Investing in Australia's Future
Commissioned by the Business Council of Australia
After many years of outperformance, Australia has become less attractive to investors
Measured by headline GDP growth, Australia has been one of the stand-out performers in the developed world for many years. This said, a variety of economic, technological and environmental challenges have begun to create material headwinds:
- Fixed capital formation has fallen (as a percentage of GDP) to the lowest level in 40 years
- Foreign investment into Australia has fallen significantly over the last decade, and major Australian investors are now exporting significant amounts of capital
- Real wage growth remains stubbornly low
Our report "Investing in Australia's Future" provides commercial perspective on inbound and outbound investment activity involving Australia, supported by quantitative and qualitative evidence. Commissioned by the Business Council of Australia in November 2021 with a focus on considering the potential factors that may be driving falling fixed capital formation, our analysis supplements existing macro-economic analysis and provide front-lines perspective from within Australia and offshore.
To download our report, please click the image.
To download our report, please click the image.
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US format (for printing on letter paper)
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Overview
Slide pack
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Media commentary
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Patrick Durkin (Australian Financial Review)
Related budget commentary by SBS
Business Council of Australia press release
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Colin Brinsden (AAP)
Independent journalist Michael West (Michael West Media)
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New initiatives are essential to compete in the global war for talent and capital
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Australian leaders talk about the opportunities of forward-looking investment
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Upcoming discussions
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Electrification of transport
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Decarbonisation and climate
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New economic thinking
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For further information, please contact Pottinger via your usual contact or using the button at the bottom of this page. Meanwhile, we provide a brief summary of the themes in our report below.
Three parallel revolutions are creating attractive opportunities for investment
The adoption of renewable energy, and simultaneous electrification of significant elements of transport and the built environment has accelerated dramatically over the last few years, with annual investment new exceeding A$ 1 trillion per year (Bloomberg NEF). Attention is beginning to turn to the need to reduce the carbon intensity of the agricultural sector, whilst simultaneously recognising its potential as a source of fossil-free hydrocarbons. Meanwhile, automation of decision-making has (and will continue) to eliminate many administrative, clerical and management roles across most industries.
Looking ahead, this implications for Australia are profound. Technology companies can create enormous value for their shareholders, but are capital-lite and can easily relocate to other countries. The USA and China dominate in the creation of unicorn businesses, creating huge upside for those economies but may eliminate jobs in many other countries. Renewable energy offers potential for both substantial capital investment and long-term job creation, but public policy signals are mixed. Lastly, the bioeconomy similarly offers enormous upside, but will require great care to manage associated environmental and ecological challenges.
To attract these new and emerging opportunities, Australia will need to compete in the war for globally mobile talent and ensure it sends the right messages to global investors that Australia should once again be an investment destination of choice.
Pottinger has completed several other assignments that dig deeper into these opportunities
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Future-proofing Farming: Collaborating to
manage risk and resilience 
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Pottinger's Independent Review of
the definition of Small Business 
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In 2020, the National Farmers' Federation retained Pottinger to provide advice and overall programme management for its landmark Financial Risk Management Project, a national initiative designed to improve the resilience of the Australian agricultural sector.
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In 2020, the ABA appointed Pottinger to conduct an independent review of the definition of small business under the Banking Code of Practice. This is of fundamental importance to small businesses, as it defines whether any individual organisation qualifies for the protections that the Code provides.
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Traditional economic analysis has focused almost entirely on optimising how we use our financial resources. New thinking is needed to relieve the growing pressure on environment and to defuse increasing tension within many societies. We share both our own perspectives and those of other leading thinkers below.
The Future of SocietyBy Nigel Lake and Prof Jorgen Randers
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Impact-adjusted return on capitalBy Nigel Lake
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Breaking BoundariesBy Johan Rockström and Owen Gaffney, and narrated by Sir David Attenborough
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Over the last two years, we have supported the Club of Rome's Earth For All Initiative, which is designed to accelerate the systems-changes we need for an equitable future on a finite planet. For further information, please visit the Earth For All website or click the image below to view the TED talk at the COP 26 Countdown Summit.
Long-term thinking in a short term world
Since our formation in 2003, our objective has been to connect long-term thinking with short-term action. Along the way, we have shared our perspectives , with a constant focus on practical ways to think about the challenges and opportunities in front of us.
