Australia and New Zealand on top – but for how long?

Ideas@TheCentre – The CIS newsletter (Sydney), 14 January 2011

Australians and Kiwis have become used to it over the last few years. Each January, the Heritage Foundation and The Wall Street Journal publish their Index of Economic Freedom and each year, Australia comes third after Hong Kong and Singapore. And each year, New Zealand is not far behind, this time in fourth place, although New Zealand has been ahead of Australia in the past.

Something happening with clockwork-like repetitiveness is usually not very newsworthy. However, in this case it is well worth a thought or two.

There are of course different ways of measuring this, but it is worth celebrating that Australia and New Zealand once again lead the world’s non-city states in economic freedom. This is often consistent across various such Indexes. Though improvements are certainly conceivable, in practical terms our two countries are as good as it gets.

There is a problem though. Our consistently good scores in the Index are threatened by complacency. The more often we hear how well we have weathered the global economic crisis of the past years, the less we believe there is anything left to do to secure our future prosperity.

Sure, governments still revert to the language of ‘reform.’ But where a generation ago ‘reform’ meant tough institutional changes, the word has now become a synonym, and sometimes an excuse, for government increasing its activities. In truth, there is nothing ‘reformatory’ about digging trenches for fibre optic cables, to just name one example.

The link between a nation’s economic success and its economic freedom is firmly established. If we want to stay at the top of the list, we need to reclaim the language of reform.