The search for growth industries beyond mining is a perennial topic of debate in Australia.
This is particularly so in Western Australia, where the accepted wisdom is that the state needs to diversify its economy in order to become less reliant on mining and resources.
Deloitte Access Economics has added to this debate with the release of a reported titled 'Positioning for prosperity? Catching the next wave'.
It starts with some interesting projections about the industry sectors that are likely to achieve above-average growth during the next 20 years.
Number one on the list is gas, seen as a relatively clean fuel that will displace coal as countries seek to improve air quality and reduce greenhouse emissions.
Other high-growth industries include tourism, agribusiness, health, international education, and wealth management.
Mining and construction, traditionally two of the mainstays of the WA economy, are ranked near the bottom of the list.
Of the 20 industry sectors covered by the Deloitte analysis, media, manufacturing, and ICT are seen as having the weakest growth prospects.
The Tourism Council of WA leapt on the report to assert that tourism and international education had been identified as "the top economic drivers in Australia's future".
That's not quite true, because the next step in the Deloitte analysis is to find areas where Australia has a competitive edge.
The report concludes that Australia has five big-picture advantages: world-class resources in land, minerals and energy; proximity to the fast-growing markets of Asia; use of English, the world's business language; a temperate climate; and well understood tax and regulatory regimes.
Off the back of this analysis, it lists agribusiness as the sector where Australia has the biggest comparative advantage, followed by mining and gas.
Further down the list came tourism, oil, and international education.
Putting these concepts together – global growth opportunities, Australia's competitive edge, and the
current size of industry sectors – led to the following conclusion.
"The sheer size of the mining sector and its continuing potential will ensure it remains central to our economy for many years to come," the report stated.
That was particularly the case for WA.
To put this in perspective, the Deloitte report also analysed the potential of other high-growth sectors, including agribusiness, gas, tourism, and international education.
"Collectively, they have the potential to be as big as mining," the report says.
This conclusion provides a reality check for those who believe other industries will take over from mining and resources as the main growth driver in WA.
While this analysis is fodder for interesting debates about future industry growth, the most important part of the report concerns the appropriate policy responses.
It lists objectives including a better-skilled vocational workforce, more efficient regulatory and tax regimes, and a stable and clear set of policy rules for business.
This accords with the policy framework Business News has long advocated – the focus should be on measures
that are good for all businesses rather than particular sectors.
The worst thing government can do is to seek out winners.
Instead, it should provide a framework that offers opportunity for all industries, whether they be in mature industries like mining, high growth sectors like agribusiness, and even low growth industries like media and manufacturing.
In all of these industries, there will be winners and losers, companies that do well and others that fail.
It's the market that should decide who or where they are.
