Michael Keating. Australian National Outlook.

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A significant new report was released last week on the Australian National Outlook by the CSIRO. In this article, I summarise the report’s discussion of the key challenges and policy choices 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 a bright and prosperous future”.

At the crossroads

The report finds that: “Australia is at a crossroads. Stride towards a positive 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 geopolitical and economic landscapes.
  • Environmental impacts and biodiversity loss, together with climate change, are seen as significant economic, environmental, and social issues for Australia and the world.
  • Inequality, stagnant wage growth, and high house price increases have left many Australians feeling left behind.
  • A growing and aging population is placing increased stress on Australia’s cities, infrastructure, and government services, and there is some evidence that Australia’s educational performance is falling.
  • Trust in 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 faced by Australia if it is to secure its long-term prosperity. These scenarios reflect the outcome of a highly collaborative and interactive approach, which 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.

Achieving our full potential

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 adequately to address such challenges, leading to poor outcomes in multiple dimensions.

A comparison of the two scenarios shows that, in the positive Outlook Vision:

  • GDP per capita could increase by as much as 36%, while ensuring 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 reduced urban sprawl, to handle a increased population, while retaining high liveability, and providing improved access to jobs and services.

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. It will not be easy to achieve, however.

Major shifts needed

The report argues that, “starting today”, achievement of this positive vision will require major shifts:

Industry composition to enable a productive, inclusive, and resilient economy, with new strengths in domestic and export sectors. This will require :

  • Increase in the adoption of technology
  • Investment in skills ensuring a globally competitive workforce prepared for the technology-enabled jobs of the future

The development of export-facing industries which build competitive advantage in global markets and value chains.

Urban development to enable well-connected, affordable cities offering equal access to quality jobs, lifestyle amenities, education, and other services. This will require:

  • High-density, multi-centre, 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 close to jobs, services, and amenitie
  • 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 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, harnessing digital and genomic technology, as well as using natural assets 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 engagement, curiosity, collaboration, and solutions, supported by inclusive civic and political institutions. This will require:

  • Rebuilding trust and respect in Australia’s political, business, and social institutions
  • Encouraging a healthy culture of risk taking and curiosity, and accepting fear of failure to support entrepreneurship and innovation
  • Recognising and including social and environmental outcomes in decision-making processes

Comment

Of course, the future is uncertain, and it would be easy to dismiss these scenarios of how Australia will be 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’ wellbeing 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 many of the challenges identified, such as technological and environmental changes, and population growth and ageing, are happening anyway. What matters 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, wellbeing 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. Republished from John Menadue’s blog, Pearls & Irritations, of 26 June 2019.

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