Linkedin
Facebook
Email
more
AUTHOR
How does Australia’s improved corruption ranking impact business?
Australia’s recent rise in the Corruption Perceptions Index(CPI), where we now rank among the top 10 least corrupt countries, is a major achievement. But what does it mean for Australian businesses?
Key insights:
- Australia's ranking in Transparency International’s Corruption Perceptions Index (CPI) has risen, placing it back in the top 10 least corrupt countries globally.
- This improvement is attributed to recent legislative reforms, including the establishment of the National Anti-Corruption Commission and strengthened foreign bribery laws.
- A less corrupt environment fosters investor confidence, leading to economic growth and stability.
- The improved ranking encourages businesses to uphold ethical practices and robust compliance measures.
- However, challenges remain, including the need for enhanced whistleblower protection and transparency in political donations.
Overview of Australia’s improved corruption ranking
Australia's corruption ranking has seen a big boost in the 2024 CPI. After dropping to an all-time low in 2021 at 18th place, Australia has made significant effort to improve integrity and transparency. The rise in ranking comes from several new laws and ideas put in place in the last few years.
Why is the Corruption Perceptions Index important?
The annual Corruption Perceptions Index (CPI) is published by Transparency International. They measure the perception of public sector corruption globally and assign scores to countries and regions on a scale of 0 to 100. A score of 0 indicates "highly corrupt," whereas a score of 100 signifies "very clean." To provide a comprehensive understanding of corruption levels in various nations, the CPI relies on multiple sources, including expert opinions and business surveys.
Rather than tallying actual corruption incidents, the CPI reflects public perceptions of corruption in a country’s public sector. These perceptions can heavily influence investor trust, impact business decisions, and affect the overall economic climate. A higher CPI score reflects a view of less corruption, indicating a government that is more transparent and accountable, which in turn suggests a more stable and reliable environment for businesses to operate.
Australia's current position and its global significance
Australia's rise in the international corruption index shows we are working hard to improve our anti-corruption efforts. For the first time since 2016, Australia ranks among the top ten least corrupt nations globally. This accomplishment reflects a strong dedication to fostering a culture of integrity and accountability.
The contributions of Transparency International Australia have significantly influenced the push for greater transparency and improved anti-corruption legislation. Their initiatives to increase awareness of corruption and advocate for effective governance have enabled Australia to perform admirably on the world stage. As a frontrunner in the battle against corruption, Australia’s experiences and successful practices serve as valuable guidelines for other nations seeking to strengthen their own anti-corruption frameworks.
What’s driving Australia’s improved ranking?
A few key developments have contributed to this positive shift. The introduction of the National Anti-Corruption Commission (NACC) has played a crucial role, providing much-needed oversight at a federal level to address corruption risks that were difficult to investigate due to jurisdictional limitations.
Another major factor is the introduction of the Crimes Legislation Amendment (Combatting Foreign Bribery) Act 2024. This new law that came into effect on 8 September 2024 introduces a corporate offence for failing to prevent foreign bribery — a significant step that aligns Australia’s approach with global best practices. In addition, Australia’s commitment to implementing Tranche 2 Anti-Money Laundering reforms — long overdue — has improved our international standing, reassuring stakeholders that Australia is serious about combatting financial crime.
What does this mean for businesses?
For Australian businesses, these changes are far more than symbolic. Companies need to review their internal controls and compliance frameworks to ensure they align with these new standards.
Recent amendments to anti-corruption laws
The Australian federal government has made important changes to the country's anti-corruption laws and public policy, including efforts to combat money laundering.
Foreign Bribery Act
The Foreign Bribery Act places a clear responsibility on organisations to prevent bribery of a foreign public official by an “associate”. A significant element of this introductory offence that businesses must be aware of is that it is an absolute liability offence, meaning intention or knowledge of the business does not need to be established.
The only defence available to businesses is that adequate procedures were established to prevent bribery of foreign officials. Accordingly, business must adopt proactive measures — such as conducting risk assessments, improving staff training, and implementing clear policies — to ensure compliance. The Attorney General’s Department has provided guidance on how companies can develop these ‘adequate procedures.
Scam prevention framework: Protecting against financial crime
Financial crime has also been a growing concern for Australian businesses. The new Scam Prevention Framework aims to hold financial institutions more accountable for ensuring their customers are protected from scams. This is a positive step, particularly for victims who have previously been left stranded due to limited accountability from financial entities.
Strengthening internal controls and governance
With these new regulatory developments, CFOs and business leaders need to embrace the opportunity to strengthen their internal controls. Our advice is simple: don’t treat compliance as a box-ticking exercise. Instead, see it as an opportunity to enhance your organisation’s resilience. Engaging external consultants for an objective assessment of your risk framework can provide invaluable insights and ensure your business is well-
How businesses can help Australia maintain integrity and transparency
While Australia’s improved corruption ranking is positive, there’s no guarantee it will last. Maintaining this progress requires ongoing commitment from businesses and government bodies alike. Ensuring your organisation stays ahead of regulatory changes and implements meaningful control measures will be crucial.
It's also very important to create a safe space for whistleblowers. Companies should have clear whistleblowing policies that keep the identities of those who report problems confidential. By promoting a culture where people feel safe to speak up, companies can spot and fix issues before they grow.
Building a culture of honesty and openness takes dedication and a forward-thinking approach. Regular training, clear lines of communication, and strong support from leaders are essential. These steps help to include these important values in a company.
RSM is passionate about supporting businesses in navigating these challenges. If you’d like to discuss how RSM can assist with improving your governance frameworks, fraud prevention strategies, or forensic investigation needs, feel free to get in touch.
Together, we can help ensure your organisation remains protected, compliant, and prepared for the future.
RSM Australia has recently expanded its Fraud & Forensic Services in Sydney, establishing this new division under Director Andrew Connelly. With a background in law enforcement and forensic accounting, Andrew’s focus has always been on helping organisations uncover risks, strengthen governance, and maintain transparency.
Frequently Asked Questions
The corruption ranking of a country has a big impact on its business environment. If a country has a high ranking, like many OECD countries that want to be global leaders, it means the public sector is clear and predictable. This helps build trust for investors and supports economic growth.
Businesses that work in places with less corruption get many advantages. When there is transparency and less public sector corruption, it helps everyone compete fairly. This encourages growth in the private sector. In the end, this leads to more investment, a stable economy, and ongoing development.
