South Australia’s opportunities to blossom: Deloitte report
The South to surf the next boom much better than it did the last oneDOWNLOAD
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 the national impacts. However, Deloitte has also extended the analysis to each State and Territory. That work finds that, whereas South Australia missed out on many of the benefits of the initial phase of development in emerging Asia, it is well-placed to make the most of a set of coming opportunities in the five super-growth sectors of agribusiness, gas, tourism, international education and wealth management.
South Australia spent much of the past decade on the wrong side of the two-speed economy. The latter boosted mineral development, but the State’s main potential there – the expansion of Olympic Dam – remained merely a possibility rather than a done deal.
At the same time the resources boom of the past decade boosted both interest rates (because the Australian economy was stronger than its peers) and exchange rates (due to robust global commodity prices). In turn, that relative strength in interest and exchange rates hit South Australia where it hurts – in manufacturing and agribusiness. As an example, the State’s winemakers have consistently struggled.
However, the Deloitte analysis indicates a turning point is approaching. Asia’s impact on Australia is changing – and it is changing in a way that particularly plays to SA’s strengths.
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 South Australia.
SA Managing Partner of Deloitte, Rob DiMonte, said: “South Australia missed many of the benefits of the resources boom. However, we look set to capitalise on the State’s strengths across a new set of developing opportunities in agribusiness and education in particular.”
For example, foreign students in South Australia are already a billion dollar business, and the State – with its world class universities and education institutes – has been generating a rising share of the earnings of the Australian international education sector.
Similarly, the State’s “wine lake” came of age when the $A was riding high. But the latter is already off its peaks, and probably has further left to fall. At the same time Asia’s rapidly growing middle classes will be increasingly able to afford the good things in life – and that includes SA’s food and wine.
Finally, although the expansion at Olympic Dam hasn’t yet got the go ahead, it will at some stage. This is a world class asset, and demand for its potential production will continue to rise over time. Moreover, initial exploration completed in the Arckaringa Basin suggests there may be an enormous shale oil gas opportunity in the area surrounding Cooper Pedy.
“The resources boom of the past decade benefited the likes of Western Australia and Queensland more than it did South Australia. However, a new set of growth drivers are opening up for the State – not only will it eventually be able to cash in on resource rich potential such as the Olympic Dam expansion in coming years, but the changing demands of Asia’s rise will play to this State’s strengths”, Mr DiMonte added.
NB: See our media releases and research at www.deloitte.com.au
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