Transcript Innovation in the Australian Economy

Innovation in the Australian
economy – recognising our
strengths
Mark Cully
Chief Economist
Office of the Chief Economist
9 June 2016
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Outline
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25 years of growth
Innovation
The economy has more than
doubled in size and average
living standards are up by
more than half
We have created a world-class
and highly innovative
resources sector
Integration with Asia
Migration
Rapidly expanded cross border
flows in goods, services,
capital, people and ideas
Australia is a magnet for
overseas students, working
holiday makers, and temporary
and permanent migrants
We are approaching 25 years without a recession
Quarterly real GDP growth, 1992 to 2016
Dot.com bust
Asian financial
crisis
Source: ABS Cat. No. 5206.0
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GFC
Australia has outperformed leading advanced economies …
Real GDP growth, 1992 to 2016
Australia
USA
UK
Japan
Source: OECD Statistical Database
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… and other resource-intensive economies
Real GDP growth, 1992 to 2016
Australia
Australia
USA
UK
South Africa
Canada
Norway
Brazil
Japan
Source: OECD Statistical Database
5
This is also true after allowing for population growth
•
Real GDP per capita, 1991 to 2015
Australia
UK
USA
Japan
•
Source: OECD Statistical Database
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This is also true after allowing for population growth
•
Real GDP per capita, 1991 to 2015
Australia
UK
USA
Japan
•
Source: OECD Statistical Database
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Australia
Norway
Canada
Brazil
South Africa
Getting goods to market: iron ore
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Iron ore cost curve
Over the course of a decade there have
been huge gains in output and efficiency
•
In 2005, output was around 220 million tonnes
and costs ranged from $US13-30 per tonne
•
In 2010, output was close to 400 million tonnes
and costs ranged from $US30-45 per tonne
•
In 2015, output was 750 tonnes and costs
ranged from $US18-40 per tonne
•
•
•
Source: AME Group
Note: these cost curves represent the cash cost of mining, processing, administration and support, royalties and freight (to the port)
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Getting goods to market: increasing market share
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Australia's share of world coal and iron ore exports by volume, 1991 to 2014
In the face of heightened global
competition, Australia has increased its
market share in metallurgical coal and iron
ore, and held ground on thermal coal
•
•
•
•
•
Source: Thompson Reuters DataStream
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Metallurgical coal: 1991 – 39%, 2014 – 61%
Iron ore: 1991 – 28%, 2014 – 49%
Thermal coal: 1991 – 17%, 2014 – 17%
The Australian economy has become increasingly intertwined
with Asian economies
PwC Melbourne Institute Asialink Index 1990-2012
Cross border flows in goods, services,
capital, people and ideas have increased
more than four fold since 1990
•
•
•
•
Due to factors such as:
advantage of proximity
complementarity in resources, stable
institutions, English language, quality of
educational institutions and sophisticated
service industries
•
•
cumulative network and diaspora effects.
•
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Source: Melbourne Institute of Applied Economic and Social Research
Skilled migration has been a jobs pressure valve
Skilled migrant arrivals and the unemployment rate, 1996 to 2015
Migration offers many economic benefits
to Australia
•
•
•
•
•
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Alleviates skill shortages
Boosts stock of human capital
Staves off effects of population ageing
Opens up new trade channels
Source of new ideas, entrepreneurialism and
innovation
•
•
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Source: Department of Immigration and Border Protection and ABS Cat. No. 6202.0
Key messages
1
.
Our growth streak
has been
uninterrupted for 25
years.
4
We have outperformed
not only other
advanced economies
but also other
resource-intensive
economies.
5
Deeper integration with
Asia has benefited our
economy.
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3
2
.
The Australian
economy has become
more open and
competitive in
traditional sectors of
strength.
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Greater migration
has brought vitality,
drive and brains.
Government policy
cannot conjure up
growth, but it can create
the conditions for
growth.
Further information
xx
Mark Cully
Chief Economist
Office of the Chief Economist
Department of Industry, Innovation and Science
Phone:
(02) 6102 8180
Email:
[email protected]
Follow us @economist_chief
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industry.gov.au