One of the pleasures of the friendly rivalry enjoyed between New Zealand and Australia is the ability to gently rub the opposition’s face in the mud when they’re on a losing streak (in a good natured way of course).

This year’s resounding Bledisloe Cup thrashing was just such a chance, but we’re also extending our lead in a more fundamental arena, namely the economy.

That was reinforced this week when the World Economic Forum released its annual Global Competitiveness Report, which showed New Zealand outranked Australia for the first time ever, coming as the 18th most competitive economy in the world.

Australia, meanwhile, slipped one place to drop out of the top twenty for the first time in the history of the report.

The headline figures certainly paint a clear picture, but are underscored even further when you consider that just four years ago the result would have been unthinkable.

Australia was riding high on a mineral boom and government budget surpluses, while New Zealand’s economy was floundering in a recession following the Global Finance Crisis, staring at ballooning deficits and grappling with a failed no-bank finance sector – and all of that was before the impact on the Canterbury earthquakes.

Now it’s Australians who are starting at widening deficits and moribund economic growth, while on this side of the Tasman, New Zealand’s public finances are set to be back in the black next year and economy is expected to expand by 2.5 per cent pace in 2013.

It’s fair to say that the fickle nature of markets played a part, with solid demand out of Asia for New Zealand produced protein helping the Kiwi economy while Australia’s once-sizzling minerals sector is wearing the effects of declining Chinese demand for hard commodities.

But let’s not underestimate the role that policy had to play in the role reversal.

In New Zealand, the Government clamped down on spending, passing a string of “zero budgets”, and made public debt reduction a priority. At the same time labour market flexibility was increased with the introduction of the 90-day trial and personal and corporate tax rates were slashed.

In Australia almost the opposite took place, with the government turning to debt funded stimulus to get their non-mineral side of their economy going – to no avail – while doing little to tackle the structural issues shackling their economy.

That comes in the detail of the competitiveness report, with Australia’s labour market ranking sliding 12 places in 2013 to come in 54th in the world, and ranking 137th globally for the rigidity of its hiring and firing practices (out of a possible 148).

The WEF also slated “the lucky country” for the regulatory burden placed on businesses, ranking 128th in the world.

The theme that emerges from this report is also borne is other data. According to BusinessNZ, Kiwi business confidence in July pinging in just shy of a 14 year high, while the equivalent measure in Australia was dragging round a 4 year low.

Clearly there are some lessons that can be extracted here, but I think we all agree the first is “don’t get cocky”.

New Zealand’s economy is riding high on the back of solid demand for our commodities out of Asia and the Canterbury rebuild, but the latter will peter out over the next five years and the Fonterra botulism scare showed just how dangerous it is to hitch your wagon to one horse.

Now, perhaps more than ever, the pressure is on to diversify our economy, and in this regard the WEF report paints a less rosy picture. New Zealand failed to gain any ground on the overall business sophistication and innovation standings, again ranking 27th globally behind both Puerto Rico and Qatar.

And while these measures may seem ephemeral to the lay person, consider that Switzerland, which was named the most competitive economy in the world for a fifth year straight, is ranked second in the world on both measures.

The onus is now on us to act while the fortunes of the market are in our favour and not when it’s our turn to have a little mud on our face.