Describe why "Australia is becoming a service based economy with increased reliance on the service sector to sustain economic growth across the next 5-10 years". Discuss this assertion including a review of the contribution that the service sector has made to the Australia economy across the past 10 years, and present your view on the contribution it will make across the next 5-10 years, with rationale.
Life without services is unimaginable. Today everything we need or do is a service. Service is usually defined as something intangible. However, it is not the norm nowadays. From education to electricity, services have taken over everything. The Australian Roundtable Services defined services as a source for delivering any intellectual content or an experience. It may also include some kind of help, care or utility or even some information. But the main point is that the major part of that activity will be intangible and thus, cannot be touched or felt. It does not reside in any physical object. What are Services?
The Australia Bureau of Statistics (Submission no. 44, pg 4-5) has identified many industries as service industries. Electricity, gas, water, construction, wholesale trade, retail trade, accommodation, education, finance, insurance, personal services, transport, storage are some of the industries in the service sector. Service sector plays a huge part in the country’s economy. It is the largest sector of the economy. The reason is simple there has been more investment, employment and interest of the government towards the service sector. It is one of the fastest growing sectors of the Australian economy. Australia has always been a service sector oriented economy. Statistics show that in 1870 thirty seven percent of the employment was generated by the service sector; one of the world’s highest proportion of employment in services during that time. Even now the percentage is huge, it is seventy five percent (ABS, Submission no. 44, pg 4-5). This figure clearly shows that majority of the workforce is dependent upon the service sector. How Has the Service Sector Improved?
There are many ways in which service sector has improved. Innovation is the new driver for the service sector. For example the Information Technology sector has contributed the most for all the sectors. Better data handling and communication there has been tremendous improvement in productivity of various sectors such as airline sector, retail sector. Due to better communication vacant seats have reduced for the airline sector and there are lesser inventories for the retailers and wholesalers. However there are some sectors where productivity has not improved. For example hair cutting sector, child care or care for aged. There is still need for more research and development in the services sector. There are two aspects of research and development; one is the good side i.e. the productivity improvement it brings and other is the cost associated with it. There has been very limited role of research and development in the service sector. Australian Services Roundtable (Submission no. 44, pg 4-5) expressed its view that the nation has to have a better understanding of what will be useful to keep the innovation running in the service sector. However there is a roadblock in the way of growth of service sector. The rate of growth of productivity is getting slower over time. Productivity is slowing down in many industries of the service sectors, the cause of which is still unknown. What are the Main Services that are Exported?
Services also hold major importance in exports. A whooping 44 billion dollars were the services contribution to the export sector in the year 2006 (ABS, Submission no. 44, pg 4-5). The share of services in the export sector is likely to increase in the coming years. Research has classified four various modes of providing services to consumers in foreign countries. One is the providing service from one territory...
Please join StudyMode to read the full document