Australia has improved its ranking for business cost competitiveness over the past two years, a KPMG comparative study of 100 cities in 10 countries reveals.
In KPMG’s Competitive Alternatives report, out today, Australia has risen from 8th place in 2014 to 5th in 2016. The report examines a range of 26 cost factors including labour, facility, transport, utility, financing and taxation costs, across four business sectors: digital services, R&D, corporate services, and manufacturing.
Australia had the biggest improvement in cost competitiveness of the countries studied between 2014 and 2016, improving by 9.9 percentage points, and moving ahead of France, UK and Japan. Australia and Italy, which was in fourth position, ranked very closely on overall cost advantage. The US and Japan were the least cost-competitive, while Mexico, Canada and the Netherlands had the lowest business costs.
The main reasons for Australia’s increased cost competitiveness were:
Brendan Rynne, KPMG Chief Economist, and leader of the Australian component of the study, said: “The slowdown in the Australian economy since the resources boom tailed off is clearly reflected in the results of this study compared to 2014. Wages growth has slowed, while utility costs have come down. Australia has a consistent middle ranking (5th) for competitiveness among three of the four sectors we considered – digital services, R&D and corporate services – but has higher costs in manufacturing due to high facility leasing and transportation costs. This suggests Australian policymakers must play to our strengths and focus on those areas we do well in. For example we have a strong offering in R&D services, with business costs more than 20 per cent below the US baseline.”
Taking the last two reports together, Australia has improved its cost-competitiveness by a total of 13.8 percentage points since 2012, second only to Japan.
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The full report can be accessed at CompetitiveAlternatives.com.
Senior Communications Manager, KPMG
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