28/08/2007 - 22:00

Dealing with rapid change

28/08/2007 - 22:00


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When CSIRO chief executive, Dr Geoff Garrett, visited Perth recently on the research group’s national industry roadshow, he delivered a very entertaining presentation on exponential change.

When CSIRO chief executive, Dr Geoff Garrett, visited Perth recently on the research group’s national industry roadshow, he delivered a very entertaining presentation on exponential change.

It wasn’t a dry, theoretical dissertation.

Instead, he listed many technical, social, demographic and economic trends where change is happening faster and faster.

The rapidly increasing capacity of computers, the spiraling use of mobile telephones and the speed of global communications were all examples he cited.

Crucially for Western Australia, Dr Garrett also pointed to the emergence of China, which he said would soon become the number one English speaking country in the world.

China accounts for one quarter of the world’s population, is growing faster than most other nations and shows no sign of slowing.

Dr Garrett’s thesis was that the world would not return to ‘normal’, the pace of change would not slow down.

We are in a new reality and we had better get used to it.

This presents a big challenge for decision makers in business, in government, in academia, in all walks of life.


China’s growth caught us unawares

Very few, if any, forecasters anticipated the strength of China’s economic surge and the impact it would have on WA and Australia.

Take BHP Billiton, for instance.

In 2002, when it kicked off the expansion of the Pilbara iron ore industry, its plan was to lift capacity to 81 million tonnes per year and provide the foundation for expansion to 90mtpa by 2011.

In practice, BHP has accelerated its expansion and already has capacity of 109mtpa and is now contemplating output of 300 million tonnes.

This is not to single out BHP for criticism.

Rather, it shows that even the world’s biggest mining company, and one of its most successful companies, can fail to anticipate how rapidly the global market can change.


Economic cycles are changing

The State Training Board, chaired by senior Woodside Petroleum executive Keith Spence, is another group trying to cope with the rapid pace of change.

It is charged with tackling the chronic shortage of skilled labour that plagues industry in WA.

A report, commissioned by the board, estimated WA would need nearly 18,000 extra skilled workers every year for the next decade.

Importantly, the report, released last week, acknowledged that WA’s traditional economic cycle appears to have changed.

It concluded that WA was unlikely to be facing another boom-bust cycle, arguing instead that the state was more likely to experience a "gradual softening" from the current strong growth.

Chamber of Commerce and Industry of WA chief executive, John Langoulant, has been pushing this view for some time, and it is gaining increasing acceptance in the business community.

In light of this conclusion, it was somewhat perplexing that the board titled its report Beyond the Resources Boom, which perpetuates the traditional thinking.

Government ministers have been talking for years about preparing for life beyond the boom, and they are still talking that way.

Treasurer Eric Ripper is a prime example. He has been publicly worrying for years that the boom will come to an end and that tax revenues will dry up.

A certain degree of prudence is commendable in the state’s CFO, but Mr Ripper has taken the hoarding of revenue, and the build-up of surpluses, to an extreme degree.

There is a danger that this mindset will hinder WA’s ability to maximize opportunities.

The state’s social and economic infrastructure remains under acute pressure, despite the big increase in the state’s capital works program.

Skilled labour shortages continue to hinder the state’s growth, despite the big increase in the number of people completing apprenticeships and traineeships.

And the public service itself is battling to meet increased demand for its services as it loses experienced staff.

It’s time to think more ambitiously about opportunities.



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