A very significant new report was released last week on the Australian National Outlook. In this article, I summarise the report’s discussion of the key challenges and policy choices that Australia faces, which will affect our future over the next fifty years.
As we are repeatedly reminded, unlike other countries, Australia has enjoyed 27 years of uninterrupted economic growth. Inequality has risen, but less than in most other developed countries, and Australians’ job opportunities and living standards have improved over the last four decades.
Furthermore, the recent election was won by the Coalition with almost no policies, suggesting that this apparent success may have made many Australians very complacent and/or resistant to change.
But the strong message from this new report on Australia’s National Outlook is that “Some concerning trends are emerging that mean we need to think differently if we are going to ensure, and plan, towards a bright and prosperous future”.
The report finds that: “Australia is at a crossroads – stride towards a more positive future outlook filled with growth, or face a slow decline.” “The world is changing and Australia will need to adapt much more rapidly than in the past if it is to keep up.”
- New technologies are transforming industries and creating new ones
- Asia’s continued rise is shifting both the geopolitical and economic landscape
- Environmental impacts and biodiversity loss, with climate change are seen as a significant economic, environmental and social issue for Australia and the world
- Inequality, stagnant wage growth, and high house price increases have left many Australians feeling left behind
- A growing and ageing population is placing greater stress on Australia’s cities, infrastructure and government services, and there is some evidence that Australia’s educational performance is falling
- Trust in both public and private institutions has fallen sharply.
While of course it is impossible to predict the exact future over the next fifty years, the report uses two contrasting scenarios to illustrate the nature of the key choices that Australia is facing if it is to secure its long-term prosperity. These scenarios reflect the outcome of a highly collaborative and interactive approach that combined the expertise of more than 50 of Australia’s business, academic and non-profit leaders with quantitative modelling and qualitative analysis by the CSIRO.
The first scenario, Outlook Vision, depicts what could be possible if Australia can achieve its full potential, while the second scenario, Slow Decline, depicts what happens if Australia fails to adequately address the above challenges, leading to poorer outcomes in multiple dimensions.
A comparison of the two scenarios shows that in the positive Outlook Vision:
- GDP per capita could be as much as 36% higher, while ensuring that growth is inclusive and environmentally sustainable.
- Greenhouse gas emissions could be reduced to zero by 2050 while still maintaining strong economic growth and energy affordability.
- Australia’s major cities would increase density, with less urban sprawl, to handle a larger population while still retaining high liveability and providing better access to jobs and services.
Both fractious and cooperative global contexts are considered in the report, which finds that strong global cooperation on trade and climate change lead to the best environmental outcomes for Australia, without significantly affecting economic growth. But Australia needs to be adaptable and prepared to deal with the full range of possible global contexts.
The important point about the Outlook Vision is that it represents what is possible. However, it will not be easy to achieve.
The report argues that “starting today” achievement of this positive vision will require major shifts in:
- Industry composition to enable a productive, inclusive and resilient economy, with new strengths in both the domestic and export sectors. This will require
- Increase in the adoption of technology,
- Investment in skills to ensure a globally competitive workforce that is prepared for the technology-enabled jobs of the future,
- The development of export-facing industries that build competitive advantage in global markets and value chains.
Urban development to enable well-connected, affordable cities that offer more equal access to quality jobs, lifestyle amenities, education and other services. This will require:
- Higher-density, multicentre and well-connected capital cities to reduce urban sprawl and congestion
- The creation of mixed land use zones with diverse high-quality housing options to bring people closer to jobs, services and amenities,
- Investment in transport infrastructure, including mass-transit, autonomous vehicles and active transit, such as walking and cycling.
Energy to manage Australia’s transition to a reliable, affordable, low-emissions energy economy that builds on Australia’s existing sources of comparative advantage. This will involve:
- Managing the transition to renewable sources of electricity, which will be driven by declining technology costs for generation, storage and grid support,
- Improving energy productivity using available technologies to reduce household and industrial energy use,
- Development of low-emission energy exports, such as hydrogen and high-voltage direct current power.
Land use to create a profitable and sustainable mosaic of food, fibre and fuel production, carbon sequestration and biodiversity. This will require:
- Investment in food and fibre productivity by harnessing digital and genomic technology, as well as using natural assets more efficiently,
- Participation in new agricultural and environmental markets, such as carbon forestry, to capitalise on Australia’s unique opportunities in global carbon markets,
- Maintaining, restoring and investing in biodiversity and ecosystem health, which will be necessary to achieve increased productivity.
Culture to encourage more engagement, curiosity, collaboration and solutions, which should be supported by inclusive civic and political institutions. This will require:
- Rebuilding trust and respect in Australia’s political, business and social institutions,
- Encouragement of a healthy culture of risk taking, curiosity and an acceptance of fear of failure to support entrepreneurship and innovation,
- Recognition and inclusion of social and environmental outcomes in decision-making processes.
Of course, the future is uncertain, and it would be easy to dismiss these scenarios of what Australia will be like in fifty years’ time. But that is to miss the point.
The Australian political debate is notorious for its focus on the short-term – often the very short-term. Even policies that take time to take effect, such as infrastructure investment, are too often determined by short-term political considerations, without proper assessment of their long-term costs and benefits.
This report on the Australian National Outlook instead represents an important attempt to refocus debate on the policy shifts that will most affect Australians’ well-being and the quality of our lives in the long-term.
Certainly, some people will see themselves as immediately disadvantaged by some of the policy shifts. However, it is important to remember that the many of the challenges identified, such as technological and environmental changes, and population growth and ageing, are happening anyway. What matter is the quality of our response, and how people are assisted to adjust to change.
As the two scenarios in the report show, if we do nothing and continue with business as usual there will be economic growth, but it will come at a cost to many other aspects of our wellbeing. By contrast, I think this report convincingly shows why we should all be better off if Australia seizes the opportunities that are presenting themselves, and makes the recommended policy shifts over time.
Nor should this report come as a shock to most people who have an interest in public policy. What is important to remember is how the different elements of this agenda interact and reinforce each other to achieve what would undoubtedly be a better future for Australia.
In sum, if we want to ensure Australia’s future prosperity, well-being and social cohesion we need to make these policy shifts. As Ken Henry and David Thodey, the joint Chairs of the report group, conclude:
“Put simply, we can no longer afford to ignore what we know is coming.”
Michael Keating is a former Head of the Departments of Prime Minister & Cabinet, Finance, and Employment & Industrial Relations. He is presently a Visiting Fellow at the Australian National University.