Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
Prior to the global coronavirus pandemic, Australia enjoyed 28 years of uninterrupted economic expansion.
However, a report warns the nation has become complacent and is not guaranteed the same sort of success over the next 50 years as it faces highly complex challenges coming out of the pandemic.
The report by consultants Deloitte says it will be more important than ever for Australia’s policy makers and business leaders to understand the structural changes underway and how they can effectively compete in a more complex and fragmented world.
“Out of uncertainty and volatility, we have the opportunity to shape a new future for Australia,” Deloitte Australia CEO Adam Powick said.
Central to Deloitte’s report is its new economic sophistication index that ranks countries based on their value add to goods and services they produce and how well their industries are connected in global supply chains.
Germany tops the rankings, followed by Great Britain, but Australia stands at a mediocre 37th.
“It’s a shock to realise we aren’t doing as well as we think we are,” head of Deloitte Access Economics Pradeep Phillip said.
“With half a century of hindsight, it’s little surprise that we have an economy characterised by low manufacturing capabilities and missed opportunities from not commercialising our strong research.”
He said Australia hadn’t built the business or structural foundations required for a diversified, resilient economy.
“Instead, we’ve been complacent with our success, and our lower value add and weaker connectedness with the global economy compared to our high-income peers is a serious issue for our future prosperity,” Dr Phillip said.
He says this will leave Australia vulnerable should geopoliticial tensions with China worsen or meaningful action on climate change catches Australia’s off-guard.
“If Australia’s action on climate change continues to lag and, in response, overseas governments introduce limits on our high emission intensity production flows, this too would be devastating for the Australian economy,” Dr Phillip said.
“The world would no longer want what we have, and our Index ranking would drop.”
AUSTRALIA NEEDS TO BE MORE SOPHISTICATED: DELOITTE
* Feeding the world – demand for Australian food is strong, but the core industries involved in Australian food production are among the least sophisticated
* Decarbonising the world – with competitive advantage in natural resources, technologies and energy, Australia can take part in the move to global decarbonisation, by producing new sustainable energy
* Shaping the future of health – Australia can create new value by using technology to turn its world-class health research into implementable health and wellbeing solutions
* Looking to the sky – Australia has a strong track record in the areas it has chosen to play in space, but also needs to grow its capabilities from niche research and manufacturing to end-to-end products and services
* Manufacturing the future – Australia should have a clear focus on moving up the value chain by connecting advanced manufacturing into areas of greatest economic opportunity
* Satisfying the senses – Australian organisations need to continue to be responsive and innovative by co-designing products and services for the ever-changing demands of consumers
* Servicing the world’s businesses – using virtual and digital technology, a significant opportunity exists to export business-to-business services such as engineering, telecommunications, professional services, and financial and insurance services.