Core arguments and facts of the 2018 Benchmark Report: Strong Foundations

09 Mar 2018


  • Edmund Tang
  • Benchmark Report
  • Australian Economy

Strong Foundations is one of the five major reasons for investing in and trading with Australia highlighted in Austrade’s 2018 Benchmark Report (BMR) (in previous posts I covered Robust Growth , Dynamic Industries , Innovation and Skills and Global Ties).

With 26 years of uninterrupted annual economic growth, globally, diverse competitive industries, an innovative, smart workforce and a globally integrated economy, Australia remains well placed to build on an impressive record of prosperity. Australia’s strong foundations, such as political stability, transparent regulatory system, and sound governance frameworks and ease of doing business continue to underpin the country’s economic resilience.

Australia is ranked fifth in the world for overall economic freedom in the 2018 Index of Economic Freedom[1], and we are among only six economies in the world earning very high economic freedom scores of 80 or more, putting us in the ranks of the economically “free.” Our global ranking is well above most major economies including the UK (8th globally), Canada (9th), the US (18th), Germany (25th), Japan (30th) and France (71st).

The Index particularly stresses “Although facing a structural change as sharply lower global commodity prices undermine mining investment, Australia’s robust free-market democracy benefits from an effective system of government that facilitates vibrant entrepreneurial development. With almost all industries open to foreign competition and a skilled workforce readily available, Australia continues to be an attractive and dynamic destination for investment. [2]

In unpredictable times, Australia’s strong governance, solid healthy institutions and superior credit rating profile provide certainty for multinational companies seeking an easy, competitive, low-risk location to expand their businesses or consider Australia as a base in the Asia Pacific region.

  • The quality of governance in Australia is ranked among the best in the world, according to the latest survey of the World Bank’s Governance Indicator[3] ; and
  • The country ranks highly in terms of legal rights (4th globally), soundness of our banks (4th) and regulation of our securities exchange ( 7th). We also have one of the world’s most independent judicial systems (8th), strongest business legislation in protectionism (10th) (that is, legislation supports fair competition between local and foreign companies or industries) and lowest risk of investment environment ( 11th) (see Table below).


Two additional strong points we highlighted in the Strong Foundations section of the 2018 BMR were Competitive Global Prime Office Costs and Ease of Doing Business. The two charts below illustrate the global competitiveness of Australian businesses in terms of office costs and ease of doing business.

  • Prime office space in Australia (using an average of all major cities) is among the most competitively priced in the world, and compares favourably to global and regional business centres. The cost of prime office space in Sydney is around a third of the cost of Hong Kong SAR (Central) and half of those in New York (Midtown Manhattan) and London (West End). The average office cost in Melbourne is also inexpensive relative to Beijing, Tokyo, Shanghai and Singapore (see chart below).


  • Overall, Australia has a stable, friendly, efficient and competitive business environment. Australia is ranked 14th out of 190 economies for Ease of Doing Business, and fourth when compared to economies with a similar or larger population. It only takes around 2.5 days and three procedures to start a business. The country also ranks particularly well for enforcing contracts (3rd globally), getting credit (6th) and dealing with construction permits ( 6th) (see chart below).


[1] 2018 Index of Economic Freedom was released in January 2018 after Austrade’s 2018 Benchmark Report had been launched on 2 February 2018.
[2] Ibid, page 84. 
[3] The Worldwide Governance Indicators reports aggregate and individual governance indicators for 214 economies over the period 1996–2016, for six dimensions of governance in the above table. They are based on over 30 individual data sources. Economy scores are reported as percentile ranks, with higher values indicating better governance ratings.