Australia’s competitiveness: Reversing the slide

Since the turn of the century, Australia’s competitiveness has collapsed, contributing to the economy’s rate of growth falling below potential. Over this time, Australia has experienced an unprecedented mining boom which sustained income growth and minimised the macroeconomic impact of the global financial crisis (GFC) in 2008-09, greatly assisted by the flexibility of the exchange rate and strong trade ties to Asia, most notably China.1 However, the fact that Australia has not fared as badly as many other advanced economies since then has bred complacency in policy circles about the need to address a persistent competitiveness problem.