Australia is competing in a global race for investment that underpins jobs, wages and living standards.
Capital is increasingly mobile in a more competitive world. Businesses can choose where to invest, expand and create jobs and they do so where it is easiest, most predictable and most competitive to operate. That investment matters because it underpins almost everything Australians care about:
Australia does not save enough domestically to fund all worthwhile and nation-building investments. As a result, we rely heavily on foreign investment, particularly in capital intensive sectors like resources, energy, infrastructure and advanced manufacturing. The question is, will we continue to win that investment?
To understand how Australia stacks up as a competitor in the global race for investment, the Business Council of Australia (BCA) has developed the BCA Global Investment Competitiveness Index, comparing Australia with 41 other countries across the investment fundamentals that matter most to decision-makers.
The BCA Global Investment Competitiveness Index draws on 17 international indexes across a range of indicators in regulation, trade, business taxation, labour markets, investment restrictions, rule of law, and energy.
It has been developed in close consultation with the BCA members – the largest companies operating in Australia – to inject real world investment experiences.
The need for the index is clear: if Australia becomes less competitive, investment goes elsewhere, taking jobs, innovation and the future of Australians with it.
How Australia compares to the world
The index ranks Australia 21st out of 42 countries in 2025
One clear success story for Australia in recent years has been trade openness. Australia now ranks 2nd globally on trade, reflecting low tariffs, relatively few non-tariff barriers and strong integration into global markets. With one in four Australian jobs depending on trade, this is a key metric.
This improvement has not happened by chance. Governments have taken deliberate steps to liberalise trade, including expanding and upgrading free trade agreements, investing in trade facilitation, and committing to the removal of unnecessary barriers at the border.
Most recently, the decision to abolish nearly 500 nuisance tariffs from July 2024, with a further approximately 500 proposed for removal from July 2026, has reinforced Australia’s reputation as an open and reliable trading partner. This comes along with ongoing needed reforms to our foreign investment framework.
These reforms lower costs for businesses, support exporters, and help sustain the one in four Australian jobs that depend on trade, demonstrating how well‑designed policy can directly strengthen Australia’s competitiveness.
Ambition:
To make Australia a top 10 competitor for global investment
There is much more to do if Australia is to reach our ambition to be a top 10 competitor for international investment.
How Australia can climb the ranks
Priority actions
Just as recent reforms have moved Australia up in key areas like trade, further reforms can improve our overall rankings and help us win more investment.
The BCA index draws on the approaches and strengths of other international competitiveness indexes and has been developed in consultation with large companies and investors to focus on the key issues that matter for them when making investment decisions. Of course, the relative importance of each factor will vary for every investment – and indeed, there may be other factors that have not been selected in this index.
Table: Australia’s BCA Global Investment Competitiveness Index rankings
Open and predictable trade settings allow businesses to access global markets, integrate into international supply chains, and benefit from greater competition and scale. Complexity and rigidities in cross-border trading systems also impact competitiveness. The general openness and efficiency of a country’s trade environment is also important and includes tariffs, non-tariff barriers, customs processes, participation in trade agreements, and the quality of trade infrastructure.
Australia’s trade freedom index lifted to second place in 2025, reflecting low tariff and non‑tariff barriers relative to the rest of the world.
Australia’s ranking on the OECD’s Trade Facilitation Index improved from 12th to 7th in the latest ranking.
Australia’s Logistics Performance Index has remained steady at 15th across the analysis period.
Service trade restrictiveness improved over time, lifting from 17th in 2019 to 14th in 2025.
Regulation is important but when it is poorly conceived or badly designed, the burden ultimately falls on business and consumers through higher costs, delays and fewer choices. Unnecessary and inefficient regulation makes it harder to do business, makes a jurisdiction less competitive and a less attractive place to invest. The burden of regulation is a significant issue for companies, which can face duplication and inconsistencies across various levels of government, frequent changes to laws and regulations, and a poor understanding from policymakers and regulators of the complexity, time and cost of implementing changes. The regulatory burden is often sourced from law, but can also be applied through regulatory guidelines and government contracts and funding arrangements.
Australia’s OECD Administrative and Regulatory Burden ranking slipped from 30th to 33rd across the analysis period.
Australia’s business freedom settings have remained relatively steady, starting and finishing the analysis period in 27th place.
The ability for capital to move between jurisdictions is critical for driving investment, promoting competition and improving the allocation of resources across the economy. Countries can impose restrictions on investment, be it through a foreign investment screening regime, restrictions on ownership in assets or sectors, or capital controls. These restrictions can be at the border or behind the border.
Australia has the third most restrictive foreign investment screening regime in the index. Among OECD countries, Australia has the most restrictive settings, including the most restrictive screening and approval process.
The Investment Freedom Index ranking improved from 17th in 2019 to 11th in 2025, particularly as other countries imposed greater relative restrictions on investment.
The availability of energy is critical for competitiveness because all businesses (and households) are consumers of energy. Among the most important global challenges and opportunities facing businesses and governments is facilitating an orderly transition to net zero by 2050. A competitive energy system must therefore support an orderly transition to net zero in an affordable, secure, reliable and competitive way.
The Energy Equity Index ranking improved from 23rd in 2019 to 18th in 2025, while the Energy Security Index was broadly steady and ranked 5th in 2025.
Competitive tax settings reduce the cost of investment and improve a country’s attractiveness as a location for business activity. Businesses invest when the expected rate of return from an investment adequately compensates investors for their capital, including the riskiness of the investment. The higher the company tax, the higher the hurdle for an investment to proceed in a jurisdiction and the greater the deterrent effect on new investments. If capital is more mobile, this will discourage new investment at any given company tax rate. Complexity in a tax system (including around administration) can increase the direct cost of compliance while also increasing uncertainty. Stability and certainty in the tax system – around both policymaking and administration – are critical for long‑term decision making and investments.
Australia’s 30 per cent company tax rate contributed to an effective tax rate that went from being the 34th highest to 38th across the analysis period for these competitor countries.
The complexity of Australia’s corporate tax system increased, driving Australia’s ranking on this metric from 14th in 2019 to 32nd in 2025.
The BCA stands for productive, inclusive, flexible, and diverse workplaces that create high‑wage and high-productivity jobs and a more diverse economy. High wages can only be sustained through high levels of productivity. This means that the labour market must be flexible and efficient so workers can be better matched to higher paying jobs and that wage setting is aligned to productivity outcomes. The workplace relations system must not inhibit the ability to realise productivity benefits from investments and innovations, while ensuring employers can share the dividends of better performing workplaces with their workers through higher wages and better conditions.
Australia’s labour market freedom index has fallen from 4th in 2019 to 11th in 2025.
Cooperation between employers and employees is around the middle of the pack.
The relationship between productivity and pay has slipped since 2019 to be ranked 18th in the latest ranking.
The rule of law in a jurisdiction is critical such that laws are applied equally, clearly, consistently and impartially for all individuals and entities. This is closely linked to robust intellectual property regimes that encourage innovation, support research and development, and provide businesses with greater confidence that their ideas and technologies will be protected. Rule of law must be stable and predictable, yet sufficiently flexible and adaptable to respond to new circumstances, including rapid changes in technology.
The World Bank rule of law indicator slipped from 11th in 2019 to 13th in the latest data.
Intellectual property rights slipped from 4th in 2019 to 8th in 2025.
Category based actions
Actions to lift Australia’s competitiveness
To lift our ranking and attract more investment, Australia must streamline regulation, improve investment and tax competitiveness, and ensure workplace settings support productivity.
Proceed with the proposed abolition of a further approximately 500 nuisance tariffs from 1 July 2026.3 This should act as a stepping stone towards further removing Australia’s remaining tariff barriers.
Deliver new opportunities for trade by finalising a free trade agreement (FTA) with the EU and finalising the Comprehensive Economic Cooperation Agreement with India.
Negotiate upgrades to existing bilateral FTAs with Southeast Asian partners to increase liberalisation in priority sectors and reduce non‑tariff barriers.
Commission feasibility studies for new bilateral FTAs with Vietnam and The Philippines, notwithstanding existing multilateral FTAs.
Prioritise and implement the Simplified Trade System agenda and prioritise the creation of a Trade Single Window. Other specific elements of this agenda include:
Extend funding for the Simplified Trade System Unit to support delivery of, and provide certainty around, the agenda for business.
Help boost confidence in and the use of paperless trade by accelerating the implementation of the United Nations Model Law on Electronic Transferable Records in Australia.
Implement the Simplified Trade System Fit and Proper Person Assessments Reform framework to streamline assessments and remove duplication across government agencies.
The government should commit to a 25 per cent reduction in regulatory costs by 2030 and undertake a national stocktake of red tape and the impact it is having on the economy.
The stocktake, which will be the first since 2014, must identify redundant, duplicative and high-cost regulation across all levels of government and provide a clear baseline for ongoing regulatory reduction.
Re-examine incentive mechanisms to drive nationwide reform. The existing $900 million National Productivity Fund is an important tool to support whole-of-nation reform at the federal, state and local government levels. Further consultation on additional incentive options could supercharge progress.
Resource a strengthened central regulatory oversight function, including enhanced Cabinet-level focus on better regulation and a more empowered, better-resourced Office of Impact Analysis, to embed consistent, rigorous economic assessment across all new policy proposals.
Invest in the development and rollout of a regulatory “economic star-rating” system, supported by improved data capability and mandatory cost-benefit analysis tools, ensuring regulation only proceeds where it demonstrably improves productivity and economic efficiency.
The government should prioritise the completion and implementation of its review of the foreign investment framework. The review must focus on streamlining the framework to fast-track low risk investments that do not raise national interest concerns and better focus resources on the more timely consideration of higher risk transactions.
Align the recommendations of the foreign investment framework review with the government’s new Investor Front Door mechanism for high value projects in priority sectors.
Foreign investment application fees should be put on a cost recovery basis and not used for general revenue raising, which risks deterring foreign investment applications.
Government should develop a comprehensive, technology agnostic roadmap to support business investment in new energy capacity and supply to deliver reliable, affordable energy as we transition to net zero.
The roadmap needs to give confidence to investors and the broader community that enablers are being addressed by policy and that Australia’s energy reliability and energy affordability will be maintained and enhanced in the pursuit of net zero.
Increase the competitiveness of Australia’s business tax settings, such as through an investment allowance, immediate expensing, or reforms to the Research and Development Tax Incentive to help drive business investment.
The Productivity Commission’s net cashflow tax, as well as super profits taxes, must be rejected given our already uncompetitive company tax settings.
To illustrate, this proposal could reduce Australia’s business taxation ranking by another place if it were to be implemented.
The OECD is the key multilateral forum for developing a coordinated international approach to global taxation issues and this process should be supported.
Australia should ensure this process reflects best practice tax principles and avoid ad hoc responses that are unilateral, ignore best practice tax principles, and undermine competitiveness and jobs.
Maintain and improve Australia’s strong rule of law, institutional and overall governance arrangements that have served us well for decades. This means that they must support:
A reasonable level of macroeconomic stability and certainty of policy settings upon which to base long-term decisions.
Confidence in the government’s ability to pursue and successfully implement evidence‑based policy reforms that are demonstrably in the long-term public interest.
Regulations that are clearly expressed and administered efficiently to protect legitimate rights.
The ability of governments to perform critical functions in the most efficient and effective manner possible, with appropriate checks and balances and disciplines in decision making.
Avoid unexpected or sudden policy changes that adversely affect business, particularly changes that introduce sovereign risk.
This full report is a call to all Australian policymakers – with ambition and action Australia too can become a top 10 competitor for global investment.
