Australia has slipped to 21st out of 42 countries in the Business Council of Australia’s (BCA) 2025 Global Investment Competitiveness Index, down from 17th in 2019, highlighting growing structural pressures that directly affect capital-intensive sectors such as food and beverage manufacturing.
The index measures competitiveness across trade, regulation, business taxation, labour markets, investment restrictions, energy and rule of law. While Australia performs strongly in trade (ranked 2nd globally), rule of law (10th) and energy (11th), its rankings in regulation (37th), business taxation (38th) and investment restrictions (38th) weigh heavily on overall performance.
For food and beverage manufacturers – a sector reliant on export markets, foreign capital, automation investment and energy-intensive processing – the findings are more than macroeconomic commentary. They go directly to cost, speed and certainty of doing business.
Trade strength: a competitive advantage for exporters
Australia’s 2nd place ranking on trade reflects low tariff and non-tariff barriers and improved trade facilitation. The government’s abolition of nearly 500 nuisance tariffs in 2024, with a further 500 slated for removal from July 2026, strengthens export competitiveness.
For manufacturers, particularly in dairy, meat, grains, beverages and premium packaged foods, this reinforces Australia’s export platform advantage – especially as global supply chains fragment and regional FTAs become more strategically important.
However, the report also flags cross-border regulatory complexity and slow trade processes relative to peers, suggesting further digitisation – including a proposed Trade Single Window – is needed to reduce compliance costs. For exporters facing margin compression, administrative friction remains a competitiveness drag.
Regulation: cost and delay pressures mounting
Australia’s regulation ranking has deteriorated to 37th. The BCA points to duplication across levels of government, policy instability and growing compliance burdens as factors eroding attractiveness for capital.
For food and beverage manufacturers, regulatory layering is particularly acute. Facilities must navigate environmental approvals, food safety regimes, labelling standards, workplace laws, biosecurity compliance and – increasingly – ESG reporting obligations. Delays in planning approvals or environmental permits can materially impact project timelines and returns.
The BCA calls for a 25 per cent reduction in regulatory costs by 2030 and stronger central oversight of regulatory quality. For processors planning site expansions, automation upgrades or greenfield investments, regulatory certainty and faster approvals would materially improve investment feasibility.
Business tax: a structural hurdle
Australia’s 30 per cent company tax rate has pushed the country’s effective tax ranking from 34th highest to 38th among comparator economies. Complexity has also worsened, with corporate tax system rankings slipping from 14th to 32nd over the period.
In a sector where capital expenditure on robotics, packaging lines, cold storage and energy transition is intensive and long-dated, higher tax hurdles reduce internal rates of return. Global food multinationals allocating capital across jurisdictions will weigh Australia’s tax profile against Ireland (20 per cent), Finland (20 per cent) and Sweden (20.6 per cent), all of which rank higher in the index.
For Australian-headquartered manufacturers competing for global capital within multinational structures, this relative tax disadvantage is material.
Investment restrictions: foreign capital friction
Australia has the most restrictive foreign investment screening regime in the OECD and the third most restrictive among index competitors.
Given Australia does not generate sufficient domestic savings to fund all large-scale investments, foreign capital remains critical. In food manufacturing, foreign direct investment underpins everything from dairy processing capacity to beverage bottling plants and ingredient manufacturing.
Lengthy approval processes or broader screening thresholds can add uncertainty for cross-border acquisitions or greenfield builds. In a globally mobile capital environment, that uncertainty can redirect investment elsewhere.
Energy transition: opportunity and risk
Energy performance has improved in certain measures, with strong security rankings, but overall competitiveness depends on delivering an affordable, reliable transition to net zero.
Food and beverage manufacturing is energy intensive – from refrigeration and spray drying to brewing and high-speed bottling. Rising energy costs, grid constraints and policy volatility can directly affect operating margins. Conversely, jurisdictions that deliver reliable low-cost renewable energy at scale become magnets for advanced processing investment.
Labour markets: productivity alignment critical
Australia’s labour market ranking has softened, with the labour market freedom index declining from 4th to 11th between 2019 and 2025.
High wages are sustainable only if matched by productivity growth. For manufacturers investing in automation and digitalisation, workplace flexibility that supports technology adoption is essential. If industrial settings inhibit productivity gains, capital deployment slows.
What this means for manufacturers
The BCA frames the index as a call to become a top 10 investment competitor. For food and beverage manufacturers, the implications are clear:
- Export advantage remains strong but must be matched with digital trade reform.
- Regulatory simplification could unlock faster capacity expansion.
- Tax competitiveness will influence where multinational capital flows.
- Foreign investment certainty remains critical for scale.
- Energy affordability will shape the future of processing investment.
In a sector facing margin compression, climate transition costs and global competition, competitiveness settings are not abstract policy debates. They are determinants of whether Australia builds the next generation of protein processing plants, beverage facilities and advanced ingredient hubs – or watches that capital flow offshore.
For food and beverage manufacturers planning the next decade of investment, the index is a reminder that competitiveness is cumulative – and that policy settings today shape processing footprints tomorrow.
