The road ahead
Australia has enjoyed nearly three decades of uninterrupted economic growth, with its cities constantly ranking in the most liveable cities in the world.
Australia has six key challenges it needs to address between now and 2060 to remain a prosperous nation.
- Rise of Asia: By 2030, Asia will be home of 65 per cent of the middle class. If Australia can’t boost its competitiveness and diversify exports, it risks missing out on this opportunity.
- Technological changes: With the rise of AI, automation and advances in biotechnology are transforming industries and the skills required. Unless Australia can reverse its declines in educational performance, its future workforce is poorly prepared for the challenges tomorrow brings.
- Climate change and environment: With the world already warming by 1 degree, the planet could be on the path to warming by 4 degrees if significant action to reduce climate change isn’t taken.
- Demographics: Australia is growing and ageing. At the current rate, Sydney and Melbourne will each reach 8–9 million by 2060 and the workforce participation will fall from 66 per cent to 60 per cent.
- Trust: Nationally, Australians are less trustworthy of the government, business and the media. Unless as a nation it can build a consensus on the long-term solution, it will not be able to address other challenges.
- Social cohesion: Many Australians feel left behind. Issues related to trust, as well as factors such as financial stress, slow wage growth and poor housing affordability, may play a role.
The slow decline
Without appropriately addressing the above factors, the nation risks entering a “slow decline”, as the CSIRO calls it.
If the nation’s future is in a slow decline, Australia’s economic growth, investment and education outcomes are all relatively weak. With this our economy becomes vulnerable to external shocks, total factor productivity (TFP) remains lower than the rest of the world and wage growth remains flat.
In this environment, Australian cities sprawl outwards making it harder for people to access education and services. This will lead to a deepening social division and polarisation.
In this scenario, Australia fails to transition to low-emission energy, and with this, both energy and agricultural productivity remain low.
Key projections for a “slow decline” situation:
- GDP grows at 2.1 per cent annually
- Real wages are 40 per cent higher in 2060
- Urban vehicle kilometres travelled per capita falls by less than 25 per cent
- 11 per cent reduction in emissions
- Household spend 38 per cent on electricity as a percentage of income
- Returns to landholders increase by around $18 billion
The Outlook Vision
The Outlook Vision, as outlined by the CSIRO, is one where the nation reaches its full potential. Economically it remains strong, technology companies move towards global frontier and it creates new export-facing industries. Improved education gives Australians the skills they need to compete in this new world.
Australia’s cities are dynamic and diverse global centres, with higher density populations with an increase in affordable housing options with equal access to services.
Australia successfully transitions its limit climate change to 2 degrees and can reach a “net zero” emissions by 2050 driven by the use of the land in carbon planting.
Key projections for “Outlook Vision”:
- GDP grows at 2.75 to 2.8 per cent annually
- Real wages are 90 per cent higher in 2060
- Average density of major cities increase by 60–88 per cent
- Australia reaches net zero emissions through 11 -20Mha of environmentally planting by 2060 (12–24 per cent of intensive agricultural land)
- Households spend 64 per cent less on electricity
- Return to landholders increases by $42–$84 billion
Ensuring Australia ends up in Outlook Vision
Achieving positive outcomes in five main areas will ensure Australia ends up in the Outlook Vision by 2060.
- Industry: An industry shift will enable a productive, inclusive and resilient economy.
- Urban: A shift that allows for well-connected affordable city offering equal jobs, lifestyle and education services.
- Energy: A shift in energy allowing for low-emission energy that builds on Australia’s existing sources of comparative advantage.
- Land: A land shift will create a profitable and sustainable future that includes food, fibre and fuel production as well as carbon sequestration and biodiversity.
- Culture: A shift in culture that encourages more engagement, curiosity, collaboration and solutions.