Below trend growth to continue
Australia is at a crossroads and we face a stark choice – strive towards a more positive future of growth and prosperity or suffer a slow decline.
The choice is outlined in the Australian National Outlook 2019 (ANO), which details five necessary major shifts in key areas of our economy and society if Australia is to make the most of its opportunities and head towards growth and prosperity:
The fifth is a shift in culture. Each of the other shifts relies on Australia having the right culture with inclusive civic and political institutions that foster greater engagement, curiosity, collaboration and solutions.
The report – by CSIRO, NAB and 20 other organisations – draws on the latest scientific data and envisages two possible scenarios.
The culture shift
The Outlook Vision scenario incorporates inclusive civic and political institutions that foster greater engagement and curiosity to engage with new ideas, and find solutions to national challenges.
Strong incentives support technology adoption, innovation and healthy risk taking to increase Australia’s resilience to shocks. Long-term thinking places greater value on the health of Australia’s natural environment and the benefits that can be gained through the improved wellbeing of all Australians.
To achieve the culture shift three key levers are required:
Reforge institutional trust
Trust matters. It enables businesses to leverage their relationships with employees, stakeholders, regulators, customers and clients to invest and innovate, and it empowers governments to make necessary changes to policy and programs. It’s also vital in responding to crises.
One of the reasons why so many productivity-enhancing Australian reforms were possible in the 1980s was because they were enabled by a bipartisan consensus on broad economic reform that spanned both major political parties, big business and the union movement, and because Australian leaders focussed on the longer-term benefits of reform.
However, today trust has weakened for many reasons. In recent years there’s been decline in trust among the general population in our institutions, including businesses such as NAB.
The ANO report notes there’s no “silver bullet” to recovering trust of institutions but says further research is necessary.
Respondents to the Edelman Trust survey identified fostering prosperity for workers, taking care of people, fairness and equity as key areas for trust-building. Trust can also be restored in businesses by pursuing a more inclusive strategic direction, for example by incorporating employees’ input into how to direct and grow businesses.
In terms of trust in government and politicians, at every opportunity parliaments and executives should adopt a bipartisan approach to policy-making, and in this way ensure focus on longer-term needs and aspirations.
Encourage healthy risk-taking
Along with developing trust in decision-making institutions, the Outlook Vision depends on the existence of a healthier risk-taking culture in all parts of the Australian economy and community.
It requires risking an investment or decision for something that may be unfamiliar but is, on balance, needed. “Only then will Australia be able to invest in the technology needed for productivity, in the emerging sectors needed for resilience, in the technology needed for affordable, reliable low-emission energy and in the sources of future land-based income,” the ANO report states.
However, many sectors in Australia have relatively low levels of technology adoption, thanks to the relative lack of risk culture, entrepreneurship and risk capital. For example, 44% of global companies with the largest R&D spends have a ‘high performance innovation culture’ compared with only 16% of Australian businesses.
The report suggests Australia wold benefit from entrepreneurial programs that bring businesses together with young and experienced entrepreneurs, encouraging experimentation by a firm’s workforce and linking formal studies to industry and digital technology.
Broaden decision making
Incorporating social and environmental outcomes in decision-making by government, industry and civil society organisations is central to achieving each of the shifts required for Outlook Vision.
Incorporating these considerations into decision-making creates an opportunity to deliver significant commercial value for the private sector and reduce the burden on government and civil society in the process, the report states.
By contrast, failure to do so could lead to greater costs for all sectors, as well as an erosion of trust and confidence in institutions from communities more broadly.
Incorporating social and environmental considerations will re-define the roles of organisations across each sector and the private sector has a “significant business opportunity” to leveraging its core assets and expertise.
One approach that enables businesses to conceive of their role differently is through the lens of shared value – a way for businesses to strengthen their competitive positioning by accessing new markets, creating new products, driving operational efficiencies or investing in local clusters while also addressing social and environmental challenges
The scale of the opportunity is highlighted by the benefits of adopting the United Nations Sustainable Development Goals (SDGs), which provides a blueprint to achieve a better and more sustainable future for all citizens.
A report by the Business & Sustainable Development Commission, which had input from global leaders from business, finance, civil society, labour and international organisations, estimated that achieving the SDGs could open up US$12 trillion of market opportunities, spanning food and agriculture, cities, energy and materials, and health and well-being.
The ANO report advocates greater collaboration across sectors, saying it will allow organisations from across the spectrum to understand and respond to social and environmental challenges more effectively.
In response to the ANO report, NAB will be announcing significant commitments informed by the report findings.
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