THE NEW AUSTRALIA

1. INTRODUCTION

The whole world has been through a series of the most unusual occurrences, including drought, flooding rains, and bushfires, and the global populations were “attacked” by Covid 19. Australia was particularly hard hit by the pandemic which forced lockdowns and hospitalisations of large sections of the community. This was particularly unfortunate as there were shortages in many basic items due to the seriously disrupted supply lines which included almost all items and has persisted for long after the pandemic.

As we look forward, the future is unknown. In Australia, because we are at the end of supply chains, and we have virtually no manufacturing, the probability of serious and continual disruptions is high, and this has been devastating.

It certainly makes one wonder what the future holds for Australia. What is the new normal??? That is a very difficult question to contemplate, however, that was the starting point for this essay, because it became patently obvious that no answer could be provided. This essay is not designed, nor is it qualified to answer the question directly, but analyses have been separately undertaken of Australia’s connection with the global entities in several areas, there are many sectors which any analysis shows could benefit from action to become internationally competitive.

2. BASELINE POSITION

The approach is to set the baseline position, so in the future it is easier to see from where we have progressed, and by establishing the base and including the performance of other countries, it means we can identify the areas in which improvement is required to bring that element up to a reasonable level of performance even by today’s standards. By establishing
the base there are 2 benefits, firstly, it is possible to identify those elements which would benefit from immediate improvement of the performance, and secondly, it is possible to identify those elements which are likely to change over time, and it is possible to monitor the changes in Australia.

In the real world it would be impossible to identify all the elements which need to be monitored over the period, so a representative number of those elements have been identified for the beginning, and it is left to prosperity to answer the question.

3. MANUFACTURING OR PROCESSING.

During the pandemic the international companies were unable to manufacture the goods, but also an inability to deliver due to the breakdown of supply lines. The list of goods which were unavailable is extremely long and includes a complete range of goods from medical to building materials and everything in between. This has led to a strong move toward “on-shoring” i.e., manufacturing goods in-country to avoid the problems with shipping and delivery.

Australia has a history of non-manufacturing, so if the predictions for the future are at least partially correct, then we are in for a torrid time, and it may be appropriate for us to review our abilities in relation to manufacturing so that we can join the onshore manufacturers.

It is fanciful to imagine that Australia could become fully self-sufficient but there are many areas and products where Australia could supply the local market. Many commentators have suggested that we should be among the manufacturers and not just be a recipient of goods manufactured by others. Given the massive disruption to the structure of the commercial world, it is appropriate to review the global situation and speculate as to where Australian processing fits into it.

4. OFF-SHORE MANUFACTURING

We require the manufacturing skills to service our local requirements, and it is possible to duplicate those skills and knowhow in an offshore business which would also provide an additional offshore income. However, we are not a significant offshore investor, and the reasons which are often quoted as being impediments have been identified and explored in many publications. 
Those reasons which seem to be regularly quoted are listed below.
1. Australia does not have the funds to invest offshore.
2. Corruption is too daunting.
3. The Australian requirement to provide quarterly results makes international investment very difficult.
4. Corporate taxation and lack of franking credits makes it very expensive.
5. Regulations and red tape are daunting.
6. It is too difficult.
7. A lack of a legal framework puts us at risk.
8. Who does invest in the region?
9. A reason which is rarely discussed, is the capability of Australian business leaders.

These reasons postulated are reasonably weak and do not stand up to significant examination. The one impediment which is rarely mentioned is the capability of Australian business leaders, which is difficult to define and measure.

5. STOCK MARKET PERFORMANCE

In order to provide an analysis covering an extended period and perhaps shed some light on the capability of the management of Australian public companies, the indices from the end of the Global Financial Crisis, 1st January 2009, to the end of the 2020 financial year have been plotted weekly and are shown in the following graphic, with the Jan 1st, 2009, taken as 100, the changes in the weekly index for each exchange are shown.

The performance of the Australian stock market index, when compared with some peers is not particularly stellar, as Australia was outperformed by most countries evaluated. This clearly shows that Australia has a great opportunity to lift the performance on the stock market, and perhaps this is one of the elements which will greatly improve for the New Australia
.

6. OFFSHORE INVESTMENT

6.1 Outwards FDI

Outwards FDI is an indicator of the propensity for offshore investment, and while this factor has been adversely affected by the events of the last several years, the results for 2022 definitely show a significant recovery. This is significantly higher and reflects the increased or at least improved confidence in the financial situation of many of the global companies (FDI Report 2023. Global Greenfield Investment Trends)

6.2 Inwards & Outwards FDI - Australia

Australia has a modest record when it comes to commercial contact with the global partners, historically the trade has been with China, USA, Japan, and Korea, although Singapore and India are becoming significant partners.

The five countries which are export targets make up 63% of Australia’s exports and the five countries which are imports suppliers make up 50% of Australia’s imports.

On a comparison with 19 countries within the OEDCD, Australia’s exports in the 2022 year were $US464,569 million which was a ranking of 15/19 in the OECD list, and on a per capita basis, it was an export value of $US17,569 per capita which was a ranking of 9/18.  In relation to imports, Australia import value was $US 290,113 million, which was ranked 14/18 on the OECD list and on a per capita basis, the imports were $US10,973 which was a rank of 11/18.

7. EDUCATION

Australia offers a diverse range of study options for both local and international students, with more than 1100 institutions and over 22,000 study courses. There are 43 universities,and many have multiple campuses, and according to the international ranking services, 8 of those university’s rank in the top 100.

The most quoted measure of the student performance is the Programme for International Student Assessment (PISA) which is administered to 15-year-olds, and it assesses the level of
skills and knowledge on Reading, Mathematics, and Science. As this is a triennial assessment the last one was administered in 2018 and in that the Australian students were at a higher
level than the average of the OECD results, but the Australian results are showing a long- term decline in each of the test subjects. (www.usnews.com/education/best-global-universities/rankings)

8. HEALTH

It is difficult to establish a valid and relevant baseline for the health sector, but attempts have been made by applying evaluation techniques to some factors relative to the health system. The results for the year 2020 are shown.

AUSTRALIA
Life Expectancy at birth (years)83.0
Mortality by preventable causes ( per 100,000)180
Prevalence of Diabetes (% of adults)5.6
Infant Mortality ( per 1000 live births)3.3
Smokers (% of over 15 yo population)11.2
Doctors per 1000 population3.8
Nurses per 1000 population12.2
Doctor consultations (no. per year )7.3
Suicide (per 100,000)12.3
Health spend (USD annuaL per capita)4919

OECD
AVE
81.0
191
6.7
4.2
16.5
3.6
8.8
6.8
11
4087

For most factors, Australia has a more favourable result than the average of the 38 OECD members.  As new treatments are developed it is expected that improvements to the health system
will benefit, however, the industry must not only develop the new technologies but must be prepared to deal with emerging pandemics as they arise, which is not an easy task.

There is room for improvement, both in the treatment of the current ailments but more importantly, in anticipation of new medical problems.

It is relevant to consider the performance of all sectors of the economy in the response to the debilitating Covid which very quickly permeated the whole world in 2020 to 2023, and it may well be preparing further attacks.  The performance by the medical fraternity seems to be exemplary, from the development and distribution of vaccines, however the performance of the authorities left a lot to be desired, not just in Australia, as it seemed to be worldwide problem. But it was a good lesson in demonstrating what is required in an emergency, and hopefully we will have learned a lesson.

9. TECHNOLOGY DEVELOPMENT

It would appear that the world is about to undergo another leap in technology use. There is an unprecedented range of technologies being considered, formulated, developed, installed, and implemented, and it is most likely that this will continue. The difficulty is that the end user will be left behind and just as importantly, the redevelopment and improvement of existing technology will not be improved and updated, as all the focus will be on the new technology.

There will be wide ranging technologies ranging from reasonably small and personal through to the “earth shattering” which will be large and likely to be really intrusive, and not be able to be ignored, and we are seeing the beginnings of it already with the development of Crypto Currency and AI, and their offshoots. It will entail a wide range of endeavours, which at this stage, it is impossible to predict or even imagine the extent of the development.

10. CRIME

Crime in Australia is rarely regarded as a significant issue, but it is worth considering it as a factor in the longer-term development of Australia, so research has been undertaken to compare with the OECD countries.

The European Institute for Crime Prevention and Control has obtained information from a number of sources and published the results, and only those OECD countries have been
included.

The rate of offences is the annual frequency in which the police make an arrest per 100,000 people, and the rank is the position Australia holds in comparison to 36 other OECD countries. In comparison with our OECD peers, Australia has some improvements to be made in some sectors.

11. SOCIAL CONTRACT

The social contract is changing, and we can see it in other countries, as examples

 In USA, the rise of extremism is reportedly based on lies and mistruths, and is certainly disruptive to the democratic processes,

 In Israel and Palestine where one country is completely dominating the other, with little regard for the rights of the people, nor democratic rights,

 And in Australia, The Scanlon-Monash Index of Social Cohesion provides a measure of social well being, and in the latest report the index of social cohesion is the lowest on record.

The potential for the rise of divisions in the population seems to be developing, and if it continues along this path the “she’ll be right” thinking will disappear along with other attributes which make this country so attractive.

The other issue is one of racial harmony. While there has been some historical ups and downs, generally there has been a reasonable level of harmony, however, there is an apparent increase in “disharmony” and while it currently is of a low level and low frequency, the potential for growing disharmony is available.

Another aspect of “social contract” is the geopolitical situation. There is no doubt that the global geopolitics will have a significant impact on life as it is currently known, but what that impact will be, and the effects it will have, cannot be anticipated at this stage, so no baselines can be developed.

It is difficult to quantify the levels of social cohesion we are likely to achieve, but it is a feeling which we have, and certainly adds to the level of comfort and complacency we
enjoy.

12. CLIMATE CHANGE

Most people are somewhat weary of the various arguments, counter arguments, theories, speculations, and lists of dire consequences if action is not undertaken, but luckily it would appear the situation has now been reached that most people have accepted the inevitable and agree that action must be taken.

The action to be taken is not a given and it is not within the objectives of this essay to speculate on what those actions should be, nor attempt to speculate on the effect of those actions or inactions. Except to speculate that the actions will be significant, intrusive and hopefully effective.

It is expected that a truly scientific approach will guide the direction in which action is taken to mitigate the effects and importantly to reduce the current effects and to ensure that it
does not return.

13. SUMMARY & CONCLUSION

The factors which add to the attractiveness of our country are diverse and far reaching, and obviously have the potential to change and become unattractive in the “new Australia”.

Within this essay we began by establishing the baseline for several factors, of course there are many more factors which could have been evaluated, but sufficient have been selected
to provide a baseline, and importantly to suggest to the reader that they should brace themselves for the changes which are likely to occur and develop, however slowly.

There is no question that significant changes are beginning to occur, and we must recognise that change is inevitable, the only question being “is the change for the better or not”. We can make it to enhance our lot or to worsen our lot. In many areas we are among the world leaders, but in others we seem to lag, which is to our detriment.

The two areas in which we do not excel are the lack of onshore manufacturing or processing and the reluctance to establish companies offshore, both of which are required for the
future. It may seem contradictory to suggest that both are important for Australia’s future, but we need the manufacturing skills and knowhow to service our local requirements, and we can duplicate those skills and knowhow in an offshore business and take advantage of the benefits of having an additional offshore income.

The future is certainly one of significant change and we have to face it and embrace it with enthusiasm, because we cannot let the world change around us, we must be part of it. If we stagnate, we will miss out on the exciting and profitable events which are awaiting us.

Author; Glen Robinson B.Sc. [Tech]

Glen is a co-founder and director of Asean Focus Group with Peter Church which was formed in 1990 to provide advice and assistance to those organisations which wished to take a commercial presence in ASEAN and other Asian countries. Throughout this process a deep network of colleagues in the region was developed in both government and the private sectors. A number of years ago the company entered into a joint venture with Venture Group and both now trade as AFG Venture Group.

Glen is a director of the Australia Thailand Business Council and a Councillor of the Australia Institute of International Affairs NSW.

The views expressed in this article are solely those of the author and not of any of the companies or organisations mentioned.