Australia is lucky, lucky, lucky. But us, not so much
In 1964 Donald Horne, an Australian author, wrote a book called “The Lucky Country”. In spite of the negative connotations in the book, the title has now become a nickname synonymous, of course, with Australia. The term is frequently used to describe the country’s abundant natural resources, wonderful weather, proud history, distance from global problems, and many other forms of prosperity.
Horne wrote the book with the intention of portraying Australia’s rise to prosperity as being primarily because of luck rather than the strength of its political or economic systems, which he believed were “second rate”. Speaking of “second rate”, having recently visited “the Lucky Country”, in many cases it would be hard to argue that New Zealand is now not the “second rate” cousin – a prime example being infrastructure: I drove 1,050 kilometres from Sydney Airport to north of Brisbane and averaged 103 kilometres per hour. A couple of years ago when we weren’t allowed to travel and return from overseas, I drove from Auckland to Queenstown. The average speed on that trip was just 70 kilometres per hour. The difference – road infrastructure!
Horne’s statement was a criticism of Australia in the 1960s. He intended to suggest that where other industrialised countries used innovation and technology to create wealth, Australia did not. Instead, Australia’s economic success was mainly down to its abundant natural resources that were relatively easy to access and waves of immigration. He may have been and still be correct as Australia ranked 25th in the 2021 Global Innovation Index well behind consistent innovators Sweden, the USA, Japan, the UK, South Korea, and Germany. New Zealand surprisingly ranked 26th in the same survey.
But the big advantage is Australia can literally dig up its vast natural resources and export these to the world: these resources are critical pieces in the manufacturing and production chains for other countries to utilise and create their own forms of innovation. Think electric car batteries. A multi-decade mining boom has reinforced the “Lucky Country” image as the Australian economy has thrived from unprecedented and seemingly infinite demand from the likes of China for hard commodities.
Last week Macquarie Group, the Australian banking behemoth (more later) hosted Australia’s largest investment conference in Sydney, it was the 25th anniversary of the conference. The conference was attended by more than 750 institutional investors, mostly funds managers, and featured presentations from over 100 Australian and New Zealand companies. I use the term behemoth kindly to describe Macquarie Group – at the end of the conference it posted its annual financial results for the year ended March 2023 recording an impressive A$ 5.2 billion net profit. To put that level of profit in context, the aggregate net profit for the big four banks here in New Zealand for their most recent full year periods was NZ$ 6.2 billion…hence the word.
One of the speakers that resonated was a New Zealander, who now is the CEO and Managing Director of one of Australia’s largest mining companies. The company has a growing world-class portfolio of mining operations, with innovation and operational efficiency at the heart of getting its multiple commodities extracted and to market. After his formal presentation he was asked why he doesn’t come back home to New Zealand and do the same thing here? His answer was surprising in that he said was against mining in New Zealand, in part because of the country’s natural beauty but mainly because of the prohibitive costs of the necessary, almost surgical nature any extraction in New Zealand would entail. In the large swathes of Australia, the key to commercial resource extraction is digging up the mine sites as cheaply as possibly, withdrawing the particular mineral and then getting it to port and ready to export as economically as possible.
At the same conference, one major thematic for which New Zealand looks to be well placed is the transition to net zero. Almost all the Australian corporates presenting are committed to net zero and have quite aggressive timetables to reduce their emissions. In Australia, this process in many cases is a transition away from coal to gas which, although a fossil fuel is essential for Australia’s near-term energy needs and is much less polluting than coal.
This is where New Zealand is well placed given, we are far further advanced from a renewable generation perspective. Almost all our electricity production is already from renewable resources but how we exploit this is key. For example, and in terms of innovation, a large gentailer talked about its preparations for exporting green ammonia as a way to add value from New Zealand’s clean green energy sources. We have a unique advantage in this respect, and we need to get out there and leverage this feature.
I was in Queensland when the respective Labour Governments on both sides of the Tasman jointly announced the agreement giving New Zealanders a clear pathway to Australian citizenship. For those of us who have taken a trip to Sydney, Brisbane or Melbourne lately, it doesn’t stretch the imagination far to predict an increase in the resulting number of New Zealanders lining up to make the move across the ditch. And it was interesting to compare the media cover in Australia – this is great, we will be able to attract more teachers, nurses, police, tradies etc from New Zealand – to that in New Zealand – oh well, a lot of Kiwis head over to Oz anyway, this won’t make much difference. To coin another phrase that is relevant for all of the above, “luck” is what happens when preparation meets opportunity.