Three trends impacting the future of Australian business
Which trends will most strongly influence change in Australian business over the next decade or two? Here we discuss the drivers that will create, and in some cases destroy, opportunity.
Australia’s business environment is influenced equally by internal market forces, external market forces, by the country’s vast geographic nature, by the changing weight of authority and power of traditional partners such as the US and UK and regional neighbours such as Indonesia and China, and by its unique political challenges.
There is little argument that within any and all of these areas Australia is currently facing uncertainty and change.
So where does the business world look for guidance on what is around the corner?
Here are the big ticket areas that experts believe may hold the key to the future for business Down Under.
1. The ageing population
Few forces are as powerful as population. When the shape of that population is changing dramatically, as it is in Australia, there is no part of business left untouched.
Consider that there are currently five Australians of working age supporting each person over the age of 65. By 2050 there will be less than 2.4 workers per over-65-year-old.
The declining tax base combined with a massive blowout in aged-care related outlays is going to be a rude shock.
Specific industries that will grow are obvious, including aged care and health. What is less clear is which feeder industries - the businesses that sell shovels during a gold rush - will also find themselves in great demand.
Technology providers, biotech firms, independent financial advisors, various members of the ‘university of the third age’ - there are countless industries that stand to gain. But there are also plenty that will suffer major talent shortages.
This one may seem fairly obvious to mention. But more interesting is the fact that specific types of technologies present opportunity, and threat, within the Australian environment.
The nature of Australian industry is that there often exist one or two major organisations within specific fields that enjoy a monopoly, or a duopoly.
There is Australia Post, for example. Bunnings has tight control over the hardware retail arena. Coles and Woolworths rule the supermarket game. Virgin Australia and Qantas own the skies and Telstra is the single power in telecommunications.
Wherever incumbents exist, smaller, more relevant and faster moving businesses increasingly attack the larger players. Today’s customisable web technologies and automated, smart processes, including artificial intelligence, mean those attackers can behave like much larger entities.
So when online-based, door-to-door delivery business Sendle launched, offering simpler services and often sharper prices than Australia Post, the major player saw some of its vital package delivery market being eroded. Pay TV powerhouse Foxtel felt some pain when several streaming networks, including Netflix, launched last year.
And as our own industry knows, when accounting software providers began offering software-as-a-service via online subscription, it changed the entire shape of the industry.
Technologies such as HyperLoop could very easily disrupt Australia’s powerful transport logistics businesses. Driverless cars will bring changes across numerous Australian industries including transport, automotive (what’s left of it), insurance and more. The ‘internet of things’ will do the same, and there is no telling how the new wave of virtual reality devices might disrupt industries, including travel, e-commerce and entertainment.
Thanks to technology, no industry is safe and no incumbent too big to fail.
There is also the disturbing fact that up to 40 per cent of Australia’s workforce will likely be replaced by automation within the next two decades (according to the Committee for Economic Development of Australia). On the upside, those doing the disrupting will likely offer thrilling opportunity for growth.
3. Powerful neighbours in Asia
China drove much of Australia’s resources boom. The densely populated Asian region, including nearby neighbour Indonesia, will continue to rule over Australia’s fortunes long after the boom ends.
The growing wealth of the Asian middle classes (today estimated at over 500 million people across Asia, growing to 1.7 billion by 2020 and 3.2 billion by 2030 according to The Australian newspaper) will create heavy demand for Australia’s resources including products, professional services and agriculture.
It’s not all about export, though.
Australia’s relative stability makes it an attractive investment option, benefiting all types of business as well as real estate.
Australia’s natural beauty and advanced tourism infrastructure also means it will likely continue to attract more than its fair share of holiday visits from its northern neighbours, too.