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.
Exceptional growth in these five sectors could add an additional $25 billion to Australia’s GDP in 2033 or a boost of about one per cent to an economy turning over $2.6 trillion in today’s dollars.
It’s all about catching the next wave. 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 per cent per year.
For example, global markets for gas, tourism and agribusiness are each expected to grow at rates at least 10 per cent 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 Australian economy grows when Australian advantage meets global opportunity. The multibillion-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.
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; our use of English, the world’s business language; a temperate climate; and well understood tax and regulatory regimes.
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 our 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 our 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 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. 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.
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.
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.
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