2018 Index of Economic Freedom


overall score80.9
world rank5
Rule of Law

Property Rights78.7

Government Integrity77.4

Judicial Effectiveness93.4

Government Size

Government Spending61.2

Tax Burden63.0

Fiscal Health84.3

Regulatory Efficiency

Business Freedom89.1

Labor Freedom79.7

Monetary Freedom87.4

Open Markets

Trade Freedom86.2

Investment Freedom80.0

Financial Freedom90.0

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Quick Facts
  • Population:
    • 24.3 million
  • GDP (PPP):
    • $1.2 trillion
    • 2.5% growth
    • 2.7% 5-year compound annual growth
    • $48,899 per capita
  • Unemployment:
    • 5.7%
  • Inflation (CPI):
    • 1.3%
  • FDI Inflow:
    • $48.2 billion
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Australia’s economic freedom score is 80.9, making its economy the 5th freest in the 2018 Index. Its overall score has decreased by 0.1 point, with higher scores for the government integrity and government spending indicators offset by declines in labor freedom and property rights. Australia is ranked 4th among 43 countries in the Asia–Pacific region, and its overall score is well above the regional and world averages.

Although facing a structural change as sharply lower global commodity prices undermine mining investment, Australia’s robust free-market democracy benefits from an effective system of government that facilitates vibrant entrepreneurial development. With almost all industries open to foreign competition and a skilled workforce readily available, Australia continues to be an attractive and dynamic destination for investment. The government has withdrawn from most areas of the market, and government debt, rising since the global financial crisis, remains relatively low.



Australia is one of the wealthiest Asia–Pacific 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 that has continued under subsequent Liberal governments. Malcolm Turnbull, a former businessman and communications minister, replaced Tony Abbott as head of the ruling Liberal–National coalition and as prime minister in 2015. Australia is internationally competitive in services, technologies, and high-value-added manufactured goods. According to its Department of Industry, Innovation and Science, services (especially financial and insurance services) account for more than 60 percent of GDP. Mining and agriculture are important sources of exports.

Rule of LawView Methodology

Property Rights 78.7 Create a Graph using this measurement

Government Integrity 77.4 Create a Graph using this measurement

Judicial Effectiveness 93.4 Create a Graph using this measurement

Australia’s stable political environment supports transparent and well-established political processes, a robust legal system, competent governance, and an independent bureaucracy. The strong rule of law protects property rights and mitigates corruption. Expropriation is highly unusual, and enforcement of contracts is reliable. The judicial system operates independently and impartially. Anticorruption measures are generally effective.

Government SizeView Methodology

The top income tax rate is 45 percent, and the flat corporate tax rate is 30 percent. Other taxes include value-added and capital gains taxes. The overall tax burden equals 27.8 percent of total domestic income. Over the past three years, government spending has amounted to 36.0 percent of total output (GDP), and budget deficits have averaged 2.8 percent of GDP. Public debt is equivalent to 41.1 percent of GDP.

Regulatory EfficiencyView Methodology

Australia’s regulatory environment is one of the world’s most transparent and efficient and very supportive of entrepreneurship. In 2016, registering a business took less than three days. The labor market is well supported by the modern and flexible employment code. The government continues to fund multibillion-dollar subsidies for clean and renewable energy but eliminated its farm export subsidies in May 2017.

Open MarketsView Methodology

Trade is moderately important to Australia’s economy; the combined value of exports and imports equals 40 percent of GDP. The average applied tariff rate is 1.9 percent. Nontariff barriers impede some trade. In general, government policies do not significantly interfere with foreign investment. The financial sector is competitive and well developed. All banks are privately owned and subject to prudent regulations.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Hong Kong90.20.4
3New Zealand84.20.5
6Malaysia 74.50.7
7South Korea73.8-0.5
12Thailand 67.10.9
16Brunei Darussalam64.2-5.6
18Kyrgyz Republic 62.81.7
25Sri Lanka57.80.4
26Solomon Islands57.52.5
28Papua New Guinea55.74.8
29Bangladesh 55.10.1
31Pakistan 54.41.6
43North Korea5.80.9
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