AGRIBUSINESS, gas, tourism, international education and wealth management are five future growth sectors in which Australia has a competitive advantage -- and it is vital Australian business fosters them properly according to new research from Deloitte.

Chris Richardson

According to the report, Positioning for Prosperity? Catching the next wave, these five ‘super-growth' industry sectors could be worth an extra $250 billion to the national economy over the next 20 years and are likely to hold the key to Australia's future prosperity.

The report is the third edition of Deloittes' Building the Lucky Country series, which focuses on business imperatives for a prosperous Australia, according to its co-author from Deloitte Access Economics, Chris Richardson.

"As the mining wave continues to deliver prosperity for Australia, albeit at a declining rate, our analysis shows there is vast potential to be tapped in five additional super-growth waves of agribusiness, gas, tourism, international education and wealth management," Mr Richardson said.

"Exceptional growth in these five sectors could add an additional $25 billion to Australia's GDP in 2033 or a boost of about 1 percent to an economy turning over $2.6 trillion in today's dollars."

Positioning for prosperity? Catching the next wave  includes detailed analyses of the challenges and opportunities for maintaining Australia's current wave of prosperity beyond the mining boom as well as how to make the most of the next five ‘super-waves', which Deloitte predicted would collectively match mining in terms of their contribution to the Australian economy.

"It's all about catching the next wave," Mr Richardson said.

"Mining will continue as a major driver of our prosperity over the next two decades and beyond. We need to look at how we can extend our ability to ride the mining wave. Yet success as a nation cannot be built on natural resources alone. That boom is slowing and our competitive advantage is being challenged.

"The reality is that we need new growth drivers. We need another wave - or several - to create more diversified growth. And the first place to look is markets that can be expected to grow significantly faster than the global economy as a whole over the next 10 or 20 years, or by more than about 3.4 percent per year. For example, global markets for gas, tourism and agribusiness are each expected to grow at rates at least 10 percent faster than global GDP as a whole.

"As history has shown, global growth alone isn't enough to deliver success to Australia. We also need an edge, a source of comparative advantage that's hard for other nations to match, so that the world wants what we have."

The report said five big-picture advantages gave Australia a head-start: world-class resources in land, minerals and energy; proximity to the world's fastest growing markets in Asia; Australia's use of English, the world's business language; a temperate climate; and well understood tax and regulatory regimes.

Building the Lucky Country co-author and global thinker on growth strategy, Mehrdad Baghai, managing director of Alchemy Growth Partners, said, "The Australian economy grows when Australian advantage meets global opportunity.

"The multi-billion-dollar question is: where will global growth and Australian advantage next intersect? That's where we will catch the waves that will drive our prosperity, today and tomorrow."

BREAKING WAVES

Central to the Deloitte report is a Positioning for Prosperity map, which assesses where the next waves of prosperity are most likely to come from by plotting expected average global GDP growth rates over the next 20 years against the level of Australian competitive advantage for each sector. 

The five sectors which offer both high growth rates and Australian advantage are:

•        Agribusiness: Global population growth of 60 million per year will increase food demand, with Asia's growing middle classes set to boost their protein intake.

•        Gas: Rapid growth in emerging economies has polluted the air in the major cities to Australia's north. That will underwrite demand for gas, a cleaner and greener alternative.

•        Tourism: This sector is set to double in size in the next 20 years, with Asia's expanding middle classes fuelling the growth.

•        International education: Foreign students are already Australia's fourth biggest export earner, with India and China likely to drive great growth in demand in the sector.

•        Wealth management: Three billion people in Asia will join the middle class by 2030 and by 2050 the region will account for more than half the world's financial assets.

These next export waves are the most important growth priorities for Australia, and Mr Richardson said the growth of these sectors would be helped by the retreat of the Australian dollar from its record highs.

"We see the Australian dollar settling at US80 cents in the longer term," Mr Richardson said. "This downswing has already begun, and it signals the starter's gun on new opportunities for ‘dollar dependent' sectors including manufacturing, farming, tourism, and international education. It will also be a tailwind for interest rate-sensitive sectors, such as retail and housing construction."

As well as mining and the five super-growth sectors identified, the Deloitte Positioning for Prosperity map features 14 other major sectors whose contribution to the nation's prosperity will continue to be vital. These include big, domestically-focused industries such as banking, health, construction, business and property services, transport and logistics, public administration and manufacturing, among others.

According to Mr Richardson, "These sectors all have the potential to generate substantial pockets of export business. Indeed, some of these mainstay industries have served as stable incubators for their high-growth sector offspring."

Agribusiness had emerged from farming, wealth management from financial services and banking; and international education from education as a whole, Mr Richardson said.

"In early 2014, Deloitte will release the final version of this report with further research that explores the story of where future growth exists and how business can unlock its potential," he said.

BUSINESS MUST TAKE LEAD

Deloitte chief strategy officer and Building the Lucky Countryseries co-author, Gerhard Vorster, said business has to take the lead in positioning Australia as a competitive global force in these growth sectors. 

Gerhard Vorster

"Governments will play a supportive role in managing the challenges of labour markets, providing more efficient regulation and tax regimes and a stable and clear set of policy rules for business, in order to enable growth," Mr Vorster said.

"But ultimately, it is up to business leaders to put in the hard work, to think hard about their own proximity to prosperity and about how best to position themselves closer to these prosperity opportunities.

 "Our report helps equip decision-makers to hit ‘forward' and ‘fast forward' when and where it counts to shape the future for their companies and Australia's economy," Mr Vorster said. 

"The report includes a range of actions, what we call ‘prosperity levers', which can help organisations to identify and review their current competencies and structural advantages.

"How organisations allocate their resources and arrange their mix of portfolios now will determine whether they optimise their growth in the years ahead.

  "Australian businesses and families can be confident that our opportunities are just as great now as they were at the start of the mining boom," Mr Vorster said.

"Our future growth will be more diversified than the past decade and we will have to work harder to maintain the quality of life we have come to expect.  But the opportunities are there to generate exceptional and lasting sources of future wealth for all Australians.

"The potential payoff is huge."

http://www.deloitte.com.au/

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LAST week’s Federal Budget spared the agricultural sector from significant budget cuts that would have jeopardised the sector’s productivity and profitability – according to the Queensland Farmers Federation (QFF) – but it also failed to deliver on anticipated reforms.

Cairns remains an agribusiness growth hub while also developing Reef protection systems.

QFF said the reform measures were expected to set out a plan for growth into the future and adequately recognise the sector’s broader contribution to the national economy.

According to research by the agribusiness organisations that make up the QFF, the most notable new measure in the budget is for $99.4 million for a Farm Household Allowance over four years, to support farmers through drought.

  “It follows the recent announcement of Farm Finance, which would provide $60 million over two years to help fund concessional loans for Queensland farmers,” a QFF spokesman said. “The Budget confirms the transition to a new range of drought support measures, which are due to begin on July 1, 2014. QFF received a briefing last week on the Farm Household Allowance payment, and QFF will be briefing members on the issue at the QFF Council meeting this week.”

QFF did welcome the confirmation in the budget of the $200 million extension to the Reef Rescue program, which has achieved major outcomes for Queensland farmers and the environment in catchments along the coast.

However, the new measures in the Budget have been offset by a number of cuts to other areas of government.

Much of the $99.4 million for the Farm Household Allowance has been diverted from the Caring for Our Country (CFOC) program.

QFF said this program provides crucial support for farmers to partner with the government to undertake natural resource management, and any cuts to this program will have negative repercussions for industry and the environment.

The government is also reducing CFOC by a total of $140 million over the next five years.

There is a reduction in funding of $4.1 million to Plant and Animal Health Australia, with cuts forecast to reach $8.1 million by June 2017. These are in addition to a $34.6 million cut to quarantine and export services last year.

QFF also noted cuts to all departments, but specifically to staff working on quarantine and export services and Austrade staff.

Another issue is that the cost of applying for a 457 visa will increase from $455 to $900, which is expected to raise $198 million over four years. For many farmers, 457 visas play an important role in tackling the skills shortage facing regional areas, and moves to make these visas more expensive put the efficacy of these visas at risk, said QFF.

WET TROPICS RESOURCE

QFF lodged a submission on the draft Wet Tropics Water Resource Plan last week. The key issues addressed relate to concerns farmers have in the Upper Catchments about the availability of water that they will have when the plan is implemented.

For example, the plan proposes conversions of eight megalitre per hectare in most of these catchments but dairy and vegetable farmers indicate that they can use up to 10 megalitres per hectare. The Plan makes allowance for farmers to apply for up to 20 megalitres of additional water for uses other than irrigation such as dairy wash down, fruit packing sheds and for watering of dairy herds.

QFF is asking in its submission that issues such as water pumping rates be further examined with farmers before the plan is finalised “to ensure all has been done in the final plan to avoid any adverse impacts on existing farming operations”.

RAIL FREIGHT FOCUS WELCOMED

On state issues, QFF has welcomed the announcement from the State Government that it will work to improve the process of taking bulk commodities out of trucks and off the roads, and into trains and on railways.

The State Government announced this week that it would invest up to $50 million on passing loops on the Toowoomba range and up to 20 additional train paths per week will be made available for rural freight.

“This move follows a huge plummet in recent years in the agricultural sector’s ability to get time on the tracks to move rural commodities such as grain to the port of Brisbane,” a QFF spokesman said.

“Solving agricultural freight issues is both complex and expensive and this announcement will help contributing to a positive end result.

“QFF also seeks the government to address a range of other infrastructure issues affecting the sector such as the deterioration of a number of railways lines across regional areas, some of which have been inoperable for years from flood damage.

“The much-talked about ‘missing link’ rail line from the Downs north to Gladstone would also provide another avenue for rural freight, provided that this rural freight was able to get access to the tracks.

“The announcement last week shows very positive signs that the Minister for Agriculture and the Transport Minister are working together to look at pragmatic solutions, and QFF looks forward to working with them further on the details of the plan and the longer term complex issues, while promoting any opportunities for farmers to take advantage of improvements as they arise.”

www.qff.org.au

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The Queensland business calendar has little to match the Business Leaders Hall of Fame in terms of anticipation.

Flight Centre's Graham 'Skroo' Turner (centre) was one of last year's Business Leaders Hall of Fame inductees.

The Queensland Business Leaders Hall of Fame 2011 Induction Dinner will be staged on Thursday, September 1 at the Brisbane Convention and Exhibition Centre (BCEC). Expectations are running high as to which business leaders and organisations will join the esteemed list this year.

The Hall of Fame Governing Committee said tickets were now on sale and special guest Queensland Governor Penelope Wensley AC would be inducting the 2011 nominees.

In 2010, Australia's first millionaire, century-old family businesses, Flight Centre's founder, Golden Circle, Ray White and Bundaberg Rum were among nine great Queensland business success stories inducted into the Queensland Business Leaders Hall of Fame.

The Hall of Fame, now in its third year, celebrates leading businesses and business leaders who have enhanced Queensland's reputation and its economy. It is a joint partnership between the Queensland University of Technology (QUT) Business School, the State Library of Queensland and Queensland Library Foundation, with support from the Queensland Government.

The Hall of Fame now has a permanent home in a purpose-built space at the State Library where video stories and historical data proudly display Queensland's business leadership excellence and culture of innovation.

"Our 2010 inductees represent the diversity and development of the Queensland economy from the 19th century to the present," QUT Faculty of Business executive dean, Peter Little said.

"Each has exhibited excellence and, in their own way, made a remarkable contribution to business in Queensland," Professor Little said.

Queensland Business Leaders Hall of Fame is supported by Origin Energy, the Australian integrated energy company and one of Australia's leading accounting and advisory services firms with a Queensland presence dating back 120 years, WHK Horwath,

The 2010 Queensland Business Leaders Hall of Fame inductees were:

Jack Hutchinson - Mr Hutchinson took the family building business, established in 1912, and turned it into Queensland's largest privately owned construction company, whose projects include Kingfisher Bay Resort on Fraser Island and St. Stephen's Cathedral restoration in Brisbane.

Kate Mary Smith (1847-1932) - The Irish immigrant founded K.M. Smith Funeral Directors after the premature death of her husband left her with six children to support and a business to run. The business, 130 years later, remains in the family.

Graham Turner - ‘Skroo' Turner is managing director and co-founder of Flight Centre, Australasia's largest retail travel group. He established the company in 1981 after selling the successful Top Deck tour company he established in England in the 1970s.

James Tyson MLC (1819 - 1898) - Immortalised by Banjo Patterson's poem T.Y.S.O.N, Australia's first millionaire began his working life as a squatter on the Lachlan River. The rural entrepreneur first found wealth droving cattle to the Bendigo goldfields and butchering the meat for miners. By the time of his death, he had served as a member in the Queensland Parliament and owned more than five million acres in Queensland, New South Wales and Victoria.

Bundaberg Distilling Company - In 1888, several small sugar producers banded together to float a new public company, The Bundaberg Distilling Company. The company used molasses, the by-product of the booming local sugar industry to produce the now iconic Bundaberg Rum.

Golden Circle Limited - Founded 63 years ago by Queensland pineapple farmers as a growers' co-operative, Golden Circle has played a significant role in the Queensland economy and processes about 180,000 tonnes of fruit and vegetables with a $400million turnover annually.

Queensland Institute of Medical Research - Established in 1945 by the Queensland Government, the QIMR is one of the largest and most successful medical research institutes in Australia, recognised worldwide for the quality of its research. Its achievements include discovering Ross River Virus and developing environmentally friendly, mosquito-breeding control programs against dengue fever.

Ray White Group - Established in 1902 in Crows Nest, Queensland, family-owned Ray White has grown into Australia's most successful real estate agency business, specialising in auction as a method of sale since 1906. Run by the family's fourth generation, the Ray White Group handles 10 percent of all real estate business in Australia.

Xstrata Mount Isa Mines - Following the discovery of lead ore in Mount Isa in 1923, Mount Isa Mines was established the following year. However, due to difficulties such as isolation and flooding, it was not until 1937 that the company first made an operating profit. Acquired by Xstrata in 2003, the business has made a significant impact on the Queensland economy and regional development.

* For more information on the 2011 Hall of Fame induction event, contact Rebecca Gauld. Tel: (07) 3138 2532. E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Master of Ceremonies for the black tie event will be national television broadcaster Sharyn Ghidella and Katie Noonan Jazz Trio will provide entertainment.

www.qut.edu.au

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Businesses recovering from interruptions such as the recent natural disasters in Queensland and Victoria are being urged to see the rebuilding process as an opportunity to improve their systems and operations. National chartered accounting and business advisory firm, PKF, wants business to seize opportunities to implement plans that ensure future disruptions to their operations are minimised.

Business recovery planning 'opportunity'.

PKF's director of Enterprise Advisers, Matthew Field, said the biggest obstacle many face as a result of unexpected events, such as natural disasters, is not having a recovery plan in place, which would allow them to continue to operate their businesses. 

"Many business owners in Queensland in particular thought they were properly prepared for an unexpected business interruption, like flooding. However, they were caught out having inadequate plans in place. Other businesses had no contingency plan at all, with some losing all business records as these were stored on-site in hard copy, rather than electronically," Mr Field said. 

"While tragic, the recent natural disasters present a unique opportunity to affected businesses and offer valuable lessons to all businesses. Apart from realising the need to have robust disaster plans in place, in many ways the events we have seen have provided a clean slate on which businesses can rebuild their operations and devise new and more resilient processes and systems," Mr Field said. 

According to Mr Field, business owners recovering from unexpected business interruptions due to natural disasters should seek to combine the available government assistance and tax concessions for immediate relief with a more comprehensive medium-term rebuilding and future risk analysis plan. 

In the aftermath of the Queensland floods and cyclone, the Federal Government has made a series of tax concessions and other assistance measures available to businesses, including tax exemptions and lodgement extensions. 

"When the Queensland floods first hit, many of our clients were concerned with short term issues such as their ATO obligations like deadlines for BAS payments. While Federal Government assistance for disaster-affected businesses is fairly comprehensive, relying solely on this to continue normal operations would be like 'placing a band aid on a bullet wound', as fundamental issues regarding how they function would be left unchanged. 

"We are urging our clients affected by business interruption not to take a short-term view of their recovery. Rather, they should see this as an opportunity to reconstitute their businesses, comprehensively examine their models and processes and use the opportunity of rebuilding to improve their business as a whole," Mr Field said. 

Looking further on the bright side, businesses now have a unique opportunity to improve their products or service offerings from taking advantage of newer technology or plant and equipment replaced after the natural disaster.  

Mr Field said PKF was advising businesses affected by interruptions to their operations, due to factors beyond their control, to seek Australian Government relief in a number of ways:

•·         Federal and State Government grants and subsidies.

•·         Tax exemption assistance from the ATO.

•·         Tax agent relief for professionals.

•·         ATO lodgement extensions.

•·         Other ATO assistance and support - for example reconstruct tax records, Fastrack refunds, and tax hardship concessions.

•·         Certain payments from employers to employees relating to the floods, for example emergency clothing, transport and accommodation may be exempt from Fringe Benefits Tax.

•·         ATO extensions to meet BAS and other lodgement obligations without penalties.

•·         Accounting professionals are receiving extra support from the ATO to help clients recover from the disaster.

www.pkf.com.au

* Business Recovery is now a regular section of Business Acumen magazine. Subscribe now. Gift subscriptions also available.