Friday 28th June 2019
The Australian National Outlook and how private capital can help
A new report recently released by the CSIRO predicted a bleak future for Australia unless action was taken to address some our most significant challenges.
The Australian National Outlook 2019 (ANO), a new report from the CSIRO, NAB and other partner organisations, is based on input from more than 50 senior leaders from across industry, non-profit and university sectors as well as the CSIRO's own latest scientific data and modelling.
Looking at Australia’s economic, social and environmental prospects in 2060, the report projected that based on current trends we would go into a ‘Slow Decline’ – a future of weak economic and wages growth, low investment and education outcomes, and vulnerability to external shocks. Other indicators points to a similar picture. The Productivity Commission in its May 2019 Productivity Bulletin noted that there has been a marked slowdown in investment in capital, which partly explains the weakness in labour productivity gains over recent years. The Bulletin further notes:
This is troubling because investment typically embodies new technologies, which complement people’s skill development and innovation. This is especially so for investment in research and development, where capital stocks are now falling.
In a nutshell, underinvestment in many areas of the economy has led to Australia maintaining a workforce that isn’t as well-equipped as it should be to harness future opportunities.
However, the ANO report proposes the undertaking of a number of ‘shifts’, which would see Australia achieve a far more positive future. One of the ways in which Australia could reach that positive vision was the need to make an industry 'shift'. That would mean that nationally we would need to boost productivity in established industries, prepare our workforce for jobs of the future, and invest in innovative, high-growth industries.
The industry shift is centred on three areas of focus: Firstly, we must increase the adoption of technology at a broad level, which could mean digital technology, mechanical or human processes. This would see us boost productivity in existing industries that have historically supported Australia’s growth, as well as new and emerging industries. Secondly, we should look to invest in people and build their skills to ensure a globally competitive workforce that is prepared for technology-enabled jobs of the future. Thirdly, it is vital to continue developing and investing in export-facing growth industries that draw on Australia’s strengths and build competitive advantage in global markets and value chains.
All three of these areas will require significant investment over the long term.
Private capital – which already provides billions of dollars of investment to thousands of businesses across most sectors – will have its own unique role to play in this setting. As an ‘active’ form of investment, private capital investors have the money, but also the experience, networks and know-how to accelerate this industry shift. One of the ways in which private capital firms grow the value of the businesses that they back is by investing in employees, whether it be through training and upskilling, providing them with productivity-enhancing technology, or by simply hiring more staff.
Private capital investors are also major institutional backers of early stage companies that are at the forefront of new technologies and innovations that will change the nature of work. It is therefore imperative that our industry does its part, through investment and support, in ensuring we avoid the ‘Slow Decline’ scenario and put ourselves on a positive growth trajectory.