Topics: Productivity, investment, Australia’s competitiveness
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Geoff Culbert, BCA President: Good evening, everyone.
Thank you to the team at the CBA for hosting us here tonight.
To James and the team at the AFR, thank you for leading the conversations that matter for our economy and our country.
And to everyone else in this room, in business, finance, media and public life, thank you for joining us.
It’s always a privilege to gather like this.
There’s a lot of influence in this room.
There’s also a lot of genuine care and concern for our nation and its future.
So, I want to start with a shared confession.
I’m worried.
I’m worried about the state of our economy.
I’m worried about our lagging productivity and stifling regulation.
I’m worried that as a nation we no longer seem to care about debt and deficits.
I’m worried that more than half of all Australians now receive some form of government payment, and that over the past two years around two-thirds of growth in employment was in the non-market sector.
I’m worried that this only leads to more spending, which can only be paid for by more taxes.
And to the point I am going to focus on tonight: I am worried that our global competitiveness is slipping, and we are not winning the investment needed to lift living standards for all Australians.
None of this is new.
These issues have built up over multiple years across numerous state and federal governments.
What is new is that the competition continues to get fiercer and each year our competitiveness suffers.
And the numbers tell the story.
Today the BCA launched our new Global Investment Competitiveness Index.
This new index compares Australia with 41 other countries across the fundamentals that matter most to investment decision-makers:
- Trade.
- Regulation.
- Business taxation.
- Labour markets.
- Investment restrictions.
- Energy.
- The rule of law.
It draws on 17 international indices and was developed in close consultation with large companies that account for around 75 per cent of private investment in Australia, employ 4.7 million Australians and pay around 70 per cent of company tax.
And here’s the headline.
Australia ranks 21st out of 42 countries.
Down from 17th in 2019.
And if you dive deeper into the numbers there are some concerning data points.
- On regulation, we rank 37th out of 42.
- On business taxation, we rank 38th out of 42.
- On investment restrictions, we rank 38th out of 42.
Our corporate tax rate of 30 per cent is materially above the average of our competitors.
And among OECD countries, we have the most restrictive foreign investment screening regime.
Let that sink in.
We are a capital-importing country with one of the most restrictive regimes for foreign investment in the developed world.
Why? What problem are we trying to solve?
There is some good news.
We rank second in the world on trade openness.
That didn’t happen by accident.
It was the result of deliberate reform that governments have undertaken; free trade agreements, tariff reductions, border improvements.
It shows that when we choose to act, we can move up the rankings.
And this matters because investment isn’t an abstract concept.
Investment grows the tax base that funds the schools, hospitals and services Australians rely on.
Productivity growth from investment and innovation is the only sustainable way to lift real wages without inflation.
We rely heavily on foreign investment, particularly in capital-intensive sectors like resources, energy, infrastructure and advanced manufacturing.
If we become less competitive, that capital goes elsewhere.
And when it does, jobs, innovation and opportunity go with it.
The countries leading the rankings are not accidents of geography.
Finland. The United States. Estonia. Sweden. Ireland. Denmark.
With the exception of the US, these are small, open economies.
Corporate tax rates closer to 20 per cent.
Strong rule of law.
Simple, predictable regulation.
Flexible labour markets linked to productivity.
Reliable and affordable energy systems.
And importantly, they combine competitive business settings with strong social outcomes.
They understand something fundamental:
You cannot sustainably fund a generous welfare system without a competitive economy.
That is the tension Australia must confront. Which brings me back to where I started.
We have normalised structural deficits.
We have grown government spending significantly as a share of the economy.
And we have a community increasingly conditioned to look to government first.
That’s not a moral judgment. It’s a fiscal reality.
And when more than half the electorate has a direct financial relationship with government, the incentives in politics change.
The point of this index is two-fold.
First, we want to provide an objective, fact-based assessment of where we rank on global competitiveness.
But secondly, and more importantly, we want to set an ambitious target for the future and lay out the steps we can take to get there.
If there’s one thing we understand in business, it’s this:
You get what you measure.
And when you set clear targets and align all your actions and behaviours to achieve those targets, you get results.
There are practical, actionable steps that we can take.
Our Competitiveness Index outlines priority reforms:
- Committing to a 25 per cent reduction in regulatory costs by 2030, just like the UK and EU have done.
- Making business tax settings more competitive, lowering the effective tax burden on new investment and ruling out increases in the overall corporate tax take.
- Streamlining foreign investment rules, fast-tracking low-risk investments and focusing scrutiny where it genuinely matters.
- Modernising trade systems, including delivering the national Trade Single Window to reduce cross-border friction.
- Ensuring workplace relations settings support productivity and genuine enterprise bargaining, not criminality and corruption.
- And developing a comprehensive, technology-agnostic roadmap for energy that balances reliability, affordability and emissions reduction.
None of these are radical.
They’re pragmatic, they’re achievable, and many come at no cost to the budget.
I often contrast our global economic competitiveness with our performance at the Olympics.
I’ve said before that if Australia finished outside the top 10 of the medal tally at the Summer Olympics there would be calls for a Royal Commission.
Over the past two weeks I’ve watched our Winter Olympics team absolutely tear it up and finish 14th on the medal tally.
14th for a country that is better known for sun and sand than it is for snow.
We should look at this Competitiveness Index like an Olympic Medal tally.
We’ll look to run this every year, and we should it approach it from the perspective that 21st in the world is not good enough.
As I said before, the goal has to be top 10.
And we can be. It’s just a choice.
The index shows it is possible.
We’ve done it in trade – where we took deliberate and targeted actions that mean we now rank second.
We can do it in regulation.
We can do it in tax.
We can do it in investment settings.
We can be a country that attracts capital, grows productivity, lifts wages and funds world-class public services – all at the same time.
It doesn’t have to be an either or.
But it will only happen if we chose to compete and take action.
And if we don’t, we will drift and slip further down the rankings.
So, let’s be ambitious.
Let’s target being a 10 ten destination for global investment and take the steps that will get us there.
And lift the living standards for all Australians.
Thank you.