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SEVEN MEGATRENDS THAT WILL SHAPE THE NEXT 20 YEARS

Published

2 years ago

5 August 2022

JeffG

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SEVEN MEGATRENDS THAT WILL SHAPE THE NEXT 20 YEARS

A once-in-a-decade report from CSIRO, Australia’s national science agency, identifies seven global megatrends that hold the key to the challenges and opportunities ahead.
With an outlook to 2042, Our Future World revisits CSIRO’s ground-breaking 2012 report of the same name, exploring the geopolitical, economic, social, technological and environmental forces unfolding around the world, predicting their likely impact on Australia’s people, businesses and governments.
The seven global megatrends are: Adapting to climate change; Leaner, cleaner and greener; The escalating health imperative; Geopolitical shifts; Diving into digital; Increasingly autonomous and Unlocking the human dimension.
CSIRO Chief Executive Dr Larry Marshall said megatrends help us to understand the challenges and massive opportunities that will shape our future.
“Australia is at a pivotal point. There is a tidal wave of disruption on the way, and it’s critical we take steps now to get ahead of it,” Dr Marshall said.
“From resource scarcity to drug resistant superbugs, disrupted global trade, and an increasingly unstable climate threatening our health and way of life – these are just some of the challenges we face.
“But these challenges also tell us where the most powerful innovation can be found, when we see a different future and leverage science to create it.
“Australia has the highest wind and solar capacity of any developed nation and a wealth of critical energy minerals – we can be a leader in feeding the world’s hunger for clean energy.
“The next wave of digital innovation will generate $10–15 trillion globally.
Australia can tap into this to transform existing jobs and create new jobs and wealth while leveraging Artificial Intelligence to solve some of our greatest challenges, like outthinking bushfires, accelerating vaccine development, predicting drought, or stabilising our energy grid.
“We have the opportunity now to use science to invent the kind of world we want to live in – but we have to act, and we have to do it together.
“Trust in science led Australia’s response to COVID-19, and science can help us lead a Team Australia response to the challenges ahead,” he said.
Our Future World report co-lead author Dr Stefan Hajkowicz said: “We analysed thousands of data points collected over decades.
“Some of the trends we identified have been widely discussed, while others are newer and directly related to our experiences during the pandemic.
“We are, for example, just beginning to understand the potential long-term impacts of the pandemic on mental health and chronic illness.
“We anticipate that while the pandemic sped up digital transformation, the real explosion in our capability is yet to come. In this environment, digital skills will become more valuable, but rather than replacing human intelligence, technologies like AI will assist us in doing our work better.”

Our Future World co-lead author Dr Claire Naughtin said: “Trust emerged as a central theme – trust in institutions, technology, supply chains and security will all be key issues over the coming two decades.
“Currently just under 70% of Australians do not trust AI systems but would be more willing to use these systems if appropriate ethical measures were in place.
“This latest update on the global megatrends gives us line of sight as to what has changed over the past decade and a view to the coming decades.
“Like aircraft engineers would use wind tunnels to test the robustness of new aircrafts, we can use these megatrends to develop, test and refine future strategies to ensure they are robust, whatever the future holds.”

Snapshot of the megatrends:

Adapting to climate change: with natural disasters expected to cost the Australian economy almost three times more in 2050 than in 2017, we can expect to be living in a more volatile climate, characterised by unprecedented weather events
Leaner, cleaner and greener: an increased focus on potential solutions to our resource constraints through synthetic biology, alternative proteins, advanced recycling and the net-zero energy transition. By 2025, renewables are expected to surpass coal as the primary energy source.
The escalating health imperative: the post-pandemic world has exacerbated existing health challenges posed by an ageing population and growing burden of chronic disease. One in five Australians report high or very high levels of psychological distress and there is heightened risk of infectious diseases and pathogens resistant to modern antibiotics. There is now a burning platform to also respond to our health risks and improve health outcomes.
Geopolitical shifts: an uncertain future, characterised by disrupted patterns of global trade, geopolitical tensions and growing investment in defence. While the global economy shrunk by 3.2% in 2020, global military spend reached an all-time high of $2.9 trillion and Australia saw a 13% increase in cybercrime reported relative to the previous year.
Diving into digital: the pandemic-fuelled a boom in digitisation, with teleworking, telehealth, online shopping and digital currencies becoming mainstream. Forty percent of Australians now work remotely on a regular basis and the future demand for digital workers expected to increase by 79% from 2020 to 2025.
Increasing autonomous: there has been an explosion in artificial intelligence (AI) discoveries and applications across practically all industry sectors over the past several years. Within the science domain the use of AI is rising with the number of peer-reviewed AI publications increasing nearly 12 times from 2000 to 2019.
Unlocking the human dimension: a strong consumer and citizen push for decision makers to consider trust, transparency, fairness and environmental and social governance. While Australia saw a record level increase in public trust in institutions during the pandemic, this ‘trust bubble’ has since burst, with societal trust in business dropping by 7.9% and trust in government declining by 14.8% from 2020-21.

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Business News

Business Closures Reach Four-Year High Amid Cost Pressures

Published

6 days ago

28 November 2024

Liam

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Business Closures Reach Four-Year High Amid Cost Pressures

By Ian Rogers

Business insolvencies in Australia have hit a four-year high, with rising costs and financial pressures forcing many companies to shut their doors. According to debt-monitoring firm CreditorWatch, the business failure rate rose to 5.04% in October 2024, nearing the peak of 5.08% seen during the height of the COVID-19 pandemic in October 2020.

On an annual basis, insolvency rates are now 25% higher than pre-pandemic levels.

Why Are Businesses Struggling?

CreditorWatch identified three main reasons for the increase in insolvencies:

Higher Cost of Living: Consumers are tightening their spending, particularly on discretionary items, affecting business revenues.
Higher Cost of Doing Business: Rising electricity prices, insurance premiums, rent, and wage increases have put pressure on operating costs, especially for smaller businesses.
Tax Debt Recovery: The Australian Taxation Office (ATO) is actively pursuing $35 billion in unpaid tax debts, with many affected businesses in the hospitality and construction sectors.

Sectors Most Affected

Hospitality:
- This sector had the highest failure rate, averaging 8.5% over the past year.
- CreditorWatch predicts the rate will climb further to 9.1% in the next 12 months.
Construction:
- The construction sector’s failure rate averaged 5.3%, though it appears to be stabilizing.
- Long-standing cost pressures and reduced activity due to high interest rates have strained many businesses.

Both sectors also face the highest levels of tax debt and defaults, further limiting their financial viability.

Broader Financial Challenges

The report highlighted a rise in business-to-business payment defaults, indicating that more companies are struggling to pay their bills. Arrears have increased across most industries, reflecting the cumulative impact of rising costs and economic pressures.

Ivan Colhoun, CreditorWatch’s chief economist, remarked “Unfortunately, higher costs and interest rates are leading to more arrears and business failures. It’s an expected but unfortunate consequence of the current environment.”

Will Interest Rate Cuts Help?

The Reserve Bank of Australia (RBA) is unlikely to cut interest rates at its December meeting. Rates have remained steady at 4.35% since November 2023, with economists expecting the first cuts in the first half of 2025.

While inflation fell to 2.8% in the September quarter and unemployment held steady at 4.1% in October, the RBA has signalled it won’t reduce rates until inflation drops further or unemployment rises.

Mr. Colhoun noted that even if rates are cut, the effects will take time to materialize. However, lower inflation could provide some relief by reducing cost-of-living pressures and encouraging consumer spending, potentially boosting businesses in the medium term.

Future Uncertainties

While consumer and business confidence have shown modest improvement in recent months, challenges remain:

Global Risks: A potential shift in U.S. trade policy, including proposed tariff increases on major Australian trading partners, could create additional uncertainties for businesses.
Tax Debt Recovery Delays: The impact of delayed tax cuts and ongoing tax collection efforts could exacerbate financial strain for some businesses.

The Road Ahead

While some sectors show signs of resilience, the rising insolvency rates underscore the need for continued government and industry support. Businesses in hospitality and construction, in particular, will require targeted relief and reforms to navigate these challenging conditions.

The long-term outlook hinges on broader economic stability, interest rate adjustments, and efforts to reduce operational costs for struggling businesses.

For more local news, click here.

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Business News

Business Confidence Surges as Inflation Declines, Hitting a Two-Year High

Published

2 weeks ago

20 November 2024

Liam

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Business Confidence Surges as Inflation Declines, Hitting a Two-Year High

By Robert Heyward

Roy Morgan Business Confidence rose sharply in October 2024, increasing by 12.4 points to 106.7. This marked the most positive sentiment in over two years, driven by falling inflation and growing optimism about the Australian economy and business investment.

Key Drivers of the Increase in Confidence

The October rise in Business Confidence coincided with significant declines in inflation:

Monthly inflation: Dropped to 2.1% in September, as announced in late October, down from 2.7% in August and 3.5% in July.
Quarterly inflation: Reached 2.8% for the September quarter, its lowest level since March 2021 and within the RBA’s target range of 2–3%.

This decline in inflation has improved economic sentiment and heightened expectations of future interest rate cuts, aligning Australia with trends seen in central banks overseas.

Roy Morgan Monthly Business Confidence Australia

Improved Sentiment Across Key Indicators

Financial outlook:
- 46.3% of businesses (up 5.2 percentage points) expect to be better off financially in a year.
- Only 20.6% (down 4.4 points) anticipate being worse off.
Economic outlook:
- 59% of businesses (up 6.8 points) expect “good times” economically over the next year, the highest level since February 2022.
- Confidence about the economy over the next five years also rose, with 35.6% expecting “good times” (up 4.4 points).
Investment sentiment:
- 42.9% (up 6.9 points) believe the next 12 months is a “good time to invest” in growing their business.
- Only 35.2% (down 10.4 points) consider it a “bad time to invest,” the lowest level since June 2021.

Business Confidence by State in October 2023 vs October 2024

State-by-State Analysis

Business Confidence improved across most states, with New South Wales leading at 111.6, followed by Queensland (105.7), Western Australia (105.2), Victoria (104.4), and South Australia (102.4).

Tasmania (89.0) was the only state with confidence below the neutral level of 100, reflecting political instability within its Liberal-led government.

Industry Performance

The most confident industries in September and October included:

Public Administration & Defence: 160.1 (+48.9 points year-on-year).
Education & Training: 127.3 (+6.7 points).
Finance & Insurance: 121.6 (+20.7 points).
Recreation & Personal: 112.0 (+16.9 points).
Professional, Scientific & Technical Services: 111.0 (+11.9 points).

At the lower end, industries like Transport, Postal & Warehousing (72.6), Mining (78.3), and Agriculture (85.7) reported subdued confidence, with the Transport sector consistently lagging throughout the year.

Business Confidence for Top 5 and Bottom 5 Industries in September & October 2024

Commentary from Roy Morgan CEO Michele Levine

“Roy Morgan Business Confidence surged in October, reaching its highest level since April 2022,” Ms. Levine said.

“This increase was driven by improved optimism about the economy and growing sentiment that the next 12 months is a good time to invest in business growth. The rapid decline in inflation, combined with expectations of potential interest rate cuts, has fostered greater positivity among businesses.”

Ms. Levine also noted strong performances across major states and industries but highlighted the need for targeted support in lagging sectors such as Transport, Postal & Warehousing, and Tasmania’s struggling economy.

Conclusion

Roy Morgan Business Confidence is now just 4.5 points below its long-term average of 111.2, signalling a steady recovery in sentiment as inflation declines and businesses prepare for a potentially favourable economic environment.

For more detailed insights, the Roy Morgan Business Confidence Report is available via subscription.

For more local news, click here.

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Business News

NSW Businesses Poised to Shine at Global Expo in China

Published

3 weeks ago

14 November 2024

Liam

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NSW Businesses Poised to Shine at Global Expo in China

By Robert Hayward

The NSW Government is backing 29 businesses from the food, beverage, and health supplement sectors as they prepare to showcase their products at the China International Import Expo (CIIE) this week. The six-day trade show, China’s premier import-focused event, draws dignitaries and exhibitors from over 150 countries, offering NSW companies a direct connection to buyers, distributors, and potential customers throughout China.

As NSW’s largest two-way trading partner for nearly 20 years, China continues to be a top consumer of the state’s agricultural exports, valued at $3.6 billion for 2023/2024. NSW’s wine exports have also surged since the removal of import tariffs earlier this year, signalling continued growth opportunities, especially for the state’s premium food and beverage sector.

Last year’s CIIE saw NSW businesses secure $40 million in export deals, and the NSW Government is once again committed to facilitating new opportunities for expansion and success. Among this year’s exhibitors is Mrs Toddy’s Tonics from Sydney’s Northern Beaches, which will present its range of plant-based beverages, already stocked in Australian supermarkets.

Other participating businesses include Pablo & Rusty’s Coffee Roasters, Australian Vintage Wines, Balance Water, and Noumi. The CIIE will take place in Shanghai from 5–10 November 2024.

For more information about the event and the full list of NSW businesses that’ll be exhibiting visit here.

Minister for Industry and Trade Anoulack Chanthivong said:

“The China International Import Expo is a leading event on the global trade calendar and offers unparalleled opportunities for NSW exporters to connect with buyers and distributors in China.”

“We are excited to once again showcase the best from across NSW at this prestigious import-focused event, including meat from the Riverina, wine from the Hunter Valley, spirits from Wollongong, and health supplements made in Sydney.”

“China has a strong appetite for produce made in NSW, which is globally recognised for its high quality and safety standards, with demand only set to grow.”

Mrs Toddy’s Tonics Co-Founder Sophie Todd said:

“We’re thrilled at the opportunity to introduce a proudly Australian, female-led brand to China, and look forward to showcasing the Mrs Toddy’s Tonic range on the international stage.

“We know that Chinese consumers are becoming more health conscious and are turning to products with natural ingredients, so there’s enormous potential for a business like ours to establish a presence in this lucrative market.”

For more local news, click here.

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