Australia has experienced a period of strong economic expansion for more than a decade with rates of growth at the upper end of OECD countries. This performance has been supported by low interest rates and low inflation together with significant public sector savings reflected in ongoing budget surpluses. Maintaining these sound macroeconomic settings is important to Australia's ongoing prospects for strong economic growth.
Over the last decade, the economy has expanded by an average of 3.5 per cent a year. Gross Domestic Product (GDP) has grown by 41 per cent to $933 billion in real terms at the end of 2006. The human dividend of this growth is evident: the unemployment rate is at a 30 year low, over two million more Australians are in work and real wages are almost 20 per cent higher than they were in March 1996.
Further underpinning this performance have been reforms which contained and reduced input costs, increased the competitiveness of firms, provided a more efficient and globally competitive business taxation system and introduced more flexible workplace arrangements. Together with the introduction of new technologies, particularly in IT, the result has been accelerated productivity. Australia now ranks highly in international comparisons of productivity growth.
Research and consultations for the Industry Statement confirmed that trends in global markets over the last decade have heightened the importance of an industry policy focused on improving the international competitiveness of Australian businesses. Trade barriers are dissolving. The costs of conducting business are falling. Investment capital flows more freely and rapidly. More and more industries are exposed to international competition, in the services sector as well as in manufacturing.
Most significantly, supply chains have been rationalised, cutting the number of suppliers and forcing businesses to expand to a truly global scale of production. In this market, for many businesses, global integration is a necessity. Their benchmarks are now global – meeting world best practice is essential as is finding new ways to add value to products and services. Businesses will need to regularly reassess their management, their production processes and their use of technology.
Fortunately, change presents opportunities as well as challenges. In 2007, Australian industry is in a stronger competitive position than a decade ago. Manufacturing has achieved record exports, innovation and investment. In many businesses there is a new found confidence that they can succeed in world markets. Industry is shaking off the legacy of protectionism.
Return to DITR Strategic Plan 2007-2010