Often referred to as the "Lucky Country," Australia stands out globally for its remarkable economic prosperity and sporting prowess.
Often referred to as the "Lucky Country," Australia stands out globally for its remarkable economic prosperity and sporting prowess. How does a nation with less than 0.33% of the world’s population build an economy that ranks 13th1 globally and a retirement savings system in the top 6?2
Similarly, how does Australia continue to compete at the top echelons of sport, consistently performing in the top 10 and often the top 5 of all countries competing at the summer Olympics?
How much of it was luck? And what role did smart planning and long-term thinking play?
This dual prowess is not coincidental but rather the result of a combination of geographic, social, and policy factors that have uniquely positioned Australia as an outlier in both realms.
Australia's economic success is underpinned by several key factors:
1. Natural Resources: Australia's vast and rich natural resources are a cornerstone of its economic prosperity and likely account for most of the “luck” involved. The country is a leading exporter of coal, iron ore, gold, and natural gas. These resources have fuelled economic growth, attracted foreign investment, and generated significant government revenue, allowing for substantial public investments in infrastructure and services.
2. Stable Political and Economic Environment: Australia enjoys a stable political climate and robust legal system, which provide a secure environment for businesses and investors. This stability is supported by prudent economic policies, including a well-regulated banking system and a floating exchange rate, which have helped the country navigate global financial crises more effectively than many other nations.
3. Strategic Trade Relationships: Australia's proximity to Asia, the fastest-growing economic region in the world, has facilitated strong trade relationships. Countries like China, Japan, and South Korea are major trading partners, providing Australia with vast markets for its exports. The country's commitment to free trade agreements further strengthens its economic integration with global markets.
4. Universal Healthcare: Australia’s universal healthcare system, Medicare, consistently ranks top 54 globally in terms of funding, trained professionals and comprehensive coverage.
Medicare universal coverage, specific funding mechanisms, integration of public and private healthcare options, and comprehensive coverage of medical services and prescription medicines ensure that all Australians have access to high-quality healthcare, making Medicare a cornerstone of the country's healthcare system.
The Pharmaceutical Benefits Scheme (PBS) in Australia is effective due to its comprehensive national coverage, regular updates, effective price negotiations, and robust safety net mechanism. While other countries have similar programs aimed at making medications affordable, the PBS is consistent with broad accessibility (ranks 16th among 20 OECD countries alone)5 for its consistency and broad accessibility, providing Australians with access to essential medicines at an affordable cost.
5. Innovation and Education: Australia places a high value on education and research. The country is home to several world-renowned universities and research institutions that foster innovation and technological advancement. This focus on education not only supports economic growth but also ensures a skilled and adaptable workforce.
6. Fiscal Responsibility: Australia has maintained prudent fiscal policies, focusing on balanced budgets and manageable public debt levels. This fiscal discipline has provided economic stability and resilience against global financial shocks.
7. Robust Retirement Savings System: Australia's retirement savings system is ranked among the top six globally by size. This ranking is even more impressive considering the compulsory superannuation guarantee was only introduced in 1992, compared to more mature systems of larger countries.
| Rank | Country | Pension System Size (Assets Under Management, trillion USD) | Year Created | Pension System Description |
| 1 | United States | 35.5 | 1935 | Social Security (public), plus extensive private pension schemes and 401(k) plans. |
| 2 | Japan | 3 | 1961 | Employee Pension Insurance (EPI) and National Pension (NP) systems. |
| 3 | United Kingdom | 2.8 | 1908 | State Pension, plus extensive private pension schemes and workplace pensions. |
| 4 | Netherlands | 1.7 | 1956 | National Old Age Pensions Act (AOW) and extensive occupational pension schemes. |
| 5 | Canada | 1.5 | 1966 | Canada Pension Plan (CPP) and Quebec Pension Plan (QPP), plus extensive private pension plans. |
| 6 | Australia | 1.5 | 1992 | Superannuation system with mandatory employer contributions. |
| 7 | Switzerland | 1.3 | 1948 | Three-pillar system: State pension, occupational pensions, and private pensions. |
| 8 | Germany | 1.1 | 1889 | Statutory pension insurance, plus occupational and private pensions. |
| 9 | South Korea* | 0.9 | 1988 | National Pension Service (NPS) and corporate pension plans. |
| 10 | Sweden | 0.8 | 1913 | Income pension, premium pension, and occupational pension schemes. |
Source: https://www.oecd.org/finance/pensionmarketsinfocus.htm. As at February 2023.
*Note the other outlier in this table is South Korea, the subject of my earlier article Outliers – Korea – From K-Pop to Conglomerates, whose pension system was created around the same time as Australia’s in 1988.
Australia’s superannuation system, based on the superannuation guarantee, aims to encourage Australians to save for retirement through compulsory employer contributions. This robust framework not only encourages financial security for retirees but also contributes to the stability and health of the broader economy through the accumulation of long-term capital invested in the financial services system.
8. Banking System: Australia's banking system is recognised as one of the strongest in the world. The country's major banks are frequently ranked among the safest worldwide, ensuring a stable financial environment that supports economic growth and resilience against global financial shocks.
9. Global Liveability Rankings and Immigration: Australian cities consistently rank among the most liveable8 in the world. Melbourne, Sydney, and Adelaide frequently appear in the top ten of global liveability indexes, reflecting the high quality of infrastructure, healthcare, education, and overall standard of living. This high standard of living attracts skilled immigrants, who contribute to the workforce and drive innovation and productivity. Australia’s immigration policies have also contributed to a diverse and skilled workforce. Its points-based immigration system attracts skilled migrants, boosting economic growth and addresses labour shortages in critical sectors.
Australia's success in sports is equally impressive and is driven by a combination of cultural, structural, and environmental factors.
1. Geographic and Environmental Advantages: Australia's diverse climate and geography (a large component of “luck” here), offer ideal conditions for training in various sports year-round. Whether it's swimming, athletics, cricket, or surfing, athletes can train in environments that enhance their performance.
2. Sports Culture and Education: Sport is an integral part of Australian culture. From a young age, Australians are encouraged to participate in sports, and physical education is a key component of the school curriculum. This widespread engagement with sports cultivates talent and passion from an early age, setting the foundation for future success.
3. Investment in Sports Development: Australia invests significantly in sports infrastructure and development programs. Government initiatives and private sector support provide funding for training facilities, coaching, and athlete development programs. Institutions like the Australian Institute of Sport (AIS) play a crucial role in nurturing elite athletes.
There is a little-known fact that the AIS was created in 1981 as a direct response to Australia's disappointing performance in the 1976 Montreal Olympics, where the country did not win a single gold medal and secured only five medals in total. This poor showing highlighted the need for a more structured and systematic approach to athlete development and high-performance sports.
An early Aura Group portfolio company, Catapult Sports—provider of cutting-edge wearable technology and data-driven insights to athletes, teams, and coaches—formed out of a partnership between the Australian Institute of Sport (AIS) and the Cooperative Research Centres (CRC). Their goal was to maximise the performance of Australian athletes ahead of the Sydney Olympics.
4. Strong Competitive Spirit: Australians possess a strong competitive spirit and a desire to excel on the international stage. This drive is evident in the country's performance in global sporting events such as the Olympics, where Australia consistently punches above its weight.
| Year | Host City | Gold Medals | Silver Medals | Bronze Medals | Total Medals | Rank |
| 2020 | Tokyo | 17 | 7 | 22 | 46 | 6th |
| 2016 | Rio de Janeiro | 8 | 11 | 10 | 29 | 10th |
| 2012 | London | 8 | 15 | 12 | 35 | 10th |
| 2008 | Beijing | 14 | 15 | 17 | 46 | 6th |
| 2004 | Athens | 17 | 16 | 16 | 49 | 4th |
| 2000 | Sydney | 16 | 25 | 17 | 58 | 4th |
| 1996 | Atlanta | 9 | 9 | 23 | 41 | 7th |
| 1992 | Barcelona | 7 | 9 | 11 | 27 | 10th |
Source: https://olympics.com/en/olympic-games/olympic-results
Australia's economic prosperity and sporting excellence are the results of deliberate and sustained efforts across various domains. The country's rich natural resources, stable political environment, strategic trade relationships, and emphasis on education underpin its economic success. Meanwhile, a strong sports culture and competitive spirit, underpinned by a structured and systematic approach drive Australia's sporting achievement. Together, these factors make Australia a unique and enviable outlier on the global stage, demonstrating that a blend of natural advantages and strategic initiatives can yield extraordinary outcomes in both economic and sporting arenas.
Australia’s success is a tale of winning mindsets and long-term strategic planning. These factors make Australia an important market for asset allocation and means Australia will always form the cornerstone of our private credit strategies. Request our white paper on private credit investing below.
Until next month,
Managing Director
Sources:
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If you could focus on only one metric to guide your life, what would it be? Salary, retweets, distance walked, # productive hours, happiness score…
This represents a 64% growth rate year on year and a 29.4% growth rate per annum since 30 June 2015.
This represents a 54% growth rate year on year and a ~30% growth rate per annum since 30 June 2015.