Modern Australia was founded with the influx of European settlers just over two hundred years ago, but the Aborigines inhabited the continent for tens of thousands of years before that. They numbered a few hundred thousand before the European influx. But two centuries of discrimination and expropriation followed, and at one point the indigenous population fell as low as 60,000.

Australia's politicians at first looked to Europe and the US in foreign policy, but in the past 20 years or so they have made their near neighbours a priority. The British founded the first European settlement in 1788 and named it Sydney. Many of the first settlers were convicts, but free settlers started to arrive in increasing numbers, particularly after the discovery of gold in the mid-19th century. Today, just over 90% of the population are of European descent, with less than 3% descended from the indigenous Aboriginal population.

The government formally apologised in 2008 for the past wrongs committed against the indigenous Australians, who still suffer from high rates of unemployment, imprisonment and drug abuse.

The gradual dismantling of the "White Australia" immigration policy in the decades after World War II heralded an increase in the number of non-European arrivals.

The country has federal structure, with the six states retaining extensive powers, particularly over education, police, the judiciary and transport.

Overview

Politics:

The Labour Party won a landslide victory in elections in 2007, ending more than 11 years of Liberal Party government. Julia Gillard heads a minority government.

There is an influential republican movement and the debate over future of the monarchy is a recurring issue in Australian politics. In a 1999 referendum, nearly 55% of Australians voted against becoming a republic.

Economy:

The strong, services-based economy has seen sustained growth; mining and agriculture provide the lion's share of exports

International:

Australia is a regional policeman; further afield, its troops are in Iraq and Afghanistan

FACTS

Full name: Commonwealth of Australia

Population: 21.5 million (UN, 2010)

Capital: Canberra

Largest city: Sydney

Area: 7.7 million sq. km (2.9 million sq. miles)

Major language: English

Major religion: Christianity

Life expectancy: 80 years (men), 84 years (women) (UN)

Monetary unit: 1 Australian dollar = 100 cents

Main exports: Ores and metals; wool, food and live animals; fuels, transport machinery and equipment

GNI per capita: US $43,770 (World Bank, 2009)

Internet domain: .au

International dialling code: +61

LEADERS

Head of State: Queen Elizabeth II, represented by a governor-general

Prime Minister: Julia Gillard

Julia Gillard became Australia's first woman prime minister in June 2010 after the once hugely popular Kevin Rudd fell to a party coup less than three years after taking office.

Ms Gillard called a snap election in August to try restore her Labour Party's fortunes. However, the closely fought contest failed to produce an outright winner. After weeks of political deadlock, Ms Gillard managed to cling to power by the narrowest of margins, when two independent members of parliament finally decided to back her as the head of a minority government - the first in Australia for seventy years.

Aged 48 at the time of taking office, Ms Gillard was born in Barry in South Wales, United Kingdom, and emigrated to Australia with her parents in the 1960s. She was motivated to seek the prime ministership out of fear that the ruling Labour party would lose the forthcoming election.

Her predecessor, Mr Rudd, started the year as the most popular Australia leader in thirty years, but his approval ratings collapsed after he shelved his flagship environmental policy, an emissions trading scheme. In a country that favours battlers, many regarded it as an act of political cowardice.

Ms Gillard the straight-talking lawyer, known for her wit and savage put-downs, has forged a reputation as a formidable parliamentary performer since taking on the demanding employment and education portfolios under Rudd.