...our continued reliance on commodities as the lucky country may well worked for the past decades, but over the coming decades, it could all change.
...how can we even have home grown solid world leading tech companies willing to list on the ASX. Australia’s competitiveness hits 25-year low Michael Read and Jacob Greber
Jun 17, 2021 – 6.00pm
Australia has scored its worst result in 25 years in a global ranking of competitiveness, even as it was one of few countries to successfully manage the twin health and economic crisis unleashed by the pandemic.
Australia fell four places to 22nd in the Swiss-based Institute for Management Development’s (IMD) World Competitiveness Yearbook, which compares the performance of 64 nations. The result puts Australia in sixth place out of the 14 countries of the Asia-Pacific that were included in the survey.
The Swiss-based IMD is not the first organisation to single out Australia for its narrow economic base, whereby minerals and energy comprise 70 per cent of all exports. Glenn Campbell
It was Australia’s worst performance since 1996 according to Jarrod Ball, chief economist for the Committee for the Economic Development of Australia.
“It is a warning sign in terms of our competitiveness and complacency,” Mr Ball said in an interview.
“This is really a survey about the capacity in the longer term to grow jobs and incomes.”
The rankings are compiled using a mix of statistical indicators and the results of a survey of more than 5700 international executives.
Mr Ball said the results were a call to arms to get Australia’s innovation engine firing, urging the government to lower business and income taxes, boost climate resilience and diversify the nation’s export base.
The way executives see the economy, they are not convinced it will work out.
— Christos Cabolis, chief economist, IMD competitiveness centre
“Australia’s tax regime is called out in the survey as a drag on competitiveness, with Australia ranking 54th and 57th respectively for its corporate and personal income tax burdens,” he said.
Australia’s management practices rated a “lacklustre” 58th, Mr Ball said, while the country’s scores for agility, entrepreneurship, customer satisfaction and credibility of managers put it among the lowest-ranked of the 64 nations.
“But it is not just our management practices that are deteriorating,” he said.
“Our heavy reliance on mineral resources and a narrow set of markets sees us rank in the 50s for our export sophistication.”
The Swiss-based IMD is not the first organisation to single out Australia for its narrow economic base, whereby minerals and energy comprise 70 per cent of all exports.
A study by Harvard Kennedy School’s Centre for International Development released in 2019 ranked Australia 93rd out of 133 nations for economic complexity, noting the similarity between the export profiles of Australia and low-income Angola.
Christos Cabolis, chief economist at IMD’s competitiveness centre, said in a separate interview that Australia’s business community had “major doubts” about the economy as well as deteriorating attitudes towards globalisation, exacerbated by the pandemic.
“The whole issue of COVID has in many ways strengthened social cohesion in different countries,” Professor Cabolis said. “This happened in Australia as well, yet it seems that business sentiment has deteriorated.
“The way executives see the economy, they are not convinced it will work out.”
Australia’s strongest attributes, according to IMD, were its health and environment, business legislation and international investment.
Australia’s successful economic response to the COVID-19 pandemic also helped its economic performance ranking climb.
The yearbook identifies several challenges for Australia, including laying the groundwork for the safe reopening of international borders, maintaining health and safety through the vaccination rollout, and driving private sector-led growth and investment.
“There are many times when people see our rankings and they feel it is something like a football championship,” said Professor Cabolis. “In fact it’s not. At the end of the day, each country has a strategy to increase the prosperity of their people, and what we try to do is place them in a relative position.
“In the end there are important issues for each country that may be different ... for example, democracy is extremely strong in Australia, which is ranked ninth.”
This year’s report showed the top five most competitive nations were Switzerland, Sweden, Denmark, the Netherlands and Singapore, helped by improvements in innovation, digitalisation of their economies, welfare benefits and social cohesion.
“Highly competitive countries have been able to tackle these challenges by strengthening their institutional and social frameworks,” the report’s authors wrote.
They also said “trends in highly ranked economies show that the health and education systems remain at the core of competitiveness, contributing to having successfully endured the pandemic – so far”.
Mr Ball warned that Australia’s perception as a laggard on climate change may become a drag on competitiveness in coming years.
“If we continue to have a level of uncertainty and a perception and a reality that we are moving slower than the rest of the world then you find you have an uncertainty from investors,” he said.
“To the extent that we don’t use those opportunities [for green investment] absolutely we fall back in terms of competitiveness long term.”
