The Australian tech sector is now one of Australia’s largest industries – but it still has enormous growth potential.
The tech sector is now a major part of the Australian economy
New research by Accenture and the TechCouncil (PDF, 20.7 MB) suggests that the tech sector generated A$167 billion for our economy in 2020–21. That makes technology the third largest contributor for the year behind mining and finance.
The growth of the Australian tech sector is reflected in stock market valuations. The market capitalisation of the ASX information technology index grew over 120% between June 2019 and June 2021. (Source: Macrobond, 2021)
Australian tech is also a fast-growing export industry
According to the Export Council of Australia, technology is already our fourth-largest export sector, worth A$8 billion in 2018. This could more than double to A$19 billion by 2030.
Australian companies have made a major impact on the business-to-business subsector. Products are typically delivered as cloud-based services. Well-known success stories include Atlassian, Cargowise and Canva.
In the business-to-consumer space, Afterpay, is now a global success.
We also have global AI capability in health and biotech, infrastructure and urban management, agriculture and resources.
Tech talent is spread around Australia
Growth has been nothing short of incredible. When I moved to Sydney in 2015, the sector was in its infancy. In just six years, the tech sector’s economic contribution has increased 79%.
And it’s much more than just a Sydney–Melbourne CBD phenomenon. World-beating unicorns are springing up across the country. (Unicorns are recent start-ups with a valuation of over US$1 billion.)
The fastest growing regions for ICT professionals include Brisbane’s east, outer southwest Sydney, and the Melbourne’s inner east. Moreton Bay just north of Brisbane and Adelaide are also technology hotspots.
Rapid expansion during the pandemic
The pandemic has accelerated digital trends. A vast amount of economic activity has now shifted from the physical to the virtual world. And it may not all go back. Telework, telehealth, online retail, online education, and online entertainment are booming.
It seems that about a decade’s worth of digital transformation has happened in a few months. Digitised activities are now pervasive across business and industry.
This has turned the tech sector into an engine of growth. The sector created 65,000 jobs during the pandemic, on top of the 861,000 people it already employed.
This is very good news for Australian trade. Rapid growth in a new industry will help us shift towards a more diversified trade portfolio. It helps our country create new sources of value. But Australia can’t stand still. The global market is far too competitive for that.
We have recently seen advanced economies such as the US, the UK, Singapore and New Zealand announce large research and development (R&D) fiscal-stimulus programs. This suggests similar countries see major opportunities in their domestic technology industries.
The TechCouncil report I quoted at the start of this blog illustrates the need to competitively incentivise R&D in Australia. It suggests we should encourage digital adoption and try to attract technology talent.
Success could see the tech sector contribute A$240 billion to the Australian economy by 2031, according to the TechCouncil report.
By: Ashley Brosnan, Manager for Economics & Analysis at Austrade