Stupid Australia: Brain drain leaves economy less able to compete

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Latest global competitiveness rankings paint a bleak picture for Australia, which has now fallen behind NZ and is fast losing ground as a ‘smart’ economy.

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Could it be that investment in scientific research and development is directly linked to a country’s economic competitiveness? If this were true – and there is a great deal of evidence to suggest it is – it might explain why Australia has dropped yet another place in the this year’s global competitiveness rankings, falling behind New Zealand to number 18 in the world.

The poor performance of Australia – which, as we noted yesterday, is set to cut its research budget by 7 per cent more over the next 12 months, and another 10 per cent in the following three years – was highlighted by Committee of Economic Development of Australia (CEDA) on Thursday, in a report analysing the results of the 2015 IMD World Competitiveness Yearbook.

The annual report from the Switzerland-based IMD World Competitiveness Centre, released on Thursday, assesses and ranks 61 economies, according to more than 300 business competitiveness criteria.

IMD director, Arturo Bris, said a general analysis of the 2015 ranking shows that this year’s top countries are going back to economic basics.

“Productivity and efficiency are in the driver’s seat of the competitiveness wagon,” Bris said. “Companies in those countries are increasing their efforts to minimise their environmental impact and provide a strong organisational structure for workforces to thrive.”

But not Australia, which, according to CEDA chief Stephen Martin, has instead been charting a worrying decline over the last five years.

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“The overall result is drawn from rankings for four key areas – economic performance, government efficiency, business efficiency and infrastructure and Australia has slipped significantly in all these areas over the last five years,” Professor Martin said.

“Our fall in economic performance is particularly concerning, with a drop of four places from last year to 28, which is a drop of 15 places in the last five years.

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“Our ability to innovate and be a ‘smart’ economy with a highly skilled and innovative workforce has been a comparative advantage for Australia and is becoming even more important as our economy shifts away from mining and resources and looks to services to pick up the slack.

“However, these significant slips in the rankings suggest we may not be keeping pace with global competitors at the very time it is becoming increasingly important for our economy.”

Professor Martin also noted that the two areas where Australia slipped the most in the infrastructure category were in technological infrastructure and scientific infrastructure.

“This again suggests we are losing ground as a smart economy, and we don’t have the infrastructure in place to compete in R&D,” he said.

This is hardly surprising. As this Bloomberg article on Wednesday pointed out, the Abbott government’s latest federal budget suggests the Coalition is betting on “baristas over brains” to build Australia’s economy.

“The country that brought you refrigerators, black-box flight recorders, bionic ears and Wi-Fi will cut its research budget by 7 per cent over the next 12 months, and another 10 per cent in the following three years,” said the article.

“At the same time it’s offering tax cuts and write-offs in its budget this month for small firms to buy equipment like espresso machines and lawnmowers as the centerpiece of a plan to build a ‘stronger and more prosperous Australia’.”

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The Bloomberg article goes on to quote Australia’s Chief Scientist, Ian Chubb, as saying that every OECD nation has a plan to grow its scientific enterprise and aid its translation into technology, innovation and development … except Australia, which the article points out now ranks in the bottom seven countries based on government spending on research and development as a proportion of gross domestic product.

Of course, what is also damaging Australia’s economic competitiveness – as well as levels of private sector investment in R&D – is its the ongoing political uncertainty that has been dogging key sectors like renewable energy.

According to the IMD report, political stability and predictability has now fallen out of the top five key attractiveness indicators for Australia.

“In addition, Australians were more pessimistic about how efficiently public finances are being managed, with the ranking dropping 14 places to 27,” said Professor Martin.

Overall, the US retained the number one spot in the IMD rankings, followed by Hong Kong, Singapore and Switzerland. The top four have remained the same with Hong Kong and Switzerland swapping places this year.

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New Zealand, for the first time in 18 years, jumped ahead of Australia in the rankings, moving to 17 from 20.

“In the Asia Pacific region Australia dropped one place, due to New Zealand moving ahead. Japan had the biggest fall in this group dropping in the overall ranking from 21 to 27,” said Professor Martin.

Professor Martin said the results for emerging economies were patchy, with China improving slightly, Brazil dropping slightly and India remaining in the same place.

The rankings are part of Switzerland based IMD’s 2015 World Competitiveness Yearbook, which compares and ranks 61 countries based on more than 300 business competitiveness criteria. Two-thirds are based on statistical indicators and one third is based on a survey of international executives conducted in March/April of this year. CEDA is the Australian partner for the yearbook.

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11 Comments
  1. Keith 4 years ago

    There are consequences of being run by medievalist deniers of evidence-based science. Let’s hope these issues get ventilated in the lead up to the next election.

    • Matt Schlutz 4 years ago

      Haha, that’s awesome,

  2. Jacob 4 years ago

    Makes sense.

    My shaving machine is made in Holland. Hope to get an Israeli made inverter soon.

    You can even make money by exporting beer as Holland does.

    What does AUS want to export, coal and uranium?

    • Jan Veselý 4 years ago

      Countries like Germany, Denmark or Netherland are relatively poor on resources. So, they have only one option, to invest into “heads and hands” of their people. Elites needs ordinary people, they need them skilled and smart. Everything else is just a result.

      • Jacob 4 years ago

        The problem is that the world does not want to buy Aussie coal any more. Nor will it want Aussie uranium.

        AUS is due for a recession with the death of car exports, coal exports, uranium exports.

        • Jan Veselý 4 years ago

          That is exactly the risk of having resource extraction based economy.
          Once guano was a great commodity to be sold. It made such a big profits that it also caused several wars in Southern America. Than some damned German engineers invented an industrial technology which produces nitrogen rich fertilizers out of the thin air (and plenty of energy). So, now the guano is almost worthless.
          Will the same happen to coal? I hope so.
          Will the same happen to uranium? It is happening now.

  3. Barri Mundee 4 years ago

    The country is being run by people who know the price of everything but the value of nothing.

    Stupid, short term focus on “repairing the budget” when the focus should on fostering innovation in energy, R & D etc

    • Jacob 4 years ago

      Aussie politicians are just corrupt. AUS has the most distorted tax system in the OECD. Worse than Italy!

  4. Rob G 4 years ago

    Our current government has no time for science. As an ideology, they would prefer the country becomes dumbed down. Their own chances of survival decreases when the population becomes more educated. They don’t want that! Look at papers like the ‘Daily Telegraph’, here uneducated audiences happily believe the sensational headlines and vote accordingly. Big uncle Rupert can look after his preferred party if his audience is gullible, but the educated votes are much harder to come by.

  5. john 4 years ago

    We get out science from our business adviser thanks.
    He knows exactly what this science stuff is all watermelons.
    We are open for business we can serve you a coffee and give you a doughnut.
    Out the back is a shovel we dig up that stuff and ship it to you.
    Any questions about this business plan?
    If you question our business plan you obviously have some kind of angsts against looking after poor people because we supply the energy and resources to lift poor people out of poverty.

  6. Herring Colin 4 years ago

    perhaps if there were not so many instances of science selling out to corporations and governments to endorse corrupt developments then perhaps this current government would realise the value. Don’t get me wrong, I am not supporting the LNP rather saying science in this country has sold out to the highest bidder

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