According to a report from Deloitte, Australia Remade: A Country Fit for the Age of Disruption, with so much complexity and change in the world — brought about by COVID-19 and other disruption — Australia’s economy needs to become more sustainable and sophisticated. And while the economy has experienced 28 years of uninterrupted GDP growth, it’s not enough to rely on our traditional “rocks, crops and cameras” model forever.
“That growth wave we’ve ridden has turned the phrase ‘the lucky country’ into shorthand for our success. But this isn’t guaranteed for the next 50 years,” said Deloitte Australia CEO Adam Powick.
“Particularly as we bounce back from COVID, it will be more important than ever for our policymakers and business leaders to understand structural changes underway and how we can effectively compete in a more complex and fragmented world.”
According to Deloitte’s Economic Sophistication Index, Australia sits just 37th in the world, because while GDP is high, Australia’s economy is not very complex. In fact, it’s quite fragile. The report says Australia has relied on luck, which has made us complacent, and also neglected long-term opportunities for growth in favour of historic generators of wealth like mineral resources.
Australia’s distance from the rest of the world is also an issue, meaning we’re not connected enough and, in particular, not engaging enough in the Asia-Pacific region to take advantage of appetite for local supply chains.
“We live in a world surrounded by uncertainty and structural shifts, including technological advances, climate change, an ageing demographic, evolving geopolitical tensions and a devastating pandemic,” said Dr Pradeep Philip, Deloitte Access Economics leader and principal report author.
“In this environment, Australia’s economic performance has been historically strong, but our economy has also become inherently fragile. Even as we’re facing new challenges that are highly complex, we’ve also become complacent.”
Key areas of opportunity
Some areas where Deloitte says Australian businesses can unlock opportunity include:
- Food – while demand for Australian food is strong, the core industries involved in Australian food production are among the least sophisticated
- Decarbonisation – by producing new sustainable energy
- Shaping the future of health, turning research capability into health solutions
- Advanced manufacturing
- Space – growing capabilities from niche research and manufacturing to end-to-end products and services
- Responding to consumer demands and being innovative by co-designing products and services
- Exporting B2B services such as engineering, telecommunications, professional services, and financial and insurance services
“The good news is that we have many comparative and competitive advantages that we can amplify and build on as we become more diverse, more sustainable and more connected, and more sophisticated, as an economy,” said Dr Philip.
The report also says an entrepreneurial spirit is essential to creating a future-focused economy. Australia needs economic settings which encourage entrepreneurship, new business formation and investment in the new drivers of economic growth.