New frontiers for WA economy: Deloitte report
Hotspots that will drive sustainable growth beyond the current wave of demand for natural resources
24 March 2014: Western Australia can build on the benefits of the global demand for natural resources, boosting its growth prospects further by leveraging new market opportunities around industries such as health and aged care and the digital delivery of health services, the exploitation of its tremendous ocean resources as well as further opportunities around the gas boom such as gas transport and infrastructure processing and the facilities and ports that will support the export of gas to energy hungry Asian markets. More importantly, these growth pockets are mainly in high job creating areas of the economy.
New research from professional services firm Deloitte has identified 25 sectoral hotspots, the ‘Deloitte Growth 25’ (DG25), with the biggest potential to lift Australia’s growth trajectory over the next 20 years.
The full release of Positioning for prosperity? Catching the next wave, the third in Deloitte’s Building the Lucky Country series, analyses growth prospects across all major parts of Australia’s economy and identifies future growth pockets for Western Australia beyond the resources boom.
Deloitte Access Economics Partner, Western Australia, Matt Judkins, said “As Asia’s boom matures and Australia’s follows suit, it is important that Australia, but none more so than Western Australia, identify and act on those growth drivers and sectoral opportunities that will support the transition of our economy away from the sugar hit of resources construction, enabling sustainable growth into the future.”
A companion media release considers the national impacts of the DG25. However, Deloitte has also extended the analysis to each state. The initial findings from Deloitte’s report, which focussed on the growth potential in export-oriented sectors, found that Western Australia has been the biggest single beneficiary of the initial phase of emerging Asia’s rise. That preview report stated that mining would continue to play a vital role in the state’s economy, but that new opportunities would also open up in a ‘Fantastic Five’ super growth sectors of gas, agribusiness, international education, wealth management and tourism.
For example, rapid industrialisation has taken a toll on air quality in Asia’s cities, propelling Western Australia’s gas to the top of the global ‘most wanted’ list, while at the same time global food demand is set to soar in coming decades, and this points to particular potential for Western Australian agribusiness.
In the full report released today, Deloitte has extended its analysis to the remaining 80% of the economy – after the current growth wave of mining and the ‘Fantastic Five’ – to identify 19 new pockets with the greatest growth potential (see table below).
Western Australia Managing Partner of Deloitte, Michael McNulty, noted: “The good news is that this state’s potential beyond the first wave of the resources boom doesn’t rely solely on global potential in other sectors. We also have a range of ‘local heroes’ that can help drive Western Australia’s future growth.”
In particular, Deloitte’s new report identifies a growth cluster at the heart of the collision of megatrends such as rising life expectancies, rising relative health care costs and tightening public sector health budgets. This group contains the biggest commercial opportunities – both nationally and for Western Australia.
Moreover, some of the best opportunities for Western Australia are in lower-risk areas where the state can build on some of its existing strengths, rather than developing new industries from scratch.
This will see a number of sectors leading the pack, such as residential aged care, retirement living and leisure, community and personal care, and preventative health and wellness.
It will also see exciting new possibilities emerge in digital health delivery which could fundamentally change the way services are delivered in Australia’s largest state. This mix of new technologies with new markets could also generate new opportunities for Western Australia’s economy.
Other opportunities among the DG25 include sectors that are poised to make the most of extending the benefits of the resources boom that has seen growth in Western Australia’s economy leading the nation. For example, an ongoing boom in gas comes with further opportunities for gas transport and infrastructure, building and maintaining the pipelines, processing facilities and ports that will support the export of gas to energy hungry Asian markets.
Deloitte has also identified smaller hotspots where the ability to sell into world markets has the potential to turbocharge growth. These are the opportunities with the most to gain from new approaches and new technologies and include new ways of making the most of Western Australia’s ocean resources.
Mr McNulty added: “We all know Western Australia is huge. Yet what many don’t realise is that we’re even bigger than we think we are – Australia’s Exclusive Economic Zone is the world’s third largest, and those rights over ocean resources will eventually prove vital to this State’s development.”
“With more coastline than India, our access to both tropical waters and the Southern Ocean puts us in a unique position to take advantage of new technologies that will open up new potential in ocean resources.”
The State’s abundance of seawater and sunlight can also be used to make so called ‘green oil’ from algae, while electricity can be generated through the power of wind and waves. Similar opportunities exist on dry land, with potential in next-generation solar and geothermal energy generation and storage.
While these sectors aren’t a big part of Western Australia’s economy today, they could come up big for the state over the next 20 years as world markets search for cleaner, greener energy sources.
“As Western Australia looks to extend the benefits of the resources boom, it is important that the state also looks to the growth hotspots of the future”, said Mr McNulty. “We are looking forward to seizing home grown growth opportunities and pioneering new technologies in this State.”
NB: See our media releases and research at www.deloitte.com.au.
Last Updated: Sunday, 23 March 2014
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