Around the world, democracy as a system of government is backsliding. After more than 50 years of liberal democracy in ascendancy, democratic progress plateaued around the turn of the century and is now going backwards .
In 2025, there were only 31 liberal democracies out of 179 countries assessed . And the United States - once the poster-child for democracy - was downgraded from "liberal democracy" to "electoral democracy" because of declining checks and balances on power, freedom of expression and civil rights and equality before the law.
Australia is one of the few remaining liberal democracies, and a leading one at that. But we are not immune to anti-democratic forces or the fraying international rules-based order.
A new Grattan Institute report, For the people: Future-proofing Australia's democracy , identifies the main vulnerabilities for Australia's democracy and opportunities to build a better, more resilient democratic system.
A bright light in a dark landscape
Australia comes from a place of strength. We are one of the world's leading democracies, consistently ranking highly on international measures of democratic health, as well as on a suite of economic and social measures - including life expectancy , human development , employment , and GDP (gross domestic product) per capita .
This is no coincidence. Our democracy underpins our prosperity and safeguards our rights and freedoms. International evidence shows democracy supports peace and economic growth, while delivering longer lives and more education.
Social trust matters too. Countries with higher interpersonal trust - like Australia - tend to have higher economic growth and lower income inequality, which in turn support democratic resilience.
But the world order in which Australia has flourished is now being seriously tested. These are more turbulent times not just for our economy or standard of living, but for liberal democracies themselves.
Fuel for discontent is building
Our report takes stock of Australia's greatest asset: the health of our democracy.
The good news is that Australians' support for democracy has been consistently strong - even growing over time . Only a small share of the population is discontent or disengaged with the system, and the data do not suggest either have been spreading.
The bad news is that our social compact is under pressure. This is showing up in growing economic pessimism , worry for future generations , concern about unfairness , declining sense of belonging , and low trust in political actors .
While support for democracy remains high in Australia, satisfaction with how our democracy actually works is more fragile .
Satisfaction with democracy is typically lower among groups who are less well served by the status quo. Most obviously, our institutions have persistently failed First Nations Australians , and don't fully support new migrants .
Lower-income Australians and those with financial concerns tend to report lower trust and satisfaction with democracy .
Renters are less satisfied than homeowners, and people in regional areas tend to be less satisfied than people in cities.
Migrants are an interesting exception here. Migrants (except for those from the United Kingdom) are typically more satisfied than people born in Australia with the way democracy works here, despite the disadvantages they often face living here. This may, at least in part, be due to direct experience with other systems.
Everyone needs confidence that the system can work for them, even if it doesn't always. Groups who persistently lack security, opportunity, or solidarity under the current system cannot reasonably be expected to trust or defend it.
3 big risks
Where there is fuel for discontent, there is increasing risk that global challenges could spark a blaze. Three inter-related global risks are particularly testing for democracies.
First, the decline in traditional news media and the rise of online and social news sources are fragmenting our fact base, and making misinformation and extreme views more salient in people's daily lives.
Second, global political tensions and the rise of anti-democratic forces overseas are testing Australia's social cohesion at home.
And third, the heightened probability of economic, social, and environmental shocks increases the challenges democratic governments face to deliver better outcomes for their people.
These are risks - not eventualities. The resilience of our democracy is in its capacity to recognise challenges and collectively respond.
And 5 ways forward
Our research and consultation identified five priorities for Australia to build a better and more resilient democracy:
1. Make the most of our parliament
Our elected federal parliament sits at the centre of Australia's democracy. An independent review should consider how to make it more representative and better functioning - to rebuild trust in politics, improve administration of government and enable better long-term decision-making.
2. Nurture belonging and engagement
We need more ways to have a say and be heard and clearer pathways to citizenship. Our public sector leaders should also be actively stitching public engagement into the fabric of our existing institutions.
3. Protect our public sphere
A healthier public sphere requires ensuring the sustainability of our news media and investing in institutions that produce trusted information. We should also experiment with responses to misinformation, to work out which approaches are effective at scale.
4. Tackle the known policy challenges
In a democracy, process matters, but so do outcomes. Australians need confidence that our system of government can work for them and build something better than the status quo.
5. Prepare for the future
Crises are the moments that build trust, or lose it, and the future will almost certainly be more volatile. Governments can prepare by reducing our vulnerability to known risks, building fiscal buffers and calibrating expectations about what governments can reasonably do to cushion the blow.
Governments can and should lead on this. But we mustn't forget that in a democracy, we govern ourselves. This is a task for all of us.
The Grattan Institute began with contributions to its endowment of $15 million from each of the Federal and Victorian Governments, $4 million from BHP Billiton, and $1 million from NAB. In order to safeguard its independence, Grattan Institute's board controls this endowment. The funds are invested and contribute to funding Grattan Institute's activities. Grattan Institute also receives funding from corporates, foundations, and individuals to support its general activities as disclosed on its website.
Matthew Bowes does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
