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Associated Press
25-04-2025
- Business
- Associated Press
Australia's next government must mend structural cracks appearing in its political, economic and social foundation, report finds
Australia boasts some of the world's most sophisticated political institutions and one of its wealthiest economies. But this veneer of success masks deeper structural issues - and a 'ticking time bomb' of overreliance on extractive industries must be addressed under Australia's next government, a new report recommends. Cracks have begun to show in the country's façade of optimism, prosperity and progress, according to anAustralia BGI Reporton the country's governance performance, released eight days before the May 3 election. According to the report, the country's economy continues to rely heavily on environmentally harmful extractive industries, while economic centralization in only a handful of cities has driven up housing costs. Racial tensions, including the displacement of Indigenous populations, remain unresolved. This is resulting in 'rising political polarization, deepening inequality and heightening exposure to the deeper geopolitical tensions emerging between the U.S. and China,' said the report. Based on theBerggruen Governance Index(BGI), the report was conducted by researchers from the Los Angeles-based Berggruen Institute think tank, the Luskin School of Public Affairs at the University of California Los Angeles (UCLA) and the Hertie School, a German university. According to the report, Australia has long benefited from favourable economic, geopolitical and demographic conditions. Its cities are ranked as some of the most livable in the world and it scores highly on almost all governance measures in the BGI, which analyzes the relationship between democratic accountability, state capacity and the provision of public goods. But the country isn't exempt from the same challenges to democracy, prosperity, and social cohesion that similar countries are facing, according to the report. Eroding public trust in government is providing 'the backdrop for a hotly contested federal election,' during which the centre-left Labor Party under Prime Minister Anthony Albanese is seeking to defend its majority against Opposition Leader Peter Dutton and the centre-right Liberals. While the Labor Party was previously projected to lose after a lacklustre post-pandemic economic recovery, it has recently risen in the polls - a reversal mirroring a similar trend in Canada, in which U.S. President Donald Trump has amplified negative associations with conservatism. Now, the Australian Labor Party is projected to win by a slim margin. Another factor influencing the election is rental affordability, which reached its worst level on record in 2025,according to the REA Group, a company in the real estate industry. This trend is pushing younger voters toward the Australian Green Party, which has made reform on the housing market a central part of its policy agenda, the Australia BGI Report said. However, in the 2022 election, 12 per cent of the national vote translated into just 2.5 per cent of seats for the Greens - a pattern that 'could repeat itself in 2025 due to the country's preferential voting system.' Australia's electoral system uses a preferential voting system rather than the 'first-past-the-post' method common in many other Anglophone democracies, which conceals a 'darker history of Indigenous dispossession and racial discrimination.' It's also one of only 22 countries in the world that require citizens to vote. However, the stresses that have plagued Albanese's government 'will persist regardless of who prevails in May,' said the BGI report. Australia generally resembles wealthy Western European and North American countries on the 2024 Berggruen Governance Index, scoring highly on democratic accountability. It's ranked as one of only 25 'full democracies' by the Economist Intelligence Unit. But, despite ranking 9th globally in GDP per capita, Australia ranks only 99th worldwide in the Economic Complexity Index (ECI). 'Although Australia is blessed with bountiful natural resources, its political economy is also constrained by this very endowment,' said the Australia BGI Report. 'Its reliance on extractive industries has reduced the incentive to diversify and weakened other parts of the economy.' Iron ore, coal, petroleum, gold, and other minerals comprise the five largest products sold abroad, accounting for more than half of all exports. Instead of moving away from this reliance, 'Australia has in many ways doubled down,' said the report. Australia is the world's largest coal exporter and accounts for more than half of the world's lithium, with most of it going to China for battery manufacturing. Therein lies another issue. While Australia is increasingly economically dependent on China, it has also long relied on the U.S. security guarantee. In the context of a growing U.S.-China rivalry, this puts Australia in a precarious position, said the report, being 'economically tethered to one superpower, while militarily aligned with another.' To move past these problems, Australia will have to 'leverage its impressive state capacity and strong educational system to develop a more advanced services sector and more complex manufacturing,' said the Australia BGI Report. The next government will need to focus on the 'domestic essentials of growth' such as housing market reforms, as well as building economic complexity, to ensure internal and external stability, the report's researchers conclude. Only with a more complex economy 'can Australia ensure future growth and reduce vulnerability to foreign powers like China and the U.S.' ---------------------------------------------- This text and the accompanying material (photos and graphics) are an offer from the Democracy News Alliance, a close co-operation between Agence France-Presse (AFP, France), Agenzia Nazionale Stampa Associata (ANSA, Italy), The Canadian Press (CP, Canada), Deutsche Presse-Agentur (dpa, Germany) and PA Media (PA, UK). All recipients can use this material without the need for a separate subscription agreement with one or more of the participating agencies. This includes the recipient's right to publish the material in own products.
Associated Press
17-04-2025
- Business
- Associated Press
Canada must reduce reliance on extractive industries and U.S. exports, report finds
From dissatisfaction with the Trudeau government to dissatisfaction with Trump's policies — compounded by general anxiety around tariffs, the economy and a deteriorating relationship with the U.S. — navigating an economic downturn should be an immediate priority for Canada as it heads into a federal election, a new report recommends. In the long-term, however, it says Canada will need greater economic diversification and regional representation. 'Although it is wealthy by global standards, Canada's economy faces key vulnerabilities such as excessive reliance on extractive industries, shortages of critical goods like housing and heavy dependence on exports to the U.S.,' states aCanada BGI Reporton the country's governance performance, released a little more than ten days before the April 28 federal election. The report, based on theBerggruen Governance Index (BGI), was conducted by researchers from the Los Angeles-based Berggruen Institute think tank, the Luskin School of Public Affairs at the University of California Los Angeles (UCLA) and the Hertie School, a German university. Currently, Canada ranks only 48th on the Economic Complexity Index. 'Given its wealth, this is a disproportionately low figure and increasing it should be a top priority,' said the report. The Berggruen Governance Index (BGI) Project analyzes the relationship between democratic accountability, state capacity and the provision of public goods to develop a deeper understanding of how governments can create a more resilient future for their people. While Canada scores highly on most measures of the BGI, the report found that Canada's performance 'has been uneven over the last decade' and for many years has failed to address systemic problems. These problems, however, have been overshadowed by U.S. President Donald Trump. Until recently, analysts predicted a landslide victory for the Conservatives under Pierre Poilievre, since the Liberals, under former Prime Minister Justin Trudeau, had become deeply unpopular over numerous policy decisions, including immigration. But the Liberals have 'experienced one of the most dramatic electoral turnarounds in recent political history,' according to the Canada BGI Report, attributing the ascension of Trump to the U.S. presidency in January 2025 to this reversal of fortunes. This reversal also coincided with the resignation of Trudeau and the selection of former Bank of Canada and Bank of England Governor Mark Carney as the new Liberal leader. 'Repeated threats of tariffs and even territorial annexation provoked outrage among Canadians and ignited a surge in patriotic sentiment, to which Poilievre's defeatist 'Canada is broken' rhetoric was particularly ill-suited,' the researchers wrote. Carney has rallied Canadians around national unity — and managed to solidify a poll swing back to the Liberals. What seemed like an inevitable win for the Conservatives just a few months ago has become a close race to the finish line. While the Canada BGI Report found that Carney's vision of 'One Canadian Economy' appears to be a politically successful response to the crises Canada faces from the U.S., in the long-run Canada will need to contend with 'persistent economic tensions' and 'overcome governance challenges that predate both Trump and Trudeau', the report said. The BGI scores for state capacity and democratic accountability 'trail those of many Western European peers,' according to the report, with institutional accountability falling by seven points from 2000 to 2021. This indicates disillusionment with Canada's institutions; researchers found that public trust in government steadily declined throughout the 2010s. 'Coupled with eroding faith in democratic institutions and lingering regional tensions, the previous unpopularity of Trudeau's Liberals appears to reflect systemic issues rather than an anomaly,' according to the Canada BGI Report. A major flashpoint for Canadians is immigration. Canada has long been a supporter of greater immigration but, by 2024, public sentiment had shifted — helping to propel the Conservatives to the top of the polls. Canada's international migration surged 15-fold under Trudeau — with the aim of meeting the country's current labour shortage — but Ottawa started coming under fire for housing inflation. Canada has one of the highest housing price-to-income ratios in the developed world, according to the OECD. One reason is stagnant homebuilding, with the number of dwellings per 1,000 residents far below the G7 standard. With homeownership rates declining, that has led to increasing backlash toward immigrants and newcomers. Canada has also struggled with excessive reliance on extractive industries and heavy dependence on exports to the U.S. With current tensions between Canada and the U.S., 'reliance on both oil and exports remains a major feature of the country's economy and has recently been exposed as a geoeconomic vulnerability,' according to the researchers. However, the persistent challenges of regional representation and limited state capacity 'will make it increasingly challenging to enact far-reaching plans for economic integration and greater political sovereignty.' The report said that addressing these challenges will require investments in state capacity, economic diversification — both sectorally and geographically — and building greater democratic legitimacy through regional inclusion. Researchers recommend the next government 'complete Trudeau's unfinished goal of introducing a proportional representation system' that includes greater geographic representation and inclusion of First Nations peoples, which will be 'critical for increasing legitimacy and national unity.' Polls now project a Liberal majority in the House of Commons. ---------------------------------------------- This text and the accompanying material (photos and graphics) are an offer from the Democracy News Alliance, a close co-operation between Agence France-Presse (AFP, France), Agenzia Nazionale Stampa Associata (ANSA, Italy), The Canadian Press (CP, Canada), Deutsche Presse-Agentur (dpa, Germany) and PA Media (PA, UK). All recipients can use this material without the need for a separate subscription agreement with one or more of the participating agencies. This includes the recipient's right to publish the material in own products.
