2. Centres of creativity
Reserve Bank board member
The digital age may have made it easy to work from anywhere, but in reality cities will remain vital to productivity and growth over the next 30 to 50 years, according to Reserve Bank board member Professor Ian Harper.
Harper argues that “place” has become more important, because human beings stimulate each other when they gather together; they come up with new ideas and ways to improve life.
“It’s the creativity that drives innovation that drives productivity,” he says, adding that the challenge is to make cities livable so they remain engines of productivity growth.
In the short term, Harper forecasts that Australian economic growth will return to stronger levels as the export cycle improves.
He rejects the view that the mining boom is over, saying it is in a third phase when higher production leads to increased exports. The first phase was the price boom, followed by the mining investment boom.
The export phase will not be as big as the investment in production, but it will last longer – possibly 30 or 40 years, says Harper. Mining investment will pick up as companies spend to maintain and upgrade their equipment.
Harper says the Australian economy has been in an income recession, with per capita disposable income falling as a result of lower commodity prices and structural changes in the Chinese economy. But there are signs of recovery as China settles into a new pattern beyond the rapid growth associated with industrialisation.
“As the export cycle starts to pick up, we will grow at more or less average rates,” he says, adding that the biggest risk to growth forecasts would be China not experiencing a smooth transition as it rebalances demand from investment to consumption.
On the subject of the UK’s Brexit decision, Harper says it will not have a large impact on Australia and may lead to increased opportunities.