AGRIBUSINESS, gas, tourism, international education and wealth management are five future growth sectors in which Australia has a competitive advantage -- and it is vital Australian business fosters them properly according to new research from Deloitte.
According to the report, Positioning for Prosperity? Catching the next wave, these five ‘super-growth' industry sectors could be worth an extra $250 billion to the national economy over the next 20 years and are likely to hold the key to Australia's future prosperity.
The report is the third edition of Deloittes' Building the Lucky Country series, which focuses on business imperatives for a prosperous Australia, according to its co-author from Deloitte Access Economics, Chris Richardson.
"As the mining wave continues to deliver prosperity for Australia, albeit at a declining rate, our analysis shows there is vast potential to be tapped in five additional super-growth waves of agribusiness, gas, tourism, international education and wealth management," Mr Richardson said.
"Exceptional growth in these five sectors could add an additional $25 billion to Australia's GDP in 2033 or a boost of about 1 percent to an economy turning over $2.6 trillion in today's dollars."
Positioning for prosperity? Catching the next wave includes detailed analyses of the challenges and opportunities for maintaining Australia's current wave of prosperity beyond the mining boom as well as how to make the most of the next five ‘super-waves', which Deloitte predicted would collectively match mining in terms of their contribution to the Australian economy.
"It's all about catching the next wave," Mr Richardson said.
"Mining will continue as a major driver of our prosperity over the next two decades and beyond. We need to look at how we can extend our ability to ride the mining wave. Yet success as a nation cannot be built on natural resources alone. That boom is slowing and our competitive advantage is being challenged.
"The reality is that we need new growth drivers. We need another wave - or several - to create more diversified growth. And the first place to look is markets that can be expected to grow significantly faster than the global economy as a whole over the next 10 or 20 years, or by more than about 3.4 percent per year. For example, global markets for gas, tourism and agribusiness are each expected to grow at rates at least 10 percent faster than global GDP as a whole.
"As history has shown, global growth alone isn't enough to deliver success to Australia. We also need an edge, a source of comparative advantage that's hard for other nations to match, so that the world wants what we have."
The report said five big-picture advantages gave Australia a head-start: world-class resources in land, minerals and energy; proximity to the world's fastest growing markets in Asia; Australia's use of English, the world's business language; a temperate climate; and well understood tax and regulatory regimes.
Building the Lucky Country co-author and global thinker on growth strategy, Mehrdad Baghai, managing director of Alchemy Growth Partners, said, "The Australian economy grows when Australian advantage meets global opportunity.
"The multi-billion-dollar question is: where will global growth and Australian advantage next intersect? That's where we will catch the waves that will drive our prosperity, today and tomorrow."
Central to the Deloitte report is a Positioning for Prosperity map, which assesses where the next waves of prosperity are most likely to come from by plotting expected average global GDP growth rates over the next 20 years against the level of Australian competitive advantage for each sector.
The five sectors which offer both high growth rates and Australian advantage are:
• Agribusiness: Global population growth of 60 million per year will increase food demand, with Asia's growing middle classes set to boost their protein intake.
• Gas: Rapid growth in emerging economies has polluted the air in the major cities to Australia's north. That will underwrite demand for gas, a cleaner and greener alternative.
• Tourism: This sector is set to double in size in the next 20 years, with Asia's expanding middle classes fuelling the growth.
• International education: Foreign students are already Australia's fourth biggest export earner, with India and China likely to drive great growth in demand in the sector.
• Wealth management: Three billion people in Asia will join the middle class by 2030 and by 2050 the region will account for more than half the world's financial assets.
These next export waves are the most important growth priorities for Australia, and Mr Richardson said the growth of these sectors would be helped by the retreat of the Australian dollar from its record highs.
"We see the Australian dollar settling at US80 cents in the longer term," Mr Richardson said. "This downswing has already begun, and it signals the starter's gun on new opportunities for ‘dollar dependent' sectors including manufacturing, farming, tourism, and international education. It will also be a tailwind for interest rate-sensitive sectors, such as retail and housing construction."
As well as mining and the five super-growth sectors identified, the Deloitte Positioning for Prosperity map features 14 other major sectors whose contribution to the nation's prosperity will continue to be vital. These include big, domestically-focused industries such as banking, health, construction, business and property services, transport and logistics, public administration and manufacturing, among others.
According to Mr Richardson, "These sectors all have the potential to generate substantial pockets of export business. Indeed, some of these mainstay industries have served as stable incubators for their high-growth sector offspring."
Agribusiness had emerged from farming, wealth management from financial services and banking; and international education from education as a whole, Mr Richardson said.
"In early 2014, Deloitte will release the final version of this report with further research that explores the story of where future growth exists and how business can unlock its potential," he said.
BUSINESS MUST TAKE LEAD
Deloitte chief strategy officer and Building the Lucky Countryseries co-author, Gerhard Vorster, said business has to take the lead in positioning Australia as a competitive global force in these growth sectors.
"Governments will play a supportive role in managing the challenges of labour markets, providing more efficient regulation and tax regimes and a stable and clear set of policy rules for business, in order to enable growth," Mr Vorster said.
"But ultimately, it is up to business leaders to put in the hard work, to think hard about their own proximity to prosperity and about how best to position themselves closer to these prosperity opportunities.
"Our report helps equip decision-makers to hit ‘forward' and ‘fast forward' when and where it counts to shape the future for their companies and Australia's economy," Mr Vorster said.
"The report includes a range of actions, what we call ‘prosperity levers', which can help organisations to identify and review their current competencies and structural advantages.
"How organisations allocate their resources and arrange their mix of portfolios now will determine whether they optimise their growth in the years ahead.
"Australian businesses and families can be confident that our opportunities are just as great now as they were at the start of the mining boom," Mr Vorster said.
"Our future growth will be more diversified than the past decade and we will have to work harder to maintain the quality of life we have come to expect. But the opportunities are there to generate exceptional and lasting sources of future wealth for all Australians.
"The potential payoff is huge."