Corruption’s $72.3 billion hit to GDP
New research released today by the Australia Institute estimates the effects of rising perception of corruption in Australia since 2012 could have reduced Australia’s GDP by $72.3 billion, or 4%.
[Full report - see PDF below]
“Since 2012 Australia has slid from 7th to 13th on Transparency International’s Corruption Perception Index (CPI), with index score declining from 85 to 79,” said Rod Campbell, Australia Institute Director of Research and co-author of the report.
“Economic analysis estimates each point decline in this score translates into a reduction in GDP per capita of $486. Extrapolating across Australia’s population, our GDP could have been $72.3 billion higher this year had we maintained our 2012 reputation for minimal corruption.
“This is in line with World Economic Forum estimates that corruption costs 5% of GDP worldwide.
“The economic impacts of corruption are well-known. Business costs increase, capital is not allocated efficiency and inequality worsens.
“Australia needs policies to address this threat to our economy.
“A federal ICAC with teeth is needed to increase public trust and tackle the perception of corruption in Australia.
“The perception of corruption is on the rise, the number of public servants who have witnessed corrupt behaviour is on the rise and public trust in federal parliament is at an all-time low. As well as the obvious democratic cost, corruption and the perception of corruption also costs our economy.
“Not only does corruption cost business, businesses do not want to operate in countries where there is a perception of corruption.”
“This research shows that the business community also has a stake in perceptions of corruption and should be supporting calls for a federal ICAC,” Campbell said.