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AUSTRALIA

Economic Freedom Score


25

World Rank:

Regional Rank:

Least
free 0

ustralia, a vibrant free-market democracy, has recordA


ed impressive economic progress without undergoing
a single recession for almost 25 years. In addition to its

50

75
Most

100 free

80.3

Freedom Trend
85

abundant natural resources, the economy has benefited


from lasting entrepreneurial development facilitated by
an effective system of government, a well-functioning
legal system, and an independent bureaucracy.
ECONOMIC FREEDOM SNAPSHOT
2016 Economic Freedom Score: 80.3 (down 1.1 points)
Economic Freedom Status: Free
Global Ranking: 5th
Regional Ranking: 4th in the AsiaPacific Region
Notable Successes: Rule of Law, Open Markets,
and Regulatory Efficiency
Concerns: Fiscal Freedom and Government Spending
Overall Score Change Since 2012: 2.8
Australia continues to be an attractive and dynamic
investment destination, with almost all industries open to
foreign competition and a skilled workforce readily available. The government has withdrawn from most areas of
the market, and competition in sectors such as financial
services has increased. Government debt has been rising
since the global financial crisis but remains substantially
lower than in most other advanced economies.

BACKGROUND: Since the early 1980s, successive Australian


governments have deregulated financial and labor markets
and reduced trade barriers. Malcolm Turnbull, a former
communications minister, replaced Tony Abbott as head of
the ruling LiberalNational coalition and as prime minister
in a leadership ballot in September 2015. Australia is one of
the AsiaPacifics wealthiest nations and has enjoyed more
than two decades of economic expansion. It emerged from
the 2009 global recession relatively unscathed, but stimulus
spending by the previous Labor government generated a fiscal deficit. Australia is internationally competitive in services, technologies, and high-value-added manufactured goods.
Mining and agriculture are important sources of exports.
How Do We Measure Economic Freedom?

See page 467 for an explanation of the methodology


or visit the Index Web site at heritage.org/index.

84
83
82
81
80
79

2012

2013

2014

2015

2016

Country Comparisons
80.3

Country
World
Average

60.7

Regional
Average

59.0

Free
Economies

83.9
0

20

40

60

80

100

Quick Facts
Population: 23.6 million
GDP (PPP): $1.1 trillion
2.7% growth in 2014
5-year compound annual growth 2.7%
$46,433 per capita
Unemployment: 6.0%
Inflation (CPI): 2.5%
FDI Inflow: $51.9 billion
Public Debt: 34.3% of GDP
2014 data unless otherwise noted.
Data compiled as of September 2015.

99

AUSTRALIA (continued)
THE TEN ECONOMIC FREEDOMS
Score

RULE OF
LAW

Property Rights
Freedom from Corruption

Country

World Average

90.0
80.0
0

20

40

60

80

Rank

1Year
Change

3rd
11th

0
1.0

100

Australias judicial system operates independently and impartially. Property rights are secure,
and enforcement of contracts is reliable. Expropriation is highly unusual. The stable political environment supports transparent and well-established political processes, a strong legal
system, competent governance, and an independent bureaucracy. Anti-corruption measures
are generally effective in discouraging bribery of public officials.
Fiscal Freedom 63.2
GOVERNMENT
Government Spending 62.0
SIZE

161st
109th
0

20

40

60

80

0.5
+0.2

100

Fiscal policy has been relatively stable. The top income tax rate is 45 percent, and the flat corporate tax rate is 30 percent. Other taxes include a value-added tax and a capital gains tax. The
overall tax burden equals about 27.5 percent of GDP. Government spending amounts to 35.6
percent of total domestic output. Public debt remains low but has risen to around 35 percent
of GDP.

REGULATORY
EFFICIENCY

Business Freedom
Labor Freedom
Monetary Freedom

89.4
77.2
85.2

13th
22nd
10th
0

20

40

60

80

4.7
4.4
0.1

100

Australias regulatory environment, one of the worlds most transparent and efficient, is highly
conducive to entrepreneurship. It takes only two days to launch a business. The flexible labor
market facilitates dynamic employment opportunities. In 2015, the conservative government
ordered the taxpayer-funded $10 billion Clean Energy Finance Corporation (CEFC) to cease
any new investments in wind power projects.

OPEN
MARKETS

Trade Freedom
Investment Freedom
Financial Freedom

86.4
80.0
90.0

44th
23rd
1st
0

20

40

60

80

0
0
0

100

With a 1.8 percent average tariff rate, low non-tariff barriers, and few limits on foreign investment, Australia has some of the worlds most open trade and investment policies. The government screens large foreign investments. The well-developed financial sector is highly
competitive and sound; all banks are privately owned. Since late 2010, banking reforms have
fostered greater transparency and competition.

Long-Term Score Change (since 1995)


RULE OF LAW
Property Rights
Freedom from
Corruption

100

0
+10.0

GOVERNMENT
SIZE
Fiscal Freedom
Government
Spending

+3.6
+8.1

REGULATORY
EFFICIENCY

OPEN MARKETS

Business Freedom +19.4


Labor Freedom
8.6
Monetary Freedom 1.5

Trade Freedom
+9.4
Investment Freedom +10.0
Financial Freedom
0

2016 Index of Economic Freedom