The Australian economy continues to undergo significant changes, but unfortunately, the changes required to keep up aren’t being made.

According to a new report from the World Economy Forum, the “Global Information Technology Report”, Australia is in 18th place when it comes to relative international competitiveness in information and communications technologies.

As other nations are taking proactive steps in order to remain competitive in the digital age, Australia is falling behind. Finland was named on top of the list, followed by Singapore and Sweden.

Australia was ranked:

  • 14th in the “environment” sub-index – down from 8th in 2007. This index measures the ability of a country’s legal framework to support ICT innovation and growth.
  • 9th in the “readiness” index, up from 26th in 2011. This measures a country’s ability to take advantage of improvements in ICT infrastructure.
  • 19th in the “usage” index, down from 11th in 2008 – this measures the ability of governments and businesses to use ICT improvements.
  • 20th in the “impact” index, down from 16th in 2012, which measures the economic and social impacts occurring in a country as a result of moving towards ICT improvements.

In particular, the report mentions Australia’s approach to intellectual property as a liability, suggesting is has “worsened over time”.

However, Australia has some advantages The average per-minute cost of mobile calls has decreased from 46c a minute in 2008 to just 10c a minute in 2012, a rate of decline greater than in other countries.

Broadband availability is a different story. Australia dropped from 10th to 101st for “fixed broadband availability” due to increases in monthly costs, compared to other nations which have either declined or remained stable – such as the United Kingdom and United States, respectively.

The most distressing finding, however, was in the “usage” sub-index, which found the ability of businesses and governments to increase their capacity with IT usage has droped from 11th in 2008 to 19th in 2014.

While usage among individuals and businesses is largely increasing, government usage has fallen from a peak of 5th place in 2010 to 21st in 2014.

“Although Australian Governments have a clear implementation plan for utilizing ICTs to improve Australia’s overall competitiveness…they are less successful in promoting the use of ICTs and is only ranked 48th for this measure in 2014,” the report found.

Although Australia’s “Networked Readiness Index”, which measures its ability to use ICT to boost competitiveness and well-being, improved after 2007 – but other countries have experienced a greater improvement.

“As a result, Australia’s relative competitiveness with regard to our capability to leverage ICT has deteriorated.”

“Australia failed to improve upon its 2013 performance which has represented a steady and disappointing decline over the past decade from a peak of 9th place in 2004,” Australian Industry Group CEO Innes Willox said in a statement.

The importance of modernising the economy is essential to unlocking value and productivity. The recent book from Google, “Start With Code“, which features input from PwC’s Digital Change partners, estimates there could be at least $100 billion worth of value in the next two decades.

This report unveils risks which are putting this digital transformation behind. In order to not only survive but thrive, Australian businesses must unlock the potential within their own workforces by accessing skills, training and new education methods. In particular, government infrastructure requires significant upgrades to take advantage of this digital change. (Programs such as the App Hot House with Transport for NSW are an example of this in action.)

There is a treasure trove of resources waiting to be unlocked in the digital economy – this report is a warning it can drift out of reach if it goes untouched.

The AIG report is available here.