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In focus: Productivity and public transport go hand in hand - EY - Australia

In focusProductivity and public transport
go hand in hand

Over 75% of Australians are employed in the services sector and yet the services economy barely rates a mention.

When it comes to the end of the mining boom, how will Australia earn a living? Tony Canavan, EY's National Transport Leader, says the answer is services.

Over 75% of Australians are employed in the services sector and yet the services economy barely rates a mention.

We know that being globally competitive in services, especially high value knowledge-based services, requires a highly educated, creative and skilled workforce.  Have we thought about what hard infrastructure we need to be globally competitive in knowledge-based services?

Cities dominate the services economy

What makes a successful services economy can be summed up in one word. Cities.

The developed world trend towards services industries is concentrating more and more economic activity in cities.  Services economies are all about cities. 

Over half the world’s population and 92% of Australians, now live in cities.

Cities that generate innovation; that create new products and attract creative people dominate the world economy - cities like Shanghai, Tokyo, London and New York. 

Those cities behave like standalone economies within their country, often connected directly and competing with other like international cities.  New York’s economy alone is similar in size to that of Australia.

The need for connecting people with people

The reason why cities dominate the knowledge economy is pretty straightforward.

People need other people.

Knowledge-based services companies don’t just compete on cost.  They more so compete and survive on their ability to innovate; to be creative; to stay in touch with the latest developments.  In other words – they need to be connected.

Innovation in these firms is organic, not dramatic.  It comes from ongoing conversations, experiences, training, conferences and ideas sharing, not from a world-changing discovery.

The range of collaboration is broadening as well.  Logistics experts need lawyers and marketers.  Manufacturers need researchers.  IT firms need accountants.  Hospitals need universities.

Modern services economies thrive in cities.  Some urban forms are more productive than others, because knowledge-based services tend to cluster and organise themselves to be close to clients, collaborators and competitors.

In order to foster and increase productivity in our services economy, we need to encourage and stimulate collaboration and hence innovation.  We need to connect people with ideas. 

In other words – people to people.

When Australia was more dominantly an agricultural, natural resource and industrial economy, we knew what was needed from our transport systems.  Transport connected goods to market, factories to warehouses and houses to jobs.

Now, investment in connecting people with people, and rapidly improving accessibility of people to jobs and services, is a direct investment in improving productivity in the modern, post-industrial economy.

Public transport: an enabler of productivity

Urban mass transit systems such as the Hong Kong Mass Transit Railway (MTR), the London Tube, the New York City Subway and the Paris Metro are the ultimate people connectors. 

Despite their mega-city status, people in these cities are connected to each other, regardless of where they live and work.  All enjoy a vibrant city centre, although they also enjoy lively, attractive and prosperous urban areas well away from the very centre of the city.

In our major cities in Australia, we need investment in urban mass transit systems that:

  • Make our cities more connected
  • Make them more liveable and attractive to footloose creative people
  • Stimulate collaboration and clustering by bringing precincts and ideas together
  • Supercharge accessibility of people to services and jobs whether they’re inner-city dwellers or suburbanites

Future productivity will depend on how competitive our cities will be.  When it comes to infrastructure, public transport will be the key in the mega-cities of the future, let’s think beyond the mining boom.

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    Tony Canavan
    National Transport Leader
    Tel: +61 3 8650 7331
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