Education

Australia being ?leap-frogged? by global competitors

The Global Competitiveness Report 2014–15 produced by the World Economic Forum (WEF), indicated that Australia had dropped in rank to 22nd place, one place down from last year.

Innes Willox, chief executive of WEF’s official Australian research partner Australian Industry Group (Ai Group), stated that the nation had been continuing an “annual downward trend” since 2009–10 when Australia ranked 15th.

“With Australia’s absolute Global Competitiveness Index (GCI) performance static this year, and broadly stable since 2010–11, more and more of our competitors are leap-frogging ahead as they improve their performance and competitiveness,” Willox commented.

The report stated that there were three main areas that Australia needed to focus on to improve its competitiveness:

  • Labour market efficiency – Australia currently ranks 56th from a high of ninth place in 2009–10.
  • Government regulation – Australia ranks 124th from its position in 60th place in 2010–11.
  • Efficiency of goods markets – Australia’s current ranking of 29th is a drop from its ninth place ranking in 2009–10.

The report also stated that Australia had seen a significant fall in relative competitiveness of pay and productivity, slipping from a peak of 26th place in 2008–09 to 125th place this year.

Building productivity
Commenting on these findings, Willox said, “The WEF report reinforces recent calls from the business community for greater urgency to be injected into building domestic productivity and competitiveness. This is particularly the case in relation to reforms of industrial relations with restrictive labour regulations identified as the most significant impediment to doing business in Australia.

“In light of this report, Ai Group again urges the government to accelerate progress on its foreshadowed Productivity Commission review of Australia’s workplace relations arrangements.”

His words echoed the sentiments of Boral CEO and managing director Mike Kane, who recently delivered a keynote presentation at the 2014 Construction Materials and Industry Conference. The conference explored the theme of Building Productivity, and Kane highlighted Australia’s reduced global competitiveness as one of the barriers to achieving this.

Kane referred to a study by Boston Consulting Group that found Australia had slid from 19th to 25th place in its global index of manufacturing cost competitiveness, attributing this to high wages, poor productivity and exchange rate gains.

“Global miners and contractors like BHP, Rio Tinto and Bechtel, to name a few, [have] called out the high cost of project work in Australia versus alternative global options, suggesting Australia may get less access to mining and energy projects in future due to an uncompetitive cost, regulatory and productivity environment,” he stated.

Kane pointed out that certain “unproductive labour entitlements” that had been incorporated into enterprise bargaining agreements and awards were “costing builders, driving developers offshore and … costing Australian jobs” as well.

Improvement on the horizon
Despite Australia’s concerning overall position within the global competitiveness index, the report showed that it was a world leader in other aspects. For example, it ranked first for secondary education enrolment rates, the legal rights index and its ability to manage inflation.

“These positives suggest we have the fundamentals in place to support a real improvement in national economic competitiveness but this will require a concerted effort to address serious shortfalls in the key areas of labour flexibilities, business regulation and company taxation,” Willox said. “Standing still is not an option. It is clear that improvement is necessary just to keep up.”

The full report can be accessed via www.aigroup.com.au

A more detailed summary of Kane’s CMIC14 presentation will appear in a forthcoming issue of Quarry.

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