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AUSTRALIA HAS A FEDERAL SYSTEM of government, which means there is both a national and a second level of government, the state and territorial authorities. It is a liberal democratic government and its structure is a hybrid, reflecting the influence of both the British parliamentary model and the American presidential model. The British queen is the head of state and the governor general represents the monarch in her absence (which is most of the time). The head of state is a mostly symbolic position. The national parliament is bicameral, with a House of Representatives and a Senate. Like a parliamentary system, there is a blending of the legislative and executive branches; there is cabinet solidarity and responsible government; there is strict party discipline. Australia has a written constitution. The date of elections is not fixed, but there is a maximum length to a term (and different terms for both houses) and an election must be called before the end of the term. The individual states also have constitutions and these documents may be amended in most parts by the state legislature without the express consent of the people.

The Australian party system is theoretically a multiparty system. In actuality, it is a strong bipolar party system, essentially a two-party system. The Liberal Party is a center-right party and the National Party is also a center-right party and together they act as a coalition to counter the center-left Labor Party. All of the main parties differ more with respect to social policy than economic policy.

The Australian Labor Party (ALP) is the oldest party in Australia politics, dating back to 1891 and formed in the colonies prior to federation. In the first election in the Commonwealth of Australia, the ALP elected 16 members to the House of Representatives and 8 members to the Senate. The ALP first formed the government in May 1904 (in a parliamentary system, the party that wins the most number of seats forms the government, and it is the leader of that party who becomes the prime minister). This Labor government, however, was a minority government (this means that although the ALP won a plurality of seats, it did not win a majority of the seats, and this is an inherently unstable government) and the government only lasted three months.

Australia's ALP was the first successful labor party in the world. By 1915, it had formed the national government three times and it had governed in all the states, even if only for a brief time. The last Labor government lasted a record 13 years (from 1983 to 1996), and at the time of its defeat, Australia was left in a sound economic position. Australia had experienced over four years of sustained economic growth, low inflation, stable interest rates, and more than 2 million new jobs had been created.

The ALP was historically committed to socialist economic policies, including national wage fixing and a strong welfare system. The ALP did not try to nationalize private enterprise. There was an attempt to nationalize the banking system in the 1940s, but the High Court of Australia ruled this move was unconstitutional. Since the 1970s, under party leader Gough Whitlam, the ALP moved from describing itself as socialist to social democratic. In the 1980s, during the ALP's 13-year domination of national politics, the party pushed for the privatization of government enterprises and the deregulation of many tightly controlled industries—measures more closely identified with conservative politics, on the right side of center.

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