With an estimated population of 21,875,000 in June 2009 and a surface area of around 7.7 million km, Australia is a continental-scale country with a medium sized population (Australian Bureau of Statistics (ABS). Population by age and sex, Australian states and territories, Jun 2009, cat. no. 3201.0. ABS, Canberra, 2009a). It is a relatively wealthy country with an overall high standard of living ranking second (behind Norway) according to the 2009 Human Development Report (United Nations Development Programme (UNDP), Human development report 2009. Palgrave MacMillan, New York, p. 171, 2009). However, amongst the ‘Very High Human Development’ (VHHD) countries, Australia has a reasonably high level of income inequality, ranking equal 7th and 9th out of 28 countries according to the ratio of the wealthiest 10 % of the population to the poorest 10 % and the Gini index respectively (United Nations Development Programme (UNDP), Human development report 2009. Palgrave MacMillan, New York, p. 195, 2009). For the most part, Australia has been populated by a process of international migration. According to the most recent (2006) Census, 23.9 % of the Australian population was born overseas. Furthermore, only 56.1 % of the population had both parents born in Australia. This chapter outlines the interaction between demography and Australian interpretations of race and ethnicity. The discussion focuses on the two population groups mentioned above—Indigenous Australians (in section “Aboriginal and Torres Strait Islander Australians”) and the overseas-born population and their descendants (in section “Migration and multicultural Australia”). A recurring theme is the degree of variation within these groups (especially for the migrant population), both in terms of ethnic identification and demographic or socioeconomic outcomes. In the final part of the paper (section “Social cohesion and multiculturalism”), we provide a summary of sorts, focussing on the notions of social cohesion and multiculturalism.