The nation's "Human Development Index" (HDI) was measured at 0.935 out of a maximum score of one, coming second to Norway and beating Switzerland, which has held on to third place in 2015's annual report.
The top three rankings, Norway, Australia and Switzerland, are unchanged from a year ago.
The score was calculated by crunching data on what the UN says are the "three basic dimensions of human development". They are: life expectancy at birth, mean and expected years of schooling and standard of living, which is measured by gross national income per capita.
Australians can expect to live on average to about 82 1/2 years, have a mean 13 years of schooling and the gross national income per person is $58,618.
And despite Australian women living on average four years longer and spending more time hitting the books, men's average gross national income was significantly higher at $70,620 compared with the woman's average of $46,727.
In Norway, the only country ranked higher than Australia, life expectancy was lower at 81.6 years and the mean years of schooling were 12.6 but citizens enjoy a much bigger slice of the national pie.