New mindset needed for economy to progress beyond resources boom

The resources sector has brought billions of dollars into the Australian economy, mainly due to the mining boom. But, economic experts caution, the country can’t rest on these laurels. Many say that to capitalise on this boom, not only does it need to expand, but a new mindset is required in order to restore the international competitiveness of Australia’s non-resources industries to where they were a decade or more ago.

Several solutions have been proffered to jumpstart this process, focusing on measures like structural adjustments and productivity reforms.

However, Treasury Secretary Dr Ken Henry says this is not enough. Dr Henry, an adviser to Prime Minister Gillard, explains why such measures are not enough in a speech to the Business Symposium of the Australian Conference of Economists at Victoria University.

“I don't kid myself into thinking that productivity reforms are somehow going to restore the international competitiveness of Australia's non-resources sector to where they were back in year 2000-01 or even 2002,” he says.

“…It is no exaggeration to say that if Australia is going to navigate successfully the . . . extraordinary growth of China and others in the region, a new mindset will be required, in government certainly, business and the broader community also,” Dr Henry adds.

One of Dr Henry’s recommendations for making Australia more competitive involves making transportation and logistics more efficient. This will shift the focus away from expansion of activity in the resources sector, which he says is “crowding out” competitiveness in other sectors due to factors like wage increases and exchange rates.

Dr Henry is currently working on a White Paper on Australia in the Asian Century. It will discuss the economic and strategic changes in the region, and what can be done to position Australia in what many predict to be a period of ongoing growth in the Asia-Pacific.

 

Image source: Victoria University website