Australia

2016 business cost index

89.4

Country ranking

5th / 10

Australia, GDP per capita: US$61,925 (2014), GDP growth rate: 3.0% (2015), Unemployment rate: 5.8% (Q4/2015), Inflation rate: 1.7% (2015)
Locations12016 indexRank12014 indexRank1
Australia89.4599.38
Adelaide88.22398.986
Brisbane90.329100.597
Melbourne88.82497.672
Sydney90.128101.0100
1  Overall results for the country and cities. Rank for Australia is relative to 10 countries in both 2016 and 2014. Ranks for cities are relative to 111 cities in 2016 and 107 cities in 2014.
 
Sectors2016 indexRank22014 indexRank2
Digital services84.1596.96
R&D services77.9594.16
Corporate services79.6598.17
Manufacturing93.06100.59
2  Rank is relative to 10 countries in both 2016 and 2014.
 
Cost factors3
  • 22.3% currency depreciation against the US$
  • Below-average increase in total labor costs
  • Increase in lease costs for industrial and downtown office space
  • Decrease in utility costs, for both electricity and natural gas
3  Significant cost trends between 2014 and 2016.
 
Exchange rate sensitivity4IndexChangeRank5
20% appreciationUS$1 = AU$1.1196.4-7.05
20% depreciationUS$1 = AU$1.6784.8+4.65
4  "What if" sensitivity scenarios based on appreciation or depreciation relative to the US dollar.
5  Rank among 10 countries assuming equal appreciation/depreciation of all currencies relative to the US dollar.

Locations

National results for Australia reflect the combined results for two major cities, Melbourne and Sydney, with Adelaide and Brisbane also included in the study.

Among these major cities, Adelaide and Melbourne are the cost leaders and appear to be in constant competition for the title of “lowest cost city” in Australia. These two cities have alternated between first and second place among the Australian cities compared in each edition of Competitive Alternatives since 2008.

Brisbane has experienced rising costs for industrial leasing and utilities since 2014. This has pushed Brisbane’s total business costs above those of Sydney for the first time in the history of this study.
 

Sectors

Among the four study sectors, Australia ranks consistently as fifth among the 10 countries in all sectors except for manufacturing. Relatively high costs for industrial facility leasing and transportation (freight) contribute to Australia’s lower ranking in the manufacturing sector.
 

Cost factors

The rise in value of the US dollar relative to the Australian dollar in 2015 is the primary driver of Australia’s improved cost index in 2016 and the improvement in rankings for the Australian cities. However, other cost trends as noted in the table help Australia to move ahead of France, the UK and Japan in the current study.
 

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