The federal government’s new Industry and Competitiveness Agenda is a welcome initiative on a critical issue for the nation. The plan highlights key issues of employee share ownership to encourage start-ups, education and training and funding for industry growth centres.
Some is new, some rebranded but it is all vital for Australia’s future. The key point is that these are issues that have been identified as requiring national attention for many years, so it is probably no surprise that not many people have been talking about it.
Australia has enjoyed a long and comfortable history as the lucky country, but our economy is at a tipping point and that luck may well be fast running out. While we may have weathered the worst impacts of the global financial crisis, the mining investment boom is ending as China’s resource intensity slows. Emerging economies are reacting to this changing reality with a hyper-competitive fire in the belly and transitioning to service-based economies. It is a determination that, post-World War II, Australia had too and we must again rekindle if we’re to remain competitive and secure the future of our children.
Never has it been more important for our political leaders to persuasively outline why, in simple terms, we must transition away from resources to a competitive, knowledge-based economy.
Last year, CPA Australia released the most comprehensive research on Australia’s international competitiveness ever undertaken. Drawing on the insights of more than 6000 decision-makers in Australia and overseas, it found that Australian businesses are just as likely to identify China and other Asian economies as their key competitors in a number of sectors. We found that business is already comparing policy settings here with China and other emerging economies in the region. The findings made it clear that while proximity gives us a relative competitive advantage over those outside of this region, it is not an advantage we can take for granted; it still needs to be properly leveraged.
The government’s competitiveness plan is recognition of the importance of the issue, and in this context it is welcomed. However, I do question if we are we going far and fast enough to enable Australian business to be truly competitive in world markets and make Australia an attractive place to invest.
We need to put in place strategies that will enable us to create stronger links with Asia, reduce transaction costs for business, harness new and emerging opportunities and better leverage key markets for all our products and services.
The government’s announcement that it will be changing the tax treatment of employee share schemes – incentives that will spur start-ups and boost entrepreneurship – is an easy decision, but all it does is enable Australia to catch up to the likes of the US and UK who already offer these benefits. If I was looking at Australia as an overseas investor my comment would be that Australia is looking to match what other countries are doing, which is an improvement, but it has not been bold enough to go ‘above and beyond’ – to make Australia a truly compelling place for global businesses to invest.
It is not difficult to see that the high paying jobs of the future will come from a versatile, agile economy that has an embedded culture of innovation. A competitiveness agenda is ultimately about delivering jobs, and education and research are the keys to success. A good example is Australian researchers leading the way on nanopatches, a revolution in how vaccines are delivered. They are carving out a place for our country in an industry estimated to be worth in excess of $2 trillion. We need strong government policies that support this type of innovation and make sure that these businesses stay in Australia.
A stronger focus on innovation, removing the barriers and creating incentives that enable Australian business to succeed on a global scale, mitigates the risks of Australia continuing to rely on our domestic economy to support our way of life. Only by looking ahead can we create the jobs of the future.
It is not a given that the Asian Century will be the Australasian Century. We have to be smarter. We have to be innovators. And we have to stop looking west for inspiration. We applaud the government for recognising this and urge policymakers to build on this solid foundation. Our future depends on it.
Alex Malley is chief executive of CPA Australia.