Here’s Why Australians Make More Money Than Canadians — And What Canada Can Learn

Vikrant Gungash
Oct 24
3 min read

By Vikrant Singh, October 24, 2025

Australia and Canada might look like economic twins on paper — vast, resource-rich nations with small populations, open economies, and shared British roots. Both boast high living standards, stable governments, and diverse industries. Yet, when it comes to income and productivity, Australia consistently pulls ahead.

According to new international data, Australia enjoys a four-point lead in both productivity levels and average income. In simple terms, Australians produce and earn more per hour worked. The result? The average Australian earns about US $54,000 a year, compared to US $51,000 for the average Canadian.

At first glance, the gap may seem minor. But over decades, small differences in productivity compound — just like interest — and can lead to major divergences in wealth and living standards.

So, what’s Australia’s secret?

1. A Legacy of Bold Economic Reforms

Australia started transforming its economy in the 1980s, embarking on sweeping reforms that liberalized trade, deregulated industries, and privatized state enterprises. These policies unleashed competition and innovation across key sectors. Canada undertook similar reforms, but they didn’t deliver the same punch — partly due to slower follow-through and structural bottlenecks that lingered in its economy.

2. Investment, Investment, Investment

The biggest difference boils down to how much each country invests in its own future. Between 1995 and 2020, Australia’s investment spending averaged 26% of its economy, while Canada’s was just 22%. That extra four points translates to more capital for new technologies, infrastructure, and business growth — the fuel for higher productivity and wages.

3. Riding Commodity Booms Wisely

Both nations rode waves of booming commodity prices and strong currencies. But Australia used those tailwinds to drive reinvestment and modernization, while Canada’s stronger dollar and policy uncertainty at times dampened manufacturing and investment momentum.

The Bottom Line

Australia’s edge isn’t luck — it’s the result of decades of consistent policy direction and stronger private investment. Meanwhile, Canada’s lagging productivity performance remains one of its biggest long-term economic challenges.

If Canada wants to close the gap, experts say policymakers need to rethink barriers to business investment, streamline regulations, and reinvigorate innovation.

Because in the global race for prosperity, even a small productivity edge can mean thousands more in the average citizen’s pocket — and Australia is proof of that.

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