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Australian Global Competitiveness Ranking Slips in 2016-17

Australia's ranking in the World Economic Forum's (WEF) Global Competitiveness Report slipped one place to 22nd in 2016-17, indicating a slight deterioration in national business competitiveness compared with last year. This performance equalled Australia's worst ranking of 22nd reached in 2014-15. Ai Group is the WEF partner organisation in Australia and collects the bulk of the local data for the survey.

Australia's ranking of 22nd most competitive economy in 2016-17 leaves it lagging behind most of our peers including Canada (15th), New Zealand (13th), Japan (8th), the UK (7th), the US (3rd) and Singapore (2nd). Australia's largest trade partner, China, was ranked the 28th most competitive economy, the same as in in 2015-16. The top three competitive economies in 2016-17 are Switzerland (1st), Singapore (2nd) and the US (3rd), unchanged from 2015-16.

Ai Group Chief Executive, Innes Willox, said: "The key policy message for Australian business, governments and the broader community arising from this year's WEF Global Competitiveness Report is that Australia must work harder just to keep up with the improvements to competitiveness among our peers.

"For both businesses and governments this requires looking for innovative solutions and, critically, building community ownership of and support for the required business and policy directions," Mr Willox said.

Australia continues to rank relatively poorly on 'labour market efficiency' despite a large movement in this indicator, up 8 places to 28th place. Australia still trails behind other economies on many labour market measures. Australia still ranks poorly on hiring and firing practices (118th), flexibility of wage determination (111th) and taxation incentives to work (111th). Other outstanding areas of concern in our labour market are co-operation in labour-employer relations (54th), female participation in the labour force (54th) and redundancy costs (43th). A number of these measures improved significantly compared to 2015-16, notably pay and productivity (from 66th place to 26th) and co-operation in labour-employer relations (from 70th place to 54th).

"The Government is proposing some important improvements to Australia's workplace relations arrangements and support for them in the Parliament is critical. Additional proposals for practical improvements to workplace relations were included in the recent Productivity Commission report and they deserve support," Mr Willox said.

While innovation is crucial to successful participation in the latest global wave of technological advancement, Australia is falling further behind its developed nation peers, as measured by the WEF's innovation pillar. This key ranking slipped three places to 26th place in 2016-17. Ongoing deficiencies for Australia in this area are government procurement of advanced technology (63rd), lower company spending on R&D (24th) and university-industry collaboration in R&D (33rd), although Australia does better on the quality of our scientific research (12th).

"More can be done by government, business and universities in collaborating on research and in successfully commercialising new technologies and R&D," Mr Willox said.

The WEF Report also identifies the five 'most problematic factors for doing business in Australia' in 2016-17, as identified by CEOs participating in the WEF's Global Executive Opinion Survey (Chart 4). These are:

  • restrictive labour regulations;
  • inefficient government bureaucracy;
  • high tax rates;
  • complexity of tax regulations; and
  • insufficient capacity to innovate. 

The WEF identified Australia's competitive strengths as:

  • 'financial market development' (6th);
  • 'higher education and training' (9th); and
  • 'health and primary education' (10th).

Full Report:  

Australian summary: 

Media enquiries: Tony Melville – 0419 190 347