In collaboration with the Centre for Institutional Investors (CII), I joined Australia’s Ambassador to the United States, the Hon. Arthur Sindodinos AO, in conversation about the Biden Infrastructure Agenda and Avenues for Growth post COVID-19.

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Mr Ambassador opened the discussion with an overview of America’s political priorities at present – just nine tumultuous months into the Biden administration. The U.S. has executed a strong economic consolidation post COVID-19, in which consumer and business confidence has allowed the maintenance of economic growth at a rate of 6% per annum. Coined by the US President as an ‘existential crisis’, tackling the climate emergency is a top priority. The government is also expected to play a larger role in strengthening the social safety net for citizens from cradle to grave. 

 

In addition to the implementation of greater social infrastructure, the development of physical infrastructure is taking centre stage. The Bipartisan Infrastructure Investment and Jobs Act authorizes expenditure, in addition to the USD2 trillion American Rescue Plan Act, was introduced to stimulate the economy across 2021. Over USD1.2 trillion of which is focused on building traditional infrastructure, such as port, airports, roads, and bridges. According to Mr. Ambassador, opportunities for cooperation are unfolding between the U.S. and Australia, with growth prospects magnified by potential upcoming Agreements. 

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In Australia, I would like to see emphasis placed on building infrastructure for the future, which includes clean energy, transmission, and EV infrastructure. Grid deployment, to allow for resilient 21st century clean electric grids is also paramount, along with introducing broadband, digital and 5G nationwide. 

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We discussed: 

 

• Energy – It is essential that we adopt an 'all of the above energy transition strategy' and to secure clean energy supply chains. We need to continue extracting pledges from major finance houses on green related investments over the next decade. There is also an opportunity to capitalize Wall Street interest in green activities, as mirrored in Australia by companies such as Macquarie Group. An ongoing focus on ESG goals grants business a social license to operate. 

 

• Critical Minerals – America will lead the way in de-carbonization of the economy. Australia to follow in the supply of rare earth, light and heavy minerals, which are expected to meet increased demand as electric vehicles, batteries and magnets gain prominence. The Morrison government will work to apply a $2 billion fund into mineral-based production, and new partnerships with the U.S. Defense Department. 

 

• Cyber and Emerging Technology – There is an opportunity to mobilize opportunities for partnership with trusted allies. COVID-19 has seen advances in medical technology and the opportunity exists to continue work into dual purpose technology, addressing both military and civilian needs. AUKUS opens up opportunities beyond just nuclear propulsion for submarines, to advances in AI, machine learning, quantum computing, space, cyber and electronic warfare. 

 

• Investment in Innovation – It is important to see a move towards digitalization. Australia currently spends between $6-$8 billion on innovation per annum. There are over 150 budget line items being spent on innovation, yet little measurable return has been seen. We need to narrow the focus and implement the sectoral based Modern Manufacturing Strategy adopted by the government to produce enough digital and deep tech companies. Product development in Australia saw only three new products produced in 2018 contributing $2 of income per capita compared to Ireland producing $768 per capita income and Singapore producing $1,746 per capita. This is an indication that established companies are not renewing their offering. This makes them less innovative and less competitive on the global stage and it makes the Australian economy less complex. Australia needs to drive a business agenda, inform investment decisions and work hard on the value chain and ecosystem around them. 

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• Negotiating Partnerships – American presence should be strategically encouraged across the Asia Pacific, through the Transpacific Partnership (TPP) and alternate trade agreements. Australia should work to enforce digital economic agreements in New Zealand and Singapore. Uniform data protection models increase the capacity for payment systems to be recognized across borders, strengthening opportunities for free trade.

 

• Avoid Overusing Consultants – This results in a deskilling of the public service, increased cost of delivery and compromised outcome quality. There is a negative impact on citizens when politics trumps policy.

 

Finally, I addressed the importance of mitigtating supply chain disruptions, not just to safeguard the sale of products but to minimize price increases. We are seeing 15-20% coming through the value chain that will eventually be passed on to the consumer. This will result in major cost-based inflation, leading to price inflation, which is one of the major threats to the global economy at present. The solution lies in onshore supply chains and the reskilling of workers, with automation playing a major role, which presents massive opportunity for Australian ingenuity to be put to work.

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ADDITIONAL RESOURCES

 

• Make it in America

• ‘Innovators will win’: Liveris confident on Australia’s tech transformation

• Joint Leaders Statement on AUKUS

• Digital Trade Agreement for the Indo-Pacific

• Austrade's Critical Minerals Prospectus

• Modern Manufacturing Strategy

• Harvard Complexity Atlas

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