News Feature

Digital disruption year: 2014

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A DIGITAL business researcher is tipping 2014 will play out as a landmark year in disruption – and the recent industry closures and job losses appear to bear out his analysis.

Digital Business insights (DBi) CEO, John Sheridan, is using his 13 years of research and 50,000 in-depth surveys of Australian businesses  to develop systems and digital tool sets to assist business leaders in developing capability within their organisations.

Mr Sheridan and his team at DBi use the evidence of those surveys to help shape knowledge delivery to business leaders, based upon their individual business profiles, and encourage new collaboration. 

But the research also often throws up accelerative trends, blockages and opportunities that are not following the conventional business, government or educational wisdom.

For example, Mr Sheridan’s research has been predicting a long-term and lasting hit to Australia’s commercial property market, largely because of mobility and the almost universal practice of business teleworking. Online retail has critically disrupted ‘high street’ retailing forever, he believes, and many ‘mum and dad’ retailers will leave the industry forever.

One of the biggest worries for CEOs is where the next challenge will come from. Most now acknowledge that the toughest competition may be yet to come – but some entrepreneur and start-up is likely to arrive out-of-the-blue and gain critical market share with lightning speed.

Australia may not have time to get used to it, but it has no choice but to adapt to it.

“Full time, well-paid jobs will disappear forever in manufacturing, mining, retail, real estate, construction and government only to be partially replaced by a range of government sponsored infrastructure developments,” Mr Sheridan said.

“Digital disruption will continue to pummel all industry sectors. Sixty percent – up from 40 percent last year – of US CEOs worry about competition from new market entrants. And competition can come from anywhere.

“Teleworking will increase steadily promoted by government and office lease vacancies will grow further. They will move from the teens to the 20s in Brisbane, Perth, Melbourne and even Sydney. Retail vacancies will follow the same trend.”

He said all indications were that, between 2014 and 2017, Australia will “haemorrhage thousands of full time, well paid jobs”.

“They will disappear forever,” Mr Sheridan said.

It was plain from the research that the future for Australia rested in start-up businesses that were fleet of foot, highly adaptable, innovative and ready to employ to sustain their high trajectory growth. He said US research showed clearly that established firms tend to shed jobs over time, when challenges strike, but new companies were always where the high job growth actions was.

“And yet, it is the least understood sector and the least supported, especially by government and the banks,” he said.

“Government cut backs and redundancies in Canberra and in other state governments will result in thousands of white collar workers moving into early retirement or possibly starting new business ventures.

“Retraining for the new business environment will be critical.  But what are the new skills required and do the traditional vocational training facilities have the knowledge, vision and capability to train people to be successful in this new world?” Mr Sheridan asked.

“No,” he said. “Independent contracting will grow. No job security or little job security means less borrowing and spending, and more saving where possible. Banks and other finance providers will wrestle with how to rate this new ‘worker’ and manage risk.

“The nature of a job will shift from full time to permanently part time or ongoing contracts. Job security? Forget it.”

Mr Sheridan warned the biggest impact on Australia will be the drop in income levels “as newly redundant workers move from high paying jobs to low paying jobs, if they can get any jobs at all”.

“The baby boomers are now starting to retire in droves, conserving their resources, downsizing and only spending where it suits them,”  Mr Sheridan said. “Retired people save money and don’t spend as much.

“Less money to spend will impact retail, personal and business services even further.

“As interest rates slowly rise again, the housing market will be hit hard. Mortgage defaults will increase. The overall number of people able to buy property will fall further and the price of housing will drop. There aren’t enough Chinese investors to go around.”

Mr Sheridan is living out his own deductions that the digital world offers the best solutions to combatting and working past its own disruption.

“How can we use the internet and web based services in a more intelligent manner to support individuals in this new environment?” he said. “Not based on the presentation of old world 20th century resources and information but really tailored to the new condition – starting with the customer and working back.”

He said the organisations and business leaders who got their heads around this core issue would thrive in the new digital economy.

“The only room for real job growth is in startups. And value adding,” Mr Sheridan said.

“And for them to have any hope of success they will need support. Net job growth – full time, part time, contract, self employed – will come from startups.

“We have to provide the right resources for startups to have more chance of success – the business intelligence, the mentorship and support, the connections and introductions, the export resources and support, the networks – both real world and virtual world.

“The new disruptive condition and business environment is upon us. It isn’t going away. 2014 will be a shocking year.

“Shocks, but also huge opportunities. The two go hand in glove,” Mr Sheridan said.

“It requires cooperation, collaboration and sharing. It requires the putting down of political dogma and the acceptance that the only viable strategy is shared value.

“The old way doesn’t work.”

www.db-insights.com

  • Turn to Business Acumen’s Digital Disruption feature, pages 18-25.

 ends

 

POSTED MAY 2014

 

Can innovation save manufacturing in Queensland? Innovation in tech procurement will sure help ...

By Rowan Gilmore >> 

THE MEDIA has been quick to explain why the last three big car manufacturers are pulling out of Australia. High costs, poor innovation, manufacturing is dying.

Is there any hope for a renaissance among smaller more agile firms that embrace innovative design and smart manufacturing?  

For example, EM Solutions, an innovative Brisbane-based firm designing and manufacturing broadband microwave radios for telecommunications and satellite links, exports more than 70 percent of its products. 

The company recently released the world’s fastest commercial radio transmitter and receiver, for carrying data traffic 20 times faster than the fastest mobile phone. Intended to carry heavy traffic in mobile or internet networks, the radio recently passed its acceptance tests on a trial between Brookfield and Springfield with flying colours. 

Technological innovation is important to compete in an industry such as telecommunications.

But home grown innovation is a tough sell, with our big telecommunications companies content to purchase equipment from large multinationals to reduce their commercial risk.

Innovation is often not enough. EM Solutions struggles to sell its products to large corporations and government agencies here at home, even while blue-chip customers overseas seek it out.

Why?

If taxpayers are spending $40 billion to lay a broadband network across Australia, why aren’t local innovators thriving on the back of that?

If Australian Defence is spending billions upgrading its telecommunications equipment, why is most imported?

It seems our large corporations don’t like to take risks, to work with SMEs, to nurture home grown innovative firms.

Even when prices are lower.

They work instead with accredited suppliers, other large organisations they think are more trustworthy than small local businesses.

One solution to prevent the further hollowing out of manufacturing in Australia is indeed to innovate; but another is for our big corporations to innovate in their technology procurement, and better manage the risk of working with small business.

The Queensland Government (through its Queensland Health payroll fiasco) has learned that ‘buying big’ did not protect it against failure, and is now adjusting its procurement practices to buy from small businesses that innovate. 

Being more innovative in their own procurement is one trend all Queensland corporations should emulate.

www.emsolutions.com.au

 

Rowan Gilmore is the managing director of EM Solutions Pty Ltd and a former CEO of the Australian Institute for Commercialisation. EM Solutions is also a current member of Queensland Leaders, the organisation helping to foster leading companies in Queensland.

ends

POSTED MAY 24, 2014.

 

Insolvencies up: agribusiness and mining services most at risk

 

AUSTRALIAN business continues to endure unprecedented levels of insolvencies and business liquidations and a legal specialist in the sector is warning that conditions are now heavily impacting agribusiness and mining services companies. 

Law firm Henry Davis York (HDY) is warning that a combination of local and global pressures could see the number of domestic insolvencies increase significantly over the next 12-24 months, particularly in the agribusiness and mining services sectors.

According to Mark Schneider, specialist restructuring and insolvency partner at HDY, international uncertainty and increasing international competition is compounding a generally subdued growth outlook for the Australian market. Investment and business activity is yet to return to pre-2008 levels.

Mr Schneider said the agribusiness sector is under significant pressure, particularly due to recent extreme weather events.

“Agribusinesses in Queensland, NSW and Victoria have struggled recently due to the drought,” Mr Schneider said. “However, before this, particularly in Queensland and northern NSW, there was severe flooding.

“Lately it seems the weather conditions have been one extreme or the other, with enormous impacts on cashflow, forward planning and crop prices for those in the agribusiness sector. When coupled with a high Australian dollar and disrupted markets, for example the live export trade, the agribusiness sector has really taken a beating.

“Financiers in the sector will want to review their customers’ positions to protect their exposures and farmers may need to keep in close contact with their financiers to retain their support in these tough times.”

Mr Schneider also drew attention to the mining services sector, which has been held out as propping up the Australian economy for some time now, but is also under increasing pressure.

“A number of mines and associated mining projects are moving from the construction phase to the operational phase and others have simply been mothballed completely as the big miners look to cut costs,” he said.

“This sector has also been affected by fluctuating commodity prices and exchange rates, and now the consensus view seems to be that growth in this sector is slowing.

“In the main, banks with large exposures in the mining services sector have been very considered in working with their customers to address the challenges they face. However the changes in the mining services industry have wide-reaching effects.

“Some businesses have had to deal with a yellow goods market where demand was once so high that second hand equipment was selling for more than brand new equipment, but where there is now no demand and an over-abundant supply of expensive parked-up equipment.

“In addition, there are a host of other businesses in mining areas that are affected by the decrease in activity in this sector, notably accommodation providers and other suppliers to the mines,” Mr Schneider said. 

Mr Schneider said a key trend to watch was the direction of investment into distressed assets.

“It is interesting that there is certainly available capital out there, both domestically and internationally, but there has not been a rush of investment into distressed assets in Australia,” he said.

“This could be for a range of reasons, including because of the perceived value of particular assets, regulatory and structural issues within industries and the relative number of opportunities in other depressed markets, for example, the US, UK and Europe.

“There remains much uncertainty about the global economy and in the meantime businesses in Australia will continue to face the pressures of subdued economic growth and increased international competition.”

HDY specialises in the banking, financial services and government sectors and focuses on ‘tier-one’ insolvency and restructuring expertise. Its latest research into Australian insolvency risks has thrown up the most vulnerable sectors as agribusiness and mining services.

According to HDY, the top five sectors at risk of insolvency at present are:

Agribusiness – because extreme weather conditions have caused significant financial pressures in this sector.

Mining services – with mining projects transitioning from development to operational phases and some projects being scrapped altogether, this has significantly reduced demand and the effects on associated businesses could see some suppliers facing difficulties in the next 12 months.

Manufacturing – the continuing strong Australian dollar and generally high cost of business operations in Australia have led major car manufacturers to announce their departure from the market.  This will have strong flow-on effects to manufacturing suppliers in the auto industry who need to urgently re-tool or restructure their businesses.

Retail – this sector is continually under pressure from online competitors and strongly-backed international retailers entering the domestic market.

Aviation – there are smaller airlines beginning to collapse (such as Brindabella Airlines) matched with continuing speculation around Federal Government intervention for larger players, such as Qantas.

www.hdy.com.au

ends

 

 

Queensland floods cause major damage to agribusiness

The Queensland Farmers Federation (QFF) is still assessing the true damage to the state's agriculture industries from what is now the third major flood in two years for many farmers. 

However for some farmers not directly in the path of floodwaters or extreme rainfall, the storms have broken an intense period of unseasonal drought. But even they are impacted by damage to road and telecommunications infrastructure.

The federation and its member industries have confirmed that rainfall from ex-Tropical Cyclone Oswald has produced flooding comparable to both late 2010 and early 2011.

A QFF spokesman said this placed "serious and significant financial and emotional strain on many farmers, and government support will be required to assist in many instances". In the horticultural sector, QFF is already estimating losses of more than $100 million.

QFF members have reported varying impacts between regions and industries, but generally farms in the path of the flood have faced serious damage to crops and livestock as well as agribusiness and personal infrastructure.

The impact was worsened by the fact that the intense rain and wind squalls followed an unseasonal dry spell from which farmers were desperate for relief. In fact, parts of Queensland are still badly in need of rain.

On a positive note, some farmers not directly under the very high rainfall bands of more than 150mm are now reportedly in a more reasonable production position than they were earlier in the month.

In regions of high rainfall and swollen creeks and rivers, there have been major impacts on crops and livestock - in fact just about all major coastal rivers and catchments along the coast from Central Queensland (Rockhampton and Gladstone), south to the border fall into this category.

Farming regions adjacent inland have also been badly affected, including major horticultural and cotton producing regions.

 

DIRECT IMPACTS

Some intensive animal industries including piggeries and dairies have been cut off and remain isolated by floodwaters. Industry is working to resolve these high risk cases as quickly as possible.

It has been estimated the impact on the horticulture industry could be as high as $100 million.

Major transport disruptions along the Bruce Highway and telecommunications shortages have also caused significant problems for the industry, even for those who experienced lesser direct on farm impacts.

Severe losses have been incurred around the major horticultural region of Bundaberg, and upstream on the Burnett River at the citrus production region at Gayndah and Mundubbera.

The cotton industry has suffered serious damage in some regions, with further flooding yet to come as the flood peak makes its way down the Condamine River.

This peak has already caused major damage on the Darling Downs and is currently comparable to the flood heights of 2010/2011 in places.

The extent of damage to these crops will only become apparent a day or two after the water makes its way down the river and then recedes.

In Central Queensland, the Biloela region has suffered major crop and infrastructure damage on the back of a significant loss in the 2010/2011 floods.

Growers near Murgon have suffered major losses also along with previous flood losses and yield and quality issues last season with rainfall.

There are also reports of some significant damage in the Border Rivers area, particularly from flooding from the Weir River.

With a wide geographic distribution, the cane industry has suffered varying amounts of damage along the coast. It has been hit with flooding in major growing regions, with particularly acute flooding around Bundaberg and Maryborough and the surrounding mill areas.

The full extent of the losses are being assessed and will be known more accurately as the floodwaters recede. Torrential flood waters have caused major damage to infrastructure and crops, and recently planted crops are particularly vulnerable to losses from flooding.

A number of dairies have lost electricity and road access, creating difficulties milking cows. Properties that have been without road access or faced other issues have been forced to discard milk.

Some farms could still face isolation and electricity issues into next week. Infrastructure has been damaged and farms will be facing significant losses. It is estimated that about 50 percent of the Queensland industry is impacted, at a cost of about $40 million.

John Coward of Pork Queensland and also Australia Pork Limited and QFF have been assisting the pork industry with the response.

Mr Coward said about 50 percent of the Queensland pork industry has been impacted. Two piggeries have been severely impacted, with many others facing infrastructure, transport, power and water issues.

One major piggery at Mundubbera lost about 200 sows and approximately 2500 weaner pigs and a second property lost about 95 percent of their herd, with only 12 sows out of 200 remaining and 180 grower pigs out of 2500.

Production nurseries have been impacted on by this extraordinary weather from Gladstone to the Tweed River including areas in the Burnett, Lockyer Valley, Toowoomba and Granite Belt regions with complete inundation of businesses occurring in Bundaberg and along the Logan/Albert River systems. 

The cost of this event is being felt by industry in crop, infrastructure and equipment damage and losses, inaccessible markets and/or lost markets, staff retention costs and in the general clean-up, all contributing to significant pressures on cash flow and business viability. 

Nursery and Garden Industry Queensland (NGIQ) estimates the cost of this event will run to the many millions of dollars as industry starts to recover. 

Many farms in the path of the flood have faced direct infrastructure or household damage or both.

 

ASSISTANCE

Category B disaster assistance under the Natural Disaster Relief and Recovery Arrangements (NDRRA) was enacted for a number of local government areas. This scheme offers concessional loans and freight subsidies for primary producers and small businesses.

Given the extent of the disaster, industries are also working with the government to enact Category C measures, as was the case with the previous flood of 2010/2011. Agriculture Minister John McVeigh said he was looking at Category C measures for the worst-affected shires.

Category B assistance is now in place for:

  • Banana Shire Council
  • Brisbane City Council
  • Bundaberg Regional Council
  • Fraser Coast Regional Council
  • Gladstone Regional Council
  • Gold Coast City Council
  • Gympie Regional Council
  • Ipswich Regional Council
  • Lockyer Valley Regional Council
  • Logan City Council
  • Moreton Bay Regional Council
  • North Burnett Regional Council
  • Redland City Council
  • Rockhampton Regional Council
  • Scenic Rim Regional Council
  • Somerset Regional Council
  • South Burnett Regional Council
  • Southern Downs Regional Council
  • Sunshine Coast Regional Council
  • Toowoomba Regional Council
  • Western Downs Regional Council.

Mr McVeigh said he may seek to extend assistance to other shires as the full picture of the flood damage emerged.

http://www.qff.org.au/

Farmers seeking assistance:http://www.daff.qld.gov.au/ or call 132 523.

ends

Queensland businesses still affected by 2011 natural disasters reveal bank, insurer ‘let-downs'

Queensland's forgotten businesses, still dealing with the aftermath of the 2011 floods, may have initially been helped by their banks and insurers but now in many cases find themselves let down by insurance and ‘surcharged' by their banks.

Image
The water may have subsided, but last year's Queenslsand floods are still hurting businesses.

 

Business Acumen research has found many cases of insurers providing little information for many months before delivering ‘the bad news'. One business owner felt it was a tactic by his insurer to let the issue "go out of the spotlight" so this common practice received no media coverage.

Several businesses that have been denied assessments so far, a year on, could still go to the wall. But business owners are reticent to go public while the issue is still in negotiation as they fear a backlash from their insurers and banks, with loans usually needing to be secured by business insurance.

Several business owners have found that selling assets to reduce monthly outgoings has been exploited by their banks insisting on early payout fees on leases - and in most cases this has amounted to payments of thousands of dollars.

"You do the right thing, at their advice, and sell vehicles and things to reduce outgoings -- and you get slugged by the bank over and above," said one business owner who did not want to be identified for fear of recrimination. His early payout figure on vehicle sales totalled more than $10,000.  

"It stinks," he said. "We are forgotten now."

Chamber of Commerce and Industry Queensland (CCIQ) research has shown that many Queensland businesses are still significantly impacted by the natural disasters of early 2011 - and many have been let down by their insurers after very lengthy periods of assessment.

In the CCIQ report, Six Months on from Queensland's Natural Disasters, CCIQ indicated that three out of five businesses which made an insurance claim were still waiting for the claim to be settled. CCIQ's new  ‘one-year-on' analysis revealed that as time went on more businesses discovered that they had been more greatly affected than they had initially anticipated.

The results confirm the concerns of a survey in February last year by CCIQ that warned job losses from the floods in the longer term would be significant and many businesses would struggle to recover without sufficient support from authorities and insurers.

CCIQ's initial survey in late January 2011 found one in five businesses in Queensland had to close as a result of the floods due to full or partial water inundation, loss of power or being cut off from their business. The average number of days businesses were forced to close was eight and the average number of days before a business returned to normal operations was 31 days.

The loss to property including plant and equipment, stock, buildings and motor vehicles to those businesses directly affected by the floods was on average $589,000. In the months following the natural disasters, businesses were experiencing difficulty finding out from their insurers where they stood in terms of claims and subsequent results have shown insurers have taken many months to deliver new - especially bad news.

CCIQ president David Goodwin said one of the key findings following the natural disasters was that businesses did not have to be directly impacted by the floods to have experienced a significant and serious financial impact. Furthermore, a noticeable trend was that as time progressed, more businesses came to the realisation that the indirect impact of the floods on revenue had been much greater than first anticipated.

There are also a number of outstanding issues that continue to impact on many businesses, particularly unsettled insurance claims.

For many businesses, the indefinite delay in claim payouts has effectively resulted in being non-insured in terms of ensuring business viability.

Overwhelmingly businesses have also indicated a need for a standard definition of flood, insurance policies that are clearly and plainly written for ease of understanding and the need for earlier payouts with the introduction of a fixed period for assessing claims.

Queensland businesses generally gave positive feedback to CCIQ on the assistance provided by the State Government. The primary assistance measures accessed by businesses were the $25,000 Special Disaster Assistance Grant and deferral of both State and Federal Government tax liabilities.

However there were a large number of both directly and indirectly impacted businesses who are critical of their ineligibility to access any government assistance.

CCIQ stressed the importance of the State Government learning from their experiences to ensure a quicker recovery for businesses and the economy in the event of future natural disasters.

BDO partner Marita Corbett said that all Queensland businesses needed to proactively review their insurance, financing and operational systems.

"For many businesses waiting more than six months for an insurance claim to be settled could be the last straw," Ms Corbett said. "The aftermath of the floods and Cyclone Yasi demonstrated that many Queensland businesses were unclear as to what aspects of their business were covered by insurance.

"Business owners need a clear understanding of their insurance cover, both for physical assets and any loss of profits or business interruption. If you are not 100 percent sure, now is the time to contact your insurance broker or insurer.  Don't wait until you have to make a claim."

According to Ms Corbett, business recovery plans should be reviewed on a continual basis to reflect ongoing changes in internal and external environments.

"Many businesses reviewed their business recovery plans directly after the floods but probably haven't looked at them since," she said. "Simple elements can bring down a plan if not continually updated and tested. 

"Businesses need to update their database of contact numbers of key personnel, particularly in a mobile workforce. 

"Do they know the location of all their critical contracts for services that may be relied upon during the disaster and recovery phases?

"Testing strategies in simulated environments can provide a valuable insight into how they may perform in a real-life situation.

"There is a cost involved in testing your business recovery plan. But what might be the cost to a business if its recovery plan remains untested and then fails during a time of disaster?"

* More on this issue in the February edition of Business Acumen magazine. Subscriptions: www.businessacumen.biz

http://www.cciq.com.au/

http://www.bdo.com.au/

ends

Australia must maximise five ‘super-growth' sectors worth $250b - Deloitte

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.

Image
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. 

Image
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/

 

ends

 

Federal Budget does not grow in agribusiness estimations - farmers federation

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.

Image
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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