Global Perspectives
National Economic Profiles from IIC Partners
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Australia
DeJager & Associates
SYDNEY Australia is both a country and a continent, the sixth largest national land mass in the world (after Russia, Canada, the United States, China and Brazil).
As a consequence of its status among the geographic giants, Australia is rich in natural resources including; coal, gold, aluminum, iron ore and natural gas. Not surprisingly, its leading mining companies are now among the worlds largest.
Since the Second World War, Australia has leveraged its resource wealth to grow from an isolated and primarily agrarian nation to a leading global economic power. From 1983 onward, this transition has been aided by a determined policy of economic liberalization, featuring unilateral tariff reductions, bank deregulation, trade union rationalization and integration of the formerly fragmented economies of its six states. Capping this effort is the ongoing privatization of government-owned monopolies that developed initial economic infrastructure across a vast and sparsely populated landscape.
For the past 16 years, Australia has posted an average annual GDP (gross domestic product) growth rate of 3.6 per cent and outpaced all of the G-8 nations over that period, notes Kris de Jager, founder of the De Jager and Associates executive search firm in Sydney.
One important result is a GDP per capita of $33,000 (US) thats slightly higher than those of Germany or France, de Jager says. Meanwhile, inflation has been held to 2.1 per cent and unemployment stands at a mere 4.3 per cent (Q2/07) as the country benefits from growing trade with Asian neighbors, especially China.
Its not bad performance for a nation of just 21 million people, developing a country the size of the contiguous United States, says de Jager, himself a South African national whose extensive international business career has given him a global perspective.
Without a large population and domestic market, he says, growth in Australias consumer manufacturing base has faced limitations and this situation has been exacerbated by the cheap-labour advantages of regional trading partners. Instead, Australia relies on resource exports for most of its foreign exchange and is significantly exposed to any downturn in commodity prices. But de Jager notes that Australia weathered the abrupt retrenchment in Asian markets during the late 1990s and today most observers believe Chinas policy-driven economic modernization will continue to provide a large and growing market for Australias minerals and energy exports.
Chinas beneficial impact is most dramatically demonstrated in its recent deal for supplies of Australian liquefied natural gas. An agreement with North West Shelf LNG will deliver A$25 billion worth of liquefied gas to China by ocean-going tanker over 25 years. Meanwhile, additional LNG proposals are aimed at developing more of Australias estimated 150 trillion cubic feet of proven and probable gas reserves in order to expand export markets in the Asia/Pacific region and the U.S.
Not surprisingly, mining and resource development industries provide some of the best wages and career growth opportunities in the country, de Jager says.
Australian Average Annual Wages by Sector
| Sector |
Annual Average Wage (Australian $) |
| Tourism |
$38,075 |
| Retail |
$41,285 |
| Manufacturing |
$50,310 |
| Construction |
$50,425 |
| Wholesale |
$51.330 |
| Health/Community Services |
$52,210 |
| Personal and other Services |
$53,645 |
| Cultural/Recreational services |
$62,060 |
| Transport and Storage |
$53,735 |
| Government and Defense |
$57,440 |
| Communications Services |
$57,790 |
| Property and Business Services |
$58,455 |
| Education |
$59,890 |
| Energy/Water Supply |
$64,300 |
| Finance and Insurance |
$67,835 |
| Mining |
$85,550 |
| Source: Australian Bureau of Statistics |
What is, perhaps, surprising to outsiders is that, while mining and agriculture supply 65 per cent of exports, some 70 per cent of total GDP output and 75 per cent of total employment are derived from the domestic services sector.
As a consequence of strong economic performance the federal government delivered its ninth consecutive balanced budget for 2006-07 and continues to reduce its share of accumulated public debt, which stands at $585 billion (US) against an annual GDP (purchase power parity) of $645 billion (US). For 2006-07 a domestic surplus of $17 billion is forecast. Government coffers are expected to receive a further substantial boost likely around A$8 billion from the scheduled privatization of its last 17-per-cent holding in Telstra, the former government telephone and communications monopoly, that has been gradually sold off since 1999. While some of this infusion may go for debt retirement, the government also faces calls for improved telecom services across vast rural areas.
Employment levels are high, with unemployment at a historically low level of 4.5 per cent. Domestic demand is strong, foreign demand for Australian resources appears to be on a fairly steady growth track and economic observers are predicting three-per-cent GDP growth through 2007, de Jager says. Of concern is current inflation of 2.9 per cent which is at the top end of the Reserve Banks comfort zone and exerting upward pressure on the current cash rate of 6.5 per cent. Additionally consumer spending is of concern with personal credit levels running at 125 per cent of annualized income.
Still, its a country with a lot of advantages but two of its best are an entrepreneurial heritage and a can-do attitude.
Kris de Jager (kris@dejager.com.au) is the founder of De Jager and Associates (www.dejager.com.au), a leading executive search firm in Sydney, and a member of IIC Partners, Executive Search Worldwide (www.iicpartners.com). IIC Partners is a top-10 global search organization with more than 50 offices in 40 countries. |
