Australian Services Roundtable

Blog authors

Ian Birks Ian Birks

Ian Birks is the Chief Executive Officer of ASR.

Duncan Jones

Executive Director Science Industry Australia Inc (SIA) and Australasian Laboratory Managers Association (ALMA)

Duncan has comprehensive business experience across Australia, SE Asia and New Zealand with customer and market focused organisations. Major experience has been gained in scientific/analytical/diagnostic instruments and consumables selling into research, Government, private industry and healthcares accounts as well as B2B business development and manufacturing experience. This background has informed his work on science policy advocacy and development.

Darryl Bubner

Darryl Bubner is the CEO and founder of Disciplined Innovation Pty Ltd, and has been engaged in the commercial development of innovation metrics for businesses and government agencies for twenty years. His products are being used in Australia, including by the Commonwealth Department of Innovation, Industry, Science and Research, and in Europe, where they have received favourable reviews by NESTA.

Jane Drake-Brockman

Jane Drake-Brockman has written widely on the services economy from a policy, business advocacy and academic perspective. She is the Founder of the Australian Services Roundtable, and now operates a Hong Kong–based consultancy providing technical assistance on the services economy throughout the Asia-Pacific region.

Ian Birks

Andrew McCredie is the past Executive Director of ASR, and writes about the new competitiveness issues facing Australian business, particularly as engagement with Asia becomes more important in the services sector of the economy.

Seven Myths about Services

Posted by Darryl Bubner and Andrew McCredie, 15 March 2011

That for some time now the services sectors cover just about everything that counts in modern economy has been obscured by a number of pervasive myths. The seven most common myths are the subject of the attached paper.

  1. Services are non-productive – they don’t create wealth
  2. Essential services must remain public services
  3. The expansion of services in the economy is a result of reclassification, not substantive changes in our economy
  4. Service sector jobs are low skill and low wage
  5. The expansion of the service sector drives down productivity growth
  6. Service sector innovation investment is low
  7. Public sector innovation can’t be measured

Despite the myths it is increasingly understood that the 21st Century will reward those countries with the most dynamic, productive and internationally engaged services sectors; and a rush of countries in our region including India, China, Malaysia, Singapore and Korea are developing strategies reflecting that belief. Services now account for eighty per cent of Australia’s national economic activity making Australia one of the most services intensive major economies..

In recent years new and more accurate national account data and structures, endorsed by the UN and the OECD are being implemented in many countries including Australia. Analyses based on these new structures and data sets have provided insights into productivity that long puzzled economists, and provide a weight of evidence economic that that is slowly expelling the myths from the economic literature.

It is worth spending the time to understand how the myths came about, and how they continue to limit our thinking. In discussion over the past few years with leading economists, journalists and officials about services, we have found no one totally free of the myths.

If goods are demoted from a central role in the economy in favour of services, then it is a logical next step to recalibrate economic measures to better reflect people and services centric concepts such as wellbeing. This could help better construct services markets to achieve the outcomes that we want. Seen in this light efforts to improve GDP as a measure of national wealth and welfare are not a challenge to economics, but a necessary extension of economics to better account for services, There are active work programs at the OECD and in the US and the EU accounting for a new range of intangibles such as the value of innovation, impacts on the environment, societal conditions and dimensions of wellbeing including employment, equity, health, leisure, security and happiness.

The increased value of services in the global economy is of enormous potential benefit to Australia. We have long had sophisticated services sectors such as architecture, education and engineering. Leading practitioners from these sectors are known and respected internationally.

The tyranny of distance for services is less significant; Australia’s Asian time zone and regional people-to-people linkages are a real advantage. It is time to shake off the myths that are preventing us from seeing the opportunities for Australia as services leader in the Asian region and the global services economy.