Australia faces a productivity and competitiveness crisis, according to many economists, business leaders and op-ed writers. They even point to global competitiveness scores to illustrate their point.
“Australia’s sluggish productivity, poor levels of entrepreneurship and high-profile cyber hacks have taken their toll in the latest ranking of global competitiveness, as experts suggest countries including Switzerland and Singapore could offer lessons for our economy,” the Financial Review reported in June 2023, citing that year’s “International Institute for Management Development World Competitiveness Yearbook”.
The IMD index is one of a slew of international comparisons purporting to measure how competitive, productive or innovative various countries or regions are. The original index belongs to the World Economic Forum, but IMD was the first to copy it and has been running it since the late 1980s.
Such indices typically elevate tinpot dictatorships with dodgy human rights records and poor labour protection like the UAE and Qatar over democracies, tax havens like Ireland over nations that try to get corporations to pay tax, and countries lacking the rule of law like China over countries with well-established legal institutions.
The media is usually happy to uncritically report Australia’s performance in these exercises, especially if they fit business narratives. The Financial Review was happy to report Australia’s poor performance — 19th globally — last year and quote people from neoliberal lobby groups like the Committee for Economic Development of Australia — which “partners” with IMD — on the need for “economic reform”.
But the 2024 “yearbook” just came out this morning, without the usual round of lamentations. The Financial Review eventually covered the report in its breaking news blog, but in a curiously flat way. Why? Because “the latest Institute for Management Development (IMD) World Competitiveness Yearbook report has placed Australia 13th out of 67 countries, boosted by strong commodity prices and a healthy jobs market.”
That’s Australia’s highest result since 2011, which doesn’t quite fit the narrative about Labor mismanaging the economy, harming business with industrial regulation or presiding over a “productivity crisis”. It’s almost as if the economy, after a lost decade of poor competitiveness, has lifted back to where it was when Labor was last in power.
“Australia’s competitiveness jumps to highest level in 13 years,” CEDA said in an accompanying media release, though that didn’t stop it from insisting “the challenges we face have remained stubbornly fixed for many years now, with little sign of improvement. We must do more to diversify our economy and revive our weak productivity.”
But if you examine the details, it becomes clear first, why Australia lifted its ranking and second, why measuring competitiveness is so hard. Australia’s ranking lifted because of factors like much higher migration — something universally agreed to be a bad thing — labour force growth, monetary policy, budget surpluses from Labor banking revenue windfalls, more exports, lower energy intensity and lower inflation. Some of the factors a