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Tough times ahead, but we have plenty to be grateful for
Insurance & Risk Professional, December 2008 Ouch! What a year it’s been. In the past few months particularly, the ripple effect of the financial meltdown in the United States has presented significant challenges, despite the relatively good health of the Australian economic system. $US6 trillion has been drained from the global economy. We now have a global financial crisis. Where did it all go wrong? What does it mean to the insurance industry? What does it mean to Australian households? What does it mean to you personally? These questions and more have undoubtedly been playing on all our minds in recent months. And there appear no easy answers. Australia has had a booming economy over the past two decades, unlike any other time in its history. Yet in the blink of an eye the world has changed. Markets and economies have been shaken in ways that have sent shockwaves across the global financial services sector and impacted us locally. But as difficult as it may seem right now, there is hope and confidence. Although not immune from developments in international markets, Australia appears well positioned to withstand the turmoil. A recent Benchmark Report 2008 from Austrade, the Federal Government’s trade and investment development agency, has confirmed that “Australia has an open, competitive and resilient economy”. Although Australia’s population is less than half a per cent of the global total, our economy is among the 20 largest in the world, and has been ranked the most resilient in the world in six of the seven years between 2002 and 2008. The Austrade report highlighted that Australia’s economy is projected to exceed $US1 trillion, overtaking South Korea as the fourth-largest in the Asia-Pacific region. Let’s hope that recent financial woes don’t dent this prediction too much. And our industry is doing its bit. Finance and insurance is the third-largest sector in Australia’s economy, generating 8.6% of $81 billion of real gross value added. This contribution is up from 7.1% two decades ago. Finance and insurance is bigger than the mining sector, which is the industry traditionally associated with Australia’s economic wellbeing. And its expansion has also driven growth in related sectors such as communications, property and business services. A university bachelor degree is the most common qualification in the financial services sector. It’s one of the country’s most educated sectors, with 38% of employees having a tertiary qualification. In fact, more than 60% of people employed in financial services have post-school qualifications ranging from vocationally focused certificates to post-graduate degrees. Another interesting point highlighted by Austrade is that with around a quarter of its labour force born overseas, Australia is the most culturally diverse country in the Asia-Pacific region and one of the most multicultural countries in the world. One of the key indicators of doing business in Australia is that we have a robust regulatory framework that offers security, integrity and efficiency. Our corporate governance is strong and we are said to have one of the most “business-friendly” economies in the world. As a personal observation, while we may not have liked the plethora of regulatory overhauls that have taken place over the past decade or so in Australia, business and community life would appear fundamentally more stable as a result. We also rank number three, behind Canada and Luxembourg, as one of the most politically stable countries in the world. Australia is the only country that has ranked in the top five since 1999. Overall, this adds up to Australians enjoying a quality of life that is (almost) second to none. We are number three on the worldwide quality of life index, with Austria and Switzerland the only countries ranking higher. The Austrade report concludes that when issues of cost and quality of life are considered, “Australia stands out as one of the world’s most desirable places to live and work”. What more could we ask for? Sure, we’ve seen tough times and it’s not likely to get much better in the short term. But all things considered, we are still very fortunate people. We live and work in a country that is undeniably a safe, spectacular place to be. For the moment let’s put aside personal anxieties. Think about what we have, and how better off our families are compared to earlier generations. There is no war inside our borders, we have no famine. We have homes, peace and freedom. Yes, many are hurting. But in the main we Australians are very fortunate. We can pay our bills and meet our commitments socially, morally and professionally. So cherish the good times. Have a safe, happy Christmas and help restore some confidence in the year ahead. |
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