Australia could gain 80,000 highly skilled jobs and secure AUD $24billion in incremental capital investment by the end of the decade if the nation accelerates Emerging Tech exports to the United States, a new report by KPMG Australia and the American Chamber of Commerce in Australia, finds.
A Prosperous Future: Emerging Tech shows substantial untapped trade potential between the two countries. It highlights Australia's world-leading research in Artificial Intelligence (AI), the Digital Economy and Quantum Science, three sectors poised to benefit from the landmark AUKUS security pact. The report notes that Australia ranks among the top ten nations globally for Quantum Computing research and venture capital investment and 11th in QC patents. But the report contends Australia must improve efforts to transform innovation into commercialisation to capitalise on the unprecedented economic opportunities in Emerging Tech.
US Ambassador to Australia, Caroline Kennedy, commented: "This report shows that by building on decades of close economic partnership and shared values, the U.S. and Australia are together poised to create tens of thousands of new jobs in the industries of the future. Our commitment to innovation, and to integrating our economies even more closely will help ensure a stable and prosperous Indo-Pacific that benefits the people in both our countries."
Report co-author, Dr Brendan Rynne, KPMG Australia Chief Economist, said: "Emerging technology holds significant economic potential for both countries. Our modelling shows that Australian companies could realise billions of dollars through increased exports to the US and far greater participation in the value chain if their efforts are focused on enhancing products and services in key US Deep Tech sectors".
The report analyses Australia's strengths in each industry against the level of openness in the United States to identify opportunities for Australia to participate in the US supply chain, such as Australia's trailblazing AI capabilities in mining and defence. It notes that niche AI products and services that complement US capabilities are more likely to find a path to market, and identifies the Financial Services Industry, which purchases US $2 billion of AI goods and services annually, as the sector where Australian firms are most likely to be successful. The report suggests Australian companies at the vanguard in QC and the Digital Economy could also experience dramatic growth.
"As this report demonstrates, it's vital for Australia and the United States to collaborate in AI, Quantum Computing and the Digital Economy to secure the full economic and strategic potential of these powerful new technologies," says AmCham Board Chair Dr Brendan Nelson AO, President of Boeing Australia, New Zealand, and South Pacific.
"The stakes are huge," agrees co-author Doug Ferguson, KPMG Head of Asia & International Markets and NSW Chairman. "Australian companies must move beyond our proven research strengths and engage and compete in both Australian and US customer markets and in partnership with US firms. This will require a disproportionate joint effort by Australian corporate, federal government and tertiary education sectors."
This report follows an initial paper by KPMG and AmCham in December 2021 which outlined key industries for US/Australia collaboration. There will be a further report in the A Prosperous Future series, which is supported by the US Embassy in Canberra, next year.
"These findings underscore the tremendous potential uplift in the already sizeable US-Australia economic relationship," says AmCham CEO April Palmerlee. "This report highlights several areas that can take Australia to the next level: more jobs, more revenue, and more innovation. Collaboration in emerging technologies benefits both countries."
Explanation of analysis
KPMG modelled three scenarios for AI, Quantum Computing (QC) and digital economy over the next six years: a 'no change' scenario; a 'fair share' scenario based on historic share of trade and a third 'accelerated growth' projection based on increased trade due to increased exports in the defence and security sectors following arrangements such as AUKUS.
For AI, the modelling found that under scenario 3, trade could rise from $0.2m to $13.9m. For QC, the value of service exports rose from $13.1m to $381.3m, while the digital economy saw the largest potential opportunity - rising from $404m to $23.4 bn. On top of this, there could be indirect economic benefits. This But achieving
Key findings
Artificial Intelligence (AI): The report finds that the US financial services (FS) industry, which purchases more than US$2bn of AI goods and services each year, represents a major opportunity for Australian companies. The wide spectrum of 'use cases' suggests a high possibility that Australian-developed AI applications are capable of meeting a need in this sector, either independently or in conjunction with US-developed solutions.
Quantum Computing (QC) : The study finds that this industry is on the verge of a huge growth spurt, with the current figure of US$288m rising to over $3.3bn in the next five years. Australia ranks in the global top ten for QC research and venture capital investment, and the report points to defence as a key opportunity. While in this sector the US openness indicator is lower, the opportunities are likely to come in the longer term as Australian-developed leading technologies are increasingly adopted and sold into defence industry organisations.
Digital economy: this is the largest of the three areas and already accounts for 6.6% of Australian GDP. Once again the US FS sector is a key area of opportunity for Australia, together with government and education sectors.
The report points to four key strategies for success for Australian companies engaging with the US:
- Seek partners and customers - partnering with a US business can pay mutual dividends, as trust and credibility in a new market takes time to build
- Assess US opportunities for early adoption of Australian deep tech - US customers may be more open than others to new technologies
- Identify where your product or technology fits in the supply chain - as these become more complex, a new technology may sit further upstream from the final product
- Research the huge US market for the best opportunity - it may not necessarily be New York or Silicon Valley
