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New opportunities for Victoria
Victoria’s strengths can capitalise on Australia’s next boom sectors
24 March 2014: As global markets shift, Victoria is well placed to benefit from Australia’s export-oriented future growth waves – including international education, gas, wealth management, agribusiness and tourism – and will also be able to draw on its strengths in medical research, Information and Communication Technology (ICT), food processing and finance. 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 prosperity 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 highlights growth opportunities for Victoria to capitalise on.
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 Australia’s next boom will be much more suited to Victoria’s strengths, leading to new opportunities in five super growth sectors – the ‘Fantastic Five’ – including international education (which is already Victoria’s largest export earner), gas (where the state has opportunities in Bass Strait), wealth management, agribusiness and tourism.
Deloitte’s latest analysis has now sifted through the remaining 80% of the economy – after the current growth wave of mining and the ‘Fantastic Five’ – to identify 19 new areas of growth potential (seen in the table below), many in high job creating areas of the economy.
The good news is that Victoria is also well placed to benefit from a number of these new opportunities.
Victoria Managing Partner of Deloitte, Geoff Roberts, said: “Victoria is a state navigating its way through a clutch of bad news. Yet there is reason for optimism beyond the pain of the moment. Asia’s boom is evolving in ways that will play to Victoria’s strengths, and our latest analysis shows that new domestic opportunities are opening up for this state as well.”
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 Victoria.
These trends will generate new opportunities, with sectors such as residential aged care, retirement living and leisure, community and personal care, and preventative health and wellness at the head of the pack in terms of Victorian growth potential. Even better for regional Victoria, jobs gains will be relatively stronger in regional Victoria (creating jobs in townships as diverse as Queenscliff, Warracknabeal and Dimboola).
These megatrends will also favour growing demand for new products from the finance sector amid both a surge in the assets of older Australians, as well as the need for them to finance greater health and lifestyle spending.
Other opportunities among the DG25 include sectors that are already strong in Victoria, and which can make the most of the coming boom. For example, with Australia poised to take advantage of the global opportunities on offer and forge closer trade ties across Asia, the finance sector stands to benefit from new and expanded markets. This will provide particular opportunities in Melbourne, which is home to two of Australia’s big banks and many large superannuation funds.
ICT is also a key enabler of the coming export surge, and will play a crucial role in transforming the Australian economy over the next 20 years. ICT will remain the gateway to the economy of the future, and Victoria is a national leader in this critical sector.
While clean coal technology remains elusive – at least at low cost levels – the opportunity in extending the life of Victoria’s massive brown coal reserves shouldn’t be underestimated. Ongoing environmental concerns surrounding coal are increasingly hampering the sector’s growth, but if advances in technology are able to address those concerns at reasonable cost, renewed demand for coal could lift the fortunes of the state’s mining sector.
With the ongoing boom in gas come further opportunities for gas transport and infrastructure – constructing and maintaining the pipelines and storage that will support the expansion of supply from Bass Strait into Victoria and beyond.
Finally, Deloitte examined smaller hotspots where the ability to sell into world markets has the potential to turbocharge growth. Here the best opportunities for Victoria lie in taking advantage of its highly skilled manufacturing base and adapting to rapid technological change. The latter will see notable opportunities for the state to build on emerging high-tech industries such as the digital delivery of health, building off the state’s existing strengths in medical research, where Victoria is a global leader, and where a range of new opportunities are emerging in neuroscience and elsewhere that could transform health care.
Similarly, the state’s existing food processing manufacturing base is already large. Food processing already makes up one fifth of all manufacturing in Victoria, and there are 25,000 Victorians employed in this sector. Yet further opportunities loom. Provided lopsided regulation of the industry is addressed – levelling the playing field with competition from New Zealand – there are some notable advantages that Australia and Victoria can bring to bear here. In particular, Asia values Australia’s safety standards, and some markets will pay a premium to have food processed and packed here.
So while Victoria has struggled to fully capitalise on the opportunities offered by the resources boom, the developing waves of future growth are much more in its favour. This is true not only of the five global growth stars Deloitte has termed the ‘Fantastic Five’, but also of home grown growth sectors which are already a feature of the Victorian economy.
“Victorians keep hearing the bad news – and there has been a lot of it – but we shouldn’t ignore the good news that lies down the track. In fact, we need to embrace it,” said Geoff Roberts.
“The opportunities of the future are more important for this state than those of the past decade. Indeed, Deloitte sees great potential for Victoria if we can take advantage of the opportunities opening up in these key sectors.”
NB: See our media releases and research at www.deloitte.com.au.
Last Updated: Sunday, 23 March 2014
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