2016 Index of Economic Freedom


overall score80.3
world rank5
Rule of Law

Property Rights90.0

Freedom From Corruption80.0

Limited Government

Government Spending62.0

Fiscal Freedom63.2

Regulatory Efficiency

Business Freedom89.4

Labor Freedom77.2

Monetary Freedom85.2

Open Markets

Trade Freedom86.4

Investment Freedom80.0

Financial Freedom90.0

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Quick Facts
  • Population:
    • 23.6 million
  • GDP (PPP):
    • $1.1 trillion
    • 2.7% growth
    • 2.7% 5-year compound annual growth
    • $46,433 per capita
  • Unemployment:
    • 6.0%
  • Inflation (CPI):
    • 2.5%
  • FDI Inflow:
    • $51.9 billion
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Australia, a vibrant free-market democracy, has recorded impressive economic progress without undergoing a single recession for almost 25 years. In addition to its 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 Asia–Pacific 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 The government has withdrawn from most areas of the market, and competition in sectors such as financial services has increased.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.



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 Liberal–National coalition and as prime minister in a leadership ballot in September 2015. Australia is one of the Asia–Pacific’s 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.

Rule of LawView Methodology

Property Rights 90.0 Create a Graph using this measurement

Freedom From Corruption 80.0 Create a Graph using this measurement

Australia’s 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.

Limited GovernmentView Methodology

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 EfficiencyView Methodology

Australia’s regulatory environment, one of the world’s 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 MarketsView Methodology

With a 1.8 percent average tariff rate, low non-tariff barriers, and few limits on foreign investment, Australia has some of the world’s 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.

Country's Score Over Time

Bar Graph of Australia Economic Freedom Scores Over a Time Period

Country Comparisons

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Regional Ranking

rank country overall change
1Hong Kong88.6-1.0
3New Zealand81.6-0.5
7South Korea71.70.2
8Malaysia 71.50.7
10Brunei Darussalam67.3-1.6
11Thailand 63.91.5
17Sri Lanka59.91.3
19Kyrgyz Republic 59.6-1.7
26Pakistan 55.90.3
29Bangladesh 53.3-0.6
30Papua New Guinea53.20.1
37Solomon Islands470.0
42North Korea2.31.0
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