While Australia is already second best place to do business, more is needed to be done to be competitive. In a globalised world second best may not be enough.
Australia second easiest place in world to start-up – but it’s downhill from there
By Michelle Hammond
Thursday, 25 October 2012
Australia is the second easiest place in the world to start a business, according to a new report by the World Bank, but drops back to 10th place when it comes to the ease of doing business.
The report, titled Doing Business 2013: Smarter Regulations for Small and Medium-Size Enterprises, marks the 10th edition of the Doing Business series.
This series analyses regulations that apply to an economy’s businesses during their lifecycle including start-up and operations, trading across borders, paying taxes and protecting investors.
The aggregate ease of doing business rankings are based on 10 indicators and cover 185 economies.
According to the latest report, Australia is the second easiest place in the world to start a business, beaten only by New Zealand.
The study found it was possible to set up an operation in Australia in two days and after just two procedures.
While Australia may rank highly when it comes to the ease of starting up, it was ranked 10th with regard to the ease of doing business.
But Gavan Ord, a business policy adviser at CPA Australia, says the index is, to some extent, flawed and should therefore “be taken with a grain a salt”.
Ord says the index focuses solely on laws and regulations and, even then, it does not cover all aspects of regulation.
“The index does not take into account factors such as market size or affluence, quality of many infrastructure services, security of property, macroeconomic conditions or the strength of underlying institutions,” he says.
“[It also fails to address] the ability of managers, staff and businesses to compete… Therefore, like other global competitiveness surveys, must be taken with a grain of salt.”
Nevertheless, Ord says several conclusions can be drawn from the findings.
“Australia gets most of the business basics right – for example, rule of law, transparency, accountability,” he says.
“While Australian governments have done a tremendous job in making the country a relatively friction-free place to set up a business, once a business is set up, Australia compares poorly in many of the areas essential to operating a business.”
“It would appear that Australia has some way to go to match the leading economies in developing a streamlined, effective and inexpensive system that permits businesses to start up at higher rates than elsewhere, to succeed at higher rates than elsewhere and to overcome other disadvantages that might be present in the Australian economy.”