noted above. For example, two countries
may seek to tax the same income. Relief from double taxation is typically
provided under domestic law by either: (i) exempting the income from domestic
tax, or (ii) crediting the foreign tax paid on that income against domestic
tax. 25
Australia also allows a deduction for foreign tax paid under certain limited
circumstances. In addition to domestic law, bilateral tax treaties contain
rules
designed to eliminate double taxation.</font></div>
tax treaties allocate taxing rights between the residence (of the person) and 35
source (of the income) countries and require the former to eliminate double
taxation when there are competing taxing rights. They also provide an agreed
basis for allocating the income and expenses of multinational groups operating
in both countries. In addition, they authorise administrative cooperation to
prevent fiscal evasion and to assist in the collection of tax 40
debts.  Australia has 42 bilateral tax treaties, based on the <font
style="DISPLAY: inline; FONT-STYLE: italic">OECD Model Tax Convention on
Income
and on Capital</font>.</font></div>
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Integrity
rules</font></div> 50
STYLE: italic; FONT-FAMILY: Times New Roman">Thin 55
capitalisation</font></div>
FAMILY: Times New Roman">Thin

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capitalisation rules aim to prevent undue exploitation by Australian and
foreign
multinational enterprises of the different tax treatment that applies to the
payment of interest versus dividends; taxpayers can deduct interest but not
dividends.  The rules prevent excessive debt financing (as opposed 5
to
equity financing) of Australian entities, by disallowing the interest expense
if
the debt finance exceeds certain limits.  The rules apply
to:</font></div> 10
0pt">
<div id="FTR"> 15
</div>
</div>
</div>
</div> 25
<div id="HDR">
<div id="GLHDR" style="WIDTH: 100%" align="right">
</div>
</div>
</div> 30
<div>
width="100%">
<tr valign="top">
FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT- 40
FAMILY: symbol, serif"><font style="DISPLAY: inline; FONT-SIZE:
10pt">·</font></font></font></div>
</td>
<td>
10pt; FONT-FAMILY: Times New Roman">Australian
entities that operate internationally and some of their
associates;</font></font></font></div> 50
</td>
</tr>
</table>
</div>
</div> 55
<div>
width="100%">

1087
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<tr valign="top">
</td>
<td>
10pt; FONT-FAMILY: times new roman">Australian 10
entities that are foreign controlled;
and</font></div>
</td>
</tr>
</table> 15
</div>
</div>
<div> 20
width="100%">
<tr valign="top">
</td> 30
<td>
10pt; FONT-FAMILY: times new roman">foreign
entities that operate in
Australia.</font></div> 35
</td>
</tr>
</table>
</div>
</div> 40
FAMILY: Times New Roman">The rules 45
do not apply to entities: (i) with an annual debt deduction of $250,000 or
less;
(ii) that are outward investing Australian entities at least 90% of whose
assets
are Australian assets; or (iii) that are qualifying special purpose 50
(securitisation) entities.</font></div>
STYLE: italic; FONT-FAMILY: Times New Roman">Transfer
pricing</font></div>

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transfer pricing rules are designed to ensure that Australian and foreign
multinational enterprises price their related party international dealings in 5
accordance with the arm's length principle.  The aim is to prevent
profit shifting between associated enterprises located in different
jurisdictions to ensure taxable Australian profits are commensurate with the
economic value added in Australia.</font></div>
FAMILY: Times New Roman"> Foreign
source income anti-tax deferral (attribution) regimes</font></div> 15
attribution regimes consist of:</font></div>
<div>
width="100%">
<tr valign="top">
</td>
<td> 35
controlled foreign company
rules;</font></div>
</td> 40
</tr>
</table>
</div>
</div>
<div>
width="100%"> 50
<tr valign="top">
</td>
<td>
foreign investment fund

1089
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rules;</font></div>
</td>
</tr>
</table>
</div> 5
</div>
<div>
width="100%">
<tr valign="top">
</td>
<td> 20
transferor trust rules; and</font></div>
</td>
</tr> 25
</table>
</div>
</div>
<div>
width="100%">
</td>
<td>
deemed present entitlement 45
rules.</font></div>
</td>
</tr>
</table>
</div> 50
</div>
FAMILY: Times New Roman">These
rules are designed to ensure residents cannot defer or avoid Australian tax by
accumulating income offshore.  They tax residents on an accruals
basis
on their share of income accumulating offshore.</font></div> 60

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STYLE: italic; FONT-FAMILY: Times New Roman">Tax 5
information exchange agreements</font></div>
FAMILY: Times New Roman">A tax
information exchange agreement ("TIEA") is a bilateral agreement to establish
a
legal basis for the exchange of taxpayer information, for both civil and
criminal tax purposes. Australia has signed four TIEAs with low-tax 15
jurisdictions:  Bermuda, Antigua and Barbuda, the Netherlands
Antilles
and the British Virgin Islands.</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Commonwealth-State
Financial Relations</font></div>
FAMILY: Times New Roman">Commonwealth-State
financial relations involve the provision of Australian Government financial 30
assistance to the States and Territories, which we refer to as the States, and
oversight by the Australian Loan Council of government
borrowings.</font></div>
States receive significant financial support from the Commonwealth of
Australia.  As of the 2009 UEFO released on 3 February 2009, 40
Commonwealth payments to the States for 2008-09 were estimated to total $83.5
billion, comprising general revenue assistance, including all GST revenue, of
$42.6 billion and payments for specific purposes of $40.9
billion.  These amounts reflect additional Commonwealth funding to
the 45
States of $6.0 billion as part of the three stimulus packages announced since
the release of the 2008-09 MYEFO on 5 November 2008.  See "The
Australian Economy—Economic Outlook" in this prospectus.</font></div>
FAMILY: Times New Roman">General
revenue assistance is a broad category of payments, including GST payments,
which are provided to the States without conditions to spend according to 55
their
own budget priorities.  As of the 2009 UEFO, general revenue
assistance to the States was estimated to comprise $42.2 billion in GST
payments
and $359 million of other general revenue assistance.  As agreed by 60

1091
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all States in the <font style="DISPLAY: inline; FONT-STYLE:
italic">Intergovernmental Agreement</font>,
GST payments are distributed among the States in accordance with the principle
of horizontal fiscal equalisation.  Under this principle, States
receive funding from the Commonwealth of Australia such that, if each made the 5
same effort to raise revenue from its own sources and operated at the same
level
of efficiency, each would have the capacity to provide services at the same
standard level.</font></div>
Commonwealth of Australia provides payments to the States for specific 15
purposes
in order to pursue important national policy objectives in areas that may be
administered by the States.</font></div>
<div><br></div>
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR"> 25
Roman">
</font></div>
</div> 30
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div>
</div> 45
<div><br></div>
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">The
Australian Loan Council</font></div> 50
Australian Loan Council is a Commonwealth-State ministerial council that
coordinates public sector borrowing. The Loan Council consists of the Prime
Minister of Australia and the Premier/Chief Minister of each State and
Territory.  However, in practice each member is represented by a
nominee, usually the Treasurer of that jurisdiction, with the Australian 60
Treasurer as Chairman.</font></div>

1092
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FAMILY: Times New Roman">Current 5
Loan Council arrangements operate on a voluntary basis and emphasise
transparency of public sector financing rather than adherence to strict
borrowing limits.  These arrangements are designed to enhance
financial market scrutiny of public sector borrowing and facilitate informed
judgments about each government's financial performance.</font></div> 10
FAMILY: Times New Roman">The Loan 15
Council traditionally meets annually in March to consider jurisdictions'
nominated borrowings for the forthcoming year.  As part of the
agreed
arrangements, the Loan Council considers these nominations, having regard to
each jurisdiction's fiscal position and the macroeconomic implications of the 20
aggregate figure.</font></div>
FAMILY: Times New Roman">In March
2008, the Australian Government nominated, and the Loan Council endorsed, a
Loan
Council Allocation surplus of $18,974 million.  In the 2008-09
Budget, 30
the Australian Government estimated a Loan Council Allocation surplus of
$23,641
million.  In the 2008-09 MYEFO, the Australian Government's estimate
for the 2008-09 Loan Council Allocation surplus was revised to $7,258
million.</font></div> 35
FAMILY: Times New Roman">Since the 40
release of the 2008-09 MYEFO on 5 November 2008, the Government has announced
three additional stimulus packages.  See "The Australian
Economy—Economic Outlook" in this prospectus.  As a result,
the
Commonwealth of Australia now expects to report a cash deficit with the impact 45
that the Loan Council Allocation estimate will be revised down.</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Domestic
Issuance of Government Bonds</font></div>
defining feature of the Australian Government's debt management in recent
years
has been the substantial reduction in Australian Government net 60
debt.  The face value of Commonwealth Government Securities on issue

1093
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as at 30 June 2008, net of financial assets and Commonwealth holdings, stood
at
around $26.5 billion, down from $107.3 billion eleven years
earlier.</font></div>
FAMILY: Times New Roman">While
persistent fiscal surpluses in years prior to 2008-09 removed the need to 10
borrow
for budget funding purposes, the Australian Government continued to issue
Treasury Bonds in order to maintain an active Treasury Bond market and to
support the market in Treasury Bond futures contracts. These two markets are
used in the pricing and hedging of a wide range of financial instruments and 15
in
the management of interest rate risks by market participants. These markets
provide additional diversity to the financial system and contribute to a lower
cost of capital in Australia.</font></div>
FAMILY: Times New Roman">Treasury
Fixed Coupon Bonds were the main debt instrument issued by the Australian 25
Government in 2007-08.  The size of the program in 2007-08, at
$5.1 billion, was smaller than the 2006-07 program of $5.3
billion.  Twelve tenders were conducted in 2007-08, the same number
as
during 2006-07.</font></div> 30
FAMILY: Times New Roman">Three 35
Treasury Indexed Bond tenders added stock to the market in 2002-03 with an
aggregate face value of around $150 million, $50 million less than in
2001-02.  The issuance of Treasury Indexed Bonds has been
suspended.</font></div>
Government successfully conducted its first Treasury Fixed Coupon Bond 45
conversion tender in October 2001; two more conversion tenders
followed.  These tenders offered investors the opportunity to
consolidate their holdings of less liquid stocks into the larger, more
actively
traded, benchmark stocks.</font></div> 50
Government also has the power to issue Treasury Notes. Any issuance would be
directed primarily towards meeting the within-year funding task that arises
from
mismatches in the timing of outlays and revenue. No Treasury Notes were
outstanding as at 30 June 2008.</font></div> 60

1094
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FAMILY: Times New Roman">In 5
2007-08, all borrowing was undertaken in the domestic market.  As of
11 February 2009, the Australian Government had not borrowed directly in
foreign
currencies since 1987.  However, in addition to the $8 million of
outstanding borrowings denominated in foreign currencies, the Australian 10
Government has a foreign currency exposure achieved by way of swapping out of
domestic currency debt.  This foreign currency exposure (mainly in
U.S. dollars) is for long term portfolio management reasons.  There
were no foreign currency swap transactions in 2007-08.</font></div>
<div><br></div>
<div>
<div id="FTR">
Roman">
</font></div> 25
</div>
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div> 40
</div>
<div><br></div>
FAMILY: Times New Roman">On 3 45
February 2009, the Australian Government released updated economic and budget
forecasts.  Consistent with these forecasts, the Australian Office
of
Financial Management, which we refer to as the AOFM, will increase its
issuance 50
of Treasury Bonds over the remainder of 2008-09.</font></div>
FAMILY: Times New Roman">The AOFM
intends to conduct two Treasury Bond tenders most weeks (generally on a
Wednesday and a Friday) with the amount offered at each tender normally in the
range of $500 million to $700 million.  Total issuance over this
period is expected to amount to between $22 billion to $24 60
billion.  In selecting bond lines to be offered at tender the AOFM

1095
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will consult with bond market participants.</font></div>
FAMILY: Times New Roman">There
will continue to be a large within-year financing requirement as a result of
differences in the timing of Budget receipts and expenditures.  In
the
period ahead, Treasury Notes will be used to assist with the management of 10
short
term financing requirements.  In addition, the AOFM may also use
repurchase arrangements on its holdings of term financial assets for this
purpose.</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Guarantees
and Other Contingent Liabilities</font></div> 20
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Loan 25
Guarantees by the Commonwealth</font></div>
FAMILY: Times New Roman">It is
current practice for Commonwealth-owned instrumentalities to borrow directly
rather than for the Australian Government to borrow on their
behalf.  The <font style="DISPLAY: inline; FONT-STYLE:
italic">Financial Management and 35
Accountability Act </font><font style="FONT-STYLE: italic">1997</font> (the
"FMA
Act") allows all Government Ministers to issue loan guarantees on behalf of
the
Australian Government using executive authority under the Australian 40
Constitution, subject to the authorisation of the Minister for Finance and
Deregulation.  However, the governing legislation of some
Commonwealth
statutory authorities provides the Treasurer specifically with the
discretionary 45
power to guarantee their borrowings, reflecting legislative arrangements prior
to the introduction of the FMA Act.</font></div>
number of new loan guarantees provided by the Australian Government has
declined
in recent years, reflecting a policy that Commonwealth instrumentalities 55
engaged
in business enterprises should approach capital markets on a basis more
comparable with private businesses.</font></div>

1096
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st
Australian Government guarantees the due payment by Australia's export credit
agency, the Export Finance and Insurance Corporation ("EFIC"), of money that 5
is,
or may at any time become, payable by EFIC to any body other than the
Australian
Government.  The Australian Government also has in place a $200
million callable facility available to EFIC on request to cover liabilities, 10
losses and claims.</font></div>
following table shows, in summary form, information relating to borrowings
supported by specific Commonwealth guarantee and other indemnities and
contingencies as at 30 June 2006, 2007 and 2008.</font></div>
<div>
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
<div align="left">
width="100%"> 35
<tr>
<td align="left" colspan="7" valign="top"
roman">Table
34:  Quantifiable Contingent Losses</font></div>
</td>
</tr> 45
<tr>
new roman">
</font></td> 50
0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">At 60
30 June 2006</font></div>

1097
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</div>
</td>
inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">At
</div>
</td> 15
inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">At 25
</div>
</td>
</tr>
<tr> 30
</font></td>
inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(A$ 40
</td>
</tr>
<tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Guarantees</font></div>
</td>
<td align="right" valign="top" 50
0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: 55
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,735</font></div>
</td>
<td align="right" valign="top"

1098
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0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY:
</td>
</td>
</tr>
<tr>
roman">Indemnities</font></div>
</td> 20
</td>
</td>
</td>
</tr> 45
<tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Uncalled 50
shares/capital subscriptions</font></div>
</td>
</td> 60

1099
p1099 22-9-2014
A 1
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</td>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5,720</font></div> 15
</td>
</tr>
<tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Claims
for damages/costs</font></div>
</td>
</td>
</td> 40
</td>
</tr>
<tr> 50
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Other
contingencies</font></div> 55
</td>

1100
p1100 22-9-2014
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</td>
</td>
</td> 20
</tr>
<tr>
roman">Total
quantifiable contingent losses</font></div>
</td>
roman">11,313</font></div>
</td>
width="2%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; 40
</td>
roman">6,858</font></div> 55
</td>
</tr>
<tr>

1101
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inline; FONT-STYLE: italic">Less </font>quantifiable
contingent gains</font></div>
</td>
</td>
</td> 20
</td>
</tr>
<tr> 30
inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net 35
quantifiable contingencies</font></div>
</td>
<td align="right" valign="top" width="2%"
</td>
</td>
<td align="right" valign="top" width="2%" 60

1102
p1102 22-9-2014
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</td>
</tr> 10
</table>
</div>
</div>
</div>
</div> 15
</div>
</div>
</div>
</div>
</div> 20
</div>
</div>
</div>
<div>
FAMILY: Times New Roman">Source:  </font>Commonwealth
Consolidated Financial Statements for the years ended 30 June 2008 and 30 June 30
2007.</font></font></font></div>
</div>
<div>
</div> 35
</div>
Roman">Commonwealth
Initiatives to Enhance the Stability of the Australian Financial
System</font></div>
FAMILY: Times New Roman">In order
to promote financial system stability and ensure the continued flow of credit 50
throughout the economy at a time of heightened turbulence in the international
capital markets, the Australian Government has implemented:</font></div>
<div> 55
width="100%">
<tr valign="top">

1103
p1103 22-9-2014
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</td> 5
<td>
Financial Claims Scheme establishing measures to protect account
holders' 10
deposits made with ADIs, and interest accrued on such deposits, to a
total
maximum value of $1,000,000;
and</font></div>
</td> 15
</tr>
</table>
</div>
</div>
0pt">
<div id="FTR">
<div id="GLFTR" style="WIDTH: 100%" align="left"> 25
</div>
</div>
</div>
</div>
<div id="HDR"> 35
</div>
</div>
</div>
<div>
width="100%"> 45
<tr valign="top">
FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-
FAMILY: symbol, serif"><font style="DISPLAY: inline; FONT-SIZE: 50
10pt">·</font></font></font></div>
</td>
<td>
10pt; FONT-FAMILY: symbol, serif"><font style="DISPLAY: inline; FONT-SIZE: 55
10pt; FONT-FAMILY: Times New Roman">the
Guarantee Scheme for Large Deposits and Wholesale Funding, a voluntary
scheme allowing eligible ADIs to apply to have deposit balances of
greater 60
than $1,000,000 per customer per ADI and eligible senior unsecured debt

1104
p1104 22-9-2014
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instruments with maturities of up to 60 months that satisfy the
eligibility criteria set out in the Scheme Rules guaranteed by the
Commonwealth of
Australia.</font></font></font></div>
</td> 5
</tr>
</table>
</div>
</div>
FAMILY: Times New Roman">The key
elements of the schemes are as follows:</font></div> 15
STYLE: italic; FONT-FAMILY: Times New Roman">Financial 20
Claims Scheme</font></div>
<div>
width="100%">
<tr valign="top">
</td>
<td> 35
Commonwealth of Australia is guaranteeing new and existing deposits in
eligible ADIs (including Australian-incorporated ADI subsidiaries of
foreign banks) up to a limit of $1,000,000 per customer per ADI for a 40
period of three years with no direct charge to account
holders;</font></div>
</td>
</tr>
</table> 45
</div>
</div>
STYLE: italic; FONT-FAMILY: Times New Roman">Guarantee
Scheme for Large Deposits and Wholesale Funding</font></div>
<div>
width="100%">

1105
p1105 22-9-2014
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</td> 5
<td>
Commonwealth of Australia is guaranteeing new and existing deposits in
eligible ADIs (including Australian-incorporated ADI subsidiaries of 10
foreign banks) of greater than $1,000,000 during the continuance of the
Guarantee Scheme upon application and for a
fee;</font></div>
</td>
</tr> 15
</table>
</div>
</div>
<div>
width="100%">
</td>
<td>
Commonwealth of Australia will guarantee on an issue by issue basis 35
certain non-complex senior unsecured short term (maturities up to 15
months) and term funding (maturities of 15 months up to 60 months) debt
instruments upon application and for a
fee;</font></div>
</td> 40
</tr>
</table>
</div>
</div>
<div>
width="100%"> 50
<tr valign="top">
</td>
<td>
10pt; FONT-FAMILY: times new roman">With 60
respect to foreign ADIs, subject to satisfaction of certain conditions,

1106
p1106 22-9-2014
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st
the Commonwealth of Australia will guarantee certain deposits held by
Australian residents at call or with maturities up to and including 31
December 2009 and certain non-complex senior unsecured short term debt
instruments having maturities up to and including 31 December 2009 held
by 5
Australian residents upon application and for a
fee.</font></div>
</td>
</tr>
</table> 10
</div>
</div>
STYLE: italic; FONT-FAMILY: Times New Roman">Reporting
under the Guarantee Scheme for Large Deposits and Wholesale
Funding</font></div>
Reserve Bank of Australia will establish and maintain a website, currently 25
<font style="DISPLAY: inline; FONT-STYLE:
italic">www.guaranteescheme.gov.au</font>,
to provide information with respect to the operations of the Guarantee Scheme
by
identifying Guaranteed Liabilities by ADI, issue size, date of extension of 30
the
Guarantee, liability class, currency, program/product name, security
identifier
and maturity.  The Reserve Bank of Australia will prepare monthly
reports with respect to the operations of the Guarantee Scheme.  The 35
Government will also provide six-monthly reports to the Australian Parliament
detailing:</font></div>
<div> 40
width="100%">
<tr valign="top">
</td> 50
<td>
aggregate amount of Guaranteed
Liabilities;</font></div> 55
</td>
</tr>
</table>
</div>
</div> 60

1107
p1107 22-9-2014
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<div>
width="100%">
<tr valign="top">
</td>
<td>
10pt; FONT-FAMILY: times new roman">any
calls made under the Guarantee Scheme for payment;
and</font></div>
</td>
</tr> 20
</table>
</div>
</div>
<div>
width="100%">
</td>
<td>
10pt; FONT-FAMILY: times new roman">any
payments by the Commonwealth of Australia under the Guarantee 40
</td>
</tr>
</table>
</div> 45
</div>
FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Other
Contingent Liabilities and Undertakings</font></div>
Australian Government has contingent liabilities with various international
financial institutions. As at 31 December 2008, Australia's uncalled capital
subscriptions totalled US$2.8 billion for the IBRD, US$2.4 billion for the 60
ADB,

1108
p1108 22-9-2014
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st
US$26.5 million for MIGA and $275 million for EBRD. In addition, the undrawn
portion of promissory notes issued and payable on demand in respect of
maintenance-of-value obligations to the capital of the IBRD amounted to
US$42.6
million as at 31 December 2008. Promissory notes have also been issued by the 5
Australian Government as successive quota subscriptions to the IMF and in
order
to maintain the value of the IMF's holdings of Australian
dollars.  At
31 December 2008, the undrawn portion of lodged promissory notes issued for 10
this
purpose amounted to $3.8 billion.</font></div>
FAMILY: Times New Roman">As at 31
December 2008, the Australian Government had liabilities of $1.2 billion to
existing replenishments of the Asian Development Fund, the International
Development Association (including with respect to the Heavily Indebted Poor 20
Countries initiative) and the Global Environment Facility. These liabilities
are
covered by the instruments of commitment that were signed at the time of
pledging.  Promissory notes will be lodged regularly over the life
of 25
the replenishment to enable the draw-downs to occur in line with the agreement
timetable for cash disbursements.</font></div>
<div><br></div> 30
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
</div> 45
</div>
<div id="HDR">
Roman"> 50
</font></div>
</div>
</div>
</div>
<div><br></div> 55
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PUBLIC
DEBT</font></div>

1109
p1109 22-9-2014
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st
following table provides an account of all Commonwealth Government Securities
on 5
issue as of 31 December 2008.</font></div>
35:  Government securities repayable in Australian
dollars</font></div>
<div>
<tr>
</font></td> 20
<td valign="bottom" width="1%" style="BORDER-TOP: black 1pt solid;
MARGIN-RIGHT: 0pt">
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Date 30
of Issue</font></div>
</div>
</td>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Date
of</font></div>
roman">Maturity</font></div>
</div>
</td> 50
MARGIN-RIGHT: 0pt">
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Interest 60
Rate</font></div>

1110
p1110 22-9-2014
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WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(%</font></div>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Per
Annum)</font></div>
</div>
</td>
<td valign="bottom" width="1%" style="BORDER-TOP: black 1pt solid; 10
MARGIN-RIGHT: 0pt">
roman">Outstanding</font></div> 20
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(A$
'000)</font></div>
</div>
</td> 30
</tr>
<tr>
<td align="left" colspan="3" valign="bottom" width="47%">
FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION:
underline">Treasury
Fixe</font><font style="DISPLAY: inline; TEXT-DECORATION: underline">d
Coupon Bonds</font><font style="DISPLAY: inline; FONT-SIZE: 70%;
VERTICAL-ALIGN: super">(a)</font></font></div> 40
</td>
<td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-
</font></td>
</font></td>
</font></td>
</tr>
<tr>
</font></td>

1111
p1111 22-9-2014
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<td align="left" valign="bottom" width="1%"><font style="DISPLAY:
FONT-FAMILY: times new
roman">Oct   1996       &#16
0;       </font></div>
</td>
<td align="right" valign="bottom" width="1%"><font style="DISPLAY: 10
Sep 2009</font></div>
</td>
MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY:
</td>
10pt; FONT-FAMILY: times new roman">7,009,049</font></div> 30
</td>
</tr>
<tr>
</font></td>
roman">Jan    2005      &#16
0;         </font></div>
</td> 45
<td align="right" valign="bottom" width="1%"><font style="DISPLAY:
Aug 2010</font></div>
</td>
</td> 60

1112
p1112 22-9-2014
A 1
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</td>
</tr>
<tr>
</font></td>
roman">Aug  1998        &#16
0;       </font></div> 20
</td>
Jun 2011</font></div>
</td>
<td align="left" valign="bottom" width="1%"><font style="DISPLAY: 30
</td>
</td>
</tr>
<tr> 45
</font></td>
roman">Dec   2006       &#16 55
0;
</font></div>
</td>

1113
p1113 22-9-2014
A 1
st
Apr 2012</font></div>
</td> 5
MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: 10
</td>
</td>
</tr> 20
<tr>
</font></td>
FONT-FAMILY: times new 30
roman">May  2000        &#16
0;
</font></div>
</td>
May 2013</font></div>
</td>
</td>
</td>
</tr>
<tr>
</font></td>

1114
p1114 22-9-2014
A 1
st
FONT-FAMILY: times new roman">Jul

2008            &#
160;     </font></div>
</td> 10
</td>
</td> 25
</td>
</tr>
<tr>
</font></td>
roman">May  2002        &#16
0;       45
</font></div>
</td>
Apr 2015</font></div>
</td> 55

1115
p1115 22-9-2014
A 1
st
</td>
</td>
</tr>
<tr> 10
</font></td>
roman">June  2004        &#1 20
60;       </font></div>
</td>
Feb 2017</font></div>
</td> 30
</td>
</td>
</tr> 45
<tr>
</font></td>
FONT-FAMILY: times new 55
roman">July   2006       &#1
60;        </font></div>
</td>

1116
p1116 22-9-2014
A 1
st
Mar 2019</font></div>
</td> 5
</td>
</td>
</tr> 20
<tr>
</font></td>
FONT-FAMILY: times new roman">Sep   2007<font id="TAB2" 30
style="LETTER-SPACING: 5pt">   </font> <font id="TAB2"
style="LETTER-SPACING: 5pt">   </font></font></div>
</td>
May 2021</font></div> 40
</td>
</td>
BOTTOM: black 1pt solid">
</td>
</tr>
<tr>
<td align="left" colspan="3" valign="bottom" width="47%"
style="PADDING-BOTTOM: 2px"> 60

1117
p1117 22-9-2014
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FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-STYLE:
italic">Total Treasury Fixed Coupon
Bonds</font><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL- 5
ALIGN: super">(b)</font></font></div>
</td>
</font></td>
</font></td>
<td align="left" valign="bottom" width="17%" style="BORDER-BOTTOM:
black 1px solid">
MARGIN-RIGHT: 0pt" align="left">
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">61,802,136</font></div>
</div> 30
</td>
</tr>
<tr>
</font></td>
</font></td>
</font></td>
</font></td>
</font></td>
</tr>
<tr>

1118
p1118 22-9-2014
A 1
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underline">Treasury Indexed
Bonds</font></font></div>
</td>
<td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT- 5
</font></td>
</font></td>
</font></td>
</tr> 20
<tr>
</font></td>
FONT-FAMILY: times new roman">1985 30
- 2004</font></div>
</td>
</td> 40
MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 45
70%; VERTICAL-ALIGN: super">(c)</font></font></div>
</td>
</td> 55
</tr>
<tr>
</font></td> 60

1119
p1119 22-9-2014
A 1
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</font></td> 5
</td>
</font></td>
</td> 25
</tr>
<tr>
</font></td> 30
</font></td>
BOTTOM: 2px">
Aug  2020</font></div> 45
</td>
</font></td>
black 1px solid">

1120
p1120 22-9-2014
A 1
st
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,472,200</font></div>
</div>
</td> 5
</tr>
<tr>
FONT-STYLE: italic; FONT-FAMILY: times new roman">Total
Treasury Indexed Bonds</font></div>
</td>
</font></td>
</font></td>
BOTTOM: black 1pt solid">
10pt; FONT-FAMILY: times new roman">6,020,000<font style="DISPLAY: inline; 30
FONT-SIZE: 70%; VERTICAL-ALIGN: super">(d)</font></font></div>
</td>
</tr>
<tr>
</font></td>
</font></td>
</font></td>
</font></td>
</font></td>
</tr>
<tr>
BOTTOM: 2px">

1121
p1121 22-9-2014
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underline">Treasury
Notes</font><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL- 5
</td>
<td valign="bottom" width="21%" style="PADDING-BOTTOM: 2px">
MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE:
10pt; FONT-FAMILY: times new roman">Various</font></div>
</td> 15
BOTTOM: 2px"> 20
</td>
70%; VERTICAL-ALIGN: super">(e)</font></font></div>
</td>
</td>
</tr>
<tr>
</font></td>
</font></td>
</font></td>

1122
p1122 22-9-2014
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</font></td>
</font></td>
</tr>
<tr>
BOTTOM: 2px"> 10
underline">Miscellaneous
Sec</font><font style="DISPLAY: inline; TEXT-DECORATION: 15
underline">urities</font><font style="DISPLAY: inline; FONT-SIZE: 70%;
VERTICAL-ALIGN: super">(f)</font></font></div>
</td>
10pt; FONT-FAMILY: times new roman">Various</font></div> 25
</td>
BOTTOM: 2px">
</td> 35
</td>
black 1px solid">
MARGIN-RIGHT: 0pt" align="left"> 50
</div>
</td> 55
</tr>
<tr>

1123
p1123 22-9-2014
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MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="left"><font style="DISPLAY:
inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
Repayable in Australian Dollars</font></div>
</td> 5
<td valign="bottom" width="1%" style="BORDER-BOTTOM: black 1px
roman">
</font></td>
roman">
</font></td>
<td align="right" valign="bottom" width="1%" style="BORDER-BOTTOM: 20
</td>
</tr>
</table> 30
</div>
<div>
</td> 40
<td width="1220">
FONT-FAMILY: Times New Roman">Treasury
Bonds and Treasury Notes issued since 1 July 1984 are available only as
Inscribed Stock; before then Commonwealth securities were also available 45
in bearer form.</font></div>
</td>
</tr>
</table>
</div> 50
<div>
<tr valign="top">
</td>
<td width="1220"> 60

1124
p1124 22-9-2014
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FONT-FAMILY: Times New Roman">Since
5 August 1982, Treasury Bonds have been sold by a tender
</td> 5
</tr>
</table>
</div>
<div>
<tr valign="top">
Roman">(c)</font></div>
</td>
<td width="1220">
FONT-FAMILY: Times New Roman">Interest 20
payable is dependent upon the rate of
</td>
</tr>
</table> 25
</div>
<div>
Roman">(d)</font></div>
</td> 35
<td width="1220">
FONT-FAMILY: Times New Roman">Original
face value.</font></div>
</td> 40
</tr>
</table>
</div>
<div>
<tr valign="top">
Roman">(e)</font></div>
</td>
<td width="1220">
FONT-FAMILY: Times New Roman">Treasury 55
Notes are issued at a discount and are redeemed at par on
maturity.</font></div>
</td>
</tr>
</table> 60
</div>

1125
p1125 22-9-2014
A 1
st
<div>
<tr valign="top">
Roman">(f)</font></div>
</td>
<td width="1220"> 10
FONT-FAMILY: Times New Roman">Includes
debt assumed by the Commonwealth and various miscellaneous
securities.</font></div>
</td> 15
</tr>
</table>
</div>
tables below show the external debt of the Australian Government, on issue at
31 25
December 2008.  The bonds issued by Australia which are listed below
require the Australian Government, in accordance with their terms, to secure
such bonds <font style="DISPLAY: inline; FONT-STYLE: italic">pari passu</font>
with new bonds, loans or borrowings which would otherwise rank in priority to
such bonds.</font></div> 30
36:  Government securities repayable in Pounds Sterling</font></div>
<div>
<tr>
MARGIN-RIGHT: 0pt">
</div>
</td>
MARGIN-RIGHT: 0pt">
of Final</font></div> 60

1126
p1126 22-9-2014
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st
</div> 5
</td>
MARGIN-RIGHT: 0pt">
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Interest
Rate</font></div>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(%</font></div> 20
Annum)</font></div>
</div> 25
</td>
MARGIN-RIGHT: 0pt">
roman">Outstanding</font></div>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">31 40
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(£
Sterling)</font></div> 45
roman">('000)</font></div>
</div> 50
</td>
</tr>
<tr>
FONT-FAMILY: times new roman; TEXT-DECORATION: underline">Commonwealth
Government issues</font></font></font></div> 60
</td>

1127
p1127 22-9-2014
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st
</font></td> 5
</font></td> 10
</font></td> 15
</tr>
<tr>
FONT-FAMILY: times new roman">Various</font></div>
</td>
new roman">Matured—bonds not 30
yet presented for payment<font style="DISPLAY: inline; FONT-SIZE: 70%;
VERTICAL-ALIGN: super">(a)</font></font></font></font></div>
</td>
10pt; FONT-FAMILY: times new roman">Nil</font></div>
</td> 40
</td>
</tr>
<tr>
BOTTOM: 2px">
FONT-FAMILY: times new roman; TEXT-DECORATION: underline">State
Government issues</font></font></font></div>
FONT-FAMILY: times new roman">Various</font></div> 60
</td>

1128
p1128 22-9-2014
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st
<td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM:
BOTTOM: 2px"> 5
FONT-FAMILY: times new roman">At
Treasurer's option</font></div>
</td> 10
</td>
black 1px solid">
</div>
</td> 30
</tr>
<tr>
Repayable in Pounds Sterling</font></div>
</td>
<td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: 40
black 1px solid">
</td>
</tr>
</table> 50
</div>
<div>
</td> 60
<td width="1220">

1129
p1129 22-9-2014
A 1
st
FONT-FAMILY: Times New Roman">Elapsed
bonds reclaimed from fiscal agent.</font></div>
</td>
</tr> 5
</table>
</div>
<div><br></div> 10
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
</div> 25
</div>
<div id="HDR">
Roman"> 30
</font></div>
</div>
</div>
</div>
<div><br></div> 35
37:  Government securities repayable in United States
Dollars</font></div> 40
<div>
<tr>
MARGIN-RIGHT: 0pt">
</div>
</td>

1130
p1130 22-9-2014
A 1
st
of Final</font></div>
</div>
</td> 10
MARGIN-RIGHT: 0pt">
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Interest 20
Rate</font></div>
Annum)</font></div>
</div>
</td> 30
MARGIN-RIGHT: 0pt">
roman">(US$)</font></div>
roman">('000)</font></div>
</div>
</td> 55
</tr>
<tr>
FONT-FAMILY: times new roman">March

1131
p1131 22-9-2014
A 1
st
1987</font></div>
</td>
Mar 2017</font></div>
</td> 10
</td>
black 1px solid">
</div>
</td>
</tr>
<tr> 30
<td align="left" colspan="5" valign="top" width="79%"
Repayable in United States Dollars</font></div>
</td>
black 1px solid">
</td>
</tr>
</table>
</div>
RIGHT: 0pt" align="left"> </div>
38:  Government securities repayable in Euro</font></div> 55
<div>
<tr>

1132
p1132 22-9-2014
A 1
st
MARGIN-RIGHT: 0pt">
of Final Maturity</font></div>
</div>
</td>
Rate</font></div>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Per 25
Annum)</font></div>
</div>
</td>
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Euro
'000)</font></div>
</div>
</td>
</tr> 50
<tr>
BOTTOM: 2px">
new roman">Matured – Bonds not
VERTICAL-ALIGN: super">(a)</font></font></font></font></div> 60
</td>

1133
p1133 22-9-2014
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10pt; FONT-FAMILY: times new roman">Nil</font></div>
</td>
black 1px solid">
</div>
</td> 20
</tr>
<tr>
new roman">Total Repayable in
Euro<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: 30
</td>
black 1px solid">
</td>
</tr>
</table>
</div>
<div> 45
<tr valign="top">
</td>
<td width="1220">
FONT-FAMILY: Times New Roman">Elapsed
</td>
</tr>
</table> 60
</div>

1134
p1134 22-9-2014
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<div>
<tr valign="top">
</td>
<td width="1220"> 10
FONT-FAMILY: Times New Roman">Bonds
originally repayable in Deutsche Marks, converted to Euro at the 31
December 1998 rate of 1.95583 Deutsche Marks = 1.0 Euro irrevocably
fixed 15
by the European Central Bank.</font></div>
</td>
</tr>
</table>
</div> 20
39:  Government securities repayable in Japanese Yen</font></div>
<div>
<tr>
MARGIN-RIGHT: 0pt">
</div>
</td>
MARGIN-RIGHT: 0pt">
Rate</font></div> 50
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Per
Cent</font></div>
Annum)</font></div>
</div>
</td> 60

1135
p1135 22-9-2014
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st
MARGIN-RIGHT: 0pt">
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(¥
'000)</font></div>
</div> 20
</td>
</tr>
<tr>
<td align="left" valign="top" width="42%" style="PADDING-BOTTOM:
2px"> 25
new roman">Matured – Bonds not 30
</td>
<td valign="top" width="15%" style="PADDING-BOTTOM: 2px">
10pt; FONT-FAMILY: times new roman">Nil</font></div> 40
</td>
black 1px solid">
</div>
</td>
</tr>
<tr> 55
Repayable in Japanese Yen</font></div>

1136
p1136 22-9-2014
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st
</td>
black 1px solid">
</td> 10
</tr>
</table>
</div>
<div>
<tr valign="top">
</td>
<td width="1220">
FONT-FAMILY: Times New Roman">Elapsed 25
</td>
</tr>
</table>
</div> 30
40:  Government securities repayable in Swiss Francs</font></div>
<div>
<tr>
MARGIN-RIGHT: 0pt">
</div>
</td>
MARGIN-RIGHT: 0pt">
Rate</font></div> 60

1137
p1137 22-9-2014
A 1
st
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Per
Cent</font></div>
Annum)</font></div>
</div>
</td> 10
MARGIN-RIGHT: 0pt">
WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(SF
'000)</font></div>
</div> 30
</td>
</tr>
<tr>
2px"> 35
new roman">Matured – Bonds not 40
</td>
10pt; FONT-FAMILY: times new roman">Nil</font></div> 50
</td>
black 1px solid">

1138
p1138 22-9-2014
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st
</div>
</td>
</tr>
<tr>
<td align="left" colspan="3" valign="top" width="58%" 5
Repayable in Swiss Francs</font></div> 10
</td>
black 1px solid">
</td> 20
</tr>
</table>
</div>
<div>
<tr valign="top">
</td>
<td width="1220">
FONT-FAMILY: Times New Roman">Elapsed 35
</td>
</tr>
</table>
</div> 40
following table shows estimated payments of principal (including contractual
prepayments and payments at maturity) to be made on the direct debt of the
Australian Government outstanding on 30 June 2008.</font></div>
41:  Summary of funded debt payment (as at 30 June
2008)</font></div> 55
<div>
<tr>
solid; PADDING-BOTTOM: 1px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; 60

1139
p1139 22-9-2014
A 1
st
</font></td>
MARGIN-RIGHT: 0pt">
09</font></div>
</div>
</td>
MARGIN-RIGHT: 0pt">
10</font></div> 25
</div>
</td>
MARGIN-RIGHT: 0pt">
11</font></div>
2011-12</font></div>
</div>
</td>
MARGIN-RIGHT: 0pt">
13</font></div> 55
2016-17</font></div>
</div> 60
</td>

1140
p1140 22-9-2014
A 1
st
MARGIN-RIGHT: 0pt">
18</font></div>
2020-21</font></div> 15
</div>
</td>
</tr>
<tr>
</font></td>
MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT:
bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(A$
</td>
</tr>
<tr>
FONT-FAMILY: times new roman">Repayable:</font></div>
</td>
</font></td>
</font></td>
</font></td>
</font></td>

1141
p1141 22-9-2014
A 1
st
</font></td>
</tr>
<tr> 5
FONT-FAMILY: times new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times 10
new roman">In Australian
Dollars<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN:
</td>
MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="left"><font style="DISPLAY:
</td>
</td>
</td> 35
MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="left"><font style="DISPLAY: 40
</td>
</td>
</tr> 50
<tr>
new roman">Repayable
overseas:<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN:
</td> 60

1142
p1142 22-9-2014
A 1
st
</font></td> 5
</font></td> 10
</font></td> 15
</font></td> 20
</font></td> 25
</tr>
<tr>
1px">
FONT-FAMILY: times new roman">   In
United States Dollars</font></div>
</td>
solid">
MARGIN-RIGHT: 0pt">
</div> 45
</td>
solid">
MARGIN-RIGHT: 0pt">
</div>
</td>
<div> </div> 60
</td>

1143
p1143 22-9-2014
A 1
st
solid">
MARGIN-RIGHT: 0pt">
</div>
</td>
solid">
MARGIN-RIGHT: 0pt">
</div> 20
</td>
solid">
MARGIN-RIGHT: 0pt">
</div>
</td>
</tr>
<tr> 35
black 1px solid">
FONT-FAMILY: times new roman">Total</font></div> 40
</td>
black 1px solid">
</td> 50
</td>
black 1px solid">

1144
p1144 22-9-2014
A 1
st
<div> </div>
</td>
black 1px solid">
</td>
black 1px solid">
MARGIN-RIGHT: 0pt; TEXT-ALIGN: right" align="left"><font style="DISPLAY: 15
</td>
black 1px solid">
</td>
</tr>
</table>
</div>
<div> 30
<tr valign="top">
</td>
<td width="1220">
FONT-FAMILY: Times New Roman">Excludes
Treasury Notes and Treasury Bonds held as investment by the Commonwealth
of Australia.</font></div>
</td>
</tr> 45
</table>
</div>
<div>
<tr valign="top">
Roman">(b)</font></div> 55
</td>
<td width="1220">
FONT-FAMILY: Times New Roman">Converted
into Australian dollars at rates of exchange prevailing on 30 June 60
2008.</font></div>

1145
p1145 22-9-2014
A 1
st
</td>
</tr>
</table>
</div>
FAMILY: Times New Roman">On 4
February 2009, the Australian Office of Financial Management announced that it 10
will increase its issuance of Treasury Bonds over the remainder of 2008-09,
with
total issuance over this period expected to amount to between $22 billion to
$24
billion.  In the period ahead, the AOFM will also use Treasury Notes 15
to assist with the management of short term financing
requirements.  In addition, the AOFM may also use repurchase
arrangements on its holdings of term financial assets for this
purpose.  See "Government Finance—Domestic Issuance of
Government 20
Bonds" in this prospectus.</font></div>
<div><br></div>
<div> 25
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
</div>
</div> 40
<div id="HDR">
Roman">
</font></div> 45
</div>
</div>
</div>
<div><br></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Debt
Record</font></div>
Commonwealth of Australia has paid promptly, when due, the full amount of
principal and interest on every direct external obligation issued by it and 60
has

1146
p1146 22-9-2014
A 1
st
met every indirect external obligation on which it has been required to
implement its guarantee in the lawful currency, and in the country where
payable, at the time of payment.</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Credit
Ratings</font></div>
Australian Government has a AAA rating for both foreign and domestic currency 15
denominated debt from Standard and Poor's and Moody's. Fitch rates Australia's
domestic currency borrowings as AAA and foreign currency borrowings as AA+. On
13 January 2009, Standard and Poor's affirmed Australia's AAA rating for both
foreign and domestic currency denominated debt, noting that the outlook is
'stable'.</font></div> 20
<div><br></div>
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman"> 30
</font></div>
</div>
</div>
</div>
<div id="HDR"> 40
Roman">
</font></div>
</div> 45
</div>
</div>
<div><br></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PLAN
OF DISTRIBUTION</font></div>
Commonwealth of Australia will not participate in the offering or sale of any
of
the ADI Debt Securities and will pay no compensation to any underwriters in 60
connection with the issuance of the Guarantee.</font></div>

1147
p1147 22-9-2014
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st
Commonwealth of Australia has not agreed to indemnify any underwriter against
civil liabilities under the Securities Act of 1933 or to contribute payments
which the underwriters may be required to make in respect
thereof.</font></div>
FAMILY: Times New Roman">Except as
may otherwise be provided in any prospectus supplement relating to the related 15
ADI Debt Securities, the Guarantee may be offered in those jurisdictions in
the
United States, Europe and Asia where it is legal to make such
offers.</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">VALIDITY
OF THE GUARANTEE</font></div> 25
FAMILY: Times New Roman">Except as 30
may otherwise be provided in any prospectus supplement, the validity of the
Guarantee of ADI Debt Securities will be passed upon for the Commonwealth of
Australia by the Australian Government Solicitor, Lionel Murphy Building, 50
Blackall Street, Barton ACT 2600, Australia.  As to certain matters
of 35
United States federal law, the Commonwealth of Australia is represented by
Skadden, Arps, Slate, Meagher & Flom, Level 13, 131 Macquarie Street,
Sydney, NSW 2000, Australia.</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">AUTHORISED
AGENT IN THE UNITED STATES</font></div>
FAMILY: Times New Roman">The name
and address of the authorised agent of the Commonwealth of Australia in the 50
United States is Mr. David Pearl, Minister - Counsellor (Economic), Australian
Embassy, 1601 Massachusetts Avenue, N.W., Washington, D.C. 20036.</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">FURTHER
INFORMATION</font></div>

1148
p1148 22-9-2014
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st
prospectus is part of a Registration Statement that the Commonwealth of
Australia filed with the U.S. Securities and Exchange Commission using a shelf 5
registration process. This prospectus does not contain all of the information
provided in the Registration Statement. For further information, you should
refer to the Registration Statement.</font></div>
<div><br></div>
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR"> 15
Roman">
</font></div>
</div> 20
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div>
</div> 35
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PART 40
II</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">INFORMATION
NOT REQUIRED IN PROSPECTUS</font></div> 50
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">UNDERTAKINGS</font></div>

1149
p1149 22-9-2014
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st
Commonwealth of Australia hereby undertakes:</font></div>
FAMILY: Times New
Roman">(1)           To
file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:</font></div>
FAMILY: Times New
Roman">(i)           15
  to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;</font></div>
FAMILY: Times New Roman">(ii)
     to reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the 25
aggregate, represent a fundamental change in the information set forth in this
Registration Statement; and</font></div>
FAMILY: Times New
Roman">(iii)
to
include any material information with respect to the plan of distribution not 35
previously disclosed in this Registration Statement or any material change to
such information in this Registration Statement.</font></div>
FAMILY: Times New
Roman">(2)           Th
at,
for the purposes of determining any liability under the Securities Act of 45
1933,
each such post-effective amendment, that contains a form of prospectus, shall
be
deemed to be a new registration statement relating to the securities covered
thereby, and the offering of such securities at that time shall be deemed to 50
be
the initial bona fide offering thereof.</font></div>
FAMILY: Times New
Roman">(3)           To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the 60
offering.</font></div>

1150
p1150 22-9-2014
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FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">EXPENSES</font></div> 5
FAMILY: Times New Roman">An 10
itemised statement showing estimated expenses of the Commonwealth of
Australia,
other than underwriting discounts and commissions, in connection with the sale
of the Guarantee of each issue of ADI Debt Securities will be provided in the
post-effective amendment to the Registration Statement relating to such 15
issue.</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">AGREEMENT
TO PROVIDE LEGAL OPINION</font></div>
Commonwealth of Australia agrees to furnish a copy of the opinion of the
Australian Government Solicitor with respect to the legality of the Guarantee
of 30
ADI Debt Securities in the post-effective amendment to this Registration
Statement relating to such issue.</font></div>
<div><br></div> 35
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">II-1</font></div>
</div> 50
</div>
<div id="HDR">
Roman"> 55
</font></div>
</div>
</div>
</div>
<div><br></div> 60

1151
p1151 22-9-2014
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FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CONTENTS
OF REGISTRATION STATEMENT</font></div>
Registration Statement comprises:</font></div> 10
FAMILY: Times New 15
Roman">(1)           th
e
facing sheet;</font></div>
FAMILY: Times New
Roman">(2)           th
e 25
cross-reference sheet;</font></div>
FAMILY: Times New
Roman">(3)           Pa
rt
I, consisting of the Prospectus;</font></div>
FAMILY: Times New
Roman">(4)           Pa 40
rt
II, consisting of pages numbered II-1 to II-5; and</font></div>
FAMILY: Times New
Roman">(5)           th
e
following exhibits:</font></div> 50
<div>
<tr valign="top">
Times New Roman">
</font></div> 60
</td>

1152
p1152 22-9-2014
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Roman">A.</font></div>
</td> 5
<td>
FONT-FAMILY: Times New Roman">Deed
of Guarantee in respect of the Australian Government Guarantee Scheme
for 10
Large Deposits and Wholesale
Funding.</font></div>
</td>
</tr>
</table> 15
</div>
<div>
<tr valign="top">
Times New Roman"> 25
</font></div>
</td>
Roman">B.</font></div>
</td>
<td>
FONT-FAMILY: Times New Roman">The 35
Australian Government Guarantee Scheme for Large Deposits and Wholesale
Funding Rules, including Sample List of Deposit Accounts and Guidelines
on
Interpretation of ‘Not Complex’ for the purposes of Schedule
3 – 40
Eligibility Criteria.</font></div>
</td>
</tr>
</table>
</div> 45
<div>
<tr valign="top">
Times New Roman">
</font></div> 55
</td>
Roman">C.</font></div> 60
</td>

1153
p1153 22-9-2014
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<td>
FONT-FAMILY: Times New Roman">Eligibility
Certificate(s).**</font></div>
</td> 5
</tr>
</table>
</div>
<div>
<tr valign="top">
Times New Roman">
</font></div>
</td>
Roman">D.</font></div>
</td>
<td> 25
FONT-FAMILY: Times New Roman">Form
of Agreement for Offering Commonwealth Guaranteed Securities by and
among
the Commonwealth, the relevant ADI and representatives of the 30
Underwriters.*</font></div>
</td>
</tr>
</table>
</div> 35
<div>
<tr valign="top">
Times New Roman">
</font></div> 45
</td>
Roman">E.</font></div> 50
</td>
<td>
FONT-FAMILY: Times New Roman">Agreement
for Offering Commonwealth Guaranteed Securities by and among the 55
Commonwealth, the relevant ADI and representatives of the
Underwriters.**</font></div>
</td>
</tr>
</table> 60
</div>

1154
p1154 22-9-2014
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<div>
<tr valign="top">
Times New Roman">
</font></div> 10
</td>
Roman">F.</font></div> 15
</td>
<td>
FONT-FAMILY: Times New Roman">Itemised
statement showing estimated expenses of the Commonwealth of Australia in 20
connection with the sale of the Guarantee of each issue of ADI Debt
Securities.**</font></div>
</td>
</tr>
</table> 25
</div>
<div>
<tr valign="top">
</font></div>
</td>
Roman">G.</font></div>
</td>
<td>
FONT-FAMILY: Times New Roman">Opinion 45
of Australian Government Solicitor with respect to the legality of the
Guarantee of ADI Debt Securities.**</font></div>
</td>
</tr>
</table> 50
</div>
<div>
<tr valign="top">
</font></div>

1155
p1155 22-9-2014
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</td>
Roman">H.</font></div> 5
</td>
<td>
FONT-FAMILY: Times New Roman">Consent
of Dr. Ken Henry AC, Secretary of the Treasury of the Commonwealth of 10
</td>
</tr>
</table>
</div> 15
<div>
<tr valign="top">
Times New Roman">
</font></div> 25
</td>
Roman">I.</font></div> 30
</td>
<td>
FONT-FAMILY: Times New Roman">Consent
of Australian Government Solicitor (included in Exhibit 35
G).**</font></div>
</td>
</tr>
</table>
</div> 40
FAMILY: Times New Roman">__________</font></div> 45
<div>
Roman">*</font></div>
</td> 55
<td>
FONT-FAMILY: Times New Roman">To
be filed by amendment.</font></div>
</td> 60
</tr>

1156
p1156 22-9-2014
A 1
st
</table>
</div>
<div>
<tr valign="top">
Roman">**</font></div>
</td>
<td>
FONT-FAMILY: Times New Roman">To 15
be filed as an exhibit to the post-effective amendment to this
Registration Statement relating to the Guarantee of the relevant issue
of
ADI Debt Securities.</font></div>
</td> 20
</tr>
</table>
</div>
<div><br></div> 25
<div>
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
</div> 40
</div>
<div id="HDR">
Roman"> 45
</font></div>
</div>
</div>
</div>
<div><br></div> 50
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SIGNATURES</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">REGISTRANT:</font></div> 60

1157
p1157 22-9-2014
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st
FAMILY: Times New Roman">Pursuant 5
to the requirements of the Securities Act of 1933, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorised, in the City of Canberra, Australia on
17
February 2009.</font></div> 10
<div> 15
<div align="left">
<div align="left">
<tr>
</font></td>
10pt; FONT-FAMILY: times new roman">By:</font></div>
</td>
SIZE: 10pt; FONT-FAMILY: times new roman">/s/ 30
Dr. Ken Henry AC</font></td>
</tr>
<tr>
</font></td>
</font></td>
10pt; FONT-FAMILY: times new roman">Name:</font></div>
</td>
10pt; FONT-FAMILY: times new roman">Dr
Ken Henry AC</font></div>
</td> 50
</tr>
<tr>
</font></td> 55
</font></td>

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10pt; FONT-FAMILY: times new roman">Title:</font></div>
</td>
10pt; FONT-FAMILY: times new roman">Secretary
of the Treasury of the</font></div>
</td> 10
</tr>
<tr>
</font></td> 15
</font></td>
</font></td>
10pt; FONT-FAMILY: times new roman">Commonwealth 25
</td>
</tr>
<tr>
</font></td>
</font></td> 35
</font></td>
</font></td>
</tr>
</table>
</div>
</div> 45
</div>
<div><br></div>
<div> 50
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>

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</div>
</div>
<div id="HDR"> 5
Roman">
</font></div>
</div> 10
</div>
</div>
<div><br></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">AUTHORISED
AGENT IN THE UNITED STATES</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">TO
RECEIVE NOTICES AND COMMUNICATIONS</font></div>
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">FROM
THE SECURITIES AND EXCHANGE COMMISSION:</font></div>
FAMILY: Times New Roman">Pursuant
to the requirements of the Securities Act of 1933, the undersigned, the duly
authorised agent of the Commonwealth of Australia in the United States to
receive notices and communications from the Securities and Exchange 35
Commission,
has signed this Registration Statement in Washington, D.C. on 17 February
2009.</font></div>
<div>
<div align="left">
<div align="left">
<tr>
</font></td>
10pt; FONT-FAMILY: times new roman">By:</font></div> 55
</td>
SIZE: 10pt; FONT-FAMILY: times new roman">/s/
Mr. David Pearl </font></td> 60
</tr>

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<tr>
</font></td>
</font></td>
10pt; FONT-FAMILY: times new roman">Name:</font></div>
</td>
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Mr.
David Pearl</font></td> 15
</tr>
<tr>
</font></td> 20
</font></td>
10pt; FONT-FAMILY: times new roman">Title:</font></div>
</td>
FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Minister 30
- Counsellor (Economic)</font></td>
</tr>
<tr>
</font></td>
</font></td>
</font></td>
Embassy</font></div>
</td>
</tr>
<tr> 50
roman">Washington,
D.C.</font></td> 60
</tr>

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<tr>
</font></td>
</font></td>
</font></td> 10
10pt; FONT-FAMILY: times new roman">Authorised
Agent in the United States</font></div> 15
receive notices and communications from </font></div>
Securities and Exchange
Commission</font></div>
</td> 25
</tr>
</table>
</div>
</div>
</div> 30
</div>
<div><br></div>
<div> 35
MARGIN-RIGHT: 0pt">
<div id="FTR">
Roman">
</font></div>
</div>
</div>
</div> 50
<div id="HDR">
Roman">
</font></div> 55
</div>
</div>
</div>
<div><br></div>

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FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">INDEX
TO EXHIBITS</font></div>
<div>
<tr> 10
MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT:
bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY:
inline; TEXT-DECORATION: underline">Exhibit 15
No.</font></font></div>
</td>
MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: 20
bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB1"
style="MARGIN-LEFT: 72pt"></font><font style="DISPLAY: inline; TEXT-
DECORATION: underline">Description</font></font></div>
</td>
</tr> 25
<tr>
</font></td>
</font></td>
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">A.</font></div>
</td>
FONT-FAMILY: times new roman">Deed
of Guarantee in respect of the Australian Government Guarantee Scheme
for 45
Large Deposits and Wholesale Funding.</font></div>
</td>
</tr>
<tr>
</font></td>
</font></td> 55
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">B.</font></div>

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</td>
FONT-FAMILY: times new roman">The 5
Australian Government Guarantee Scheme for Large Deposits and Wholesale
Funding Rules, including Sample List of Deposit Accounts and Guidelines
on
Interpretation of ‘Not Complex’ for the purposes of Schedule
3 – 10
Eligibility Criteria.</font></div>
</td>
</tr>
<tr>
</font></td>
</font></td> 20
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">C.</font></div>
</td>
FONT-FAMILY: times new roman">Eligibility
Certificate(s).**</font></div>
</td>
</tr>
<tr> 35
</font></td>
</font></td>
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">D.</font></div>
</td>
FONT-FAMILY: times new roman">Form
of Agreement for Offering Commonwealth Guaranteed Securities between the
Underwriters.*</font></div> 55
</td>
</tr>
<tr>
</font></td>

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</font></td>
</tr>
<tr> 5
10pt; FONT-FAMILY: times new roman">E.</font></div>
</td> 10
FONT-FAMILY: times new roman">Agreement
for Offering Commonwealth Guaranteed Securities by and among the 15
Underwriters.**</font></div>
</td>
</tr>
<tr> 20
</font></td>
</font></td>
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">F.</font></div>
</td>
FONT-FAMILY: times new roman">Itemised
statement showing estimated expenses of the Commonwealth of Australia in
connection with the sale of the Guarantee of each issue of ADI Debt
Securities.**</font></div> 40
</td>
</tr>
<tr>
</font></td>
</font></td>
</tr> 50
<tr>
10pt; FONT-FAMILY: times new roman">G.</font></div> 55
</td>
FONT-FAMILY: times new roman">Opinion 60
of Australian Government Solicitor with respect to the legality of the

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Guarantee of ADI Debt Securities.**</font></div>
</td>
</tr>
<tr>
</font></td>
</font></td> 10
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">H.</font></div>
</td>
FONT-FAMILY: times new roman">Consent
of Dr Ken Henry AC, Secretary of the Treasury of the Commonwealth of
</td>
</tr> 25
<tr>
</font></td>
</font></td>
</tr>
<tr>
10pt; FONT-FAMILY: times new roman">I.</font></div>
</td>
FONT-FAMILY: times new roman">Consent
of Australian Government Solicitor (included in Exhibit
G).**</font></div> 45
</td>
</tr>
</table>
</div>
FAMILY: Times New Roman">__________</font></div>
<div>
<tr valign="top">
FAMILY: Times New Roman">*</font></div>

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</td>
<td width="1045">
be filed by amendment.</font></div> 5
</td>
</tr>
</table>
</div>
<div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: left"><br></div> 10
<div>
<tr valign="top">
FAMILY: Times New Roman">**</font></div>
</td>
<td width="1046"> 20
be filed as an exhibit to the post-effective amendment to this
Registration Statement relating to the Guarantee of the relevant issue
of 25
ADI Debt Securities.</font></div>
</td>
</tr>
</table>
</div> 30
<div> </div>
<div style="TEXT-ALIGN: center">II-5</div>
</body>
</html> 35

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99 40
<SEQUENCE>3
<FILENAME>exhibita.htm
<DESCRIPTION>EXHIBIT A - DEED OF GUARANTEE
<TEXT>
<html> 45
<head>
<title>exhibita.htm</title>

</head>
<div style="TEXT-ALIGN: left"> 55
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;
TEXT-DECORATION: underline">EXHIBIT
A</font></font></div> 60

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RIGHT: 0.45pt" align="right"> </div>
RIGHT: 0.45pt" align="right"> </div> 10
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DEED 15
OF GUARANTEE IN RESPECT OF THE AUSTRALIAN GOVERNMENT GUARANTEE FOR LARGE
DEPOSITS AND WHOLESALE FUNDING</font></div>
RIGHT: 0pt" align="center"> </div> 25
0pt">
<div id="FTR">
</div> 40
</div>
</div>
</div>
</div>
<div id="HDR">
<div id="GLHDR" style="WIDTH: 100%" align="right"> 50
</div>
</div>
</div>
</div>
<div style="TEXT-ALIGN: center"><img src="australian.jpg" alt=""></div>
<div style="TEXT-ALIGN: center"> </div>
<div> </div>
<div> </div> 60
<div> </div>

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<div> </div>
<div> </div>
<div> </div>
<div><br>
<div>
<div align="left">
<div align="left">
<div align="left">
<tr>
bgcolor="white" style="BORDER-RIGHT: black; BORDER-TOP: medium none; BORDER-
LEFT: medium none; BORDER-BOTTOM: 4px"><font style="DISPLAY: inline; FONT- 15
WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: times new roman bold, times new
roman, serif"> </font></td>
bgcolor="#000000" style="BORDER-TOP: black 0.5pt solid; BORDER-LEFT: black
0.5pt solid; BORDER-BOTTOM: black 2px solid"> 20
FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: times new roman bold, times
new roman, serif"><font color="#ffffff"><font size="+0" style="FONT-SIZE:
12pt; COLOR: white; FONT-FAMILY: arial">DEED</font></font></font></div> 25
</td>
RIGHT: medium none; BORDER-TOP: medium none; BORDER-LEFT: black 0.5pt solid;
BORDER-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-
FAMILY: times new roman"> 30
</font></td>
</tr>
</table>
</div>
</div> 35
</div>
</div>
</div>
</div>
<div> 40
<div align="left">
<div align="left">
<div align="left">
<tr> 45
style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-
serif"> </font></td>
0pt; LINE-HEIGHT: 14pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY:
inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-serif">DEED
OF GUARANTEE <a name="autotextagspartiescofa">IN RESPECT OF THE
AUSTRALIAN
GOVERNMENT </a></font></div> 55
inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-serif">GUARANTEE
SCHEME FOR LARGE DEPOSITS AND WHOLESALE FUNDING</font></div>
<div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 60
14pt"> </div>

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<div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT:
0pt"> </div>
</td>
</tr>
<tr> 5
</font></td> 10
</tr>
</table>
</div>
</div>
</div> 15
</div>
12.55pt"> </div>
12.55pt"> </div> 20
12.55pt"> </div>
12.55pt"> </div>
12.55pt"> </div>
12.55pt"> </div>
12.55pt"> </div> 30
12.55pt"> </div>
12.55pt"> </div>
12.55pt"> </div>
12.55pt"> </div>
12.55pt"> </div> 40
12.55pt"> </div>
12.55pt"> </div>
12.55pt"> </div>
12.55pt"><br> </div><br>
<div id="FTR">
<div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY:
inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">
</font></div>
</div> 55
</font></div>

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</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div><br>
<div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: 0pt; LINE- 10
HEIGHT: 14pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline;
FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Arial, sans-
serif">CONTENTS</font></div>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-
HEIGHT: 14pt; MARGIN-RIGHT: 0pt" align="justify"> </div> 15
<div>
<div>
<tr>
BOTTOM: black 0.75pt solid">
0pt"> </div>
0pt; LINE-HEIGHT: 11.4pt; MARGIN-RIGHT: 0pt" align="left"><font 25
style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY:
arial, sans-serif"><a name="tableofcontents">1.</a></font></div>
</td>
BOTTOM: black 0.75pt solid"> 30
0pt"> </div>
0pt; LINE-HEIGHT: 11.4pt; MARGIN-RIGHT: 0pt" align="left"><font
style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: 35
arial, sans-serif">Interpretation</font></div>
</td>
0pt"> </div>
0pt; LINE-HEIGHT: 11.4pt; MARGIN-RIGHT: 0pt" align="right"><font
arial, sans-serif">2</font></div> 45
</td>
</tr>
<tr>
</font></td>
</font></td>
</font></td>
</tr>
<tr>

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0pt"> </div>
inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-serif">1.1.</font></div> 5
</td>
0pt"> </div>
inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-
serif">Definitions</font></div>
</td>
0pt"> </div>
0pt; LINE-HEIGHT: 12pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY:
inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-serif">2</font></div> 20
</td>
</tr>
<tr>
</font></td>
</font></td>
</font></td>
</tr>
<tr>
0pt"> </div>
inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-serif">1.2.</font></div> 40
</td>
0pt"> </div>
serif">Interpretation</font></div>
</td>
0pt"> </div>
inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-serif">2</font></div> 55
</td>
</tr>
<tr>
</font></td>

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</font></td>
</font></td>
</tr>
<tr>
0pt"> </div>
inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-serif">1.3.</font></div>
</td> 15
0pt"> </div>
0pt; LINE-HEIGHT: 12pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: 20
inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-serif">Effective
Date</font></div>
</td>
0pt"> </div>
inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-serif">3</font></div>
</td> 30
</tr>
<tr>
</font></td> 35
</font></td>
</font></td>
</tr>
<tr>
0pt"> </div>
inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-serif">1.4.</font></div>
</td> 50
0pt"> </div>
inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-serif">Eligibility
Certificates</font></div>
</td>
0pt"> </div>

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inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-serif">3</font></div>
</td>
</tr> 5
<tr>
</font></td>
</font></td>
</font></td> 15
</tr>
<tr>
0pt"> </div>
arial, sans-serif">2.</font></div> 25
</td>
0pt"> </div> 30
arial, sans-serif">Guarantee</font></div>
</td> 35
0pt"> </div>
arial, sans-serif">3</font></div>
</td>
</tr> 45
<tr>
</font></td>
</font></td>
</font></td> 55
</tr>
<tr>
0pt"> </div>

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arial, sans-serif">3.</font></div>
</td> 5
0pt"> </div>
arial, sans-serif">Claims</font></div>
</td>
0pt"> </div>
0pt; LINE-HEIGHT: 11.4pt; MARGIN-RIGHT: 0pt" align="right"><font 20
</td>
</tr>
<tr> 25
</font></td>
</font></td>
</font></td>
</tr> 35
<tr>
0pt"> </div> 40
</td> 45
0pt"> </div>
arial, sans-serif">Benefit
of Guarantee</font></div>
</td> 55
0pt"> </div>

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</td>
</tr>
<tr> 5
</font></td>
</font></td>
</font></td>
</tr> 15
<tr>
0pt"> </div> 20
</td> 25
0pt"> </div>
arial, sans-serif">Preservation
of Rights</font></div>
</td> 35
0pt"> </div>
</td>
</tr> 45
<tr>
</font></td>
</font></td>
</font></td> 55
</tr>
<tr>
0pt"> </div>

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</td> 5
0pt"> </div>
arial, sans-serif">Amendment
and termination</font></div>
</td> 15
0pt"> </div>
</td>
</tr> 25
<tr>
</font></td>
</font></td>
</font></td> 35
</tr>
<tr>
0pt"> </div>
</td>
0pt"> </div> 50
arial, sans-serif">Notices</font></div>
</td> 55
0pt"> </div>

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</td>
</tr>
<tr> 5
</font></td>
</font></td>
</font></td>
</tr> 15
<tr>
0pt"> </div> 20
</td> 25
0pt"> </div>
arial, sans-serif">Governing
law</font></div>
</td> 35
0pt"> </div>
</td>
</tr> 45
</table>
</div>
12.55pt"><br></div>
</div> 50
12.55pt"><br></div>
<div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 12.55pt">
12.55pt"><br></div> 55
<div>
<div align="left">
<tr>
black 1px solid">

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0pt; LINE-HEIGHT: 10.25pt; MARGIN-RIGHT: 0pt" align="left">
style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: arial, sans-serif">Deed 5
</div>
</td>
<td align="right" valign="top" width="21%" style="BORDER-TOP:
style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: arial, sans-serif">Page
i</font></div>
</td> 15
</tr>
</table>
</div>
</div>
12.55pt"><br><br>
<div id="FTR">
Roman">
</font></div>
</div>
</font></div>
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div><br></div>
</div> 45
HEIGHT: 12.55pt; MARGIN-RIGHT: 0pt" align="left">
<tr>
<td align="left" valign="top" width="12%" bgcolor="white" 50
style="BORDER-RIGHT: black; BORDER-TOP: medium none; BORDER-LEFT: medium none;
BORDER-BOTTOM: 4px">
</td>
<td align="left" valign="top" width="61%" bgcolor="#000000"
style="BORDER-TOP: black 0.5pt solid; BORDER-LEFT: black 0.5pt solid; BORDER- 55
MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT:
bold; FONT-SIZE: 12pt; FONT-FAMILY: times new roman bold, times new roman,
serif"><font color="#ffffff"><font size="+0" style="FONT-SIZE: 12pt; COLOR: 60
white; FONT-FAMILY: arial">DEED OF

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GUARANTEE</font></font></font></div>
</td>
<td align="left" valign="top" width="27%" style="BORDER-RIGHT:
medium none; BORDER-TOP: medium none; BORDER-LEFT: black 0.5pt solid; BORDER-
new roman">
</font></td>
</tr>
</table><a name="AutoTextAGSExecutionCommonSeal"><br></a></div>
RIGHT: 0pt">
HEIGHT: 12pt; MARGIN-RIGHT: 0pt" align="left"> </div>
</div>
<div> 15
<tr>
<td valign="top" width="9%" style="BORDER-BOTTOM: black 1pt
roman"> 20
</font></td>
black 1pt solid">
0pt"> </div> 25
LINE-HEIGHT: 14pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY:
inline; FONT-WEIGHT: bold; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-
serif">Date</font></div>
</td> 30
</tr>
<tr>
</font></td> 35
</font></td>
</tr>
<tr> 40
</font></td>
0pt"> </div>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">This
Deed of Guarantee is dated the 20 day of November 2008.</font></div> 50
0pt"> </div>
</td>
</tr>
<tr> 55
</font></td>
</font></td>

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</tr>
<tr>
roman"> 5
</font></td>
black 1pt solid">
0pt"> </div> 10
serif">Parties</font></div>
</td> 15
</tr>
<tr>
</font></td> 20
</font></td>
</tr>
<tr> 25
</font></td>
0pt"> </div>
Deed of Guarantee is made by:</font></div> 35
0pt"> </div>
</td>
</tr>
<tr> 40
</font></td>
</font></td>
</tr>
<tr>
0pt"> </div>
inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-serif"><a
name="partiescofa">1.</a></font></div> 55
</td>
0pt"> </div>

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inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif"><font style="DISPLAY:
inline; FONT-WEIGHT: bold">THE COMMONWEALTH OF AUSTRALIA
</font>(the <font style="DISPLAY: inline; FONT-WEIGHT:
bold">Commonwealth</font>)</font></div>
</td> 5
</tr>
<tr>
</font></td> 10
</font></td>
</tr>
<tr> 15
</font></td>
inline; FONT-WEIGHT: bold; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">IN
FAVOUR OF</font></div>
0pt"> </div> 25
</td>
</tr>
<tr>
</font></td>
</font></td>
</tr> 35
<tr>
0pt"> </div>
inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-serif">2.</font></div>
</td>
0pt"> </div>
inline; FONT-WEIGHT: bold">THE BENEFICIARIES </font>being 50
persons to whom the Guaranteed Liabilities are from time to time owed
(the
<font style="DISPLAY: inline; FONT-WEIGHT:
bold">Beneficiaries</font>).</font></div>
</td> 55
</tr>
<tr>
</font></td> 60

1182
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</font></td>
</tr>
<tr> 5
roman">
</font></td>
black 1pt solid">
0pt"> </div>
LINE-HEIGHT: 14pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: 15
serif">Context</font></div>
</td>
</tr>
<tr> 20
</font></td>
</font></td>
</tr>
<tr>
</font></td>
0pt"> </div>
Deed of Guarantee is made in the following context:</font></div>
0pt"> </div> 40
</td>
</tr>
<tr>
</font></td>
</font></td>
</tr> 50
<tr>
LINE-HEIGHT: 11.4pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY:
inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-serif">A.</font></div> 55
</td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">The 60
Commonwealth wishes to maintain public confidence in Australian

1183
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A 1
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incorporated authorised deposit-taking institutions (ADIs) and, to the
extent they operate within Australia, foreign ADIs and maintain<font
style="DISPLAY: inline; FONT-WEIGHT: bold"> </font>the stability of
the Australian wholesale debt markets.</font></div>
</td> 5
</tr>
<tr>
</font></td> 10
</font></td>
</tr>
<tr> 15
inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-serif">B.</font></div>
</td> 20
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">The
Commonwealth has given effect to a guarantee of specific deposits with 25
Eligible Institutions under the Financial Claims Scheme established
under
the <font style="DISPLAY: inline; FONT-STYLE: italic">Banking Act</font>
1959.</font></div>
</td> 30
</tr>
<tr>
</font></td> 35
</font></td>
</tr>
<tr> 40
inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-serif">C.</font></div>
</td> 45
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">In
accordance with this Deed of Guarantee, the Commonwealth guarantees 50
payments by Eligible Institutions under certain debt instruments and
deposits.</font></div>
</td>
</tr>
<tr> 55
</font></td>
</font></td>

1184
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A 1
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</tr>
<tr>
</font></td> 5
</font></td>
</tr>
<tr> 10
</font></td>
0pt"> </div>
inline; FONT-WEIGHT: bold">NOW THIS DEED OF GUARANTEE 20
WITNESSES </font>as follows:</font></div>
</td>
</tr>
</table>
</div> 25
12.55pt"><br></div>
12.55pt"><br></div>
12.55pt"><br></div>
<div>
<div align="left">
<tr> 35
black 1px solid">
</td>
black 1px solid">
1</font></div>
</td>
</tr> 50
</table>
</div>
</div>
12.55pt"><br></div><br> 55
MARGIN-RIGHT: 0pt">
<div id="FTR">
inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"> 60
</font></div>

1185
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</div>
</font></div> 5
</div>
</div>
<div id="HDR"> 10
Roman">
</font></div>
</div> 15
</div><br>
12.55pt"><br></div>
<div>
<tr>
</font></td>
</font></td>
</tr>
<tr>
black 0.5pt solid">
0pt"> </div>
serif">1.</font></div>
</td>
0pt"> </div>
inline; FONT-WEIGHT: bold; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans- 45
</td>
</tr>
<tr>
</font></td>
</font></td> 55
</tr>
<tr>
0pt"> </div> 60

1186
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serif">1.1.</font></div>
</td> 5
0pt"> </div>
</td>
</tr>
<tr> 15
</font></td>
</font></td>
</tr>
<tr>
0pt"> </div>
inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-serif">1.1.1.</font></div>
0pt"> </div>
</td>
0pt"> </div> 35
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">Unless
the contrary intention appears a term in bold type has the meaning shown
opposite it:</font></div> 40
0pt"> </div>
</td>
</tr>
</table> 45
</div>
12.55pt"><br></div>
<div>
<tr>
</font></td>
<td align="left" valign="top" width="17%" style="BORDER-TOP: black 55
0.5pt solid; BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 0.5pt
solid">
0pt"> </div>

1187
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serif">Beneficiary</font></div>
0pt"> </div>
</td> 5
black 0.5pt solid; BORDER-TOP: black 0.5pt solid; PADDING-LEFT: 2pt; BORDER-
LEFT: black 0.5pt solid; BORDER-BOTTOM: black 0.5pt solid">
<div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 0pt"
align="left"> </div> 10
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">means
a person to whom a Guaranteed Liability from time to time is
owed.</font></div> 15
align="left"> </div>
</td> 20
</tr>
<tr>
</font></td> 25
<td align="left" valign="top" width="17%" style="BORDER-LEFT:
black 0.5pt solid; BORDER-BOTTOM: black 0.5pt solid">
0pt"> </div>
serif">Business
Day</font></div>
0pt"> </div>
</td>
black 0.5pt solid; PADDING-LEFT: 2pt; BORDER-LEFT: black 0.5pt solid; BORDER-
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">means 45
a day (excluding Saturday and Sunday) on which banks are generally open
in
New South Wales for the transaction of banking business.</font></div>
</td>
</tr>
<tr> 55
</font></td>
black 0.5pt solid; BORDER-BOTTOM: black 0.5pt solid"> 60

1188
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0pt"> </div>
serif">Due
Date</font></div>
0pt"> </div>
</td> 10
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">has
the meaning given to it in Clause 2.1.1.b.</font></div>
<div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt" 20
</td>
</tr> 25
<tr>
</font></td>
<td align="left" valign="top" width="17%" style="BORDER-LEFT: 30
0pt"> </div>
serif">Eligibility
Certificate</font></div>
0pt"> </div> 40
</td>
a certificate issued in accordance with the Scheme Rules.</font></div> 50
</td> 55
</tr>
<tr>
</font></td> 60

1189
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0pt"> </div>
serif">Eligible
Institution</font></div>
0pt"> </div>
</td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">has 20
the meaning given in the Scheme Rules.</font></div>
LINE-HEIGHT: 14pt; MARGIN-RIGHT: 0pt" align="left"> </div>
</td>
</tr>
<tr>
</font></td>
0pt"> </div> 35
serif">External
Administration</font></div> 40
0pt"> </div>
</td>
black 0.5pt solid; PADDING-LEFT: 2pt; BORDER-LEFT: black 0.5pt solid; BORDER- 45
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">has
the same meaning as in section 5 of the <font style="DISPLAY: inline;
FONT-STYLE: italic">Payment Systems and Netting
Act</font> 1998.</font></div>
</td>
</tr> 60
<tr>

1190
p1190 22-9-2014
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</font></td>
0pt"> </div>
serif">Final
Application</font></div>
0pt"> </div>
</td>
<td align="left" valign="top" width="50%" style="BORDER-RIGHT: 20
the date determined by the Guarantor in accordance with the Scheme
Rules.</font></div>
</td>
</tr> 35
<tr>
</font></td>
0pt"> </div>
serif">Guaranteed
Liability</font></div>
0pt"> </div> 50
</td>
a liability that is the subject of an Eligibility 60
Certificate.</font></div>

1191
p1191 22-9-2014
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</td> 5
</tr>
<tr>
</font></td> 10
0pt"> </div>
serif">Guarantor</font></div>
0pt"> </div> 20
</td>
the Commonwealth of Australia</font></div> 30
</td> 35
</tr>
<tr>
</font></td> 40
0pt"> </div>
serif">Scheme
Rules</font></div>
0pt"> </div>
</td>

1192
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the rules of the Australian Government Guarantee Scheme for Large
Deposits
and Wholesale Funding published on
www.guaranteescheme.gov.au</font></div>
</td>
</tr>
</table>
</div> 10
HEIGHT: 14pt; MARGIN-RIGHT: 0pt" align="justify"> </div>
<div>
<tr valign="top" style="LINE-HEIGHT: 14pt;">
Times New Roman">
</font></div> 20
</td>
<td> </td>
</tr>
</table>
</div> 25
<div>
<tr>
0pt"> </div>
serif">1.2.</font></div> 35
</td>
<td align="left" colspan="3" valign="top" width="93%">
0pt"> </div>
</td>
</tr> 45
<tr>
</font></td>
<td colspan="2" valign="top" width="50%"><font style="DISPLAY: 50
</font></td>
</font></td> 55
</tr>
<tr>
0pt"> </div> 60

1193
p1193 22-9-2014
A 1
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0pt"> </div> 5
</td>
0pt"> </div>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">Any
reference in this Guarantee to a Clause or the Schedule is, unless
otherwise stated, to a clause hereof or the schedule
hereto.</font></div> 15
0pt"> </div>
</td>
</tr>
<tr> 20
</font></td>
<td colspan="2" valign="top" width="50%"><font style="DISPLAY:
</font></td>
</font></td>
</tr> 30
<tr>
0pt"> </div>
0pt"> </div>
</td> 40
0pt"> </div>
reference in this Guarantee to "<font style="DISPLAY: inline; FONT-
WEIGHT: bold">this Guarantee</font>" shall be
deemed to be a reference to this Guarantee as a whole and not limited to
the particular clause, schedule or provision in which the relevant 50
reference appears and to this Guarantee as varied, amended, supplemented
or substituted from time to time.</font></div>
0pt"> </div>
</td> 55
</tr>
<tr>
</font></td> 60

1194
p1194 22-9-2014
A 1
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</font></td>
</tr>
<tr> 5
0pt"> </div>
0pt"> </div>
</td>
<td align="left" colspan="3" valign="top" width="93%"> 15
0pt"> </div>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">In 20
this Guarantee, unless the contrary intention appears:</font></div>
0pt"> </div>
</td>
</tr> 25
<tr>
</font></td>
</font></td>
</font></td> 35
</tr>
<tr>
</font></td> 40
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">a.</font></div>
0pt"> </div>
</td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">Words
and expressions defined in the Scheme Rules have the same meanings where
used in this Guarantee;</font></div>
0pt"> </div> 55
</td>
</tr>
<tr>
</font></td>

1195
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A 1
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</font></td>
</font></td>
</tr>
<tr>
</font></td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">b.</font></div> 15
0pt"> </div>
</td>
headings in this Guarantee are inserted for convenience only and shall
be
of no legal effect;</font></div> 25
0pt"> </div>
</td>
</tr>
</table> 30
</div>
12.55pt"><br></div>
12.55pt"><br></div> 35
<div>
<div align="left">
<tr>
black 1px solid">
style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: arial, sans-serif">Deed
of Guarantee</font></div> 45
</td>
black 1px solid">
2</font></div>
</td>
</tr>
</table> 55
</div>
</div>
12.55pt"><br></div><br>
MARGIN-RIGHT: 0pt">

1196
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A 1
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<div id="FTR">
</font></div>
</div> 5
</font></div>
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div><br> 20
12.55pt"><br></div>
<div>
<tr> 25
</font></td>
</font></td>
</font></td>
</tr> 35
<tr>
</font></td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">c.</font></div>
0pt"> </div> 45
</td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">Words 50
denoting the singular number only shall include the plural and vice
versa;</font></div>
0pt"> </div>
</td> 55
</tr>
<tr>
</font></td> 60

1197
p1197 22-9-2014
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</font></td>
</font></td>
</tr>
<tr>
</font></td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">d.</font></div> 15
0pt"> </div>
</td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">A
reference to a person includes a body politic, body corporate or
partnership;</font></div>
0pt"> </div>
</td>
</tr>
<tr>
</font></td>
</font></td> 35
</font></td>
</tr>
<tr> 40
</font></td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">e.</font></div>
0pt"> </div>
</td> 50
word "includes" in any form is not a word of limitation;</font></div> 55
0pt"> </div>
</td>
</tr>
<tr> 60

1198
p1198 22-9-2014
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</font></td>
</font></td>
</font></td>
</tr> 10
<tr>
</font></td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">f.</font></div>
0pt"> </div> 20
</td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">A 25
reference to a person includes that person's administrators, successors
and permitted assigns; and</font></div>
0pt"> </div>
</td> 30
</tr>
<tr>
</font></td> 35
</font></td>
</font></td>
</tr>
<tr>
</font></td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">g.</font></div> 50
0pt"> </div>
</td>
reference to time of day shall be a reference to that time of day in
Sydney in the State of New South Wales.</font></div>
0pt"> </div>

1199
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</td>
</tr>
<tr>
</font></td>
</font></td>
</font></td>
</tr>
<tr>
0pt"> </div>
</td>
0pt"> </div> 25
serif">Effective
Date</font></div> 30
</td>
</tr>
<tr>
</font></td>
</font></td>
</font></td>
</tr>
<tr>
0pt"> </div>
inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-serif">1.3.1.</font></div> 50
0pt"> </div>
</td>
0pt"> </div>
Guarantee comes into effect on 28 November 2008.</font></div> 60

1200
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0pt"> </div>
</td>
</tr>
<tr> 5
</font></td>
</font></td>
</font></td>
</tr> 15
<tr>
0pt"> </div>
</td>
0pt"> </div>
serif">Eligibility
Certificates</font></div>
</td>
</tr>
<tr> 35
</font></td>
</font></td>
</font></td>
</tr> 45
<tr>
0pt"> </div>
0pt"> </div>
</td> 55
0pt"> </div>

1201
p1201 22-9-2014
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Beneficiary may rely upon the issue of an Eligibility Certificate as
conclusive evidence that the liability described in the Eligibility
Certificate satisfies the Eligibility Criteria.</font></div>
0pt"> </div> 5
</td>
</tr>
<tr>
</font></td>
</font></td>
</font></td>
</tr>
<tr>
black 0.5pt solid">
0pt"> </div>
</td>
style="BORDER-BOTTOM: black 0.5pt solid"> 30
0pt"> </div>
serif">Guarantee</font></div>
</td>
</tr>
<tr>
</font></td>
</font></td> 45
</font></td>
</tr>
<tr> 50
0pt"> </div>
0pt"> </div>
</td>

1202
p1202 22-9-2014
A 1
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0pt"> </div>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">Subject 5
to the terms of this Guarantee, the Guarantor irrevocably:</font></div>
0pt"> </div>
</td>
</tr> 10
<tr>
</font></td>
</font></td>
</font></td> 20
</tr>
<tr>
</font></td> 25
0pt"> </div>
</td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">guarantees
to the Beneficiaries the payment by each Eligible Institution of the
Guaranteed Liabilities; and</font></div>
0pt"> </div> 40
</td>
</tr>
<tr>
</font></td>
</font></td>
</font></td>
</tr>
<tr>
</font></td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">b.</font></div>

1203
p1203 22-9-2014
A 1
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0pt"> </div>
</td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">undertakes
in favour of the Beneficiaries that, whenever the Eligible Institution
does not pay any Guaranteed Liability on the date on which it becomes
due 10
and payable (the "<font style="DISPLAY: inline; FONT-WEIGHT: bold">Due
Date</font>"), the Guarantor shall, upon a claim by a Beneficiary made
in
accordance with Clause 3, and following the expiry of any applicable
grace 15
period, pay that Guaranteed Liability in accordance with the Scheme
Rules.</font></div>
0pt"> </div>
</td> 20
</tr>
<tr>
</font></td> 25
</font></td>
</font></td>
</tr>
<tr>
0pt"> </div>
0pt"> </div>
</td>
0pt"> </div> 45
Guarantor shall not be liable under Clause 2.1.1 in respect of any
Guaranteed Liability which has been varied, amended, waived, released, 50
novated, supplemented, extended or restated in any material respect
without the written consent of the Guarantor.</font></div>
0pt"> </div>
</td> 55
</tr>
<tr>
</font></td> 60

1204
p1204 22-9-2014
A 1
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</font></td>
</font></td>
</tr>
<tr>
0pt"> </div>
</td>
style="BORDER-BOTTOM: black 0.5pt solid">
0pt"> </div>
serif">Claims</font></div> 25
</td>
</tr>
<tr>
</font></td>
</font></td>
</font></td>
</tr>
<tr>
0pt"> </div>
0pt"> </div>
</td>
0pt"> </div>
claim by a Beneficiary for payment under this Guarantee must be in 55
accordance with the Scheme Rules.</font></div>
0pt"> </div>
</td>
</tr> 60
</table>

1205
p1205 22-9-2014
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</div>
12.55pt"><br></div>
12.55pt"><br></div> 5
<div>
<div align="left">
<tr>
black 1px solid">
style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: arial, sans-serif">Deed
of Guarantee</font></div> 15
</td>
black 1px solid">
3</font></div>
</td>
</tr>
</table> 25
</div>
</div>
12.55pt"><br></div><br>
MARGIN-RIGHT: 0pt">
<div id="FTR">
</font></div> 35
</div>
</font></div> 40
</div>
</div>
<div id="HDR"> 45
Roman">
</font></div>
</div> 50
</div><br>
12.55pt"><br></div>
<div>
<tr>
black 0.5pt solid">
0pt"> </div> 60

1206
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</td> 5
0pt"> </div>
serif">Benefit
</td> 15
</tr>
<tr>
</font></td> 20
</font></td>
</font></td>
</tr>
<tr>
0pt"> </div>
0pt"> </div>
</td>
0pt"> </div> 40
Guarantee shall inure to the benefit of each Beneficiary and its
administrators, successors and permitted assigns. Such administrators, 45
successors and permitted assigns shall be entitled to enforce this
Guarantee against the Guarantor.</font></div>
0pt"> </div>
</td> 50
</tr>
<tr>
</font></td> 55
</font></td>
</font></td>

1207
p1207 22-9-2014
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</tr>
<tr>
black 0.5pt solid">
0pt"> </div>
serif">5.</font></div> 10
</td>
0pt"> </div> 15
serif">Preservation
of Rights</font></div> 20
</td>
</tr>
<tr>
</font></td>
</font></td>
</font></td>
</tr>
<tr>
0pt"> </div>
0pt"> </div>
</td>
0pt"> </div>
obligations of the Guarantor under this Guarantee are continuing 50
obligations despite any intermediate payment or settlement of a claim in
respect of a specific Guaranteed Liability.</font></div>
0pt"> </div>
</td> 55
</tr>
<tr>
</font></td> 60

1208
p1208 22-9-2014
A 1
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</font></td>
</font></td>
</tr>
<tr>
0pt"> </div>
0pt"> </div>
</td>
0pt"> </div> 20
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">Neither
the obligations of the Guarantor nor the rights of the Beneficiaries
under 25
this Guarantee shall be discharged, impaired or otherwise affected by
the
External Administration or dissolution of an Eligible Institution or any
analogous proceeding in any jurisdiction.</font></div>
0pt"> </div>
</td>
</tr>
<tr>
</font></td>
</font></td> 40
</font></td>
</tr>
<tr> 45
black 0.5pt solid">
0pt"> </div>
</td>
0pt"> </div>

1209
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A 1
st
serif">Amendment
and termination</font></div>
</td>
</tr> 5
<tr>
</font></td>
</font></td>
</font></td> 15
</tr>
<tr>
0pt"> </div> 20
0pt"> </div> 25
</td>
0pt"> </div>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">Subject
to Clause 6.1.2 below, this Guarantee shall terminate at midnight
on
the date which is sixty-seven calendar months after the Final 35
Application
Date but without prejudice to the rights of any Beneficiary in respect
of
a valid claim lodged prior to that time.</font></div>
0pt"> </div>
</td>
</tr>
<tr>
</font></td>
</font></td> 50
</font></td>
</tr>
<tr> 55
0pt"> </div>

1210
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0pt"> </div>
</td>
0pt"> </div>
Guarantor may extend the date of termination of this Guarantee at any 10
time
prior to termination in accordance with the Scheme Rules.</font></div>
0pt"> </div>
</td> 15
</tr>
<tr>
</font></td> 20
</font></td>
</font></td>
</tr>
<tr>
0pt"> </div>
0pt"> </div>
</td>
0pt"> </div> 40
Guarantor may amend the terms of this Guarantee at any time at its
discretion by publishing such amendment on the website referred to in 45
the
Scheme Rules provided that (except insofar as such amendment is required
by law) such amendment does not reduce the Guarantor's obligations to
the
Beneficiaries in a manner which is prejudicial to the interests of the 50
Beneficiaries in respect of any subsisting Guaranteed
Liability.</font></div>
0pt"> </div>
</td> 55
</tr>
<tr>
</font></td> 60

1211
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A 1
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</font></td>
</font></td>
</tr>
<tr>
0pt"> </div>
</td>
0pt"> </div>
serif">Notices</font></div> 25
</td>
</tr>
<tr>
</font></td>
</font></td>
</font></td>
</tr>
<tr>
0pt"> </div>
0pt"> </div>
</td>
0pt"> </div>
notice or other communication under this Guarantee shall be given in 55
accordance with the Scheme Rules.</font></div>
0pt"> </div>
</td>
</tr> 60
<tr>

1212
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</font></td>
</font></td>
</font></td>
</tr> 10
<tr>
black 0.5pt solid">
0pt"> </div> 15
</td> 20
0pt"> </div>
serif">Governing
law</font></div>
</td> 30
</tr>
<tr>
</font></td> 35
</font></td>
</font></td>
</tr>
<tr>
0pt"> </div>
0pt"> </div>
</td>
0pt"> </div> 55
Guarantee is governed by, and shall be construed in accordance with, and
any matter related to it is to be governed by, the law of New South 60
Wales.</font></div>

1213
p1213 22-9-2014
A 1
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0pt"> </div>
</td>
</tr>
</table> 5
</div>
14pt"><br></div> 10
HEIGHT: 14pt; MARGIN-RIGHT: 0pt" align="justify"><br> </div>
<div>
<div align="left">
<tr> 20
black 1px solid">
</td>
black 1px solid">
4</font></div>
</td>
</tr> 35
</table>
</div>
</div>
14pt"><br></div>
0pt">
<div id="FTR"> 45
</div>
</div>
</div>
</div>
</div> 55
<div id="HDR">
</div>
</div>
</div> 60

1214
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A 1
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<div>
<tr> 5
</font></td>
0pt"> </div>
inline; FONT-WEIGHT: bold">Executed as a 15
Deed</font>.</font></div>
LINE-HEIGHT: 14pt; MARGIN-RIGHT: 0pt" align="left"> </div> 20
0pt"> </div>
</td> 25
</font></td>
</font></td>
</tr>
<tr>
black 0.5pt solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: 35
times new roman">
</font></td>
black 0.5pt solid">
0pt"> </div>
serif">Signatures</font></div> 45
</td>
<td valign="top" width="4%" style="BORDER-BOTTOM: black 0.5pt
roman">
</font></td> 50
<td valign="top" width="50%" style="BORDER-BOTTOM: black 0.5pt
roman">
</font></td>
</tr> 55
<tr>
</font></td>

1215
p1215 22-9-2014
A 1
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</font></td>
</font></td>
</font></td>
</tr>
<tr>
</font></td>
LINE-HEIGHT: 12.55pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: 15
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">SIGNED
for and on behalf of the Commonwealth of Australia by:</font></div>
</td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">)</font></div>
</td>
</font></td>
</tr>
<tr>
</font></td>
</font></td>
0pt"> </div>
</td> 45
</font></td>
</tr>
<tr> 50
</font></td>
</font></td>
0pt"> </div>

1216
p1216 22-9-2014
A 1
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LINE-HEIGHT: 13pt; MARGIN-RIGHT: 0pt" align="left"> </div> 5
</td>
</font></td>
</tr> 10
<tr>
</font></td>
</font></td>
</font></td> 20
black 0.5pt solid">
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">/s/ 25
Wayne Swan</font></div>
</td>
</tr>
<tr>
</font></td>
</font></td> 35
</font></td>
</font></td>
</tr>
<tr>
</font></td>
Honourable Wayne Swan MP, Treasurer</font></div>
</td>
</font></td> 55
inline; FONT-SIZE: 11pt; FONT-STYLE: italic; FONT-FAMILY: arial, sans-
serif">Signature</font></div> 60
</td>

1217
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A 1
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</tr>
<tr>
</font></td> 5
</font></td>
</font></td>
</font></td>
</tr> 15
<tr>
</tr> 25
<tr>
</tr> 35
<tr>
</font></td>
0pt"> </div>
the presence of:</font></div>
</td>
</font></td> 50
</font></td>
</tr>
<tr> 55
</font></td>
</font></td>

1218
p1218 22-9-2014
A 1
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</font></td>
</font></td>
</tr>
<tr>
</font></td>
black 0.5pt solid">
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">Andrew
Thomas</font></div>
</td>
</font></td>
black 0.5pt solid">
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">/s/
Andrew Thomas</font></div>
</td>
</tr>
<tr> 30
</font></td>
</font></td>
</font></td>
</font></td>
</tr>
<tr>
</font></td>
serif">Name
of Witness</font></div>
</td>
</font></td>

1219
p1219 22-9-2014
A 1
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serif">Signature
of witness</font></div>
</td>
</tr> 5
</table>
</div>
12.55pt"><br></div>
12.55pt"><br></div>
12.55pt"><br> </div>
12.55pt"> </div> 15
12.55pt"> </div>
12.55pt"> </div>
12.55pt"> </div>
12.55pt"> </div>
12.55pt"> </div> 25
12.55pt"> </div>
12.55pt"> </div>
12.55pt"> </div>
12.55pt"> </div>
12.55pt"> </div> 35
12.55pt"> </div>
12.55pt"> </div>
12.55pt"><br> </div>
<div>
<div align="left">
<tr> 45
black 1px solid">
</td>
black 1px solid">
5</font></div>
</td>
</tr> 60
</table>

1220
p1220 22-9-2014
A 1
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</div>
</div>
12.55pt"><br></div><br><br></body>
</html> 5

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99 10
<SEQUENCE>4
<FILENAME>exhibitb.htm
<DESCRIPTION>EXHIBIT B - SCHEME RULES
<TEXT>
<html> 15
<head>
<title>exhibitb.htm</title>

</head>
<div> </div> 25
HEIGHT: 14pt; MARGIN-RIGHT: 0pt" align="justify">
FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; 30
TEXT-DECORATION: underline">EXHIBIT
B</font></font></div>
AUSTRALIAN GOVERNMENT GUARANTEE SCHEME FOR LARGE DEPOSITS AND WHOLESALE
FUNDING
RULES, INCLUDING SAMPLE LIST OF DEPOSIT ACCOUNTS AND GUIDELINES ON
INTERPRETATION OF ‘NOT COMPLEX’ FOR THE PURPOSES OF SCHEDULE 3 55
– ELIGIBILITY
CRITERIA</font></div>

1221
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<div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 15
0pt">
<div id="FTR">
</div>
</div> 20
</div>
</div>
</div>
<div id="HDR">
</div> 30
</div>
</div>
</div>
<div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; TEXT-
ALIGN: center"><img src="australian.jpg" alt=""><br></div> 35
ALIGN: center"> </div>
<div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; TEXT- 40
ALIGN: center"> </div> 45
<div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt; TEXT- 50
ALIGN: center">
<tr> 55
<td align="left" valign="top" width="15%" bgcolor="white"
style="BORDER-RIGHT: black; BORDER-TOP: medium none; BORDER-LEFT: medium none;
BORDER-BOTTOM: 4px">
</td>

1222
p1222 22-9-2014
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<td align="left" valign="top" width="57%" bgcolor="#000000"
style="BORDER-TOP: black 0.5pt solid; BORDER-LEFT: black 0.5pt solid; BORDER-
MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: 5
bold; FONT-SIZE: 12pt; FONT-FAMILY: times new roman bold, times new roman,
serif"><font color="#ffffff"><font size="+0" style="FONT-SIZE: 12pt; COLOR:
white; FONT-FAMILY: arial">AUSTRALIAN GOVERNMENT GUARANTEE SCHEME FOR LARGE
</font></font></font>
10
WEIGHT: bold"><font color="#ffffff" style="FONT-SIZE: 12pt; COLOR: white;
FONT-FAMILY: arial">DEPOSITS AND WHOLESALE FUNDING
RULES</font></font></div> 15
</div>
</td>
medium none; BORDER-TOP: medium none; BORDER-LEFT: black 0.5pt solid; BORDER-
new roman">
</font></td>
</tr>
</table> </div>
<div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt"> 25
<div>
</div>
12.55pt"><br> </div> 30
12.55pt"> </div>
12.55pt"> </div>
12.55pt"> </div>
12.55pt"> </div>
12.55pt"> </div> 40
12.55pt"> </div>
12.55pt"><br> </div>
<div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 12.55pt"> 45
<div id="FTR">
Roman">
</font></div>
</div>
</font></div>
</div> 60
</div>

1223
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A 1
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<div id="HDR">
Roman">
</font></div> 5
</div>
</div>
</div>
12.55pt"><br></div> 10
</div>
HEIGHT: 14pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline;
FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Arial, sans-
serif">CONTENTS</font></div> 15
<div>
<div>
<div> 20
<tr>
0pt"> </div>
0pt; LINE-HEIGHT: 11.4pt; MARGIN-RIGHT: 0pt" align="left"> </div>
</td>
0pt"> </div>
arial, sans-serif">Interpretation</font></div>
</td>
0pt"> </div>
</td>
</tr>
<tr>
0pt"> </div>

1224
p1224 22-9-2014
A 1
st
</td>
0pt"> </div>
arial, sans-serif">Scheme
Administrator</font></div>
</td>
0pt"> </div>
</td>
</tr>
<tr>
0pt"> </div>
0pt; LINE-HEIGHT: 11.4pt; MARGIN-RIGHT: 0pt" align="left"> </div> 30
</td> 35
0pt"> </div>
arial, sans-serif">Applications
for Eligibility Certificates</font></div>
</td> 45
0pt"> </div>
</td>
</tr> 55
<tr>
0pt"> </div> 60

1225
p1225 22-9-2014
A 1
st
</td>
0pt"> </div>
arial, sans-serif">Issue 15
of Eligibility Certificate and Issuance of Guaranteed
</td>
0pt"> </div>
</td>
</tr>
<tr>
0pt"> </div>
</td> 40
0pt"> </div>
arial, sans-serif">Counter-Indemnity</font></div>
</td>
0pt"> </div>
</td>
</tr>
<tr> 60

1226
p1226 22-9-2014
A 1
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0pt"> </div>
</td>
0pt"> </div> 15
arial, sans-serif">Fees</font></div>
</td> 20
0pt"> </div>
</td>
</tr> 30
<tr>
0pt"> </div> 35
</td>
0pt"> </div>
arial, sans-serif">Guarantee 50
Statement and Website</font></div>
</td>
0pt"> </div>
</td>

1227
p1227 22-9-2014
A 1
st
</tr>
<tr>
0pt"> </div>
</td>
0pt"> </div>
arial, sans-serif">Notification
of Breach</font></div>
</td>
0pt"> </div>
</td>
</tr>
<tr>
0pt"> </div>
</td> 45
0pt"> </div>
arial, sans-serif">Claims
and Payment</font></div>
</td> 55
0pt"> </div>

1228
p1228 22-9-2014
A 1
st
</td>
</tr>
<tr> 5
0pt"> </div>
</td>
0pt"> </div> 20
arial, sans-serif">Reporting</font></div>
</td> 25
0pt"> </div>
</td>
</tr> 35
<tr>
0pt"> </div> 40
</td>
0pt"> </div>
arial, sans-serif">Auditing</font></div> 55
</td>
0pt"> </div> 60

1229
p1229 22-9-2014
A 1
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</td> 5
</tr>
<tr>
0pt"> </div>
</td>
0pt"> </div>
arial, sans-serif">Status
of Eligibility Certificate</font></div>
</td>
0pt"> </div>
</td>
</tr>
<tr>
0pt"> </div>
</td> 50
0pt"> </div>
arial, sans-serif">Notices</font></div>
</td>

1230
p1230 22-9-2014
A 1
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0pt"> </div>
</td>
</tr>
<tr>
0pt"> </div>
</td> 20
0pt"> </div>
arial, sans-serif">Changes
to Scheme Rules</font></div>
</td> 30
0pt"> </div>
</td>
</tr> 40
<tr>
arial, sans-serif"> </font></td>
<td align="left" colspan="2" valign="bottom" width="86%"><font 45
arial, sans-serif"> </font></td> 50
</tr>
<tr>
0pt"> </div> 55
serif">Schedule
1</font></div> 60
</td>

1231
p1231 22-9-2014
A 1
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0pt"> </div>
serif">ELIGIBLE
INSTITUTIONS</font></div>
</td>
0pt"> </div>
serif">9</font></div>
</td>
</tr>
<tr>
</tr>
<tr> 30
0pt"> </div>
serif">Schedule
2</font></div>
</td>
0pt"> </div>
serif">APPLICATION</font></div>
</td>
0pt"> </div> 50
</td> 55
</tr>
<tr>
<td align="left" colspan="2" valign="bottom" width="12%"><font

1232
p1232 22-9-2014
A 1
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</tr>
<tr>
0pt"> </div>
serif">Schedule 15
3</font></div>
</td>
0pt"> </div> 20
serif">ELIGIBILITY
CRITERIA</font></div> 25
</td>
0pt"> </div>
</td>
</tr> 35
<tr>
</tr>
<tr>
0pt"> </div> 50
serif">Schedule
4</font></div> 55
</td>
0pt"> </div>

1233
p1233 22-9-2014
A 1
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serif">ELIGIBILITY
CERTIFICATE</font></div>
</td>
0pt"> </div>
</td>
</tr>
<tr>
</tr>
<tr> 25
0pt"> </div>
serif">Schedule
5</font></div>
</td>
0pt"> </div>
serif">FEE
SCHEDULE AND PAYMENT ARRANGEMENTS AND</font></div>
</td>
</font></td>
</tr>
<tr>
<td colspan="2" valign="bottom" width="12%"><font
</font></td>
0pt"> </div>
serif">REPORTING
ARRANGEMENTS</font></div>
</td> 60

1234
p1234 22-9-2014
A 1
st
0pt"> </div>
</td>
</tr>
<tr>
<td colspan="2" valign="bottom" width="12%"><font 10
</tr>
<tr> 20
0pt"> </div>
serif">Schedule
6</font></div>
</td>
0pt"> </div>
serif">FORM
OF FEE LETTER</font></div>
</td>
0pt"> </div>
serif">30</font></div> 45
</td>
</tr>
<tr>
</tr>
<tr>
<td align="left" colspan="2" valign="bottom" width="12%"> 60

1235
p1235 22-9-2014
A 1
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0pt"> </div>
serif">Schedule
7</font></div>
</td>
0pt"> </div>
serif">FORM 15
OF COUNTER-INDEMNITY</font></div>
</td>
0pt"> </div> 20
</td> 25
</tr>
<tr>
</tr>
<tr>
0pt"> </div>
serif">Schedule 45
8</font></div>
</td>
0pt"> </div> 50
serif">FORM
OF CLAIM</font></div> 55
</td>
0pt"> </div>

1236
p1236 22-9-2014
A 1
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</td>
</tr>
<tr> 5
</tr> 15
<tr>
0pt"> </div>
serif">Schedule
9</font></div>
</td> 25
0pt"> </div>
serif">FORM
OF LEGAL OPINION IN RESPECT OF THE COUNTER-</font></div>
</td>
</font></td>
</tr>
<tr>
</font></td>
0pt"> </div> 45
serif">INDEMNITY</font></div>
</td> 50
0pt"> </div>
</td>
</tr>
<tr> 60

1237
p1237 22-9-2014
A 1
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<td colspan="2" valign="bottom" width="12%"><font
</tr> 10
<tr>
0pt"> </div>
serif">Schedule
10</font></div>
</td> 20
0pt"> </div>
serif">FORM
OF LEGAL OPINION IN RESPECT OF ELIGIBLE SCHEME</font></div>
</td>
</font></td>
</tr>
<tr>
</font></td>
0pt"> </div> 40
serif">LIABILITIES</font></div>
</td> 45
0pt"> </div>
</td>
</tr>
</table> 55
</div>
</div>
</div>

1238
p1238 22-9-2014
A 1
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14pt"> </div>
<div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 14pt">
12.55pt"><br></div> 5
<div>
<tr>
black 1pt solid"> 10
serif">Government
Guarantee Scheme Rules</font></div> 15
</td>
black 1pt solid">
serif">Page
ii</font></div>
</td>
</tr> 25
</table>
</div>
</div><br>
<div id="FTR">
</font></div>
</div> 35
</font></div>
</div>
</div>
<div id="HDR">
Roman">
</font></div>
</div>
</div><br> 50
<div>
<div align="left">
<tr>
bgcolor="black">
arial, sans-serif"> 60

1239
p1239 22-9-2014
A 1
st
<a name="autotextagsexecutioncommonseal"><font style="FONT-WEIGHT: bold;
FONT-SIZE: 12pt; COLOR: white; FONT-FAMILY: arial">AUSTRALIAN
GOVERNMENT GUARANTEE SCHEME FOR LARGE DEPOSITS AND WHOLESALE FUNDING
RULES</font></a></font></div>
</td> 5
</tr>
<tr>
</font></td> 10
</tr>
<tr>
</font></td> 15
</tr>
<tr>
<td valign="bottom" width="9%" style="BORDER-BOTTOM: black
0.25pt solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY:
</font></td>
arial, sans-serif">Date</font></div>
</td>
</tr>
<tr> 30
</font></td>
</font></td>
</tr>
<tr>
</font></td>
style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">These 45
Scheme Rules commence on 20 November 2008.</font></div>
</td>
</tr>
<tr>
</font></td>
</font></td> 55
</tr>
<tr>
<td valign="bottom" width="9%" style="BORDER-BOTTOM: black
0.25pt solid"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY:
</font></td>

1240
p1240 22-9-2014
A 1
st
arial, sans-serif">Context</font></div>
</td>
</tr>
<tr>
</font></td>
</font></td> 15
</tr>
<tr>
</font></td> 20
style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">These
Scheme Rules are made in the following 25
context:</font></div>
</td>
</tr>
</table>
</div> 30
</div>
HEIGHT: 12.55pt; MARGIN-RIGHT: 0pt" align="left"><br></div>
<div>
<tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-serif">A.</font></div> 40
</td>
Commonwealth of Australia (the <font style="DISPLAY: inline; FONT-
WEIGHT: bold">Commonwealth</font>) has
executed a Deed of Guarantee which comes into effect on 28 November
2008.</font></div>
</td> 50
</tr>
<tr>
</font></td> 55
</font></td>
</tr>
<tr> 60

1241
p1241 22-9-2014
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st
inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-serif">B.</font></div>
</td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">Under
the Deed of Guarantee the Commonwealth guarantees Guaranteed
Liabilities.</font></div> 10
</td>
</tr>
<tr>
</font></td>
</font></td>
</tr> 20
<tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-serif">C.</font></div> 25
</td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">These 30
Scheme Rules are referred to in the Deed of Guarantee and govern access
to
protection under the Deed of Guarantee.</font></div>
</td>
</tr> 35
<tr>
</font></td>
</font></td>
</tr>
<tr>
<td align="left" valign="bottom" width="9%" style="BORDER-BOTTOM: 45
</td>
</td>
</tr>
<tr> 60

1242
p1242 22-9-2014
A 1
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</font></td>
</font></td>
</tr>
<tr>
</td>
</td> 20
</tr>
<tr>
</font></td> 25
</font></td>
</tr>
<tr> 30
0pt"> </div>
0pt"> </div>
</td>
0pt"> </div>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">Unless 45
the contrary intention appears, a term in bold type has the meaning
shown
opposite it:</font></div>
0pt"> </div> 50
</td>
</tr>
</table>
</div>
14pt"><br></div>
<div>

1243
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<div>
<tr>
</font></td>
black 0.5pt solid; BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 0.5pt
solid">
0pt"> </div>
serif">Applicant</font></div> 15
0pt"> </div>
</td>
black 0.5pt solid; PADDING-LEFT: 0pt; BORDER-LEFT: black 0.5pt solid; BORDER- 20
0pt"> </div>
the Eligible Institution making an Application.</font></div>
0pt; LINE-HEIGHT: 14pt; MARGIN-RIGHT: 0pt" align="left"> </div>
0pt"> </div>
0pt"> </div>
</td>
<td valign="top" width="13%" style="BORDER-LEFT: black 0.5pt 35
roman">
</font></td>
</tr>
<tr> 40
</font></td>
0pt"> </div>
serif">Application</font></div>
0pt"> </div>
</td>
<td align="left" valign="top" width="70%" style="PADDING-LEFT: 55
0pt; BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 0.5pt solid">
0pt"> </div>

1244
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an application made under Rule 3.1.1.</font></div>
0pt"> </div> 5
0pt"> </div>
0pt"> </div>
</td> 10
<td valign="top" width="13%" style="BORDER-LEFT: black 0.5pt
roman">
</font></td>
</tr> 15
<tr>
</font></td>
0pt"> </div>
serif">Australian
Resident</font></div>
0pt"> </div> 30
</td>
<td align="left" valign="top" width="70%" style="PADDING-LEFT:
0pt"> </div> 35
a person treated as an Australian resident for the purposes of
Australian 40
income taxation law.</font></div>
0pt"> </div>
</td>
roman">
</font></td>
</tr>
<tr> 50
</font></td>
0pt"> </div>
serif">Beneficiary</font></div>

1245
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0pt"> </div>
</td>
0pt; BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 0.5pt solid"> 5
0pt"> </div>
a person to whom a Guaranteed Liability from time to time is
owed.</font></div>
0pt"> </div>
</td>
roman"> 20
</font></td>
</tr>
<tr>
</font></td>
0pt"> </div> 30
serif">Business
Day</font></div> 35
0pt"> </div>
</td>
0pt"> </div>
a day (excluding Saturday and Sunday) on which banks are generally open
in
Sydney in New South Wales for the transaction of banking
business.</font></div>
0pt"> </div>
</td>
roman">
</font></td>
</tr>
<tr> 60

1246
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</font></td>
0pt"> </div>
serif">Counter-Indemnity</font></div>
0pt"> </div>
</td>
0pt"> </div>
each deed of counter-indemnity to be provided under Rule
4.1.2.</font></div>
0pt; LINE-HEIGHT: 14pt; MARGIN-RIGHT: 0pt" align="left"> </div> 25
0pt"> </div>
0pt"> </div>
</td> 30
roman">
</font></td>
</tr> 35
<tr>
</font></td>
0pt"> </div>
serif">Eligibility
Certificate</font></div>
0pt"> </div> 50
</td>
0pt"> </div> 55
a certificate issued in accordance with Rule 4.</font></div>
0pt"> </div>

1247
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</td>
roman">
</font></td> 5
</tr>
<tr>
</font></td> 10
0pt"> </div>
serif">Eligibility
Certificate Fee</font></div>
0pt"> </div>
</td>
0pt"> </div>
the fee in respect of an Eligibility Certificate determined in 30
accordance
with Schedule 5.</font></div>
0pt"> </div>
</td> 35
roman">
</font></td>
</tr> 40
</table>
</div>
</div>
12.55pt"><br></div> 45
12.55pt"><br></div>
<div>
<tr> 50
<td align="left" valign="top" width="56%" style="BORDER-TOP: black
1pt solid">
inline; FONT-SIZE: 9pt; FONT-FAMILY: arial, sans-serif">Government 55
Guarantee Scheme Rules</font></div>
</td>
black 1pt solid">

1248
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LINE-HEIGHT: 10.25pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY:
inline; FONT-SIZE: 9pt; FONT-FAMILY: arial, sans-serif">Page
1</font></div>
</td> 5
</tr>
</table>
</div>
12.55pt"><br></div><br> 10
MARGIN-RIGHT: 0pt">
<div id="FTR">
</font></div>
</div>
</font></div>
</div>
</div> 25
<div id="HDR">
Roman">
</font></div> 30
</div>
</div><br>
12.55pt"><br></div>
<div> 35
<div>
<tr>
</font></td>
black 0.5pt solid; BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 0.5pt
solid">
0pt"> </div>
serif">Eligibility</font></div> 50
serif">Criteria</font></div>
0pt"> </div>
</td>

1249
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0pt"> </div>
the criteria set out in Schedule 3.</font></div>
0pt"> </div>
</td>
roman">
</font></td>
</tr>
<tr> 15
</font></td>
0pt"> </div>
serif">Eligible
Institution</font></div>
0pt"> </div>
</td> 30
0pt"> </div>
an authorised deposit-taking institution (including a foreign ADI)
within
the meaning of the <font style="DISPLAY: inline; FONT-STYLE: 40
italic">Banking Act</font> 1959 and
listed in Schedule 1.</font></div>
0pt"> </div>
</td>
roman"> 50
</font></td>
</tr>
<tr>
</font></td>
0pt"> </div> 60

1250
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serif">Eligible
Scheme</font></div> 5
serif">Liability</font></div>
0pt"> </div>
</td>
0pt"> </div>
any liability of an Eligible Institution which satisfies the Eligibility 20
Criteria.</font></div>
0pt"> </div>
</td>
roman">
</font></td>
</tr>
<tr> 30
</font></td>
0pt"> </div>
serif">Fee
Formula</font></div>
0pt"> </div>
</td> 45
0pt"> </div>
the relevant formula set out in Schedule 5 for the calculation of the
Fee
payable by Eligible Institutions in respect of an Eligibility 55
0pt"> </div> 60

1251
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0pt"> </div>
</td>
roman">
</font></td>
</tr>
<tr>
</font></td>
0pt"> </div>
serif">Fee 20
Letter</font></div>
0pt"> </div>
</td>
0pt"> </div>
the letter referred to in Rule 6.1.3.</font></div>
0pt"> </div>
</td>
roman"> 40
</font></td>
</tr>
<tr>
</font></td>
0pt"> </div> 50
serif">Final
Application</font></div> 55
0pt"> </div>

1252
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</td>
0pt"> </div> 5
the date determined by the Guarantor and notified in accordance with
Rule 10
3.1.2.</font></div>
0pt"> </div>
</td>
roman">
</font></td>
</tr>
<tr> 20
</font></td>
0pt"> </div>
0pt"> </div>
</td>
0pt"> </div>
the guarantee contained in the Deed of Guarantee executed on behalf of
the
Commonwealth of Australia and which takes effect from 28 November 2008,
as 45
amended from time to time.</font></div>
0pt; LINE-HEIGHT: 0pt"> </div> 50
</td>
roman">
</font></td> 55
</tr>
<tr>
</font></td> 60

1253
p1253 22-9-2014
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0pt"> </div>
serif">Guaranteed
0pt"> </div>
</td>
0pt"> </div>
a liability that is the subject of an Eligibility 20
0pt"> </div>
</td>
roman">
</font></td>
</tr>
<tr> 30
</font></td>
0pt"> </div>
serif">Statement</font></div> 45
0pt"> </div>
</td>
0pt"> </div>
the statement referred to in Rule 7.1.1.</font></div>
0pt"> </div>
</td>

1254
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roman">
</font></td>
</tr> 5
<tr>
</font></td>
0pt"> </div>
serif">Guarantor</font></div>
0pt"> </div>
</td> 20
0pt"> </div>
the Commonwealth of Australia.</font></div>
0pt"> </div> 30
</td>
roman">
</font></td> 35
</tr>
<tr>
</font></td> 40
0pt"> </div>
inline; FONT-WEIGHT: bold">Reserve Bank of Australia
</font>or<font style="DISPLAY: inline; FONT-WEIGHT: bold">
RBA</font></font></div> 50
0pt"> </div>
</td>
0pt"> </div>

1255
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the body corporate constituted and continued in existence under the
<font style="DISPLAY: inline; FONT-STYLE: italic">Reserve Bank Act
</font>1959.</font></div>
0pt"> </div> 5
</td>
roman">
</font></td> 10
</tr>
<tr>
</font></td> 15
0pt"> </div>
serif">Scheme
0pt"> </div>
</td>
0pt"> </div>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">is
the Reserve Bank of Australia.</font></div> 35
0pt"> </div>
</td>
roman">
</font></td>
</tr>
<tr>
</font></td>
0pt"> </div>
serif">Scheme 55
Rules</font></div>
0pt"> </div>
</td>

1256
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0pt"> </div>
these rules as amended and in force from time to time.</font></div>
0pt"> </div> 10
</td>
roman">
</font></td> 15
</tr>
<tr>
</font></td> 20
0pt"> </div>
serif">Specified
Account</font></div>
0pt"> </div>
</td>
0pt"> </div>
any of the following:</font></div> 40
<div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: -
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans- 45
serif">a.
Farm Management Deposit within the meaning of section 393-25 of Schedule
2G of the <font style="DISPLAY: inline; FONT-STYLE: italic">Income Tax
Assessment Act</font> 1936; or</font></div>
<div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: - 50
serif">b.       55
First Home Saver Account within the meaning of section 8 of the <font
style="DISPLAY: inline; FONT-STYLE: italic">First Home Saver Accounts
Act</font> 2008; or</font></div>
27pt; LINE-HEIGHT: 14pt; MARGIN-RIGHT: 0pt" align="left"> </div> 60

1257
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serif">c.
Retirement Savings Account within the meaning of subsection 8(1) of the 5
<font style="DISPLAY: inline; FONT-STYLE: italic">Retirement Savings
Accounts Act </font>1997.</font></div>
0pt"> </div>
</td> 10
roman">
</font></td>
</tr> 15
</table>
</div>
</div>
14pt"><br></div>
<div> 25
<tr>
1pt solid">
inline; FONT-SIZE: 9pt; FONT-FAMILY: arial, sans-serif">Government
</td>
<td align="right" valign="top" width="21%" style="BORDER-TOP: 35
black 1pt solid">
2</font></div> 40
</td>
</tr>
</table>
</div>
14pt"><br></div>
HEIGHT: 14pt; MARGIN-RIGHT: 0pt" align="justify"> </div><br> 50
MARGIN-RIGHT: 0pt">
<div id="FTR">
</font></div>
</div>
</font></div>

1258
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</div>
</div>
<div id="HDR"> 5
Roman">
</font></div>
</div> 10
</div><br>
14pt"><br></div> 15
<div>
<tr> 20
0pt"> </div>
0pt"> </div>
</td>
0pt"> </div>
these Scheme Rules, unless the contrary intention appears:</font></div>
0pt"> </div>
</td>
</tr> 40
<tr>
inline; FONT-SIZE: 10pt; FONT-FAMILY: arial, sans-serif"> </font></td>
<td align="left" colspan="2" valign="top" width="73%"><font
style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans- 45
</tr>
<tr>
</font></td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">a.</font></div> 55
0pt"> </div>
</td>

1259
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inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">Words
and expressions defined in the Guarantee have the same meanings where
used 5
in these Scheme Rules;</font></div>
0pt"> </div>
</td>
</tr> 10
<tr>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif"> </font></td> 15
</tr>
<tr>
</font></td>
0pt"> </div>
</td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">References
to a Schedule are to a Schedule to these Scheme Rules;</font></div>
0pt"> </div>
</td>
</tr>
<tr>
</tr>
<tr>
</font></td> 50
0pt"> </div>
</td>

1260
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singular includes the plural and vice-versa;</font></div>
0pt"> </div>
</td>
</tr> 5
<tr>
</tr>
<tr>
</font></td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">d.</font></div>
0pt"> </div>
</td>
reference to a person includes a body politic, body corporate or
partnership;</font></div> 30
0pt"> </div>
</td>
</tr>
<tr> 35
</tr>
<tr>
</font></td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">e.</font></div> 50
0pt"> </div>
</td>
word "includes" in any form is not a word of limitation;</font></div>
0pt"> </div> 60
</td>

1261
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</tr>
<tr>
</tr>
<tr> 10
</font></td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">f.</font></div>
0pt"> </div>
</td> 20
reference to a person includes that person's administrators, successors 25
and permitted assigns;</font></div>
0pt"> </div>
</td>
</tr> 30
<tr>
</tr>
<tr>
</font></td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">g.</font></div>
0pt"> </div>
</td>
reference to time of day shall be a reference to that time of day in
Sydney in the State of New South Wales.</font></div> 55
0pt"> </div>
</td>
</tr>
<tr> 60

1262
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</tr>
<tr>
0pt"> </div>
</td>
0pt"> </div>
serif">Scheme 25
</td>
</tr>
<tr>
</tr>
<tr>
0pt"> </div> 40
0pt"> </div> 45
</td>
0pt"> </div>
Scheme Administrator is responsible for administering the Scheme Rules
on
behalf of the Guarantor.</font></div> 55
0pt"> </div>
</td>
</tr>
<tr> 60

1263
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serif"> </font></td> 5
</tr>
<tr>
0pt"> </div> 10
0pt"> </div> 15
</td>
0pt"> </div>
reference in these Scheme Rules to something being approved by, at the
discretion of, or otherwise within the power or control of, the
Guarantor 25
shall include a reference to the Scheme Administrator providing such
approval or taking any relevant action on behalf of the Guarantor in its
capacity as Scheme Administrator and an Eligible Institution or
Beneficiary is entitled to rely, without further enquiry, on such
approval 30
or action as if it had been done by the Guarantor.</font></div>
0pt"> </div>
</td>
</tr> 35
<tr>
style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans- 40
</tr>
<tr>
0pt"> </div>
0pt"> </div>
</td>
0pt"> </div> 55
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">Eligible
Institutions must comply with the reasonable directions of the Scheme
Administrator made within the scope of these Scheme Rules.</font></div> 60

1264
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0pt"> </div>
</td>
</tr>
<tr> 5
</tr>
<tr>
0pt"> </div>
</td>
0pt"> </div> 25
serif">Applications
for Eligibility Certificates</font></div> 30
</td>
</tr>
<tr>
</tr> 40
<tr>
0pt"> </div>
0pt"> </div>
</td> 50
0pt"> </div>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">An
Eligible Institution shall be entitled, until 5.00pm on the Final
Application Date, to apply for an Eligibility Certificate in respect of
an
Eligible Scheme Liability.</font></div> 60

1265
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0pt"> </div>
</td>
</tr>
<tr> 5
</tr>
<tr>
0pt"> </div> 15
0pt"> </div> 20
</td>
0pt"> </div>
Guarantor shall provide Eligible Institutions with no less than twenty
Business Days notice in writing of the Final Application
Date.</font></div> 30
0pt"> </div>
</td>
</tr>
<tr> 35
</tr>
<tr>
0pt"> </div> 45
0pt"> </div> 50
</td>
0pt"> </div>
Guarantor may extend the Final Application Date at any time at its
discretion by notice in writing to the Eligible
Institutions.</font></div> 60

1266
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0pt"> </div>
</td>
</tr>
<tr> 5
</tr>
<tr>
0pt"> </div> 15
0pt"> </div> 20
</td>
0pt"> </div>
Application must be made in the form of Schedule 2, signed on behalf of
the Eligible Institution and delivered to the Scheme
Administrator.</font></div> 30
0pt"> </div>
</td>
</tr>
<tr> 35
</tr>
</table>
</div>
12.55pt"><br></div> 45
12.55pt"><br></div>
12.55pt"><br></div>
<div> 50
<tr>
1pt solid">
</td>
black 1pt solid">

1267
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3</font></div>
</td> 5
</tr>
</table>
</div>
12.55pt"><br></div><br> 10
MARGIN-RIGHT: 0pt">
<div id="FTR">
</font></div>
</div>
</font></div>
</div>
</div> 25
<div id="HDR">
Roman">
</font></div> 30
</div>
</div><br>
12.55pt"><br></div>
<div> 35
<tr>
0pt"> </div> 40
0pt"> </div> 45
</td>
0pt"> </div>
Application which is incomplete or incorrect, including where APRA has
notified the Scheme Administrator that the letter of prudential
compliance 55
provided in accordance with Schedule 2 B.9 is incomplete or incorrect,
will be treated as not having been made and the Scheme Administrator
will
notify the Applicant accordingly.</font></div>
0pt"> </div>

1268
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</td>
</tr>
<tr>
</tr>
<tr>
0pt"> </div>
</td>
0pt"> </div>
serif">Issue
of Eligibility Certificate and Issuance of Guaranteed
</td>
</tr> 30
<tr>
</tr>
<tr>
0pt"> </div>
0pt"> </div>
</td>
0pt"> </div>
decision to issue an Eligibility Certificate shall be at the discretion 55
of
the Guarantor.</font></div>
0pt"> </div>
</td> 60
</tr>

1269
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<tr>
</tr>
<tr>
0pt"> </div> 10
0pt"> </div> 15
</td>
0pt"> </div>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">No
Eligibility Certificate in respect of an Eligible Scheme Liability will
be
issued unless, prior to the issue, the Applicant has duly delivered to 25
the
Scheme Administrator an Application in accordance with Rule
3.</font></div>
0pt"> </div> 30
</td>
</tr>
<tr>
</tr>
<tr>
0pt"> </div>
0pt"> </div>
</td>
0pt"> </div>
Eligibility Certificate shall be substantially in the form of Schedule 55
4.</font></div>
0pt"> </div>
</td>
</tr> 60
<tr>

1270
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</tr> 5
<tr>
0pt"> </div>
0pt"> </div>
</td> 15
0pt"> </div>
Eligible Institution must not issue an Eligible Scheme Liability, in
respect of which an Eligibility Certificate has been issued, which
differs
in any material respect from the particulars of the Eligible Scheme 25
Liability specified in the relevant Eligibility
0pt"> </div>
</td> 30
</tr>
<tr>
</tr>
<tr>
0pt"> </div>
</td>
0pt"> </div>
serif">Counter-Indemnity</font></div> 55
</td>
</tr>
<tr>

1271
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</tr>
<tr> 5
0pt"> </div>
0pt"> </div>
</td>
0pt"> </div>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">Subject 20
to Scheme Rules 5.1.3 and 5.1.4, each Counter-Indemnity must be
substantially in the form of Schedule 7 or such other form as
is
approved by the Guarantor.</font></div>
0pt"> </div>
</td>
</tr>
<tr>
</tr>
<tr> 35
0pt"> </div>
0pt"> </div>
</td>
0pt"> </div>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">Each 50
Counter-Indemnity shall be executed as a deed by the relevant Eligible
Institution and any additional counter-indemnitor required in accordance
with Rule 5.1.3.</font></div>
0pt"> </div> 55
</td>
</tr>
<tr>

1272
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</tr>
<tr>
0pt"> </div>
0pt"> </div>
</td>
0pt"> </div>
Guarantor shall be entitled, in its discretion, to require any member of 20
the corporate group of which the Eligible Institution is a member to
become an additional counter-indemnitor under the Counter-Indemnity, in
which event the liability of the relevant institution and the additional
counter-indemnitor shall be expressed to be joint and several under the
Counter-Indemnity and the form of the Counter-Indemnity in Schedule 7 25
shall be modified accordingly, all as reasonably required by the
Guarantor.</font></div>
0pt"> </div>
</td> 30
</tr>
<tr>
</tr>
<tr>
0pt"> </div>
0pt"> </div>
</td>
0pt"> </div> 50
Guarantor shall, as a condition to the issue of an Eligibility
Certificate, be entitled to require the making of any amendment or 55
supplement to a Counter-Indemnity which has previously been delivered to
it, and the delivery to it of a further legal opinion of the kind
referred
to in Schedule 2 as applicable.</font></div>
0pt"> </div>

1273
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</td>
</tr>
<tr>
</tr>
</table>
</div> 10
12.55pt"><br></div>
12.55pt"><br></div>
<div> 15
<tr>
1pt solid">
</td>
black 1pt solid">
4</font></div> 30
</td>
</tr>
</table>
</div>
12.55pt"><br></div><br>
MARGIN-RIGHT: 0pt">
<div id="FTR">
<div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: 40
</font></div>
</div>
</font></div>
</div> 50
</div>
<div id="HDR">
Roman"> 55
</font></div>
</div>
</div><br>
12.55pt"><br></div> 60
<div>

1274
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A 1
st
<tr>
0pt"> </div>
</td>
0pt"> </div> 15
serif">Fees</font></div>
</td> 20
</tr>
<tr>
<td align="left" colspan="2" valign="top" width="73%"><font 25
</tr>
<tr>
0pt"> </div>
0pt"> </div>
</td>
0pt"> </div>
Guarantor shall be entitled to determine the amount of, and to charge, 45
an
Eligibility Certificate Fee to each Eligible Institution in respect of
the
Eligibility Certificates issued to that Eligible
Institution.</font></div> 50
0pt"> </div>
</td>
</tr>
<tr> 55
</tr>

1275
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st
<tr>
0pt"> </div>
0pt"> </div>
</td> 10
0pt"> </div>
Eligibility Certificate Fee shall accrue during the period that the
liabilities described in that Eligibility Certificate are guaranteed and
shall be calculated in accordance with the Fee Formula.</font></div>
0pt"> </div>
</td>
</tr>
<tr>
</tr> 30
<tr>
0pt"> </div>
0pt"> </div>
</td> 40
0pt"> </div>
Eligibility Certificate Fee shall be payable in accordance with the Fee
Letter which will be substantially in the Form set out in Schedule 6 and
signed on behalf of the Eligible Institution.</font></div>
0pt"> </div>
</td>
</tr>
<tr>
</tr> 60
<tr>

1276
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0pt"> </div>
0pt"> </div>
</td>
0pt"> </div>
Guarantor may, at its discretion, waive the payment of an Eligibility
Certificate Fee by an Eligible Institution:</font></div>
0pt"> </div>
</td> 20
</tr>
<tr>
</tr>
<tr>
</font></td>
0pt"> </div>
</td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">in
total;</font></div>
0pt"> </div>
</td>
</tr>
<tr>
</tr>
<tr>
</font></td> 60

1277
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A 1
st
0pt"> </div> 5
</td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">for 10
a specific period;</font></div>
0pt"> </div>
</td>
</tr> 15
<tr>
</tr>
<tr>
</font></td>
0pt"> </div>
</td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">in
respect of one or more Guaranteed Liabilities;</font></div>
0pt"> </div>
</td>
</tr>
<tr>
</tr>
<tr>
</font></td> 55
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">d.</font></div>
0pt"> </div>

1278
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</td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">in 5
respect of one or a class of Beneficiaries; or</font></div>
0pt"> </div>
</td>
</tr> 10
<tr>
</tr>
<tr>
</font></td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">e.</font></div>
0pt"> </div>
</td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">for
any combination of sub-paragraphs a to d above.</font></div>
0pt"> </div>
</td>
</tr>
<tr>
</tr>
<tr>
0pt"> </div>
</td>
0pt"> </div> 60

1279
p1279 22-9-2014
A 1
st
serif">Guarantee
Statement and Website</font></div> 5
</td>
</tr>
<tr>
</tr>
<tr> 15
0pt"> </div>
0pt"> </div>
</td>
0pt"> </div>
Scheme Administrator will establish and maintain a website on which will
be published a statement of Guaranteed Liabilities. The current website
is
at <font style="DISPLAY: inline; TEXT-DECORATION:
underline">www.guaranteescheme.gov.au</font>.</font></div> 35
0pt"> </div>
</td>
</tr>
<tr> 40
</tr>
<tr>
0pt"> </div> 50
0pt"> </div> 55
</td>
0pt"> </div>

1280
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A 1
st
Guarantee Statement published under Rule 7.1.1 shall have no legal
status, 5
shall not affect the status or effect of any Eligibility Certificate,
and
shall be for information purposes only.</font></div>
0pt"> </div> 10
</td>
</tr>
<tr>
</tr>
<tr> 20
0pt"> </div>
0pt"> </div>
</td>
0pt"> </div>
Guarantor may have additional information published on the website
referred to in Rule 7.1.1, including but not limited to:</font></div>
0pt"> </div>
</td> 40
</tr>
<tr>
</tr>
<tr>
</font></td>
0pt"> </div>
</td>

1281
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A 1
st
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">the
names of Eligible Institutions from time to time;</font></div>
0pt"> </div>
</td>
</tr>
<tr>
</tr>
<tr>
</font></td> 20
0pt"> </div>
</td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">a
summary of the Guaranteed Liabilities from time to time in respect of
individual or groups of Eligible Institutions;</font></div>
0pt"> </div> 35
</td>
</tr>
<tr>
</tr> 45
<tr>
</font></td>
0pt"> </div> 55
</td>
inline; FONT-SIZE: 11pt; FONT-FAMILY: arial, sans-serif">any 60
amendment or supplement to these Scheme Rules; and</font></div>

1282
p1282 22-9-2014
A 1
st
0pt"> </div>
</td>
</tr>
<tr> 5
<td align="left" valign="top" width="85%"><font sty

20140922-G. H. Schorel-Hlavka O.W.B. To Submissions To The Financial System Inquiry-SUPPLEMENT 9

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