Foreign direct investors rank Australia and New Zealand highly but warn of rising competitiveness risks

SYDNEY, AUSTRALIA – 8 JULY 2026   

Australia and New Zealand remain attractive destinations for foreign direct investment, but risk losing ground as global capital increasingly flows to markets that can deliver projects faster, build workforce capability and provide greater policy certainty, new research shows. 

The EY Australia and New Zealand Foreign Direct Investment Attractiveness Survey, based on the views of 300 international business decision-makers, found that Australia and New Zealand rank highly for quality of life, political stability and sustainability credentials. 

However, the survey shows those reputational strengths are not necessarily the factors driving capital allocation decisions. 

When deciding where to invest, respondents placed the greatest weight on workforce capability (30 per cent), labour and input costs (29 per cent), R&D and innovation (26 per cent), market size (21 per cent) and tax competitiveness (21 per cent). 

The findings also point to a growing competitiveness challenge as governments race to attract investment in artificial intelligence, advanced manufacturing, digital infrastructure, clean energy and critical minerals. 

Respondents cited labour and input costs (30 per cent), energy costs (29 per cent), level of innovation and R&D (26 per cent), market size (25 per cent) and the regulatory environment (25 per cent) as the main disadvantages of investing in Australia and New Zealand. 

Approvals processes for foreign investment remain another constraint, with only 16 per cent of respondents viewing Australia’s approvals processes for foreign investment as “not at all restrictive,” compared with 5 per cent in New Zealand. 

Cherelle Murphy, EY Regional Chief Economist, Oceania, said the survey showed Australia and New Zealand’s strong investment reputations needed to be matched by faster execution. 

“Australia and New Zealand are still highly regarded by investors, but reputation alone will not be enough to win capital in a more competitive global economy,” Ms Murphy said. 

“The next wave of capital will be harder to secure. Investors are looking for economies that can commercialise ideas, mobilise talent and turn major projects into value,” she said. 

The scale of foreign investment already flowing into the region underscores why the competition for capital matters.

“From 2015 to 2025, more than 4,600 foreign direct investment projects worth almost US$400 billion were announced across the two countries, supporting nearly 400,000 jobs,” she said. 

Ms Murphy said improving competitiveness would require Australia and New Zealand to accelerate readiness for AI investment and innovation, build workforce capability and productivity, and improve tax competitiveness and investment certainty. 

“Almost half of investors identified stronger technology infrastructure as the top priority for improving attractiveness to AI investment and innovation, but technology infrastructure is only part of the challenge,” she said. 

“Investors have also pointed to the need for skills investment, targeted migration settings and clearer pathways for specialised talent to support workforce capability and productivity.” 

Tax certainty is also central to the competitiveness agenda, with 19 per cent of investors identifying unstable, unpredictable or uncompetitive tax settings as a leading risk to future attractiveness. 

Ms Murphy said supportive policy settings would be critical to encouraging business to commit capital over the long term. 

“Capital goes where it is treated best, and that means stable, predictable settings with tax rates that stand up to our competitors. These are the settings that will give businesses confidence to plan five to ten years ahead in our region,” she said.

-ENDS-

About the EY Attractiveness Survey

EY explored Australia and New Zealand’s perceived attractiveness via an anonymous online survey of international decision-makers across a range of industries, markets and organisation sizes. The survey defined the attractiveness of a location as a combination of image, investor confidence and the perception of a country or area’s ability to provide the most competitive benefits from foreign direct investment.

The field research was conducted by FT Longitude between March and April 2026, based on a representative panel of 300 senior corporate executives (C-suite or C-1 roles).

The survey panel’s demographics were determined by the most recently available FDI data (2023-2025). The research sought a representative sample of investors into the region, by geography, industry and company size.

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Media Contact:

Hamish Goodall – Corporate Affairs Manager, Oceania
Phone: 0467 346 364
Email: Hamish.goodall@au.ey.com