Canberra: Australia’s global competitiveness has slumped to the worst ranking in at least 18 years, slipping behind New Zealand, as business criticised the Abbott government’s failure to kick-start a fresh wave of infrastructure spending.
In a damning report done for the Switzerland-based IMD World Competitiveness Yearbook, the nation’s ranking slipped to 18 from 17 a year ago. The deterioration continues a six-year slide that started in 2009, when Australia was ranked five.
For the first time in 18 years, New Zealand has jumped ahead of Australia, moving to 17 from 20, the IMD report shows.
Among the biggest concerns raised by Australian businesses surveyed for the IMD rankings by the Committee for Economic Development of Australia are the fresh declines in investment in skills and leading-edge technology, and a lack of new spending on transport and other infrastructure.
The findings are a major blow for Tony Abbott, who vowed upon being elected in 2013 to become the “infrastructure prime minister”. They also highlight ongoing dismay within the business community at the lack of movement on major new projects.
With the government using this month’s budget to borrow more to pay for a short-term boost through the $20,000 instant asset writeoff for small business, concerns continue to grow at the lack of longer-term economic investment to replace the resources boom.
“For Christ’s sake, something has to happen – the economy is not ticking over, interest rates and budget deficits are not at they level they are because things are doing well,” said CEDA chief executive Stephen Martin.
Professor Martin said the government had failed to live up to its rhetoric on infrastructure and that it was time to recognise Victorians had provided a “screaming mandate” for what was a viable alternative to Mr Abbott’s preferred East West Link freeway in Melbourne.
“The most critical thing is that we just don’t have any movement on any major infrastructure projects,” Professor Martin told The Australian Financial Review. “The money for [Sydney’s] Westconnex was announced by the Gillard government – there’s been nothing else since.
“This is one of the things people responded to in the survey – there doesn’t seem to be an infrastructure prime minister.” The findings come less than a week after Infrastructure Australia, the government’s main infrastructure advisory body, warned that the national cost to the economy of road congestion would quadruple by 2031 to $53 billion.
According to the IMD report, published on Thursday, Australia’s ranking on infrastructure has worsened to 19th this year from 18th in 2014, and 14th in 2011. Economic performance has also dipped, to 28th from 24th last year, while the efficiency of government has deteriorated to 14 from nine because of the worsening budget deficit and rising government debt.
IMD’s latest ranking of 61 countries across more than 300 criteria also shows a sharp slide in international investment (to 39 from 53) and the threat of research and development being moved offshore (to 54 from 39). “We may not be keeping pace with global competitors at the very time it is becoming increasingly important for our economy,” Professor Martin said.
Globally, the US has retained the number one spot for competitiveness, followed by Hong Kong, Singapore, Switzerland and Canada. New Zealand’s improvement means Australia has dropped one place in the Asia Pacific region, where Japan recorded the biggest fall, to 27 from 21.
