Thursday 17 January 2008

Heritage Foundation ranks Aussies 4th

The Heritage Foundation has released its 2008 Index of Economic Freedom.

In the top ten, Australia is ranked in 4th place, and at a score or 82, beats New Zealand, Canada and the USA. We are above the threshold of being “free”.

We have dropped from 81.65 and 4th place in 2006.

We rank poorly in 'fiscal freedom' at 59.2%. The author notes that Australia has a high income tax rate and a moderate corporate tax rate.
  • Australia's overall score is 1% point higher than last year, primarily because of an improved investment climate. Australia is ranked 3rd out of 30 countries in the Asia–Pacific region, and its overall score is well above the regional average.

    Australia rates highly in virtually all areas but is most impressive in financial freedom, property rights, and freedom from corruption. Low inflation and low tariff rates buttress a globally competitive financial system based on market principles. A strong rule of law protects property rights and tolerates virtually no corruption.

    Foreign and domestic investors receive equal treatment, and both foreign and domestically owned businesses enjoy considerable flexibility in licensing, regulation, and employment practices.

    The top income tax rate is high, as is government spending, with both scoring below the world average. The top income tax is especially oppressive. Yet, due to its deep freedoms generally, Australia's economy is a global competitor and a regional leader.

    The top income tax rate is 47%, and the top corporate tax rate is 30%.
    Other taxes include a value-added tax (VAT), a tax on insurance contracts, and a fuel tax. In the most recent year, overall tax revenue as a percentage of GDP was 31.2 percent.

In 'freedom from Government' we also rank relatively low at 62.8%.

  • Total government expenditures, including consumption and transfer payments, are high. In the most recent year, government spending equaled 35.2% of GDP.

    The government has advanced its privatization agenda by selling its remaining share of Telstra.
The number of countries in each band are:

  1. Free ~ 7

  2. Mostly Free ~ 23

  3. Moderately Free ~ 51

  4. Mostly Unfree ~ 52

  5. Repressed ~ 24

  6. Not Ranked ~ 6

Amongst the top ten, New Zealand had the highest score of 99.9 for the business freedom, Australia was 89.32:-

  • overall freedom to start, operate, and close a business is strongly protected by Australia's national regulatory environment.

    Starting a business takes an average of two days, compared to the world average of 43 days.

    Obtaining a business license requires less than the global average of 19 procedures and 234 days. Closing a business is very easy. In sectors dominated by small businesses, the government generally follows a hands-off approach.
We should be pleased to be in the top ten countries. Hong Kong is 1st on 90.3, Ireland 3rd on 82.4. Being "free" allows and creates a competitive environment.

The poorest surveyed country is North Korea on only 3.0, followed by Cuba 27.l5 and Zimbabwe on 29.8. No real surprises there!

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