policy & reform campusreview. com. au
Not looking too smart
Australia’ s weakening performance in global economic competitiveness shows that changes need to be made.
By Antonia Maiolo
Australia has dropped another place in world competitiveness league tables, falling further in rankings for economic performance and government efficiency, raising concerns about the nation as a smart economy.
In releasing the Australian results from the IMD World Competitiveness Yearbook, which ranks and assesses 61 countries, Council for Economic Development of Australia chief executive professor Stephen Martin said Australia’ s decline to 18th in the world rankings highlighted a concerning trend over the last five years.
“ The overall result is drawn from rankings for four key areas – economic performance, government efficiency, business efficiency and infrastructure – and Australia has slipped significantly in all these areas,” Martin says.“ The most concerning thing, of course, is that Australia’ s global competitiveness continues to slump. We have achieved our lowest world ranking in something like 18 years.”
Australia dropped four places in economic performance over the last year – from 24th to 28th. This contributes to a total loss of 15 places over the last five years. Worsening domestic economic conditions, rising unemployment and lower international investment have been the biggest contributors to the overall drop in this area this year, Martin says.
“ International investment includes a ranking on the threat of R & D facilities moving offshore and also services being relocated,” he says.“ Australia has dropped from 39 to 53 and 54, respectively, for these areas.”
For the government efficiency ranking, he points to Australian public finance’ s performance as the biggest contributor to a five-place drop from 2014. In business development, productivity and efficiency are the key problem areas, with Australia falling 10 spots in the last five years.
Martin says that for participants contributing to the survey, which means largely businesses and universities, a major concern is that infrastructure – one of the major drivers of economic reform and improvement – doesn’ t seem to be attracting the level of attention it needs.
Whilst Australia slipped only one place in the last 12 months in the infrastructure category, Martin is concerned about where it slipped: technological and scientific infrastructure.
“ Our ability to innovate and be a smart economy with a highly skilled and innovative workforce has been a comparative advantage for Australia and is becoming even more important as our economy shifts away from mining and resources and looks to services to pick up the slack.”
But these ranking slips suggest that Australia may not be keeping pace with global competitors at a time where this is becoming increasingly important for the economy.
“ The major concern that would come out of all this is that [ federal and state governments ] have indicated a strong commitment to infrastructure projects, but what we haven’ t seen is the funding to match some of the rhetoric that’ s been there,” Martin says.“ This again suggests we are losing ground as a smart economy, and we don’ t have the infrastructure in place to compete in R & D. The simple fact is we need to get on and do it now.
“ We have to look at ways in which we can sustain the Australian economy going forward – and clearly infrastructure is one of those.”
Globally, the US held onto the top position, followed by Hong Kong, Singapore and Switzerland. Japan had the largest fall in the Asia-Pacific region, moving from 21 to 27. For the first time in 18 years, New Zealand pushed ahead of Australia.
“ That’ s a peak for New Zealand and I think some of the reform projects that are in place and policies adopted in that country could provide some lessons for Australia,” Martin says. n
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