Five super-growth industry sectors worth an extra $250 billion to the national economy over the next 20 years hold the key to Australia’s future prosperity, according to a new report from business consultants, Deloitte. The report, entitled Positioning for Prosperity? Catching the next wave focuses on business imperatives for a prosperous Australia.

Deloitte used a surfing analogy to explain that, whilst the mining wave continues to deliver prosperity for Australia, albeit at a declining rate, it has now past us and is heading into the shore. They have identified that the next set of super-growth waves we need to ride are agribusiness, gas, tourism, international education and wealth management. The report suggests that exceptional growth in these five sectors could add an additional $25 billion to Australia’s GDP over the next 20 years. That is a boost of about 1% to our economy, which is turning over $2.6 trillion in today’s dollars.

Deloitte says that the first place to look for sectoral growth is in markets that can be expected to grow faster than the global economy as a whole. Their analysis shows that we have a 16.2% comparative advantage in agriculture. (The Australian average is 5.2%; and the next nearest sector is mining at 13.3%.) On this basis, they have identified agriculture as Australia’s ‘forgotten hero’ – the sector which offers the greatest potential for economic growth amongst the five top spots.

Why is agriculture top of the list?

The Deloitte report explains this by pointing to the trend to higher protein diets in rapidly westernising countries, and the expected fall of the Aussie dollar back to around US$0.80 in coming years.

We have half of the world’s population living just to our north. Come what may, they will always demand food. They are a ready market for those countries that can produce beyond the needs of their own domestic population.

In Australia, we are well placed to meet some of that demand. On average, each farmer here produces enough to feed 600 people – 150 here and 440 overseas. Although we live in a challenged continent, we have become adept at adapting our agriculture to the challenges that our climate presents.

In Tasmania, we have an even greater comparative advantage because of our rainfall, soils, maritime climate and, most importantly, our innovative farmers. They are extremely quick to seize new market opportunities and have shown themselves to be amazingly flexible in diversifying their businesses to manage risk.

This is why experts like Professor Jonathan West have been saying for some time that Tasmania must look to agriculture as our key future economic driver – especially with the imposed demise of the forestry industry.

If we are to achieve this clear potential – at state or national level – we must all do our bit to ensure that this sector remains productive, profitable and sustainable.

First up, the report recommends encouraging consolidation of mature and declining industries, and winding back poorly directed subsidies. They note that specifically directed government help will often miss its intended mark. This advice echoes other assessments that urge governments to return to core business and away from their ever-expanding involvement in areas that are better left to market forces.

Instead, governments must work closely and co-operatively with industry to deliver an environment in which farming businesses can operate efficiently without unnecessary regulation and cost. Governments also need to ramp up investment in innovation, research, development and infrastructure. We need to develop a strong national focus on achieving improved market access and eliminating trade barriers. And Australians generally need to support and value their farmers as the national assets experts are now confirming they truly are.

Only then will we be able to ride the next wave and avoid being wiped out.

The report is available here:

http://www.deloitte.com/view/en_AU/au/news-research/luckycountry/prosperity-next-wave/registration/index.htm?gclid=CIiwzsOljboCFcFipQodCUcAVQ
Jan Davis, TFGA: Tasmanian Country column today