“We effectively borrowed against the windfall of rising commodity prices,” Mr Gor said, “acting as if they would last forever”. This money all went to housing and “the income windfall from rising commodity prices was spent as quickly as we earned it”.
Australia has become the little weedy kid no one wants on their team.
The net foreign liability claim is at 67 per cent of gross domestic product meaning Australia owes the world 67 per cent of output, beyond the 50 per cent mark which the International Monetary Fund considers “the point at which the financial stability of a country comes into question”, he says.
When it comes to the budget, the second of the twin deficits, a surplus looks unrealistic any time soon and Australia is issuing a projected $72 billion of bonds this year, or $2 billion a week, mostly bought by foreign investors.
— SMH, 10 June 2016

Australia has built its impressive position as a top economic performer on the back of our natural resources, primarily our agricultural and mineral exploits. This has helped us become a top performer in many of the important measures of human advancement, such as health, education, and happiness. Our value to the world via our exports is why we have been able to afford to build this prosperous nation. If not for anything else, the numbers show that we are known primarily for the exportation of energy (food, fossil and fission) and materials (agricultural and mineral).

This has not been without a cost to the environment but the evidence is clear that our way of life today - a wealthy, secular, plural democracy - owes its existence to this fact. However, we have not managed to build a successful value-added export economy during the boom and we risk losing what we have built if we do not accept these critical weaknesses and make plans to structurally change and transition to a 21st century economy.

The numbers are clear: a commodity based economy is not one that provides stable export income, a critical component of the prosperity of the nation.

Our economy is completely stuffed. And it’s only going to get worse unless we do major terraforming of it.
We need serious structural change to the composition of GDP that’s substantially more sophisticated in terms of the industries that contribute.
Australia’s GDP of $1.6 trillion is 69% services. Our “economic miracle” of GDP growth comes from digging rocks out of the ground, shipping the byproducts of dead fossils, and stuff we grow. Mining used to be 19% is now 7% and falling. Combined the three contribute now only 12% of GDP thanks to the global collapse in commodities prices.
Making things worse, the recent budget forecast mining to fall by over 25% again this year and by another 14% next. Revenue from the Petroleum Resource Rent Tax halved last year.
If you look at business as a whole, it wasn’t widely reported, but if you look at the budget that just came out, receipts from Company Tax fell last year, from $66 billion to $64.7 billion. This country is sick.
— Matt Barrie, May 2016

This story is not all doom and gloom as long as we turn this knowledge of our likely future into actionable outcomes. Our current course see us with a nil to small amount of transformation and a mild amount of mitigation. This is a missed opportunity as we are in a position in resources and time that can create more prosperity and better human outcomes not just for our own citizens, but the citizens of the world.

This plan aims to do exactly this. It will not be easy, it will not be simple and this is exactly why we must to it.

As a country we’d better start having a good think about what sorts of industries we want to have a meaningful contribution to GDP in the coming decades.
For a start, we need to elaborately transform the commodities we produce into a higher end, higher margin products. Manufacturing contributes 5% to GDP. Through the year to the end of December 2015, we created negative 60,000 jobs in manufacturing. Part of the problem is that the manufacturing we do has largely become commoditised while our labour force remains one of the most expensive in the world. So if our people are going to cost a lot, we better be manufacturing high end products, otherwise other countries can do it cheaper and naturally it’s all going to leave.
That’s where we need to seriously talk about technology, because technology is the great wealth and productivity multiplier...
With our population of 24 million and labour force of 12 million, there’s no other industry that can deliver long term productivity and wealth multipliers like technology. Today Australia’s economy is in the stone age. Literally.
By comparison, Australia’s top 10 companies are a miner, a bank, a bank, a miner, a bank, a bank, a monopoly telephone company, a bank, a supermarket and a superannuation company.
— Matt Barrie, May 2016