Australia’s success in the pool and on the track at the Sydney 2000 Olympics was only surpassed by our rapidly growing economy, which was the envy of the world.
During this period, our economy was fuelled by the hard-won gains of economic reforms including tax cuts, deregulation and policies to support small business. Together these delivered a boom time.
Now, however, our national economy is running on the fumes of those reforms. This week, Institute of Public Affairs research found that, since the mid-2000s, our economy has plummeted in key economic measures compared with the rest of the world. Analysis of key indicators, as measured by the Institute for Management Development, reveals Australia’s economic competitiveness ranking has plummeted 15 places from first in 2004.
This is the steepest decline among comparable nations, including the US, UK, Canada and New Zealand.
The fall was driven by three things: rapidly rising debt, a collapsing energy system and government red tape and tax.
Australia was once a global standout for its low government debt, ranking eighth out of 64 nations, but today we are ranked 47th. This is because government debt is growing faster than the economy and, with rising interest rates, debt servicing costs are rapidly rising. In fact, interest payments on government debt are the single fastest growing item of government expenditure.
On energy, again Australia used to be a powerhouse, boasting among the lowest electricity prices in the world. Now we are ranked 52nd, the result of a failing transition to net zero emissions.
On tax and red tape, Australian policymakers are engaging in economic selfharm. We are one of the highest taxed people in the developed world.
On corporate tax and personal income tax we are ranked 56th and 57th of 64. And on the key metric of “bureaucracy not hindering economic activity” Australia has plunged 14 places since our peak in 2004. This means there are more bureaucrats, permits, forms and red tape getting in the way of businesses which want to invest and employ Australians in secure jobs.
This is a huge problem for our nation. An economy which is becoming less competitive means we, as a nation, are less able to produce wealth-generating goods and services and the things we do produce cost you more. Worryingly, at the same time as our production capacity is shrinking, the government is forging ahead with a record, unplanned migration intake. Last year saw the largest ever annual intake in our nation’s history. The intake is set to rise to a record 1.5 million arrivals between now and 2028.
The Reserve Bank of Australia has noted rapid and unplanned growth in population will be inflationary and is one reason why interest rates are rising and are likely to continue to do so. If our leaders lack the courage to put the national interest first and deliver policies that set us up for real economic growth, Australia risks another decade of declining household incomes, unsustainable housing costs and sharply rising utilities and grocery bills.