Ten Initiatives for the Future of Australia's Economy
There has been a lot of recent discussion about the Australian economy and its performance on the global landscape. There is no doubt that Australia has been "the lucky country" in comparison to other developed countries. But the question is how well is the Australian economy geared for future growth and what initiatives should business leaders consider to position Australia for the challenges and opportunities that lie ahead?
Thirty of Australia's CEOs and business leaders from major companies across a range of industries were surveyed and asked to respond to this question. The survey targeted executives from retail, mining, banking, leisure and entertainment, high-tech, communication, manufacturing, agriculture and finance.
Each executive was asked to identify from a list of 40 possible options the key business initiatives that they believe would assist Australia's economic growth and prosperity by 2015.
The survey results produced the following list of 10 key initiatives:
- Labour market legislation
- Sourcing labour talent
- Education and vocational training
- Robust corporate risk strategy
- Developing infrastructure to attract Asian investment
- Increased depth of business knowledge of Asia's markets
- Development of rail and road infrastructure
- Investment in digital infrastructure
- Segmentation of products for different markets
- Innovation planning for business and products.
The findings highlighted key trends with 82% of executives in agreement that Australia requires short-term legislative change in industrial relations. There was a consensus that high labour costs and restricted labour flexibility were impacting on productivity, and that labour market regulation needs a thorough review. Improvements to the Fair Work Act, increased flexibility in the labour market, tax reform and limitations surrounding imported labour were all highlighted as barriers to business.
Additionally, an initiative for providing a mobile skilled labour pool with access to the right talent was considered a priority for many CEOs. The lack of trained management and skilled technical labour, particularly in more remote geographical areas in Australia, is seen to present a challenge and restrict growth opportunities for a large number of companies.
Most CEOs indicated that recruiting and training high-potential middle managers and building leadership teams with strong skills and competencies were critical for business growth. Management of talent, including retaining employees, was high on the agenda as talent shortages impact on profitability.
Executives highlighted the need to establish new initiatives to resource Australia's educational systems so, in the longer term, labour is more capable of keeping pace with business needs. Two out of three senior executives said initiatives were needed to develop a labour market with more job‑specific skills. To achieve this, Australia needs to invest in more extensive vocational training and close the gap between education and employment.
A high proportion of executives believe that corporate strategy needs to remain robust and accommodate business risks if Australia is to avoid innovation and growth becoming stifled.
Risk appetite was highlighted as an important consideration by 74% of the surveyed executives who were concerned that the global share-market's volatility and a slowdown in economic conditions were resulting in a conservative approach to corporate strategy.
One in three executives also commented that corporate risk strategy was an ongoing focus for many companies with the level of competitive intensity increasing across all industries, particularly as communications and technology broadened markets and digital media transformed business potential.
With Asia as an intrinsic economic trade partner in Australia's future, 68% of executives proposed initiatives that involved investment and development with China, Indonesia, Vietnam, Thailand, India and other Asian markets. Given the proximity and development of Asia as the world's largest producer and consumer of goods and services, executives said that resourcing and prioritising for planning and creating infrastructure to support this growth was a key requirement.
The majority of the executives surveyed acknowledged that the Asian market will increasingly demand a broad range of Australia's goods and services, from education to consumer goods, banking and financial services, health, high-end food products and tourism. Some of the opportunities arising from Asia's growing middle class are already evident.
A potential opportunity, cited by a CEO from a leading hospitality organisation, is Australia's ability to attract China's outward-bound tourist market. There is a need for national investment in luxury destination golf resorts and spas, six-star hotels, casinos and signature restaurants. The demand of Asia's emerging middle class for luxury travel destinations will have an increasing impact on inward bound tourism, if the right leisure and hospitality infrastructure is developed to service this new market.
One in five executives said developing and training our business leaders with greater Asian literacy and a deeper knowledge and expertise at an executive board level is critical to Australia's ability to operate efficiently within the Asia-Pacific region.
Development of rail and road infrastructure was among the key initiatives identified by 79% of executives. The opportunity to increase productivity and develop new markets is undermined by inefficient road and rail, and inadequate port facilities in particular.
The majority of goods produced and consumed in the Australian economy are transported at some stage in the production lifecycle. With Australia's dispersed population and production centres, the efficiency of freight transport, and the efficiency of the infrastructure it uses, are central to the country's economic performance.
Ensuring that Australia is well positioned as a leading digital economy by 2015 is a key initiative for 71% of executives. The National Broadband Network rollout will enhance digital commerce and productivity opportunities for Australian businesses. As the speed and capacity of the digital network expands, it will have an impact across a wide range of industries, resulting in significant savings on distribution costs and enabling many businesses to trade to a global market. This initiative was considered key to drive new business processes and innovations supporting Australia's economic growth.
With the Australian economy rapidly evolving, 64% of executives believe there is a need for Australian business to adapt and modify product and services for market segmentation in both domestic and global markets. As market dynamics are constantly changing, the need to create products for markets to suit local customer preferences requires business to rethink existing strategies and reinvent solutions in response to customer needs.
Australian business needs to better understand initiatives involving customer segmentation by investing in R&D, using analytics and new developments in marketing practice and, when required, implementing new production and distribution processes to meet customer requirements.
A significant proportion of CEOs and executives also identified effective innovation planning as fundamental to building successful businesses in Australia, not only creating new product and services, but also reinventing core business offerings through the process of mergers and acquisitions, divestment, alliances and partnerships.
With rapidly changing technology, particularly through the internet, an intense level of business competitiveness and market globalisation, the impetus to innovate and deliver customer-based solutions is critical to business survival.
In summary, the survey results showed that business leaders want initiatives to achieve a better balance in the labour market, with progressive changes to legislation, immigration and tax reform that respond to current market challenges.
A high proportion of CEOs are concerned that our domestic policy continues to develop and support major infrastructure development to keep pace with business needs. Additionally, business leaders see opportunities for Australian business to continue to harness Asia's growth and extend our investment in emerging markets. Innovating our business offering to deliver effective strategy, product and solutions based on changing customer needs is also seen as crucial.