The changing economic landscape and the implications for business & consumers

Dean PearsonHead of Behavioural & Industry EconomicsMarch 4, 2016

“Companies that embrace innovation, that are agile and prepared

to approach change confidently and with a sense of optimism are

more competitive, more able to grow market

share and more likely to increase their employment"

Malcolm Turnbull

Prime Minister, Australia

December 2015

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Some legal information

Part 1:

Understanding the economy.

Chinese growth slowdown continuing!

5

Chart 1

Chart 2

Chart 3

Chart 4

6 Footer

-25

-20

-15

-10

-5

0

5

10

15

20

25

Sep

-05

Sep

-06

Sep

-07

Sep

-08

Sep

-09

Sep

-10

Sep

-11

Sep

-12

Sep

-13

Sep

-14

Sep

-15

Global Merchandise Trade: Volumes & Prices: %ge YOYGlobal Merchandise Trade: Volumes & Prices: %ge YOYGlobal Merchandise Trade: Volumes & Prices: %ge YOYGlobal Merchandise Trade: Volumes & Prices: %ge YOY

Volumes

Prices

%ge YOY

Source: CPB Netherlands

Global trade flows are the weakest

since 2009 with no signs of a recovery

heading into 2016. The most recent

data show trade volumes increasing

0.7% in yoy terms, less than half the

3.7% a year ago, and significantly

below the 7% pre-GFC average. Prices

have fared far worse: declining

Global trade flows are the weakest since 2009. Trade

volumes are increasing at less than half the rate of a year ago, and significantly below the pre-GFC average. Prices have fared

far even worse!

All emerging markets are slowing

AND global trade is weak.

Chart 2

Chart 1

7

Sluggish sub-trend global growth to continue

Chart 2

Global growth forecasts % change year on yearNAB Forecasts

2011 2012 2013 2014 2015 2016 2017US 1.6 2.2 1.5 2.4 2.4 2.3 2.3Euro-zone 1.7 -0.8 -0.2 0.9 1.4 1.7 1.9Japan -0.4 1.7 1.6 -0.1 0.6 1.1 0.9UK 2.0 1.2 2.2 2.9 2.2 2.2 2.2Canada 3.0 1.9 2.0 2.5 1.2 1.7 2.0China 9.3 7.8 7.7 7.3 6.9 6.7 6.5India 7.9 4.9 6.4 7.1 7.5 7.6 7.4Latin America 4.9 2.5 2.6 0.9 -0.4 -0.3 1.2Emerging East Asia 4.4 4.6 4.2 4.1 3.6 3.6 3.8New Zealand 1.8 2.4 2.4 3.7 2.4 2.4 2.5World 4.4 3.4 3.3 3.3 2.9 3.0 3.3memoAdvanced Economies 1.7 1.2 1.2 1.8 1.9 2.0 2.1Big Emerging Economies 7.0 5.3 5.6 5.1 4.5 4.5 4.8Major trading partners 4.7 4.3 4.2 4.0 3.8 3.8 3.8

Chart 1

0

5

10

15

20

60

65

70

75

80

1990 1995 2000 2005 2010

Source: CEIC, NAB Economics

% of total population

Working age (15-64)

Older age (65+)

0

1

2

3

4

5

1950 1960 1970 1980 1990 2000 2010

Per capita income, relative to the US (natural log of %)

Middle income

Lower income

Higher income

Malaysia

China

Source: The Conference Board Total Economy Database, World Bank, NAB

Latin America

China - challenges but our future remains linked to Asia!

Top 10 opportunities for the Australian economy in the Top 10 opportunities for the Australian economy in the Top 10 opportunities for the Australian economy in the Top 10 opportunities for the Australian economy in the

short to medium-termshort to medium-termshort to medium-termshort to medium-term(% of total responses)

12%12%12%12%

13%13%13%13%

13%13%13%13%

16%16%16%16%

19%19%19%19%

28%28%28%28%

29%29%29%29%

35%35%35%35%

13%13%13%13%

19%19%19%19%

14%14%14%14%

23%23%23%23%

16%16%16%16%

23%23%23%23%

32%32%32%32%

27%27%27%27%

33%33%33%33%

22%22%22%22%

11%11%11%11%

44%44%44%44%

10%10%10%10%

24%24%24%24%

19%19%19%19%

10%10%10%10%

0%0%0%0%

0%0%0%0%

0%0%0%0%

11%11%11%11%

22%22%22%22%

44%44%44%44%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Social media

Cloud Computing

Housingshortages/affordability

Environmental/Green

Food safety, quality &security

Tourism

Ageing population

Digital technology

Rise of Asian middle class

Increased trade with Asia(inc. FTAs)

QBS SMEs ASX-300

9

China – plenty of challenges but our future remains linked to Asia!

Chinese business has an overwhelmingly positive

impression of Australia overall. Australia is also taken very seriously as an economic

partner, ranking second only to the US.

Australia challenged by end of mining investment boom, but “green shoots”.

Australian economic and financial forecasts (a)Australian economic and financial forecasts (a)Australian economic and financial forecasts (a)Australian economic and financial forecasts (a)

2014-15 F2014-15 F2014-15 F2014-15 F 2015-16 F2015-16 F2015-16 F2015-16 F 2016-17 F2016-17 F2016-17 F2016-17 F 2015-F2015-F2015-F2015-F 2016-F2016-F2016-F2016-F 2017-F2017-F2017-F2017-F

Private Consumption 2.5 2.9 2.7 2.6 3.0 2.4

Dwelling Investment 7.7 8.1 2.7 9.1 5.6 -0.3Underlying Business Fixed Investment

-7.1 -13.2 -7.2 -10.8 -10.4 -6.4

Underlying Public Final Demand

-0.4 2.7 2.3 2.0 2.0 2.5

Domestic DemandDomestic DemandDomestic DemandDomestic Demand 0.70.70.70.7 0.90.90.90.9 1.51.51.51.5 0.90.90.90.9 1.31.31.31.3 1.31.31.31.3

Stocks (b) 0.2 -0.2 -0.1 -0.1 -0.2 0.0

GNEGNEGNEGNE 0.80.80.80.8 0.70.70.70.7 1.41.41.41.4 0.80.80.80.8 1.11.11.11.1 1.31.31.31.3

Exports 6.6 7.6 9.5 6.4 9.0 9.8

Imports 0.1 -0.5 2.5 0.9 0.8 2.4

GDPGDPGDPGDP 2.22.22.22.2 2.72.72.72.7 2.82.82.82.8 2.32.32.32.3 2.72.72.72.7 3.03.03.03.0

– Non-Farm GDP 2.2 2.8 2.9 2.4 2.8 3.0

– Farm GDP -0.5 -3.4 0.1 -0.1 -3.0 1.6

Nominal GDP 1.5 1.7 4.5 1.4 2.7 5.3

Federal Budget Deficit: ($b) 40 30 30 NA NA NA

Current Account Deficit ($b) 59 89 82 75 91 73

( -%) of GDP 3.6 5.4 4.8 4.6 5.5 4.2

Employment 1.3 2.4 2.0 2.0 2.2 2.0

Terms of Trade -10.4 -13.5 -3.7 -12.2 -10.4 -1.0

Average Earnings (Nat. Accts. Basis)

1.4 1.4 2.1 0.8 1.9 2.3

End of PeriodEnd of PeriodEnd of PeriodEnd of Period

Total CPI 1.5 1.6 3.1 1.4 2.8 2.6

Core CPI 2.3 2.0 2.7 2.0 2.6 2.6

Unemployment Rate 5.9 5.8 5.5 5.8 5.6 5.5

RBA Cash Rate 2.00 2.00 2.50 2.00 2.00 3.00

10 Year Govt. Bonds 3.01 3.30 3.65 3.10 3.35 3.65

$A/US cents : 0.77 0.69 0.72 0.70 0.70 0.73

$A - Trade Weighted Index 63.8 60.6 63.9 60.2 62.1 64.5

(b) Contribution to GDP growth

(a) Percentage changes represent average annual growth, except for cash and unemployment rates. The latter are end June. Percentage changes for CPI represent through the year inflation.

Calendar YearCalendar YearCalendar YearCalendar YearFiscal YearFiscal YearFiscal YearFiscal Year

Australia has entered a new growth phase….

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

Jun-03 Jun-05 Jun-07 Jun-09 Jun-11 Jun-13 Jun-15 Jun-17

GDP

Domestic Demand

Sources: ABS, NAB

Forecasts

6mth % change (annualised)

0

1

2

3

4

5

6

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: ABS, NAB Economics

%

Broad based growth – 3.6% a yr

Main contributors:

Finance & Insurance (18%)

Construction (12%)

Mining (10%)

Narrow growth – 2.5% a year

Main contributors:

Mining (25%)

Professional Services (13%)

Manufacturing (-5%)

New phase

Post mining boom

2015 will be the 24th straight year of economic growth - a feat that no other industrialised economy can match. But there has been a significant change in

the drivers of Australian growth.

Big slowdown in mining investment, new investment slow to materialise!

Required Rate of ReturnRequired Rate of ReturnRequired Rate of ReturnRequired Rate of Return

0

2

4

6

8

10

12

14

16

18

20

Min

ing

Com

ms

Cons

truc

tion

Fin/

Bus

/ Pr

opW

hole

sale

Reta

il

Man

ufac

turin

g

Pers

onal

Ser

vice

sTr

ansp

ort

Util

ities

Tota

l

%

Non-mining investment remains the missing ingredient in Australia’s

economic landscape. However, official data only covers 50% of non-mining

investment, and excludes many of the sectors that are now outperforming -

especially health and education.

Chart 1

Chart 2

Chart 3

Australia’s terms of trade boom is over, impacting incomes!

Australia's Terms of Trade

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

Sep

-96

Sep

-98

Sep

-00

Sep

-02

Sep

-04

Sep

-06

Sep

-08

Sep

-10

Sep

-12

Sep

-14

Sep

-16

Inde

x of

Exp

ort t

o Im

port

Pric

es

Average - 1985 to 2000

Source: ABS, &, NAB Economics

Chart 1 Chart 2

Chart 3

14

While the slide in oil is in part caused by slower demand it

remains overwhelmingly a story of overcapacity and oversupply as US new oil supply has come

on board.

The ongoing fall in oil prices?

Chart 1

Chart 2

Business conditions holding despite significant headwinds!

-40

-30

-20

-10

0

10

20

Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16

Business Conditions (net balance)Business Conditions (net balance)Business Conditions (net balance)Business Conditions (net balance)

Seasonally adjusted Trend Conds 1990s recn Cond GFC

-40

-30

-20

-10

0

10

20

Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16

Business Confidence (net balance)Business Confidence (net balance)Business Confidence (net balance)Business Confidence (net balance)

Seasonally adjusted Trend Conf 1990s recn Conf GFC

Business conditions by State!

The divergence between mining and non-mining state economies

continues, although with mining investment turning down it is the

major non-mining economies that are outperforming!

Chart 1

-20

-10

0

10

20

30

Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16

Australia NSW Vic

-20

-10

0

10

20

30

Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16

Australia QLD WA

-20

-10

0

10

20

30

Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16

Australia SA Tas

Chart 2

17 Footer

NAB growth and unemployment rate forecasts for the states

14/15 15/16f 16/17f 14/15 15/16f 16/17f

NSW 2.4 2.6 2.8 5.9 5.5 5.3

VIC 2.5 2.6 2.7 6.4 6.1 5.9

QLD 0.5 4.0 4.2 6.5 6.2 6.0

SA 1.6 1.7 1.8 6.9 7.6 7.4

WA 3.5 1.7 2.0 5.4 6.5 6.5

TAS 1.6 2.2 2.0 6.9 6.7 6.5

NT 10.5 4.5 3.0 4.2 4.5 4.7

ACT 1.4 2.0 2.3 4.5 4.3 4.0

Australia 2.2 2.7 2.8 6.1 6.0 5.7

Gross State Product YoY Unemployment Rate

The rotation towards the non-mining states to continue!

Chart 1

Services and interest rate sensitive sectors outperforming!

Chart 1

Chart 2

Range of conditions widen as

mining and wholesale deteriorate sharply

-30

-20

-10

0

10

20

30

Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16

Mining Manufacturing Construction

-30

-20

-10

0

10

20

30

Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16

Retail Wholesale Transport/Utilities

-30

-20

-10

0

10

20

30

Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16

Finance/ Business/ Property Recreation & Personal Services

Services also very important to Victoria!

Range of conditions widen as

mining and wholesale deteriorate sharply

Australia’s top 10 exports

Australia's trade in services relies heavily on just 2 sectors

Services activity is driving the non-mining recovery in Australia.

Services are more labour intensive, but are

historically less capital intensive. Productivity

growth has also tended to be weaker, which together with slower

population growth will weigh on Australia’s

potential growth rate.

Australia’s population growth continues to slow.

Chart 1

Chart 2

Chart 3

Residential approvals peaking – Eastern seaboard vulnerable!

0

50

100

150

200

250

300

350

0

50

100

150

200

250

300

350

2005 2007 2009 2011 2013 2015 2006 2008 2010 2012 2014

Building Approvals to Change in PopulationRelative to long-run (LRA = 100)

NSW

Victoria

Queensland

South Australia

Western Australia

Houses Apartments

15 years ago the ratio of houses to apartments was around 3 to 1.

By early 2015, approvals for apartments and houses were

virtually identical!

Chart 1Chart 2

Chart 3

Australia’s property market is cooling

The continued moderation in investor approvals should

strengthen the RBA’s faith that regulatory measures are

helping to contain risks in the housing market.

Chart 1

Chart 2

Chart 3

Property experts see a slowdown but not a sharp correction!

-1.0

0.0

1.0

2.0

3.0

4.0

Qld

Vic

Au

str

alia

NSW

WA

SA

/NT

Qld

Au

str

alia

Vic

WA

NSW

SA

/NT

Average Survey House Price Expectations (%)Average Survey House Price Expectations (%)Average Survey House Price Expectations (%)Average Survey House Price Expectations (%)

Q4'14 Q3'15 Q4'15

%

Next 12 monthsNext 12 monthsNext 12 monthsNext 12 months Next 2 yearsNext 2 yearsNext 2 yearsNext 2 years

16.116.116.116.1

11.411.411.411.4 11.511.511.511.5

9.49.49.49.4

19.019.019.019.0

11.311.311.311.3

14.914.914.914.9

9.59.59.59.5

17.917.917.917.9

11.211.211.211.2

17.617.617.617.6

9.09.09.09.0

0

5

10

15

20

New Apartments Established Apartments New Houses Established Houses

Overseas Buyers: Purchases by Property Type Overseas Buyers: Purchases by Property Type Overseas Buyers: Purchases by Property Type Overseas Buyers: Purchases by Property Type (% of total sales)(% of total sales)(% of total sales)(% of total sales)

Q2'15 Q3'15 Q4'15

%

NAB expects house price growth to be significantly more subdued in 2016. This will

have noticeable implications for the economy, both in terms of the direct impact on dwelling

construction activity, as well as the wealth effects on household consumption

Suburbs tipped to enjoy above average capital growthChart 1

Chart 2

26

NAB Forecasts – affordability bites in Sydney and Melbourne!

2011201120112011 2012201220122012 2013201320132013 2014201420142014 2015201520152015 2016f2016f2016f2016f 2011201120112011 2012201220122012 2013201320132013 2014201420142014 2015201520152015 2016f2016f2016f2016f

Capital City AverageCapital City AverageCapital City AverageCapital City Average -4.0 -0.5 9.9 8.4 7.8 1.0 -2.6 0.5 9.0 5.1 7.9 -1.2

Sydney -2.6 1.3 15.2 13.4 11.5 0.6 -1.3 2.3 11.6 8.3 11.3 -0.6

Melbourne -4.4 -2.9 8.5 8.4 11.7 2.0 -3.2 -2.5 8.7 1.1 6.9 -3.0

Brisbane -7.0 -0.5 5.3 5.2 4.3 3.0 -2.0 -3.5 3.5 1.2 1.8 -0.6

Adelaide -3.8 -0.8 3.0 4.5 -0.3 0.2 -8.0 -0.5 0.6 2.5 1.4 0.2

Perth -3.4 0.6 10.2 2.1 -3.8 -3.0 -5.4 3.3 6.3 1.9 -3.5 -3.0

Hobart -8.8 -0.5 2.9 3.3 -1.6 -0.6 -5.6 4.2 -5.1 5.9 8.6 0.0

House PricesHouse PricesHouse PricesHouse Prices Unit PricesUnit PricesUnit PricesUnit Prices

Momentum in the market

is expected to flatten out

as credit restrictions on

investors and worsening

affordability bites in

Sydney and - to a lesser

extent Melbourne - where

foreign investment is a

larger element.

Chart 1

Demand for health services continues to rise….

-15

-10

-5

0

5

10

15

20

Finance

Property

Health

Accom, cafes &

rest

Manuf

Business

Transp

Retail

Wsa

le

Constructio

n

Business Conditions Business Confidence

Index

Is this the end of Aust manufacturing? - Far from it!BCG Global Manufacturing CostBCG Global Manufacturing CostBCG Global Manufacturing CostBCG Global Manufacturing Cost----Competitiveness IndexCompetitiveness IndexCompetitiveness IndexCompetitiveness Index

-10

-5

0

5

10

15

20

1975 1980 1985 1990 1995 2000 2005 2010

%

Source: ABS, NAB Economics

Manufacturing's share of Australian economy

Growth Manufacturing

Growth All Industries

Manufacturing’s share of the economy has clearly Manufacturing’s share of the economy has clearly Manufacturing’s share of the economy has clearly Manufacturing’s share of the economy has clearly declined over the longer termdeclined over the longer termdeclined over the longer termdeclined over the longer term

Average consumption expenditure per household in Chinese urban & rural

regions 2003-2013 (in yuan).

Impact of higher incomes in urban households. Increase in consumption

volumes

Agribusiness & premium Australian producers

Australia = one of highest concentration of O/S students in world!

Australia’s key international tourism markets!

Tourist arrivals from mainland China have hit 1 million a year for the first time - up from just 100,000 15 yrs ago.

Domestic visitors account for almost 70% of all visitor spend!

The evolution of tourism in Australia

1984

20072014

2016

2014From: “what I see” To: “what I do”

2008

Part 2:

Understanding the consumer

Living in the “lucky country” doesn’t mean we are not anxious!

50

55

60

65

70

75

Q1 2

013

Q2 2

013

Q3 2

013

Q4 2

013

Q1 2

014

Q2 2

014

Q3 2

014

Q4 2

014

Q1 2

015

Q2 2

015

Q3 2

015

Q4 2

015

Overall Wellbeing IndexOverall Wellbeing IndexOverall Wellbeing IndexOverall Wellbeing Index(score out of 100 where 0 = not at all and 100 = completely)

Wellbeing Satisfied Life Worthwhile Life Happy Yesterday Not Anxious Yesterday

-20% -10% 0% 10% 20% 30% 40% 50% 60% 70%

Events (eg abuse, victimization)Lack of time

Substance use/abuseOther

Buying/selling/finding a homeHow long to get to work

Ability to fund retirementGeneral finances/money

School/uni/education issuesWork/job issues

Physical appearancePhysical health

EnvironmentMental wellbeing

Feeling part of local communityStandard of living

Personal safetyHouse you live in

Family/personal relationships

Issues that define your personal wellbeingIssues that define your personal wellbeingIssues that define your personal wellbeingIssues that define your personal wellbeing(net balance)

Dec-15

Sep-15

56.0

58.0

60.0

62.0

64.0

66.0

68.0

70.0

Sin

gle

Fem

ale

(18-2

9)

Male

(30-4

9)

Un

der $

35k

18-2

9

Oth

er w

orkers

Male

(18-2

9)

Labo

urer

Div

orced

30-4

9

H/h

old

siz

e (

On

e)

Fem

ale

(30-4

9)

Defa

cto

Kid

s

H/H

old

siz

e (

3+)

Sale

s/cle

ric

al

DN

F H

igh

scho

ol

Vo

cati

on

al

Tech

nic

al

Reg

ion

al cit

y

Hig

h s

ch

oo

l

SA

/N

T

NSW

/A

CT

Fu

ll t

ime

VIC

Male

Fem

ale

$35k t

o $

50k

Cap

ital cit

y

No

t em

plo

yed

Part

tim

e

$50k t

o $

75k

QLD

Dip

lom

a

WA

Rural To

wn

/B

ush

Bach

elo

r/Po

stG

rad

$75k t

o $

100k

TA

S

No

Kid

s

Pro

fessio

nal

H/h

old

siz

e (

two

)

$100k+

Marrie

d

Male

(50+)

50+

Fem

ale

(50+)

Wid

ow

ed

Average LongAverage LongAverage LongAverage Long----Term WellbeingTerm WellbeingTerm WellbeingTerm Wellbeing

averageaverageaverageaverage

And consumers are very anxious about the cost of living

57

58

59

60

61

62

63

64

65

66

Q1 2

013

Q2 2

013

Q3 2

013

Q4 2

013

Q1 2

014

Q2 2

014

Q3 2

014

Q4 2

014

Q1 2

015

Q2 2

015

Q3 2

015

Q4 2

015

Overall Consumer Anxiety: TrendsOverall Consumer Anxiety: TrendsOverall Consumer Anxiety: TrendsOverall Consumer Anxiety: Trends(score out of 100 where 0 = "nil" anxiety and 100 = "extreme" anxiety)

average 2013average 2013average 2013average 2013----2015201520152015

“The notion of what is a reasonable reasonable reasonable reasonable standard of livingstandard of livingstandard of livingstandard of living has increased, as

households have become accustomed to consuming more goods and services

and those of a higher quality”…..

Reserve Bank of Australia, March 2014.

Financing retirement keeping most awake at night!

0 10 20 30 40 50 60 70

Credit card repayments

Personal loan repayments

Food/basic necessities

Children's education

Monthly household bills

Non-essentials (holidays, eating out)

Mortgage, rent, housing costs

Raising $2,000 in emergency

Providing for family's future

Medical bills/healthcare

Financing retirement

Drivers of Household Financial StressDrivers of Household Financial StressDrivers of Household Financial StressDrivers of Household Financial Stress(score out of 100 where 0 = "not at all concerned" and 100 = "extremely concerned)

Q4 2015 Q3 2015 Q4 2014

0

5

10

15

20

25

30

35

More Than Enoughto Retire

Enough to Retire Not Enough toRetire

Far From Enoughto Retire

perc

en

tag

ep

erc

en

tag

ep

erc

en

tag

ep

erc

en

tag

e

Expected Financial Sufficiency at RetirementExpected Financial Sufficiency at RetirementExpected Financial Sufficiency at RetirementExpected Financial Sufficiency at Retirement

Sep-14 Jun-15 Sep-15

Chart 1Chart 2

Chart 3

38

$572$572$572$572

$579$579$579$579

$827$827$827$827

$847$847$847$847

$854$854$854$854

$598$598$598$598

$631$631$631$631

$632$632$632$632

$970$970$970$970

$1,079$1,079$1,079$1,079

$647$647$647$647

$751$751$751$751

$905$905$905$905

$757$757$757$757

$796$796$796$796

$399$399$399$399

$528$528$528$528

$781$781$781$781

$797$797$797$797

$851$851$851$851

$655$655$655$655

$692$692$692$692

$854$854$854$854

$525$525$525$525

$571$571$571$571

$706$706$706$706

$749$749$749$749

$772$772$772$772

$1,227$1,227$1,227$1,227

$1,464$1,464$1,464$1,464

$640$640$640$640

$670$670$670$670

$698$698$698$698

$763$763$763$763

$792$792$792$792

$1,000$1,000$1,000$1,000

$717$717$717$717

$745$745$745$745

$815$815$815$815

$703$703$703$703

$814$814$814$814

$530$530$530$530

$794$794$794$794

$835$835$835$835

$171$171$171$171

$670$670$670$670

$712$712$712$712

$762$762$762$762

$828$828$828$828

$851$851$851$851

$759$759$759$759

$0 $250 $500 $750 $1,000 $1,250 $1,500

High School Leaver

High school

Bachelor/Post Graduate

Diploma

Vocational

Sales/Clerical

Labourer

Other (i.e. self-employed)

Technical

Professional

Not Employed

Working Part Time

Working Full Time

Children

No Children

Widowed

Defacto

Married

Divorced

Single

Household Size (1)

Household Size (2)

Household Size (3+)

$35k to $50k

$50k to $75k

Under $35k

$100k to $150k

$75k to $100k

$150k to $200k

Earning $200k+

Female (30 to 49)

Male (50+)

Female (18 to 29)

Female (50+)

Male (18 to 29)

Male (30 to 49)

50+

18 to 29

30 to 49

Female

Male

Rural Town/Bush

Capital City

Regional City

TAS

VIC

SA/NT

QLD

WA

NSW/ACT

All

Minimum amount that would significantly improve Minimum amount that would significantly improve Minimum amount that would significantly improve Minimum amount that would significantly improve quality of life going forward ($'000s)*quality of life going forward ($'000s)*quality of life going forward ($'000s)*quality of life going forward ($'000s)*“Financial Freedom”……

how much money would

significantly improve your life?

Many Australians dream of a financial windfall

that would significantly improve their lives

forever, but how much is enough?

On average, around $760,000 $760,000 $760,000 $760,000 is the magic number, but this hides some big differences depending on where

you live, your age, gender, income and

other factors.

Australia’s culture of innovation through the eyes of business……

Culture of Innovation: Australia as a WholeCulture of Innovation: Australia as a WholeCulture of Innovation: Australia as a WholeCulture of Innovation: Australia as a Whole(% share)

14%14%14%14%

70%70%70%70%

13%13%13%13%16%16%16%16%

74%74%74%74%

6%6%6%6%

16%16%16%16%

66%66%66%66%

15%15%15%15%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Not at all innovative Mildly innovative Highly innovative

QBS ASX 300 SMEs

not very innovativenot very innovativenot very innovativenot very innovative highly innovativehighly innovativehighly innovativehighly innovativemildly innovativemildly innovativemildly innovativemildly innovative

Culture of Innovation: Your OrganisationCulture of Innovation: Your OrganisationCulture of Innovation: Your OrganisationCulture of Innovation: Your Organisation(% share)

15%15%15%15%

55%55%55%55%

27%27%27%27%

15%15%15%15%

56%56%56%56%

29%29%29%29%

16%16%16%16%

53%53%53%53%

29%29%29%29%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Not at all innovative Mildly innovative Highly innovative

QBS ASX 300 SMEs

not very innovativenot very innovativenot very innovativenot very innovative highly innovativehighly innovativehighly innovativehighly innovativemildly innovativemildly innovativemildly innovativemildly innovative

“If you look at

history, Australia

is one of the best

managers of

adversity the

world has

seen……and the

worst manager of

prosperity.”

The Economist

Magazine, 1985

Chart 1

Chart 2

Australia’s next phase of growth will be defined by

our ability to foster a culture of innovation culture of innovation culture of innovation culture of innovation

and reform and reform and reform and reform (with much of the focus in 2016 on

taxation). This will be a key

determinant of business confidence and important

in generating the productivity growth

necessary to offset the impact of weaker

population growth and an ageing population

profile.

Collaboration the key to innovation?

"It's not enough to be globally

competitive in research if that research is not

connected with the rest of the economy

that funds the research.“

Christopher Pyne,

Industry, Innovation and

Science Minister

Genuine link between innovation & business success

Highly Innovative Firms: Business Conditions & Highly Innovative Firms: Business Conditions & Highly Innovative Firms: Business Conditions & Highly Innovative Firms: Business Conditions & ConfidenceConfidenceConfidenceConfidence

-30

-20

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40

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CONDITIONSCONDITIONSCONDITIONSCONDITIONS CONFIDENCECONFIDENCECONFIDENCECONFIDENCE

� = highly innovative firms

“If there is one key secret to business

success, one way to ensure ongoing growth,

one way to stand the test of time and one

way to keep generation after generation of customers excited,

passionate and loyal to a brand, it is through constant innovation”.

Pippa Hallas,

CEO of Ella Baché

thank-you