Why Nations Flourish: Clear Commercial Laws and Controls on Corruption

Speech given by OECD Secretary-General Mathias Cormann at the Quayside Chambers in Perth, Western Australia, on 19 August 2026.

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Thank you for that generous introduction and thank you to Quayside Chambers for the invitation to deliver this year's oration.

It is a genuine pleasure to be back in Perth. I spent a great deal of my professional life working in and for the great State of Western Australia. Western Australia has been very good to me and my family. I love Western Australia and I am full of admiration for what generations of West Australians from all walks of life have been able to develop and build here. And while I myself as a Belgium educated lawyer never practised law in Western Australia, I do feel very connected to the legal profession in this State.

So it is with genuine pleasure that I acknowledge all the members of the judiciary and the legal profession in Western Australia here this evening.

It is not lost on me that I am about to spend the best part of an hour telling a room full of judges and lawyers how much their work matters to our prosperity and how it matters so much more than most economists have historically been willing to admit.

I suspect it will not be too hard to convince this room of this core proposition in my remarks to you today. Nevertheless, I have sought to come before you well briefed and well-armed with all the necessary evidence and objectively persuasive arguments.

The title you have given me – "Why Nations Flourish: Clear Commercial Laws and Controls on Corruption" is not, I should say at the outset, a rhetorical flourish dressed up as a policy question. It states, with some precision, what the accumulated evidence of the Organisation for Economic Co-operation and Development – and, more broadly, the evidence of history – actually tells us.

Nations do not flourish primarily because they are well endowed with natural resources, although Western Australia would be forgiven for having views on that point.

Geography, climate, culture and natural resources matter, but at the margins.

There is ample evidence, with several compelling longitudinal case studies in history to substantiate that point. They are the closest thing we have to controlled natural experiments that test for the role of institutions and uncover some clear and consistent evidence.

Korea was one people, one culture, one geography in 1945. Today, South Korea is fifty times richer than the North.

The city of Berlin offers perhaps the closest thing to a pure laboratory ‘experiment’ of all. Here was a single city – same people, same language, same industrial heritage, facing the same rubble in 1945, split down the middle by an accident of military occupation. Within a generation, West Berliners drove Mercedes, BMWs and Audis whereas their Eastern cousins had to wait for fifteen years to take delivery of a Trabant. The gap grew so visible, so undeniable over time, that the East German state had to build a wall not to keep enemies out but to keep its own citizens in.

And then there is the Argentina and Australia case study, which shows how differing institutions divide near-identical starting points. In 1900, Argentina and Australia were twin economies: vast, temperate, resource-rich settler nations, both among the richest countries on earth per capita, both feeding and clothing the world from fertile plains.

An observer at the time might have bet on Argentina. Yet over the following century the paths of Argentina and Australia diverged spectacularly.

Australia built durable, impartial institutions – an independent judiciary, a professional civil service, stable democratic transitions – and, crucially, when its post-war protectionist model ran out of road, it found the political means to reform, opening its economy up in earnest from the 1980s onward and locking in decades of unbroken growth – a story to which I will return.

In comparison, Argentina fell into a cycle of institutional volatility: coups and constitutional ruptures, courts bent to executive will, property rights that shifted with each government and repeated resort to inflation and default as instruments of policy.

Same endowments, same era, same opportunities in the world economy – but one country made its rules predictable and its politics self-correcting, while the other made both negotiable and unstable.

The Argentina case study is the strongest evidence we have that resource wealth and a promising starting position guarantee nothing.

Institutional capital must be maintained and it can be squandered.

So, what does all of this tell us?

That nations flourish when they build effective, inclusive, democratic institutions: secure property rights, enforceable contracts, impartial courts and constraints on those who hold power.

These arrangements matter because prosperity is ultimately a question of incentives.

People invest, innovate and take risks over time only when they can expect to keep the fruits of their effort.

Where a ruler, an oligarch, or a corrupt official, can expropriate at will, rational people stop building and start hiding.

Political systems pulling wealth and power from the many toward a narrow elite, with property rights only for the connected, where courts serve the ruler or the elite rather than the law, where monopolies are granted to cronies, where there is taxation without services in return, with barriers to entry protecting incumbents from competition and political systems with no real constraint on those in power – those systems can generate growth for a period but not sustainably over time. The Soviet Union did for a time before entering into a phase of prolonged stagnation and, ultimately, collapse. East Germany could build factories by command. But it could not generate sustained innovation and growth, because innovation requires creative destruction. Command economies can mobilise resources impressively. But they cannot sustain the dynamism, the risk taking and the entrepreneurial and creative disruption and destruction that long-run prosperity requires, because creative disruption and destruction threatens the very elites who control those systems.

Sustained innovation and the growth in productivity which generates increases in incomes and living standards depend on what elites in centrally planned and authoritarian systems fear most – open competition and the disruption of existing arrangements.

Empirical evidence consistently backs this up. Industries facing stronger competitive pressure innovate more, adopt new technologies more rapidly and experience faster productivity growth. Quantitative studies find that higher market power reduces productivity growth, while increased competition through entry, trade openness and market contestability significantly boosts innovation and productivity performance. Effective competition needs a robust competition law framework and enforcement mechanisms that prevent and deter actions that may undermine free competition.

Three further ingredients deserve emphasis.

The first is state capacity. Open competitive markets need a state strong enough to enforce rules, collect taxes and provide public goods, yet constrained enough not to prey on its citizens.

Many struggling nations suffer not from too much government but from too little effective government – the inability to deliver a functioning land registry, a reliable court, a teacher who shows up.

The second is human capital. No nation has grown rich with an uneducated population and the returns compound: educated citizens demand better institutions, which in turn reward education and individual effort.

The third is market openness to trade, investment and migration. Economies that trade, absorb foreign ideas and expose their firms to competition consistently outperform those that wall themselves off. Openness disciplines domestic elites and imports the world’s accumulated knowledge at a fraction of the cost of inventing it.

Empirical evidence consistently shows that economies open to trade and foreign competition achieve stronger productivity growth. Openness exposes firms to competitive pressure, accelerates the diffusion of technology and knowledge from global frontier firms and allows domestic firms to benefit from innovations developed elsewhere rather than bearing the full cost of developing them independently.

Beneath all of this lies something harder to legislate: trust.

Francis Fukuyama, in his 1995 book, Trust: The Social Virtues and the Creation of Prosperity, defined trust as “the expectation that arises within a community of regular, honest and co-operative behaviour”.

High-trust societies transact at a lower cost, efficiently co-operate among strangers and sustain the political compromises that reform requires. Trust is both a cause and a consequence of good institutions. A virtuous circle where it exists. A trap where it does not. Which is why corruption is so corrosive. It converts every public transaction into a private toll and teaches citizens that rules are for fools.

The uncomfortable implication is that flourishing is a political achievement before it is an economic one.

The knowledge of what works is not scarce. Nations struggle not because their leaders lack the necessary economics textbooks, but because reform threatens those who profit from dysfunction.

The nations that flourish are those that have found ways, through crisis, leadership, or good luck, to make democratic rules self-enforcing, so that prosperity no longer depends on the virtue of any individual, but on the architecture of the system itself. Where the rules of commercial life are clear. Where those rules are enforced predictably, providing individuals with consistent incentives, and where the exercise of public power is kept honest. That is, nations flourish, where people like you do your jobs well, and where the state lets you.

Throughout history, economics spent a long time treating law as scenery, a backdrop against which the real business of growth theory took place, made up of capital, labour and technology and not much else.

That has changed and it has changed quite decisively over the past three decades. The reason it has changed is because the data and the evidence have forced that change.

A useful recent illustration comes from a large panel study covering 113 countries from 1995 to 2022, examining what actually predicts long-run income per capita once you control for the usual suspects.

The finding, put simply, is that the rule of law, control of corruption and judicial effectiveness are among the strongest predictors of per capita income, even accounting for other national characteristics and global shocks.

Political ideology matters, in that it shapes the size of the state and its openness to trade. But its effect on growth is substantially absorbed by the strength of the underlying institutions and the commitment to preserving them. As the authors of that study put it, a government of the right with weak institutions rarely produces a genuine economic boom and a government of the left with strong rule of law rarely produces a crisis.

We do need to consider the exceptions. China is the standing counter-example thrown at anyone who makes the case I am making tonight.

It has produced extraordinary growth over four decades while ranking, on the most recent World Justice Project index, 92nd in the world for rule of law.

The honest answer requires precision about terms. China’s institutions are not weak in the sense of lacking capacity. They can design, decide and enforce with formidable effectiveness. What they lack, by deliberate design, is what we mean by the rule of law: independent adjudication, transparency and binding constraints on the exercise of state power. Growth can indeed occur for a period without those features, where a state substitutes administrative discretion, forced savings and a determined industrial strategy for the predictability that the rule of law would otherwise provide.

But it is worth noting two things. First, that model has real costs – misallocated capital, the economic risks associated with overcapacity because of production decisions that are too insulated from market signals, non-performing loans and a growth trajectory now visibly decelerating as the low-hanging fruit of catch-up growth is exhausted.

Second, and more importantly for this room, China’s path is not an available alternative for economies like ours – nor one we would want. The substitutes it deploys in place of the rule of law – concentrated state power unconstrained by courts or elections, capital directed by command, consumption suppressed to force savings – are precisely the features open democracies have deliberately renounced. And once you renounce them, as we rightly have, there is no second route to prosperity that bypasses legal institutions, the rule of law, clear commercial laws and effective anti-corruption efforts.

For open, rules-based, trade-dependent economies the rule of law and institutional capacity and strength are the core foundation of strong economic development and growth.

That institutional lens does not stay at the level of grand constitutional principle. It shapes how the OECD looks at the ordinary, unglamorous machinery of economic policy too – including how governments regulate business day to day. Because for most firms, the rule of law is experienced less through landmark judgments than through whether a regulator's enforcement decisions are predictable.

Our most recent Regulatory Policy Outlook devotes substantial attention to what we have called a regulatory reset. The finding that should interest you in particular is a quiet but telling one: more than half of OECD Member countries do not currently permit their regulators to base enforcement decisions on risk criteria – meaning regulators are frequently required to apply uniform intensity regardless of the actual risk posed by the regulated activity. The rule of law has never meant the inflexible application of uniform intensity to every case, blind to risk, benefit and cost. Quite the opposite. Sophisticated regulation can be – and at its best is – applied in a well-defined, risk-based way, transparently and accountably. That is, after all, exactly how commercial law and precedent themselves evolve: differentiating the way rules apply through careful reasoning, weighing benefits and costs, in a manner that is public, principled and reviewable. The failure our data identifies is the opposite one: regulators denied any lawful framework for differentiation, left to choose between undifferentiated blanket intensity and unstructured discretion. That is the combination that erodes business confidence without buying any additional protection for the public – ineffective where risk is high, burdensome where risk is low.

I raise this not as an abstract point of regulatory design but because it goes to a theme I will return to throughout this address: predictability is not merely a virtue lawyers value for its own sake, out of professional temperament or training. It is an economic input, with a measurable upside and a price tag when it is absent. Though predictability alone, I should stress, is not the whole test. A bad rule applied with perfect consistency is still a bad rule. What we are after is predictability in the service of effectiveness – rules that are clear about what they require, and sound in what they require.

Before I turn to the global picture, I want to dwell on the case study this audience knows best. Australia has run the institutional experiment I have just described in both directions, within living memory – and there is no more instructive account of why nations flourish than the one written right here.

For most of the twentieth century, Australia ran one of the most closed and protected economies in the developed world. The Australia of the early 1970s was built on what was called “protection all round”. Tariff walls shielded manufacturers, with effective rates of protection for manufacturing averaging around 35 per cent. The White Australia Policy. A centralised tribunal set wages. The exchange rate was fixed. Banking was tightly regulated and closed to foreign competition. Governments ran the airlines, the telephones and the banks.

The system delivered comfort for the protected, but the costs were paid invisibly by everyone else: farmers and miners taxed through more expensive inputs, consumers through higher prices and the whole economy through weak competition and slow innovation. The history of Australian protectionism can be summed up in 11 words: taxes and restrictions on imports became taxes and restrictions on exports.

The scoreboard told the story. Around 1950, Australia ranked among the five richest countries in the world in income per person. By the early 1980s, it had slid well down the OECD rankings. Insulation had bred complacency, and complacency had bred relative decline.

Australia joined the OECD in June 1971, and membership mattered more than is often recognised. The first OECD survey of Australia, published in early 1973, noted that Australia “is not a particularly open economy”. But OECD membership brought a new systematic level of scrutiny. The OECD held up a mirror. Our regular Economic Surveys of Australia benchmarked the country against its peers, quantified the cost of protection and consistently pressed the case for lower tariffs, financial liberalisation and stronger competition. That external, evidence-based scrutiny armed domestic reformers – from the Tariff Board and its successor the Industry Commission through to the Treasury – with independent validation. Reform by international comparison became an Australian habit.

The reforms themselves came in waves and, crucially, across party lines. The Whitlam government cut all tariffs by 25 per cent in 1973 and established the Industry Commission. The Hawke and Keating governments floated the dollar in December 1983, deregulated the financial system, admitted foreign banks, announced phased tariff reductions that brought most tariffs down to about 5 per cent, moved wage setting from central fixation to enterprise bargaining, and in 1995 launched the National Competition Policy following the Hilmer Review, extending competition into electricity, gas, rail and the professions. The Howard government granted the Reserve Bank of Australia formal independence to target inflation, restored fiscal discipline, introduced the Goods and Services Tax and further liberalised the labour market. The Howard government also took meaningful steps to ensure competitive neutrality – a commitment to treat businesses equally regardless of their nationality and ownership, particularly in the context of a level playing field between state-owned enterprises and private firms. Four decades, both sides of politics, one direction: open, competitive, outward-looking.

The results were extraordinary. Multifactor productivity – the best measure of how cleverly an economy combines labour and capital – grew at 1.6 per cent a year between 1994-1995 and 2003-2004, placing Australia near the top of the OECD. The Productivity Commission later estimated that the National Competition Policy alone permanently lifted gross domestic product by at least 2.5 per cent. And from 1991 to 2020, Australia recorded almost twenty-nine years of continuous economic growth – a run unmatched in the developed world.

Openness did not just lift efficiency; it built resilience. The floating dollar became the economy’s great shock absorber, depreciating in the Asian financial crisis and again in the global financial crisis, cushioning both. And when China’s industrialisation generated the largest resources boom in Australian history, a flexible, open economy could actually seize it. Capital and workers flowed to where they were most valuable, mining investment surged, and the terms of trade windfall was converted into higher real incomes across the country. A protected, rigid Australia could not have done this. The China boom did not make the reforms unnecessary; the reforms made the boom possible.

But this story has a second act, and candour requires me to tell it. From the mid-2000s, the reform effort faded. The mining boom disguised the cost for a decade, because national income kept rising even as the underlying engine slowed. The mask has now fallen away. Labour productivity grew by an average of just 0.66 per cent a year over the five years to 2023-2024 – a fraction of what was achieved in the reform decade. Business dynamism has declined, with fewer firms entering and exiting markets, and competition has weakened across the economy.

After being among the OECD’s leaders in competition-friendly product market regulation in the early 2000s, Australia has fallen back to around the OECD average, as other countries pursued more ambitious reforms. Treasury and Reserve Bank research suggests that simply restoring competition to its early-2000s intensity could lift gross domestic product by 1 to 3 per cent – worth roughly 2 000 to 6 000 dollars per household per year. That is the measurable price of standing still.

But at the same time there are worrying signs of a quiet drift back towards the instincts Australia once had the courage to abandon. The new protectionism does not look like the old tariff wall; it is subtler, which makes it in some ways more dangerous. It takes the form of industry subsidies, local content rules and procurement preferences, a steady re-regulation of the labour market, and a rising burden of approvals and compliance that slows investment. Each measure has a plausible individual rationale – security of supply, sovereign capability, fairness. But collectively they recreate the exact logic of the old system: visible benefits for the assisted few, invisible costs spread across the many, and capital steered by government preference rather than competitive merit. And beyond this, there is something even more subtle. The perpetual accumulation of outdated rules and regulations. This drift mirrors a global pattern the OECD has documented in detail. For a mid-sized nation that lives by trade, joining a subsidy race it cannot win, while its productivity engine idles, is a strategy for slow relative decline.

Why does this story belong in an oration about commercial law? Because the reform era succeeded not simply as an act of economic policy, but as an act of institutional confidence. Every step – floating the currency, opening the capital account, dismantling protection – amounted to a bet that Australia’s laws, courts and public administration were strong enough to let markets allocate capital honestly. That bet paid off precisely because the institutions held. An open economy is only trustworthy when its legal foundations are. The two reform projects are, in truth, one.

The rule of law contrasts sharply with the rule of man – governance based on arbitrary personal authority. The uncomfortable headline is that the global trend on the rule of law is not moving in the right direction.

The World Justice Project's Rule of Law Index – the most comprehensive cross-country measure available, covering more than 140 jurisdictions – has now recorded a global decline for eight consecutive years, with 68 per cent of countries assessed showing deterioration in 2025.

Our own OECD analysis, published this year in a major report on access to justice, describes this candidly as a global rule of law recession that began in 2016 and continues today, driven in significant part by worsening access to civil justice and a widening justice gap.

I do not think it is coincidental that this recession in the rule of law has occurred alongside a marked increase in what business surveys describe as policy uncertainty.

The two are, in my submission, the same phenomenon observed from different angles – one from the perspective of political scientists measuring institutional quality, the other from the perspective of chief financial officers deciding where to allocate capital.

Let me be concrete about what this means for commercial law specifically, because abstractions and generalisations regarding the "rule of law" can obscure just how practical the underlying problem is.

The OECD's Public Governance Directorate published a paper last year – Supporting Businesses through Better Justice Systems – focused specifically on small and medium-sized enterprises.

The finding will not surprise anyone who has practised commercial litigation, but it is worth stating plainly because policymakers too often forget it: small and medium-sized businesses often face costly, complex, and time-consuming legal disputes that can result in financial losses, customer attrition, or even business closure.

These challenges undermine not just individual firms but broader economic growth and investment.

Unlike large corporations, small and medium-sized businesses typically lack the legal resources and protections available to larger firms, making access to affordable and timely justice essential to their survival, particularly as they navigate periods of global economic stress.

This is not a marginal constituency. Small and medium enterprises are, in every OECD economy including here in Western Australia, the overwhelming majority of firms and a very substantial share of employment.

A justice system that is slow, expensive and unpredictable functions, in effect, as a regressive tax on the very firms least able to absorb it – while sophisticated, well-capitalised litigants can better withstand delay, or use the cost and duration of litigation as a tactical weapon against a smaller opponent.

I would suggest to you that this dynamic, more than almost any other, is where the profession represented in this room has the most direct influence on state and national economic outcomes and where that influence is least well understood outside legal circles.

Nor is timeliness a solved problem in this country. When the OECD surveyed civil justice across 31 member countries, the average dispute took 238 days to resolve at first instance. Australia, at 192 days, was better than that average, but well behind the best performers. And there are signs of movement in the wrong direction since: 88 per cent of civil cases in the Federal Court of Australia were resolved within twelve months in 2015-2016; by 2024-2025, that figure had fallen to 79 per cent.

I do not cite those figures as a pointed criticism of anyone in this room. Court timeliness is overwhelmingly a function of resourcing, procedure and caseload, most of which sits with governments rather than with judges. I cite them because delay is where the economic cost of legal uncertainty becomes concrete, measurable and, most importantly, fixable.

The broader synthesis on this point comes from the OECD's most comprehensive recent statement on the subject, Making Justice Systems More Effective and People-Centred, published last November.

Its central proposition is that a responsive rule of law underpins economic growth, business confidence and innovation, and that investing in effective, digitally enabled, tailored justice services reduces time, cost, and uncertainty – creating the predictability that firms need to thrive and thereby boosting prosperity, market trust, and long-term economic competitiveness.

Our surveys consistently show that a large majority of people across OECD countries – consistently above 80 per cent – want their countries to prioritise equal opportunity and to create the conditions for business to thrive. That is exactly what a well-functioning justice system helps to deliver. The public does not always associate the two, which is a communications challenge, in particular for the legal profession itself.

Let me turn from the general proposition to the specific mechanisms. Legal certainty operates on investment decisions in a manner directly analogous to the way sovereign risk operates on the price of government debt.

When a commercial actor cannot predict how a contract will be interpreted, how quickly a dispute will be resolved, or whether a judgment will be enforced, that unpredictability is priced. It shows up as a higher required rate of return, a shorter investment horizon, a preference for jurisdictions offering greater certainty even at a higher headline cost, or – most damagingly for smaller and less mobile firms – a decision not to invest, expand, or contract at all.

This is why the OECD has, over recent years, invested heavily in alternatives to conventional litigation that preserve legal rigour while reducing time and cost.

Our Online Dispute Resolution Framework, and the broader toolkit that goes with it, rests on the observation that alternatives to litigation – online dispute resolution, negotiation, mediation, and arbitration – offer more efficient routes to resolving commercial conflict, with technology and digitalisation supporting fairer and quicker outcomes.

This is not an argument that alternative dispute resolution should displace the courts, still less that it should displace the judiciary as the ultimate guarantor of legal rights. It is an argument that the availability of proportionate, well-designed pathways – triage that sends the right dispute to the right forum, with courts reserved for what genuinely requires judicial determination – is itself a component of legal certainty, because it determines whether a small business with a genuine grievance can, as a practical matter, ever have that grievance heard and conclusively dealt with.

Australia has, to its credit, been ahead of many peers here. The Australian Small Business and Family Enterprise Ombudsman, established in 2016, helps small and family businesses resolve disputes with other businesses or with government agencies without going to court – and in the first quarter of this year alone, it handled more than five hundred new cases. That is five hundred disputes resolved proportionately, at a fraction of the cost, without adding to the burden on your courts.

Technology will extend this frontier further. Used well, artificial intelligence can speed up case resolution without undermining procedure or the rights of the parties – beginning with the unglamorous work of automating filing, transcription and case-file management, and extending to scheduling, listing and initial evidence review. Pilots are already underway around the world, including here in Australia. The judgment calls, of course, must remain human. But a significant share of what makes justice slow and expensive is not judgment; it is administration – and administration can be modernised.

There is a public finance dimension to this that I suspect is underappreciated even within the profession.

The OECD's White Paper on the business case for access to justice frames investment in justice systems not as a fiscal cost to be minimised but as a productive economic input, on a similar footing to investment in infrastructure or education.

The takeaway ‘pushing-against-an-open-door’ finding for this audience is that under-resourcing courts and legal aid is not a saving. It is a deferred and larger cost, transferred from the justice budget to the economy at large, in the form of unresolved disputes, foregone investment, and – in the most severe cases – exit from the formal economy altogether by firms that conclude the legal system cannot protect them at a price they can bear.

I would add one further, more contestable observation from our regulatory reset analysis.

Complexity and stringency are not the same thing and conflating them is one of the more persistent errors in regulatory design.

A regulatory system can be extremely stringent – genuinely protective of the public interest – while also being clear, proportionate and predictable in its application.

Equally, a system can be lightly enforced in substance while remaining bewilderingly complex in form, imposing compliance costs without buying corresponding public benefit.

Our recommendation at the OECD is for a more flexible, risk-based regulatory design, under which regulatory intensity depends on the level of risk in a given domain, so that licensing and permitting are reserved for activities posing significant and potentially irreversible risks rather than applied by default.

I raise this because I think the profession has a legitimate role in this debate that goes beyond dispute resolution after the fact – the drafting of legislation, the design of regulatory schemes, and yes, the arguments made before your courts about how ambiguous provisions ought to be construed, all bear directly on whether a country's regulatory architecture ends up meaningful, efficient and predictable or merely voluminous.

Let me turn to the second half of tonight's title, because it is not a separate topic from the first. Clear commercial law and effective anti-corruption controls are mutually reinforcing rather than merely coincidental companions.

A legal system riddled with discretion, delay, and opacity is not simply inefficient. It is an environment in which corruption finds its natural habitat, because discretion unconstrained by predictable process is precisely what corrupt actors are seeking to purchase.

The scale of the problem, stated in the OECD's own recent estimates, is worth setting out plainly, because I think even an audience as familiar with white-collar crime as this one will find the aggregate figures sobering.

Drawing on OECD analysis published this year, organisations globally are estimated to lose around 5 per cent of their funds to fraud each year; between 8 and 25 per cent of global public investment may be lost to mismanagement and corruption annually; and organised crime is estimated to cost as much as 5 per cent of annual global gross domestic product. This all directly undermines the critical asset of trust that I spoke of earlier.

And those are not marginal leakages. On the public investment figure alone, we are describing a scale of loss that, applied to any nation's infrastructure or health budget, would represent hospitals not built, transport projects abandoned and public services degraded – not through inadequate policy design, but through the simple failure to keep public money honest.

Our Anti-Corruption and Integrity Outlook, published this year, points to a persistent pattern that will be a recurring theme this evening: the gap between having strong anti-corruption and integrity laws on the books and actually implementing them. Across OECD countries, the average strength of integrity regulations sits at 63 per cent of the criteria we track. Implementation lags at 44 per cent.

Governments’ efforts to tackle corruption begin at home, but they cannot end there. This is where the OECD’s Anti-Bribery Convention – one of our most important legal instruments – comes in.

Adopted in 1997 and now binding on forty-six states parties, it was the first international instrument to criminalise the bribery of foreign public officials in international business – a strategically chosen target, because it addresses the specific point at which domestic corporations, acting abroad, had historically been able to treat bribery as a legitimate cost of doing business, in some jurisdictions even as a tax-deductible one.

Together, the Parties to the Convention account for more than two-thirds of global exports and nearly 90 per cent of outward foreign direct investment – and its reach continues to expand. We recently welcomed Ukraine as the forty-seventh member of our Working Group on Bribery, and Indonesia, Mauritius and Thailand have formally requested accession to the Convention.

What distinguishes the Convention from a great deal of international soft law is that it is not self-monitoring in any meaningful sense. Each state party is subject to a peer review process – what Transparency International has called the "gold standard" of international monitoring mechanisms – conducted by examiners drawn from other states parties, working through defined phases. The current Phase 4, which is nearing completion, focuses not only on legislative compliance but also, and most importantly perhaps, on enforcement and related resourcing of law enforcement bodies.

This is a genuinely adversarial process in the best sense of that word – nations examining other nations' law enforcement records, on the public record, with published findings that name specific deficiencies and without a veto right by the Member under review. That is consensus minus one, which is a powerful and internationally rare mechanism.

I do not think it is an exaggeration to say that this process resembles, in its structure if not its procedure, something a barrister in this room would recognise: a standard set out in advance, evidence tested by an examining party with no institutional stake in a favourable outcome and a reasoned public finding.

And that scrutiny is needed, because enforcement across the Convention’s membership remains uneven. Sixteen of the forty-six Parties have yet to report a single criminal, administrative or civil sanction for foreign bribery. Every one of those gaps places law-abiding companies at a competitive disadvantage.

I should, in the interests of candour, address Australia's own record under this Convention directly.

Australia ratified the Convention promptly and enacted implementing legislation without delay.

Enforcement, however, has been the harder half of the task.

The Working Group's Phase 4 review of Australia found that, notwithstanding measures taken to improve Australia's institutional framework for investigating and prosecuting foreign bribery, those measures had yet to translate into meaningful enforcement progress. In the first two decades of Australia's foreign bribery offence, only a handful of individuals and companies were sanctioned.

The more recent picture is more encouraging. Australia has now sanctioned seven individuals and three companies for foreign bribery through criminal proceedings, and three further companies through administrative or civil proceedings, with several matters ongoing. Reforms that entered into force in 2024 expanded corporate liability and introduced a new offence of failing to prevent foreign bribery – directly responsive to our Working Group’s recommendations – alongside strengthened whistleblower protection and published guidance on corporate self-reporting. The trajectory, in other words, has turned. The task now is to sustain it.

Again, I point to the data not as a criticism, but as an illustration of a genuinely difficult and quite general problem: criminalising conduct on the statute book is often the comparatively easy part. Building the investigative capacity, prosecutorial expertise, and corporate liability doctrine required to convert that criminalisation into actual deterrence is very much harder, and Australia's experience – shared, I would note, by a number of otherwise well-regarded jurisdictions – illustrates why enforcement monitoring, not legislative monitoring, has become the Working Group's central focus.

I would observe, too, that recent Working Group findings elsewhere in the OECD membership show the same pattern can afflict jurisdictions with far longer traditions of the rule of law.

This is a standing, iterative process, not a box ticked once and forgotten, and I would suggest that is precisely as it should be. An anti-corruption framework that is assessed once and then left alone is, in practice, an anti-corruption framework that decays.

Judicial independence is not, in the framework I have been describing tonight, a constitutional nicety somewhat disconnected from economic policy, to be admired in the abstract while the real business of growth happens elsewhere.

An independent judiciary is a load-bearing economic institution in its own right.

But independence also comes with great responsibility and self-imposed accountability. A judiciary that can be relied upon to apply the law as written, without regard to the identity or political connections of the parties before it, is what makes a rules-based economy a reality and contracts enforceable as a practical matter rather than merely as a matter of theoretical entitlement.

Every measure I have cited this evening – every study correlating rule of law with income, every OECD finding on the cost of legal uncertainty to investment, every estimate of the scale of corruption's drag on public investment – ultimately depends, at the point of final resolution, on courts that will decide matters on their merits. The reliable prospect of that final resolution of a matter on its merits is what gives people and businesses confidence in the value of the agreements they sign.

This is why judicial independence and anti-corruption enforcement are not, as they might first appear, two separate items on a checklist of good governance indicators. They are causally connected and mutually interdependent. A justice system compromised by corruption cannot deliver the predictability that gives commercial law its economic value, however well drafted the underlying statutes might be. And a commercial law framework riddled with vague standards, unconstrained discretion and inconsistent application is, as I said earlier, itself an invitation to corruption, because ambiguity is what corrupt actors are seeking to monetise in the first place. You cannot have one pillar without the other. That, I think, is the empirical case for tonight's title, stated as plainly as I know how to set it out.

There is a final, more particular point for an audience of judges and lawyers working within a resource-intensive, trade-exposed, capital-importing economy. Western Australia's prosperity has rested, for more than a generation, on international investors – many of them assessing sovereign and legal risk from Tokyo, Seoul, Singapore, London, and increasingly Riyadh and Abu Dhabi – being willing to commit very large sums of capital, over very long horizons, to projects whose returns depend on decades of policy and legal stability.

Consider the scale of what is at stake. With around 11 per cent of the national population, Western Australia generates close to half of Australia’s goods exports – iron ore, liquefied natural gas, gold, lithium and agricultural products, sold overwhelmingly into Asia. This state is the open Australian economy in its purest form, and the clearest proof that the model works. But the same exposure cuts the other way: no part of the country is more vulnerable to global fragmentation, to subsidy wars and the politicisation of commerce – or to home-grown policies that raise costs, slow approvals and deter investment.

That international investor interest and willingness to invest is not an inevitably permanent feature of the landscape. It is a judgment call, continuously renewed, about the reliability of Australian commercial law and the integrity of Australian public institutions, made in comparison with every other resource-rich jurisdiction competing for the same capital.

Every well-reasoned commercial judgment handed down in this state, every case managed efficiently rather than left to languish, every instance of corrupt conduct investigated and prosecuted rather than tolerated, is a direct contribution to that judgment being made in Australia's favour rather than in a competitor's.

I do not think that is an overstatement of your collective importance. I think it is closer to an underappreciated fact about what your profession actually does for Australia’s national accounts.

Western Australia’s comparative advantage, in other words, is not only geological. It is institutional. And its next chapter – in critical minerals, in hydrogen, in downstream processing – will only be written if it is grounded in genuine competitiveness and legal certainty rather than subsidy dependence.

Let me draw these threads together.

The evidence, considered across dozens of countries and several decades, no longer supports economic theories of growth that treat legal institutions as background scenery.

Rule of law, judicial effectiveness and anti-corruption measures and enforcement are not merely correlated with prosperity – on the best available evidence, they are among its strongest and most durable predictors.

Australia’s own half-century tells the same story in miniature. Protection made a rich country poorer relative to its peers; openness, competition and the rule of law made it one of the most successful economies on earth. The productivity data now show what happens when the reform effort stops, and the quiet drift back towards protection shows how easily hard-won gains can be surrendered by increments. The task is not nostalgia but renewal – a new generation of competition, regulatory and trade reform, anchored in evidence and in the institutions, including the courts, that make an open economy trustworthy. Australia has run this experiment once, in both directions. It should not need to run it again.

We are living through a period in which that institutional foundation is under genuine, measurable strain - a global rule of law recession now in its ninth year by the most comprehensive available measure, a widening gap in access to civil justice, and a scale of fraud and corruption that, on the OECD's own recent estimates, diverts as much as a quarter of global public investment from the purposes for which it was intended. At the same time, trust in public institutions is under strain. According to our latest OECD Trust Survey, only around 40 per cent of people across the OECD report trust in their national government. Australia, at 51 per cent, ranks significantly higher. The explanations for low trust are complex, but we measure its drivers and their evolution over time, and two findings stand out: people want a greater say in the decisions that affect them, and safeguarding accountability and strengthening integrity in our democratic systems remain among the strongest drivers of trust. Both of those, I would note, run straight through the work of the people in this room.

Against that backdrop, the work done in chambers like this one, and in courtrooms across this state, is not a professional service incidental to economic policy. It is one of its principal foundations.

The case for why nations flourish is, on the data the OECD has assembled, substantially a case about what happens in rooms like this one, in courts like the ones many of you appear in every week, and in the quiet, unglamorous, essential work of applying clear rules honestly, transparently and consistently.

Clear commercial laws and controls on corruption do not, by themselves, guarantee prosperity. But without them, prosperity cannot endure. And the trust which underpins them does not sustain itself. It must be strengthened, renewed and protected, in every generation – including by the people in this room.

That is not a small thing to have devoted a career to.

I am glad to have had the chance to say so, in your company, tonight.

Thank you.

Working with over 100 countries, the OECD is a global policy forum that promotes policies to preserve individual liberty and improve the economic and social well-being of people around the world.