Is Australia on the path to economic recovery? [OPINION]
By Mark Pejic, CEO, MediaCom
Australia was somewhat sheltered from the catastrophic global financial crisis of 2009, but our economy has now stalled and levels of business and consumer confidence are very low. The challenge of making Australia more competitive again means we must reinvent ourselves as a nation.
The key will be to transition Australia’s economy away from the over-reliance on the resources sector and towards the service industries, tourism and manufacturing. However, this requires a significant fall in the dollar value and the recent depreciation was only a “drop in the ocean” in terms of what is required to regain our competitiveness.
When we start seeing major falls in our dollar’s value of at least another ten per cent, I anticipate there will be an increase in investment in non-resources export industries. However, the Reserve Bank of Australia needs to continue cutting interest rates until such time that business confidence is restored. Only then can the weaker currency we need be sustained.
This is when all the hard work will really start, because the actual challenge is that we need to keep salaries and expenditure down, so that Australian companies can regain their competitive edge. We’re already seeing this in the wake of our car industry departure. Industry groups and economists warn us that if we do not chase new manufacturing markets, we are going to have to cut wages. Cost cutting in most industries is going to be a tough reality as Australians have become accustomed to sustained wealth and prosperity.
Read related articles in Business Review Australia:
- Top 10 fastest growing jobs
- Crowdsourcing: Businesses grow one project at a time
- 5 key steps to develop a successful leadership program
I believe that Australia's competitive future is dependent on us grasping the opportunities and challenges of our changing economic circumstances in order to maintain global relevance, including improving productivity and reducing labour costs. In addition, a review of our pricing models will be essential to help us compete on a level playing field with our international competitors.
As a nation, Australia has to learn to compete in different ways since we are surrounded by hyper-competitive emerging economies that set some of the most exceptional challenges and create extraordinary opportunities. This will include working smarter and being the innovators, something we should be pretty good at since we are a country of well-educated early adopters.
In my view, moving to a knowledge-based economy is a priority for Australia, as well as changing our approach to become more nimble. It is essential that we adopt technologies for the knowledge-based industries to prosper.
A key part of the successful transition includes the availability of the National Broadband Network (NBN) not only to consumers, but also crucially to the business sector, as soon as possible. The NBN will play a major part in this move to being more efficient and in turn, more competitive.
The ultimate challenge will be to win back business from the global competitors that took Australian business away during the last few years of the high dollar. Australians are fairly patriotic and prefer to buy Australian, up to a point, but this wears a bit thin when the reality is that foreign competitors have been charging a lot less for similar products.
Tourism takes time to recover, but we need to get those foreign tourists returning to Australia in their droves. All Australian businesses need to implement strategies to regain this lost business and dare I say it, some of this may involve discounting their prices significantly.
I do believe that we can be optimistic, because we are an innovative nation that should be able to reinvent itself again. However, being relevant in a competitive world is the key to us succeeding, so we need to take a long hard look at ourselves. Adopting a different dialogue between government, business and the trade union movement will enable Australia to improve our performance and really return to being a globally competitive force to be reckoned with.
- PwC reveals Global Economic Trends forecast for 2021Leadership & Strategy
- Deloitte: Three steps to APAC’s economic recovery in 2021Corporate Finance
- Deloitte: COVID-19 - biggest economic impact of the centuryLeadership & Strategy
- How Chinese companies bounced back from COVID-19Leadership & Strategy