Australia, which just held its latest federal election on May 3, boasts some of the world’s most sophisticated political institutions and a wealthy economy. Known as the ‘Lucky Country,’ it also shows strong measures of GDP per capita and state capacity.

But, according to a new report from UCLA Luskin School of Public Affairs and the Berggruen Institute, Australia has long struggled to move its economy past a reliance on commodity exports—notably to China. The report, part of the 2024 Berggruen Governance Index project reveals hidden erosion, according to its authors who cite democratic accountability scores which have slipped since 2010, while the provision of public goods trails peer nations, and trust in politicians has cratered. Labor’s rebound in the polls, they write, conceals a broader voter realignment, as younger Australians and disaffected centrists drift toward smaller parties in record numbers.

The authors say that economic pressures are central to the malaise as the country’s prosperity still hinges on iron ore, coal, and liquefied natural gas exposing the limits of a resource‑heavy model. Meanwhile, a housing‑affordability crunch—rents are at their worst level on record—has opened a stark generational divide and accelerated inequality, with younger voters priced out of home ownership. They also note that social cohesion is also fraying with political polarization echoing trends in the U.S. The full report, also available on substack, argues that future prosperity demands action on a number of fronts.

The Berggruen Governence Index Project (BGI) analyzes the relationship between democratic accountability, state capacity and the provision of public goods. It builds upon prior work that examined the impact of governance and democracy on the quality of life. It is a collaborative project between the UCLA Luskin School of Public Affairs, the Hertie School, and the Berggruen Institute.