Australia's Competitiveness E-Book

Michael J. Enright

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 531

Veröffentlichungsjahr: 2013

Beschreibung

In this in-depth overview of Australia's economy, Michael Enright and Richard Petty -- leading scholars on international competition--look at the data behind the news reports to offer a complete view of Australia's stable and wealthy economy. The book compares Australia with other similarly sized OECD economies as well as other Asia-Pacific economies and looks at fifteen international sources of data on competitiveness. It features a large-scale survey on Australian companies and offers deep insight on the country's future in terms of economics and economic policy. Revealing an honest assessment of Australia's true position in the world, the book looks at how Australian businesses see themselves and offers policy positions for government and firms to make the most of Australia's unique global economic position. * Backed by CPA Australia, one of the world's largest accounting bodies * Written by two global authorities on economic competitiveness * Captures the thinking of more than 6,000 business leaders both within and outside of Australia * Explains how Australia has weathered the global recession and looks at Australia's relationship with China For business leaders and policy makers in need of an in-depth look at the current and future state of Australia's economy, this book offers valuable and comprehensive information.

Leseprobe

Contents

Foreword

Introduction

Acknowledgments

About the Authors

Chapter 1: Australia’s Economic Performance

Aggregate Performance

Productivity

Global Trends

Looking Ahead

Notes

Chapter 2: International Assessments of Australia’s Competitiveness

Overall Competitiveness

Ease of Doing Business

Knowledge and Knowledge Economy

Economic Freedom

City Competitiveness

City Costs

Human Development and Quality of Living

Corruption and Corporate Governance

International Perspectives on Australia’s Competitiveness

Areas for Analysis and Action

Pushing the Envelope

Notes

Chapter 3: Competitiveness in the Real World

A Model of Competitiveness: The Five Level Competitiveness Framework™

Surveying Competitiveness: The Importance-Performance Competitiveness Analysis™ Approach

Moving Ahead

Notes

Chapter 4: Drivers of Competitiveness in Australia

Firm and Industry Drivers

Meso or Cluster-Level Drivers

Macro or National-Level Drivers

Meta or Supranational-Level Drivers

Competitiveness Drivers in Perspective

Notes

Chapter 5: Workforce, Infrastructure, and Natural Resources

Workforce

Infrastructure

Natural Resources

Input Issues in Perspective

Notes

Chapter 6: Economic Policy, Regulation, and Tax

Economic Policy

Regulation

Tax and Tax Policy

Policy Areas in Perspective

Notes

Chapter 7: The Knowledge Economy, the Asia-Pacific Region, and the Role of Cities

Australia and the Knowledge-Innovation Economy

The Rise of the Asia-Pacific Region

Competitiveness and Australia’s Cities

The Knowledge Economy, Asia, and Cities in Perspective

Notes

Chapter 8: Scenarios for Australia’s Economic and Business Future

Key Trends

Trends in Competitiveness

Some Specific Scenarios for Australia’s Economic and Business Future

The Scenarios in Perspective

Notes

Chapter 9: Implications for Australia

Global Implications

Australian Implications

Australia and the Drivers of Competitiveness

Conclusions

Notes

Index

Cover image: © derrrek/iStockphoto

Cover design: Wiley

Copyright © 2013 by CPA Australia.

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Foreword

Australia’s economy has performed very well on most measures over the last few decades when compared to the vast majority of Organisation for Economic Co-operation and Development (OECD) nations. This has been particularly true in recent years as demand for Australia’s resources has generated wealth that has helped shield Australia from the worst of the Global Financial Crisis. However, Australia’s economic future appears less assured and less certain. While some sectors, like mining, have boomed, others have struggled with higher costs, an appreciating currency, and tougher international competition in tighter world markets. Productivity growth has slowed and economic imbalances have resulted in a multi-speed economy. While impressive when compared to other OECD nations, Australia’s growth rates have trailed behind rapidly growing economies in Asia.

The imbalances and growing uncertainty as to how long the resources boom will continue have fuelled debate over what should be done to make Australia more competitive. However, this debate is often unfocussed and has resulted in no real answers as to the best way forward. It has lacked support from sufficiently detailed analysis and has been politically charged in an unhelpful way. The result appears to be an environment where good suggestions for change and reform to policies are not implemented, and where business often views government as the source of both problems and answers, rather than focusing on what business itself can do to push the economy forward.

CPA Australia believes that a better understanding of Australia’s international competitiveness is vital to addressing the nation’s present and future challenges in ways that can enhance Australia’s productivity and prosperity. Without such an understanding, policies are unlikely to focus on what is important and strategies are unlikely to leverage Australia’s advantages and mitigate its disadvantages sufficiently to ensure business success at home and abroad.

CPA Australia’s growing concern about Australia’s international competitiveness, both now and in the future, and the lack of sufficient political and public discourse on this all-important subject, have led us to collaborate with one of the world’s leading experts on competitiveness in a year-long investigation of Australia’s economy that has resulted in this book. CPA Australia, as a leading professional body with wide membership across the private and public sectors, views the competitiveness project and this book as important parts of its programme of thought leadership and engagement in the debates that are of critical interest to its members and Australian society as a whole.

The investigation assessed how the world sees Australia, but also how we in Australia see ourselves. A key element of the research was a survey of business decision-makers both inside and outside Australia on Australia’s competitiveness. With more than 6,000 responses, we understand that this is the largest ever survey of Australia’s competitiveness. These responses allow for an analysis of the competitiveness of a wide range of Australian industries spanning the whole economy. In contrast, 68 Australian respondents largely shaped Australia’s ratings in the World Economic Forum’s 2012 Global Competitiveness Report.

The present book is particularly important in light of the globalisation that allows businesses to place each activity in the best location, the rise of information and communication technologies that allow businesses to penetrate remote markets, and the emergence of what many call the Asian Century. For Australia to succeed going forward, it will need to leverage global trends, look beyond its traditional benchmarks, integrate more closely with the rest of the Asia-Pacific region, learn to compete against new competitors, and improve its productivity by improving its competitiveness. This book provides insights into how this can be done.

Australia is presently in a position of relative strength in many dimensions. While this should make it easier for Australia to take positive action, it also makes it easier to fall victim to complacency. The reality is that Australia cannot rely on its luck indefinitely. It must go from being the “lucky country” to being the “competitive country.” We need a vision for Australia and a long-term reform agenda to achieve that vision. In this book, Michael Enright and Richard Petty have made an important contribution to outlining such a vision and agenda. Their message to those of us who live in Australia is clear. Our future prosperity is in our hands; it is time for action.

CPA Australia has more than 144,000 members in 127 countries. Most have significant business, professional, or personal ties to Australia, and a strong interest in the nation’s continued prosperity. Many are leaders in their respective fields, with influence in their organisations, industries, and communities. We hope that they and others find this book helpful as they strive to make Australia a more productive, competitive, and attractive place to live and work.

John Cahill FCPA

CPA Australia President

Alex Malley FCPA

CPA Australia CEO

Introduction

When the Australian historian Donald Horne first coined the phrase “lucky country” to describe Australia in 1964, it was meant to be ironic and pejorative, as part of the description, “Australia is a lucky country, run by second-rate people who share its luck.”1 According to Horne, Australia at the time benefitted from resource wealth and from a system of governance that it had inherited from its colonial past, but had not yet moved beyond its inheritance to chart a creative, dynamic future of its own making. If we fast forward to today, Australia has made enormous progress. In terms of standards of living, Australia has left its formal colonial masters and many other OECD nations far behind. Australia has become much more open to the rest of the world, and Australian society has been transformed. Australia still exports resources, but it also exports higher education and other knowledge-intensive goods and services. Even so, there are concerns that Australia has not used its resources as productively as it should, and that talented Australians continue to emigrate to try their luck elsewhere in alarming numbers. There is also a nagging concern that Horne’s assessment still has more truth to it today than many Australians would like to be the case.

At the same time, the Global Financial Crisis, the rise of Asian economies, modern information and communication technologies, the globalisation of production systems, and increasing demand by society for equity and sustainability have made markets tighter, competition tougher, and managing and operating economies and businesses more difficult than ever before. In this world, it is becoming clearer and clearer that it is not possible to borrow or inherit a high standard of living indefinitely. Instead, such standards of living must be earned by improving competitiveness. This is why competitiveness, the ability of a nation or region to succeed in international markets, to achieve high levels of productivity, to create an attractive business environment, and ultimately to provide a high standard of living to its residents, is a pre-eminent issue in many if not most nations. Extensive work undertaken over the last two decades has shown that competitiveness is systemic, involving the interaction of drivers that act at a global or supranational level, national level, cluster (group of interlinked industries) level, industry level, and firm level. Recently, this work has given us new methods and tools to understand and assess competitiveness, as well as ways to chart a course to improve competitiveness in industries and in nations.

This book is the result of a year-long investigation of Australia’s competitiveness sponsored by CPA Australia and carried out by Professor Michael Enright in conjunction with CPA Australia. The project set out to understand Australia’s underlying competitive advantages and disadvantages and to make suggestions that would push the economic debate in Australia forward. Professor Enright was one of the founders of the modern school of competitiveness analysis while at the Harvard Business School in the 1980s and 1990s, and has been based in Asia since 1996. The present project has therefore benefitted from 25 years of experience undertaking major competitiveness studies in more than 20 nations, and has used tools and methodologies that have been refined over more than two decades. Some of these methods and tools are published here for the first time.

The Introduction sets the scene for the book by describing the year-long research project on Australia’s competitiveness carried out by Professor Michael Enright and CPA Australia. While Australia’s overall economic performance has been strong, not all sectors of the economy or society have benefitted to the same extent. There is also a concern that the resource boom of recent years has masked the impact of poor productivity performance. There is also a view that while several trends in the global economy may work to Australia’s benefit, this will only be the case if Australia recognises and acts on its potential to a greater extent than has been the case to date.

Chapter 1 indicates that the starting point for the analysis of any economy should be an understanding of its past and present performance. It is the present and past performance that needs to be explained by the analysis and that provides the baseline that allows us to understand what Australia does well and not so well, and what Australia needs to do to improve. Australia has generally outperformed other OECD nations over the last decade while maintaining a prudent fiscal and monetary stance, a position that provides for greater flexibility than most OECD nations when it comes to dealing with volatility in the global economy. However, there are issues concerning Australia’s reportedly poor productivity performance and the impact of the run-up in resource exports in recent years. The chapter also provides background on the forces and trends that are shaping the global economy and provides a context for Australia’s economic future. The upshot is that while Australia’s economy has performed well over the last several years, there are concerns and debates about its economic future that are best addressed through a detailed understanding of Australia’s competitiveness.

Competitiveness has emerged as a pre-eminent issue in many major economies around the world. Chapter 2 reports assessments of Australia from international sources that focus on international competitiveness and related matters, such as ease of doing business, economic freedom, prices and costs, the knowledge economy, human development, quality of life, transparency, and corporate governance. The major sources are identified, their main findings with respect to Australia summarised, and implications for Australia that come out of the sources provided. Results from all the sources are used to build a detailed picture of Australia’s advantages and disadvantages and to identify issues that require further analysis and action. Throughout, Australia is compared with two sets of countries, a comparison group of mostly OECD countries (the United States, Canada, Denmark, Finland, Ireland, Israel, Netherlands, New Zealand, Norway, Sweden, and Switzerland) along with three Latin American countries that are competitors to Australia in some sectors (Argentina, Brazil, and Chile), and a group of Asia-Pacific economies (China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Taiwan, Thailand, and Vietnam). The idea is to capture how Australia stacks up against similar economies and against economies that are increasingly important as markets and competitors.

The sources that assess economies as a whole that are described in Chapter 2 are helpful, but the reality is that nations, regions, and companies compete in specific industries versus specific competitors to serve specific customers. Aggregate measures cannot tell us what drives a nation’s competitiveness in individual industries. Chapter 3 introduces a framework to assess competitiveness in specific industries across the economy and the results of a detailed survey on Australian competitiveness based on this framework. The chapter uses results from individual Australian industries: the iron ore, wine, automotive, and higher education industries, to show the shortcomings of the aggregate assessments of competitiveness and the value of the present approach. The chapter also shows how the approach introduced here can be used to develop specific strategies to improve the competitiveness of individual industries and of economies.

Chapter 4 uses the methods and survey introduced in Chapter 3 to examine the drivers of competitiveness across the entire Australian economy. Survey responses from hundreds of individual industries were aggregated up to 32 sectors that cover the entire economy. The results show clear differences in importance and in Australia’s performance in firm-level drivers, industry-level drivers, cluster-level drivers, national-level drivers, and supranational-level drivers of competitiveness. They show the importance of institutions, financial systems, economic conditions, infrastructure, workforce, tax systems, and regulatory systems to competitiveness in Australia’s industries. They also show Australia’s strength in institutions, society, macroeconomy, and financial systems, as well as concerns about taxation, regulation, some workforce-related drivers, and infrastructure. In addition, from a methodological standpoint, the results show how the methods employed can generate a comprehensive picture of the competitiveness of the nation’s economy and can allow analysts and governments to home in on the drivers that are important to the key industries in an economy, in order to identify which advantages can be leveraged and which disadvantages need to be overcome.

The first four chapters show that there are a number of key issues that cut across Australia’s economy that must be understood, and dealt with, in order to improve Australia’s competitiveness. Chapter 5 focuses on an assessment of Australia’s workforce, infrastructure, and natural resources. The prosperity of any economy depends on the effectiveness and productivity of its workforce. As a nation with a small population in a huge land mass, and one that is distant from many of the world’s traditional economic centres, Australia has distinctive infrastructure challenges that it has yet to master. While Australia might be the lucky country when it comes to natural resources, luck will only get Australia so far, particularly if resource abundance is not managed properly. Australia has high levels of education participation, and achievement, but there are mismatches between the education and training base in the country and the needs of business, and counterproductive workplace relations sometimes prevent Australia from fully realising its advantages.

Chapter 6 outlines some of the main features of Australia’s economic policy, regulation, and tax policy, as they influence Australia’s competitiveness. Economic policy—in particular fiscal policy, monetary policy, competition policy, exchange rate policy, industrial support policy, trade policy, and investment policy—influence the position of Australian companies, industries, and the economy as a whole. Australia generally gets high marks on economic policy, but there are fears that politics might eventually get in the way of good policy. Regulation on entry, product standards, safety standards, the workplace, the environment, and numerous other areas provide the rules within which businesses can operate. Australia’s regulatory system is rated highly by international standards, but a cumbersome, redundant, and sometimes conflicting regulatory regime leaves many frustrated. A nation’s tax system influences its competitiveness through the number and type of taxes, tax rates, tax thresholds, compliance costs, and the way in which taxes are collected. While Australia’s tax system appears to have advantages versus several OECD nations, the efficiency of the system has been questioned, and emerging competitors in Asia are seen as having more favourable systems. The tax system also appears to provide incentives for some talented Australians to emigrate to other destinations.

Chapter 7 looks at the opportunities and challenges for Australia associated with the emergence of the knowledge economy, the rise of the economies of the Asia-Pacific region, and the growing importance of cities as engines of economic development and competitiveness. While the knowledge economy—in which value is generated through the intellectual property that is embedded in high-value goods and services—has the potential of freeing Australian companies from the tyranny of distance, the reality is that relatively few Australian companies seem to be able to sell knowledge-intensive products and services globally. The rise of the Asia-Pacific region would appear to be a huge advantage for Australia, but there is a question of whether Australia and Australian companies have the knowledge, connections, and drive to penetrate these markets in the face of cultural differences and tough competition from both inside and outside the region. Cities are becoming increasingly important as engines of development and competitiveness, as they generate new knowledge, connect countries to the rest of the world, and leverage national advantages into international markets. However, Australia’s cities are too spread out, do not function in a particularly efficient fashion, and are less plugged into regional and global information, financial, and managerial flows than they need to be for Australia to maximise its competitiveness.

Australia’s future is not pre-ordained, but instead will be influenced by both external forces and internal strategies. Chapter 8 maps out several scenarios for Australia’s future depending on how it manages the opportunities and challenges associated with globalisation, increased use of ICT, the rise of the Asia-Pacific, increased emphasis on sustainability, potential resource constraints, the increase in importance of quality of life in influencing competitiveness, and a range of other trends. The chapter identifies four pairs of scenarios, half positive, half negative, depending on the outcomes of the interaction of external forces and internal strategies. Australia’s resource position could allow it to move From Lucky Country to Competitive Country or could create a limited One-Legged Stool economy. Globalisation and the flat world, in Thomas J. Friedman’s phrase, could result in Australia as Flattenor in the Flat World or Australia as Flattenee in the Flat World. The rise of the Asia-Pacific region could result in Australia Riding Tigers, Dragons, and Elephants or being Eaten by Tigers, Burned by Dragons, and Trampled by Elephants. Trends in globalisation, information and communication technology (ICT), the knowledge economy, sustainability, and quality of life issues could result in a situation in which The World Turns toward Australia or one in which The World Turns away from Australia. Perhaps the most interesting feature of the scenarios, positive and negative, is that they are all plausible, and the choices that Australia makes will go a long way toward determining which outcomes occur.

Chapter 9 outlines the implications that come out the earlier chapters. There are global implications involving the challenges created by the Global Financial Crisis, the emergence of new competitors, the increasing ability of companies to place individual corporate activities in different locations, and increasing interconnections around the world that are combining to make the competitiveness of nations and regions more important than ever before. There are numerous implications that are specific to Australia. Australia’s recent economic performance gives the nation the opportunity to act from a position of strength, but raises the potential for complacency. The rise of Asia-Pacific economies will provide Australia a unique opportunity, but only if Australia and Australian companies can outcompete others to serve regional markets and take advantages of regional resources. Modern ICT can allow Australian businesses to penetrate world markets like never before, or could allow foreign businesses to penetrate Australia like never before, or both. The increasing importance of sustainability, resource constraints, and quality of life in driving competitiveness can provide additional advantages for Australia provided the country can leverage these drivers appropriately.

There are many implications for specific drivers of competitiveness. Chapter 9 highlights many of Australia’s significant advantages and disadvantages and makes suggestions as to how to leverage the advantages and minimise or overcome the disadvantages in order to improve the country’s competitiveness. It shows that Australia has been a lucky country in many ways, but that Australians have made a good deal of that luck themselves. The challenge is how to move from being the lucky country to being the competitive country. What is daunting, but exciting, is that while Australia is certainly subject to global forces, global markets, and global competition, its economic fate is to a great extent in its own hands.

We hope that policy makers, business people, and business/economic analysts in Australia find the tools, conclusions, and suggestions in this book useful as they move forward the competitiveness agenda in Australia. We also hope that policy makers, business people, and business/economic analysts elsewhere learn from the Australian experience as well as from the approaches to competitiveness suggested in this volume.

Note

1. Donald Horne, The Lucky Country: Australia in the Sixties (Melbourne: Penguin Books, 1964).

Acknowledgments

First and foremost, we wish to thank CPA Australia for sponsoring the project upon which this book is based. In particular, we wish to thank CEO Alex Malley, President and Chairman John Cahill, and Past-President and Chairman Low Weng Keong for their unwavering support through a long and challenging project. We would also like to thank Paul Drum and Gavan Ord of CPA Australia, who managed the process and provided valuable insights throughout, and we thank the rest of the CPA Australia team as well. We would also like to thank Nick Melchior, Emilie Herman, Stefan Skeen, and the team at John Wiley & Sons for their input and for shepherding this book through the publication process. We would also like to thank the dozens of senior academics, business leaders, and government officials who gave generously of their time to meet with us or attend project workshops, and the thousands of survey participants whose responses provided a unique source of information and insights.

About the Authors

Michael J. Enright is the Sun Hung Kai Properties Professor at the School of Business of the University of Hong Kong; Director of Asia-Pacific Competitiveness Programs at the Hong Kong Institute of Economics and Business Strategy; Director of Enright, Scott & Associates Ltd. (Hong Kong) and Enright, Scott & Associates (Singapore) Pte. Ltd. economic and business strategy consultancy; an Independent Non-Executive Director of Johnson Electric Holdings Ltd.; a Director of the Harvard Business School Alumni Association of Hong Kong; and Founder and present Advisory Board Member of The Competitiveness Institute, a global professional body with members in more than 100 countries.

Professor Enright’s research and consulting focus on issues of international and regional competitiveness, national and regional economic development, international strategies of multinational companies, and strategy in the face of volatility and uncertainty. He has worked with governments, multilateral organisations, and leading companies on six continents and has appeared as a keynote speaker and executive educator in 38 countries. Enright’s work has been featured in Asia Inc., Asian Business, the Economist, the Financial Times, Fortune, the Wall Street Journal, the Asian Wall Street Journal, the Washington Post, Newsweek, BusinessWeek, the South China Morning Post, the Straits Times, Business Times, Time, WorldLink, and numerous national newspapers and other publications all over the world.

In addition to numerous monographs, Professor Enright has co-authored or edited the following books: with Edith E. Scott and Richard Petty, The Greater Pearl River Delta, 6th ed. (Hong Kong: Invest Hong Kong, 2010); with W. John Hoffmann, China into the Future: Making Sense of the World’s Most Dynamic Economy (New York and Singapore: John Wiley & Sons, 2008); with Edith Scott and Chang Ka-Mun, Regional Powerhouse: The Greater Pearl River Delta and the Rise of China (New York and Singapore: John Wiley & Sons, 2005); with Edith Scott and David Dodwell, The Hong Kong Advantage (Hong Kong: Oxford University Press, 1997); with Antonio Francés and Edith Scott Saavedra, Venezuela: The Challenge of Competitiveness (New York: St. Martin’s Press, 1996); with Rolf Weder, Studies in Swiss Competitive Advantage (Bern: Peter Lang, 1995); with Graham Crocombe and Michael Porter, Upgrading New Zealand’s Competitive Advantage (Auckland: Oxford University Press, 1991); and with Silvio Borner, Michael Porter, and Rolf Weder, Internationale Wettbewerbsvorteile: Ein strategisches Konzept für die Schweiz (Frankfurt: Campus/NZZ, 1991).

Professor Enright received his AB (with honors) in Chemistry in 1980, his MBA (with distinction) in 1986, and his PhD (Dean’s Doctoral Fellow) in Business Economics in 1991, all from Harvard University. Before moving to Asia in 1996, Professor Enright was a Professor at the Harvard Business School from 1990 to 1996.

Richard Petty is Professor (Accounting and Finance) and Executive Director International at the Macquarie Graduate School of Management. He is Chairman of The Australian Chamber of Commerce Hong Kong & Macau, a past President and Chairman of CPA Australia, and a director of several other companies. Richard is Deputy Chairman of the Australasian Reporting Awards and is Chairman of the Judging Panel for Hong Kong’s Best Annual Reporting Awards. Professor Petty was Chairman of CPA Australia (Shanghai) Limited from 2007–2012.

Professor Petty commenced his professional career as an analyst and then worked at Ernst & Young before founding and also co-founding several successful companies. Richard has more than 20 years of consulting experience and has advised a broad range of multinational firms and several governments on financial and strategic issues, competitive issues, governance issues, and on doing business in Asia, particularly in China.

Professor Petty was appointed as a Senior Foreign Consultant to the State Economic Trade Commission in Shanghai and Tianjin, China, from 1999–2001. He also was formerly Senior Research Fellow to the Securities Industry Research Centre of Asia-Pacific.

Professor Petty has been a faculty member at the University of New South Wales and the University of Hong Kong and adjunct faculty at the University of Sydney and at the Australian Graduate School of Management. He has been awarded both as a researcher and as an editor of academic works, and he has won awards as an educator in Hong Kong and in Australia.

Professor Petty is on the management board of the Australian Accounting Review, the editorial board of the Journal of Intellectual Capital, and the editorial advisory board of the Accounting, Auditing and Accountability Journal.

Professor Petty has published extensively across various fields including on governance issues, nonfinancial reporting, valuation, China’s economy, and the management and measurement of intangible assets in journals including the Australian Accounting Review, the Journal of Management Accounting Research, the Journal of Intellectual Capital, the Journal of Law and Financial Management, the Accounting, Auditing and Accountability Journal, and others. He co-authored a research monograph for The Institute of Chartered Accountants of Scotland on Intellectual Capital Reporting (2007) with James Guthrie and Federica Ricceri and The Greater Pearl River Delta, 6th ed., with Michael J. Enright, Edith E. Scott, and Enright, Scott & Associates (2010).

Professor Petty is frequently invited to speak on topics relating to the global economy, China’s economy, corporate governance, and other topics. He has been interviewed and profiled by channels including CNBC, Bloomberg, Wall Street Journal Asia, the Australian Financial Review, the Sydney Morning Herald, Business Review Weekly, CFO Magazine, the Australian, the South China Morning Post, Business Spectator, Channel News Asia, the Standard, and others.

Professor Petty graduated with first class honours in Accounting from the University of Western Sydney (1993) and was awarded the university medal. He holds a Master’s degree (with honours) in Commerce from the University of New South Wales (1997), and a PhD from the Macquarie Graduate School of Management (2004). Richard is a Fellow and Life Member of CPA Australia and a Fellow of the Australian Institute of Company Directors.

Chapter 1

Australia’s Economic Performance

The starting point for the analysis of any economy should be an understanding of its past and present performance. The performance is what needs to be explained by more detailed analysis. This in turn provides the baseline from which we can try to build a picture of what Australia does well, and not so well, and assess what Australia needs to do to improve performance in the future.

Aggregate Performance

Australia’s economy has been one of the best performing in the OECD since 1990. Nominal GDP went from just over AUD 400 billion in 1990 to just under AUD 1,400 billion in 2011 (Figure 1.1). This was around 1.6 percent of global GDP. Australia’s annual GDP growth has been positive every year since 1991. Australia experienced real annual GDP growth on the order of 3 to 4 percent per year until the onset of the Global Financial Crisis in 2008, when growth dipped down to roughly 2 percent per year (Figure 1.2), which was still better than most other OECD nations. Australia stayed in positive territory, in part as the result of a stimulus package, which at AUD 42 billion was one of the world’s largest in proportional terms.1

FIGURE 1.1 Australia Nominal GDP, 1990–2011

Source: Australian Bureau of Statistics, Australian National Accounts, June 2012.

FIGURE 1.2 Australia Real GDP Growth Rate, 1990–2011

Source: Australian Bureau of Statistics, Australian National Accounts, June 2012.

Australia’s nominal per capita GDP went from nearly AUD 24,000 per person per annum in 1990 to AUD 62,337 per person per annum in 2011 (Figure 1.3). In US dollar terms, Australia’s 2011 per capita GDP of USD 67,554 comfortably outstripped the USD 48,043 figure of the United States. It has also been well ahead of the OECD average (Figure 1.4). At the same time, Australia’s Gini coefficient in the late 2000s of 0.336 was only slightly above the OECD average of 0.316, indicating income inequality slightly greater than the OECD average.