The internet bigger than Iron ore for Australia

Online contribution bigger than iron ore says Deloitte Access Economics.

A new report by Deloitte Access Economics, The Connected Continent: How the Internet is Transforming Australia’s Economy estimates that the Internet contributed $50 billion, or 3.6% of Australia’s Gross Domestic Product in 2010 and that contribution is primed to boom.

The report – commissioned by Google Australia, and researched and written independently by Deloitte Access Economics – forecasts the Internet’s contribution to Australia’s GDP will grow by around seven per cent a year to reach $70 billion by 2016.

Importantly, a survey commissioned as part of the Connected Continent report says almost every Australian business is an Internet business.

The shift in value that is occurring, according to the report, is from a simple use of the Internet for efficiency and productivity in supply management, finance, email and communications – to the more complex value derived through reaching out to consumers via new channels through the Internet and interactive web sites that have just begun to fully exploit the potential of the Internet.

Ric Simes, Deloitte Access Economics Director commented: “Even more important than the direct impact of the Internet on Australia’s GDP in numerical terms are the wider benefits that are not fully captured in the GDP.

“The Internet saves people time through activities like online banking and provides access to a much greater variety of goods, services, and information. It transforms the way business and government function.”

The report firmly established that the typical Australian business uses the Internet extensively:

• While Australia boasts some exciting tech companies, the Internet’s economic impact is overwhelmingly felt in industries that aren’t often thought of as cutting edge technology. Australia’s primary industries are enthusiastic adopters of the Internet: especially experiencing the benefits from using the internet for sales, marketing and advertising
• The productivity gains alone that Australian businesses get from the Internet are estimated to boost GDP by around $27 billion in 2011
• The finance and real estate industries have the highest average proportion of internet utilisation in the marketing, sales and supplies
• Banking-related searches have risen more than 60% since 2007.

Deloitte Private Partner Joshua Tanchel says his passion is helping support businesses realise their potential. Tanchel is leader of Deloitte’s technology Fast 50 Program and he emphasises that online will continue to be a fast growing segment.

“In our local retail landscape there are now international retailers looking at Australia, our very sound economy, and they have invested in their supply chains – so all of a sudden we have international brands selling into our local market, creating a whole new level of competition that our businesses haven’t experienced before,” Tanchel says.

“In particular, the retail sector needs to be looking at their business models, how they interact with their customers and most importantly making sure that their product and offering is right – all via a multi channel environment so people have an in-store and/or an online experience that is seamless.”

For the Australian workforce, the report strongly established to what extent the Internet directly creates jobs:

• 190,000 people in jobs directly related to the Internet – including IT software firms, Internet Service Providers, and companies providing e-commerce and online advertising services
• Those 190,000 jobs alone are estimated to have generated $22 billion for the Australian economy in 2010.

The full report is available at: Deloitte Connected Continent and The Connected Continent website.

This opinion piece was first published on Deloitte Private Matters and is reproduced here with the kind permission of the author.