AUSTRALIA

Economic Freedom Score

25

World Rank:

Regional Rank:

Least
free 0

ustralias economic freedom score is 82, making its econoA

my the 3rd freest in the 2014 Index. Its overall score is 0.6
point lower than last year, with a gain in investment freedom

50

75
Most

100 free

82.0

Freedom Trend
85

outweighed by declines in monetary freedom and labor freedom. Australia is ranked 3rd out of 42 countries in the Asia
Pacific region.

84

Over the 20-year history of the Index, Australia has advanced

its economic freedom score by 7.9 points, one of the 10 biggest improvements among developed economies. Substantial
score increases in six of the 10 economic freedoms, including
business freedom, investment freedom, and freedom from
corruption, have enabled Australia to achieve and sustain its
economically free status in the Index.
With an economy that benefits from sound fundamentals
including monetary stability, low public debt, and a vibrant
employment market, Australia has weathered the global economic uncertainty well. Openness to global trade and investment is firmly institutionalized, supported by a relatively
efficient entrepreneurial framework and a well-functioning
independent judiciary. Australia has a strong tradition of
reliable property rights protection, and the legal system is
transparent and evenly applied. Effective anti-corruption
measures are in force.
BACKGROUND: Since the early 1980s, successive governments have deregulated financial and labor markets and
reduced trade barriers. In September 2013, Liberal Party
leader Tony Abbott became prime minister following his
coalitions victory in national elections. Australia is one of the
AsiaPacifics richest countries and has enjoyed economic
expansion for over two decades. It came through the global
recession relatively unscathed, but stimulus spending by the
previous Labor government generated a deficit. Australia is
internationally competitive in services, technologies, and
high-value-added manufactured goods. Mining and agriculture are important exports.

How Do We Measure Economic Freedom?

See page 471 for an explanation of the methodology

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

83

82

81

2010

2011

2012

2013

2014

Country Comparisons
82.0

Country
World
Average

60.3

Regional
Average

58.5

Free
Economies

84.1
0

20

40

60

80

100

Quick Facts
Population: 22.8 million
GDP (PPP): $970.8 billion
3.6% growth in 2012
5-year compound annual growth 2.5%
$42,640 per capita
Unemployment: 5.2%
Inflation (CPI): 1.8%
FDI Inflow: $57.0 billion
Public Debt: 27.2% of GDP
2012 data unless otherwise noted.
Data compiled as of September 2013.

103

AUSTRALIA (continued)
THE TEN ECONOMIC FREEDOMS
Score

RULE OF
LAW

Country

World Average

Property Rights 90.0

Freedom from Corruption 87.7
0

20

40

60

80

Rank

1Year
Change

2nd
9th

0
0.3

100

Anti-corruption measures generally discourage bribery of public officials. In 2013, however, a

special Independent Commission Against Corruption investigated two former state ministers
in New South Wales on allegations of a conspiracy to profit from mining leases. Australias judicial system operates independently and impartially. Property rights are secure, and enforcement of contracts is reliable. Expropriation is highly unusual.
Fiscal Freedom 64.2
GOVERNMENT
Government Spending 62.6
SIZE

160th
111th
0

20

40

60

80

2.2
0.2

100

Australias top individual tax rate is 45 percent, and the top corporate tax rate is 30 percent.
Other taxes include a value-added-tax (VAT) and a capital gains tax. The carbon tax has been
abandoned for a cap-and-trade system. The overall tax burden has fallen to 25.6 percent of
GDP. Government spending amounts to 35.3 percent of total domestic output, and public debt
remains at 27.6 percent of GDP.

REGULATORY
EFFICIENCY

Business Freedom 94.6

Labor Freedom 79.2
Monetary Freedom 80.5

5th
32nd
27th
0

20

40

60

80

0.9
4.3
3.3

100

Australias highly competitive regulatory framework promotes business formation and operational efficiency. With no minimum capital standards, starting a company requires only one
procedure. Flexible labor regulations enhance employment and productivity growth. A controversial carbon pricing scheme encourages consumers to use alternative energy sources that
otherwise would not be economically viable.

OPEN
MARKETS

Trade Freedom 86.4

Investment Freedom 85.0
Financial Freedom 90.0

41st
13th
1st
0

20

40

60

80

+0.2
+5.0
0

100

Australia has a 1.8 percent average tariff rate. The government has reduced tariff and non-tariff
barriers both unilaterally and through negotiated trade agreements. Foreign investment in a
few sensitive sectors is limited. The open financial sector is highly competitive and welldeveloped. All banks are privately owned, and prudent regulations have allowed them to withstand the global financial turmoil with little disruption.

Long-Term Score Change (since 1995)

RULE OF LAW
Property Rights
Freedom from
Corruption

104

0
+17.7

GOVERNMENT
SIZE
Fiscal Freedom
Government
Spending

+4.6
+8.7

REGULATORY
EFFICIENCY

OPEN MARKETS

Business Freedom +24.6

Labor Freedom
6.6
Monetary Freedom 6.2

Trade Freedom
+9.4
Investment Freedom +15.0
Financial Freedom
0

2014 Index of Economic Freedom