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NSW – ready for take-off: Deloitte report

NSW will surf the next boom much better than it did the last one


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8 October 2013:  Five super-growth sectors worth an extra $250 billion to the national economy over the next 20 years hold the key to Australia’s future prosperity, according to a new report from Deloitte. The report, entitled Positioning for Prosperity? Catching the next wave, is the third edition of the firm’s Building the Lucky Country series.

A companion press release considers these national impacts.  However, Deloitte has also extended the analysis to each State and Territory.  That work finds that, whereas NSW struggled to capitalise on conditions over the past decade, it is superbly placed to cash in on the five super-growth sectors of agribusiness, gas, tourism, international education and wealth management.

During the last decade NSW was caught on the wrong side of the two-speed economy. The rise of emerging Asia generated a burst of mining construction projects, most of those were in other states – meaning that many of the benefits of the boom went elsewhere.

At the same time the rise of Asia underpinned a decade of relative strength in Australia’s interest rates and exchange rates.  Those high interest rates were particularly bad news for Sydney – home to half the financial sector businesses in Australia – and meant that NSW’s families had to fork out more to finance their outsized mortgages.  Similarly, the $A’s strength penalised NSW’s farmers and manufacturers, as well as its tourism operators and higher education sector.

The last decade saw NSW lose ground as a share of the Australian economy, dropping by a tenth (from 34.3% in 2000-01 to an estimated 30.6% in 2012-13).

However, Asia’s impact on Australia is changing – and it is changing in a way that particularly plays to NSW’s strengths.

  • For Australia as a whole, the five super-growth sectors could be as big as mining
  • But for NSW, the five super sectors outweigh mining by a factor of two and a half.

That is because all five super-growth sectors identified by Deloitte hold a strong presence in the NSW economy – effectively positioning the state for future prosperity.

Collectively, Deloitte estimates the five super sectors will be a larger share of NSW’s economy than of any other State or Territory.  

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.  Below are two versions of the map, one for Australia as a whole and one for NSW.

NSW Managing Partner of Deloitte, John Meacock, said:  “The next two decades can be a good news story for Australia – but a great news story for our State.  The last boom didn’t play to NSW’s strengths – but the next one looks like being a perfect fit.”

The NSW Deputy Premier and Minister for Trade and Investment, Andrew Stoner, who was in Indonesia, Malaysia and Singapore last week promoting the NSW agribusiness sector, welcomed the report.

"NSW has the most diverse economy in the nation," Mr Stoner said.

"Our industries are well placed and ready to lead a national economic recovery," he said.

"Increasing global demand for food, energy and skilled labour means that the world, particularly Asia, is turning to places like NSW to help meet that demand.

"NSW industry is well placed to benefit from surging demand in regions like Asia, which is why international engagement with our trading partners is so important."

NSW is ideally positioned to take advantage of the identified intersections between Australian advantage and global growth.  For example, NSW – and its world class icons such as the Opera House – remains a magnet for the world’s travellers.  NSW is well set to attract an unfair share of Asia’s tourists – a realisation which James Packer has already moved on with his development of the hotel-casino at Barangaroo.

Similarly, Sydney’s four major universities have been developing their credentials to prosper during the Asian century, while a number of smaller universities and vocational education providers are right behind them.

Most importantly, Sydney is ‘wealth management central’ for that sector nationally, positioning NSW to sell into the market of three billion people in Asia who will join the ranks of the middle class by 2030.  

A further boost to Sydney’s fortunes is the emergence of an Asia Region Funds Passport which would see its world class wealth management sector leverage off Asia’s enormous potential. While it will still take some time before the Asia Region Funds Passport will be introduced, the impact it will have is significant.

Finally, regional NSW will also sell into Asia’s burgeoning markets. With the Murray-Darling remaining Australia’s food bowl, the state’s agribusiness sector will be able to prosper in the face of rising Asian food demand. At the same time, coal seam gas in the Sydney and Surat Basins has the potential to generate a prosperous future for those regions – especially if NSW can navigate the concerns of stakeholders.

For Australia as a whole, the next five growth waves represent enough weight to replace the receding mining wave. The story is very different for NSW, where the five upcoming sectors will be more than three and a half times larger than the mining sector.  This will allow this state to maximise the next round of benefits of Asia’s prosperity.

NB: See our media releases and research at www.deloitte.com.au

Follow us – @DeloitteNewsAU

Last Updated: 

Contacts

Name:
John Meacock
Company:
Deloitte
Job Title:
NSW Managing Partner
Phone:
jmeacock@deloitte.com.au
Email
Tel: +61 (0) 2 9322 5949; Mobile: 0414 917 652
Name:
Vessa Playfair
Company:
Deloitte Australia
Job Title:
Head of Corporate Affairs
Phone:
Tel: +61 2 9322 7576, Mobile: +61 419 267 676
Email
vplayfair@deloitte.com.au
Name:
Ben Shine
Company:
Office of the Deputy Premier
Job Title:
Press Secretary
Phone:
Mobile: 0431 096 596
Email
ben.shine@deputypremier.nsw.gov.au

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