June 29, 2021
Intergenerational Report offers chance to reflect on the need for sustained investment
The 2021 Intergenerational Report (IGR) was published yesterday, laying out a 40-year projection of the Australian economy, the age and size of the population, and the long-term impacts of Budget measures on Australian life. Needless to say, COVID-19 is the economic linchpin of much of the document’s direction, an event it refers to as “the most severe global economic shock since the Great Depression”.
While the pandemic will certainly have lasting effects on the national economy, we can also look further ahead to the challenges that will no doubt be presented by the crucial post-recovery period.
The Intergenerational Report predicts population growth will slow over the coming decades due to factors such as limited migration and an ageing population. This will in turn affect the labour force, with GDP predicted to grow by 2.6 per cent per year over the next 40 years compared to the 3 per cent achieved for the past 40 years.
The Australian oil and gas industry has been a key contributor to Australia’s economic growth and standard of living, supporting more than 80,000 Australian jobs and investing more than $473 billion into the economy over the past decade. Throughout the COVID-19 pandemic, Australian oil and gas companies have continued delivering gas to homes, businesses and industry, helping lay the foundations for broader economic recovery.
The release of the IGR, with its prediction of a slowing economy, underscores the need for courageous policies that will encourage investment and economic growth over the long term. While Australia’s economy has shown impressive resilience bouncing back to pre-pandemic levels, much of this has been on the back of short term incentives designed to create an immediate uptick in consumer and business spending.
What is needed now are long term policy measures that will encourage high levels of sustained investment over the next 40 years. Budget reforms such as improving investment allowances will stimulate growth in multiple industries within the oil and gas chain, boost the economy and provide much-needed jobs.
The oil and gas industry has a role to play. An EY report, commissioned by APPEA in November last year showed that with the right investment settings, the oil and gas sector could provide a $350 billion boost to the economy and more than 220,000 jobs over the next two decades. Overseas too, demand for Australian product, particularly in Asia, is high, with demand for gas forecast to double by 2040, providing a valuable export stream that can also reduce emissions in importing countries.
The industry will keep working with governments and industry to curb the tide of misinformation around oil and gas and point out all the good that our industry does. We are a key economic pillar, able to support the next generation of jobs and support the move to a net zero economy as the industry evolves.
Supporting the uptake of renewables, meeting demand in overseas markets (including developing energy markets) and implementing technologies such as Carbon Capture and Storage (CCS) and hydrogen as part of a cleaner energy future — systems the report says can provide “new opportunities for Australia” — will ensure our continued success.
The full document, 2021 Intergenerational Report: Australia over the next 40 years, can be accessed here.