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Immigration has been a major factor in Australia's development since the beginning of European settlement in 1788. For generations, most settlers came from Britain and Ireland, and the people of Australia are still predominantly of British or Irish origin, with a culture and outlook similar to that of the United Kingdom and the United States.

In common with many other developed countries, Australia is currently experiencing a demographic shift towards an older population, with more people retiring and fewer people of working age. Similarly, a large number of Australian citizens (950,000 as of 2004) live outside of their home country. This number (almost 5%) represents a higher per capita percentage of overseas residents than many other countries including the United States. This phenomenon was, until recently, given little attention by the Australian government and media, but the term Australian Diaspora has now joined the Australian vocabulary.

Australia has had a significant school of painting since the early days of European settlement, and Australians with international reputations include Sidney Nolan, Russell Drysdale, and Arthur Boyd—not to mention the prized work of many Aboriginal artists. Writers who have achieved world recognition include Thomas Keneally, Les Murray, Colleen McCullough, Nevil Shute, Morris West, Jill Ker Conway, Booker Prize winner Peter Carey and Nobel Prize winner Patrick White. Noted expatriate writers include Germaine Greer and Clive James, who are sometimes better known in the UK than they are in Australia.

Much of Australia's culture is derived from European and more recently American roots, but distinctive Australian features have evolved from the environment, aboriginal culture, and the influence of Australia's neighbours. The vigor and originality of the arts in Australia—films, opera, music, painting, theater, dance, and crafts—are achieving international recognition.

Sydney is located in a coastal basin between the Pacific Ocean to the east and the Blue Mountains to the west. Sydney features the largest natural harbour in the world, Port Jackson, and also enjoys more than 70 beaches, including the famous Bondi Beach.

Sydney is a significant global and domestic tourist destination and is regularly declared to be one of the most beautiful and livable cities in the world, admired for its harbour, beautiful coastline, warm and pleasant climate and cosmopolitan culture. Sydney significantly raised its global profile in recent years as the host city of the 2000 Summer Olympics. The city's name is pronounced "SID-nee".

Many Perth residents consider their city to be egalitarian and relaxed, with a relatively large middle class and a suburban lifestyle; however, as with all large cities, Perth does have pockets of extreme wealth and poverty. The population is easy-going and friendly, but can be parochial, especially towards the "Eastern States" which are often viewed with deep, but usually jocular, suspicion. This attitude can be attributed mainly to isolation — reflected in the widely-held belief that Perth is "the world's most isolated capital city".