Australia having slipped four rungs on the IMD World Competitiveness Yearbook, which compares the performance of 64 different nations, economist Jarrad Ball says it is time for the nation to get serious about how it is going to compete in a post-pandemic world.
IMD is a Swiss-based management development institute that produces an annual reference point on the competitiveness and prosperity of different countries. This year Australia dropped to 22nd overall in the worldwide rankings and sank back to 16th place for government efficiency (Australia ranked 15th on this metric last year) when scored against 330 different criteria.
CEDA’s chief economist Jarrod Ball said Australian businesses would need to do ‘a lot of heavy lifting’ to resurrect Australia’s competitiveness because business efficiency had taken a walloping, ranking 58th for management practices.
“We are among the lowest-ranked of 64 nations on company agility, entrepreneurship, customer satisfaction and credibility of managers,” Ball said.
“Governments also need to play their part. 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.”
According to Ball, there is no time to waste lifting Australia’s game in a post-pandemic market. He underscored other IMD metrics where Australia competitiveness ranking had slipped: down 13 places since 2020 to 34th for business efficiency; and down five places for infrastructure from 18th to 23rd spot.
Embarrassingly, he added, this year Australia achieved a rank of 56 out of 64 for its energy infrastructure. The score indicated the need for more action from Australia on its commitment to achieving net-zero by 2050.
“We must boost our climate resilience and regain our energy advantage,” Ball said.
“The federal government should commit Australia to net-zero by 2050 and announce more ambitious policies to get us there.”
Australia’s rank in the IMD competitiveness scorebook increased in only one area – economic performance – moving up four places from 23 to 19 since last year. The last time Australia ranked 19th for economic performance was in 2018, improving by four places to 14th in 2019. Ball credited the relatively light hit the Australian economy took from the COVID-19 pandemic compared with other nations for this positive result.
“Australia’s skilled workforce, policy stability, legal environment, healthcare and life expectancy are all strengths for the competitiveness of our economy,” Ball said.
This year the IMD competitiveness report highlighted the importance of ‘innovation, digitisation of the economy, welfare benefits and social cohesion’ for the among the leading nations – all Nordic.
The 2021 report ranked the top five competitive countries as Switzerland, Sweden, Denmark, the Netherlands and Singapore. China also jumped three spots to rank number eight.
“Highly competitive countries have been able to tackle these challenges by strengthening their institutional and social frameworks,” the report said.
Ball also called out Australia’s ‘deteriorating’ reputation against the export sophistication metric because of our ‘reliance on mineral resources and a narrow set of markets’, which ranks us in the 50s for this measure.
“We will need to be a lot more dynamic, innovative and open up new markets for new goods and services in future to deliver another generation of solid economic growth, jobs and rising incomes,” Ball said.
Earlier in June the federal government published a new global resources statement, declaring the minerals exploration sector in Australia was ready to supply new markets.