This report is a contribution to the study Australia’s Comparative Advantage taking place under the wider Securing Australia’s Future program, both led by ACOLA and reporting to the Prime Minister’s Science, Engineering and Innovation Council (PMSEIC).

Australia’s Comparative Advantage (ACA) aims to assess Australian strengths and weaknesses in the context of external threats and opportunities (both Australian and global) in order to identify Australia’s current position, as well as its present and future comparative advantages, relative to a comparable cohort of countries. Identification of these strengths incorporates political, economic, socio-cultural, technological, and organizational (PESTO) dimensions, and its forward-looking nature (it considers a long time horizon of 5-7 decades) creates the possibility of some long-sighted contribution to helping condition Australia’s future well-being.

The project wishes to drill down into more structural aspects, through a ‘matrix’. The three suggested sectoral themes are:

• Agriculture – including associated infrastructure and potential for advanced manufacturing
• Mining – including associated infrastructure and potential for advanced manufacturing
• Services – including finance and health

The three proposed cross-sectoral themes are:

• Skills, management and innovation – including research and education
• Society, culture and creativity – including cities, regions and immigration
• Institutions and governance – including legal frameworks relating to intellectual property.

This report is conducted under the second cross-sectoral theme: Society, culture and creativity – including cities, regions and immigration.

This includes a very broad range of factors, some of which might appear as having somewhat marginal relevance to Australia’s comparative advantage. Considerations of national comparative advantage often focus on a limited number of high performing industries, particularly in internationally traded goods and services. The paradigm case for Australia would be mining. Such industries are certainly important to the success of nations, particularly open trading nations such as Australia. Without a healthy balance of payments, the economy will falter, with cascading implications from problems of unemployment to a declining revenue base to support health, education and other government services.