Australia Now The Not-quite-as-lucky Country

The Age

Wednesday July 23, 2008

Tim Colebatch Economics Editor Canberra

AUSTRALIA has slid 10 places on the world's income charts, dropping from being the world's 24th richest country to 34th richest in just one year, the World Bank estimates.

The bank's annual estimates of national income in 208 countries shows Australia remains part of the big group of Western countries with similar living standards, riding bunched together like a Tour de France peloton. But in 2007 we slipped towards the back of the group.

The World Bank estimates that, after adjusting for relative prices, Australians in 2007 had a national income per head of $US33,340 ($A34,085) in real purchasing power - more than three times the world average of $US9816 per head.

But 33 countries earned more, many of them tiny tax havens and other refuges of the rich, such as the Isle of Man, San Marino and the Cayman Islands. Half the countries that overtook Australia last year on the bank's charts were micro-countries.

Luxembourg remains the world's richest country, partly because its low taxes attract European companies. At $US64,400 per head, its income per capita is now almost double that of Australia.

Liechtenstein and Bermuda were second and third. Norway ($US53,960) was the richest "normal" country, ahead of oil producers Kuwait and Brunei. Singapore - dramatically upgraded this year - came next. The United States ($US45,850) was just ninth.

Then came most of Western Europe, where all but three countries are estimated to be richer than Australia. Greece ($US32,520), Spain ($US30,110) and Italy ($US29,900) are ranked behind us.

The gaps between Australia and those ahead of us, however, are small and the estimates so approximate as to make such differences meaningless. A 10% rise in Australia's income would have lifted us into the top 20.

Three of the countries that overtook Australia in 2007 were oil producers - Kuwait, Bahrain and the United Arab Emirates.

New census figures showed Australia had 100,000 more people than previously thought, slashing its income per head.

Australia's national income per head remains six times that of China ($US5370), 12 times that of India ($US2740), and 115 times that of Liberia ($US290), estimated to be the world's poorest country.

WHERE WE RANK

World Bank rankings for 2007

Income per head in $US

1 Luxembourg $64,400

4 Norway $53,690

8 Singapore $48,520

9 USA $45,850

16 Netherlands $38,090

28 UK $34,370

34 Australia $33,340

35 Greece $32,520

38 Italy $29,900