November 15, 2022 • 19 mins
With the global economy facing some significant challenges, we talk to Daniel McCormack, Head of Thought Leadership from Macquarie Asset Management, about the forces at play, the likely impacts, and how businesses can work through them. We cover supply issues, labour markets, geopolitical risks, the transition to renewable energy, and lots more.
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Speaker 1 (00:03):
Welcome to Vocus Inspire, the podcast full of brilliant ideas
for business.
Hi, I'm Luke Coleman, head of government and corporate affairs
at Vocus, Australia's leading specialist fibre and network solutions provider.
Before we get things underway, we want to acknowledge and
pay our respects to the traditional custodians of the land
(00:24):
from wherever you're listening. In this podcast, we dive headfirst
into what's on the minds of Australian business and government
leaders to help inspire you and your organisation to go forward,
go further, and go faster. So let's go.
Today we're talking to Daniel McCormack, managing director and head
(00:46):
of thought leadership at Macquarie Asset Management. Daniel works globally
across infrastructure, real estate, agriculture and private credit sectors to
produce insights on their performance and their return drivers. His
team also produces research on the energy transition,
And the opportunities and threats that it creates for real
assets investors. Prior to joining Macquarie Asset Management, Daniel worked
(01:11):
for 10 years as an economist, and equity market strategist,
covering a broad range of economies and markets, including the US,
UK and Europe area, as well as China and Australia.
Daniel, thanks for joining us on the podcast.
Speaker 2 (01:25):
Thanks, Luke, and hi everybody.
Speaker 1 (01:27):
Daniel, is it fair to say that the world is
facing some challenges that it hasn't seen before, or at
least for a very long time? And how would you
rank them in terms of the biggest impact or the
toughest to work our way out of?
Speaker 2 (01:40):
Geopolitically, I think the biggest challenge at the moment is, is,
is undoubtedly China.
After 40 years of of robust economic growth, China is
really now starting to assert itself geopolitically, and that is happening,
whether by coincidence or not, at the same time that
there's a bit of a backlash going on against globalisation
(02:01):
in the developed world and the US in particular, I
would say is going through a period, as it has
been wont to do throughout its history periodically, of becoming
a bit more isolationist and and pulling back from global
commitments and pulling back,
From enforcing or enforcement of of the global order. So,
so geopolitically, I think that that is definitely the biggest challenge,
(02:23):
how that, how that process is managed. Economically, the biggest
challenge right now is, is in my view, adjusting to
slower supply side growth. So, you know, for the last
30 years or so, we've had very rapid supply.
side growth from the global economy in my view, and
that is pretty much good for everything. But that, you know,
has really changed now and how households sort of policy makers,
(02:47):
corporates adjust to this new world, I think will be,
will be absolutely key.
If it's a clear-eyed, smooth adjustment, I think that can
result in decent economic outcomes, but if agents adjust in
a very disjointed way or if they underestimate the challenge
that is, that is before us, you know, the economic
(03:07):
costs could be, could be somewhat higher. Um, so getting,
you know, getting that adjustment right I think is, is
really important.
Speaker 1 (03:14):
We were all looking forward to this year being a
time of economic recovery, but it just hasn't worked out
that way. Can you go further into what's causing the
supply side issues in the economic environment and what's it
going to take to overcome these
Speaker 2 (03:28):
issues? So right now, the supply disruption has really come from,
from two areas, so one is supply chains.
And, and that has been a direct consequence of the
disruption that that COVID caused from a, from an economics
and a logistics point of view, and the other is
the labour market where in many instances,
(03:49):
Certain cohorts have not returned to the workplace in the
numbers that they participated in prior to COVID. So, so
both of those things have, have constrained supply and have
added to inflationary pressures globally. The the good news is
that the data are now starting to show that some
of these supply chain pressures are starting,
To ease up, and my guess would be that that
(04:11):
process continues over the next 6 to 12 months, notwithstanding
the fact that China is maintaining its zero COVID policy,
I'd expect that some of those pressures continue to ease.
At the same time, um, I think the labour market
adjustment is occurring, but it's occurring at a much slower pace.
So, you know, overall, over the course of the next
(04:32):
12 months or so, I think supply pressures will ease.
I think demand pressures will, will also ease. So I'd
anticipate that, you know, inflation 12 months from now is
quite a bit lower than it is now, but I,
I don't think it'll go back to, to 2% over that.
And I don't think it'll go back to 2% or
(04:52):
below in in any great hurry. So even though it'll
go down, I think 12 months from now, inflation will
still be at a level that is, that is problematic
for policymakers and and problematic for investors. How
Speaker 1 (05:04):
do you see geopolitical issues and risks influencing economies and
trading environments?
Speaker 2 (05:11):
So geopolitical risks are certainly on on the rise, and
I think that to a degree, this was inevitable. Military
and geopolitical power tends to follow economic power just like
night follows day, and I think, so I think it
was only a matter of time before China started to
(05:31):
assert its interests more forcefully around the world and particularly
in the, in the Asia Pacific.
Uh, region, so I, I think that was unavoidable and
it's really just a matter of, of managing uh China's
rise and managing that process. But there are other ones,
I would say coming from places such as, you know, China, Iran,
(05:52):
North Korea, for example,
That with good sort of strong and well thought through
foreign policy decisions, you know, those risks can be, can
be minimised. So I think that's that's an area, both
areas we can, we can move the needle, but you know,
in the, in the second category, I think, I think
we can, we can do more to remove the geopolitical risks, whereas,
(06:13):
whereas in the first category with China, it, it's more
a matter of, of, of managing.
It in a in a smooth a way as possible.
Speaker 1 (06:20):
Skills shortages, low unemployment, recruiting and retaining talent, helping keep
people safe, happy and engaged in their work. These are
all key issues facing organisations today. What impact are labour
market issues having on economies, and what do you see
as some of the necessary conditions to provide some relief
in the short-term?
Speaker 2 (06:41):
labour markets are certainly very, very tight, look, I think
pretty much every developed world economy we've got either the
lowest unemployment rate on on record or the lowest unemployment
rate since, since the 1960s. I, I think the key
thing that's going on here is, you know, is, is
tight labour markets are naturally contributing to an increase in
employee bargaining power. And, and in a lot of the
(07:03):
developed world, employees didn't have much bargaining power, you know,
for a very long, long time.
But, but that is, that is changing, and, and, and,
and what are the consequences of that? Well, the consequences
of that are of course that wages are starting to rise,
um more, more rapidly than they have for a long
period of time now.
And at the same time, uh employees are, are able
to demand more things, right, so, so one of those
(07:25):
things I think that they're demanding at the moment is,
is flexible working and employers are having, uh, to adjust
just to that.
Um, you know, there's not a lot that you can
do about tight labour markets and this situation in the
near term if you're an employer. Of course, central banks
are trying to slow demand growth, which will help a little.
(07:46):
And rising wages may induce some people to come back
into the labour market. That's a normal cyclical phenomenon, but
some of those folk that that didn't come back post-COVID
may start to come back, you know, if they get
the right offer, right, in terms of, in terms of
pay and in terms of workplace workplace arrangements. But you know,
these things will, will take some time now.
(08:08):
In a longer term, what of course you can do
is you can, you can boost productivity, you know, if
labour is constrained, you can boost the productivity of your
workforce by investing in capital, investing in education and training, and,
and those, those things can make a difference, but again,
you know, that, that takes time. So, uh, overall, I
(08:29):
think this is an issue that
Really, you know, isn't going away in the near term,
absent a very large recession in the developed world, which is,
which is unlikely.
Speaker 1 (08:38):
How important in your view are environmental, social and governance
or ESG obligations for national economic growth? For example, we're
seeing a rapid acceleration in the transition to renewable energy.
How do you see that influencing economic conditions in the
near to medium term? It's
Speaker 2 (08:57):
clearly a very important area for for a whole range
of reasons. Um, in the near term, the push to
a net zero carbon world is clearly having a pretty.
Found impact on specific sectors. So I'm thinking about electricity
generation here and what's going on with renewables in that space,
and also road transport with the electrification, particularly of light
(09:19):
duty vehicles, but also potentially down the track, heavy, heavy
duty vehicles.
But longer term, I think that the real opportunity here, uh,
from an economic growth perspective is around is around cheaper energy.
If you look back through economic history, you know, cheaper
energy has been, you know, a major stimulus to economic
growth at certain points. So if you take the industrial revolution,
(09:40):
which was really a spectacular increase in the growth rate
at the time, you know, that process in part was
brought about by the
Discovery of a of a new cheap form of energy
in terms of coal. There were many other factors contributing
to the revolution, but, but that, that was certainly one.
You know, similarly, in the post-World War II economic boom
(10:00):
that we experienced, you know, that was in part driven
by the emergence of very cheap, you know, Middle Eastern
oil at the time. So, you know, cheap energy can
be a real boon for economic activity.
And renewables really hold out that promise over the longer term.
So for example, if you look at analysts projections by 2050,
you know, power from solar is expected to be about
(10:22):
1/6 the cost of coal, and about 1/5 the cost
of of gas. So that is a very pronounced decline
or potential decline.
In the cost of energy. Now, you know, there are
uncertainties in those projections for sure, and there will be
adjustments that need to be made to get us there.
But if realised, that kind of cost reduction in such
(10:45):
a key input to virtually all economic activity, you know,
could provide tremendous support over many.
Years and and and even decades to economic growth and
prosperity
Speaker 1 (10:55):
generally. A big enabler of business opportunity and growth that's
emerged in the last decade or two has been digital
connectivity and the possibility to connect everything that can be connected.
It's been referred to as the 4th industrial revolution or
industry 4.0.
How do you see the impact of digital transformation on
(11:16):
economic growth today and into the future, and what are
some of the key trends or the biggest opportunities from
an economic perspective?
Speaker 2 (11:24):
This is an extremely exciting area, no doubt about it.
There are a number of, of really exciting technologies on
the horizon, but digitalization and connectivity is, is certainly one
of those.
In my mind, I liken it a bit to the
smartphone revolution that occurred through the 2000s, but I think
digitalization and connectivity will probably be even more powerful than that.
(11:47):
So what did smartphones do for us? Well, they really
increased our productivity, our workplace productivity, our personal productivity. We
were just able to get a lot more out of
our lives.
And we were able to be a lot more efficient.
So for example, you could book and pay for travel,
you could order items from the home, you could read
the paper, do your banking, you could do all of
that from your phone on the way to work. And
(12:09):
that was just a tremendous increase overall in our capacity
to do things and enrich our lives. And I think
the connectivity promise that IoT technology.
Uh, is we'll take that to another level. It will
just enable us to be so much more efficient in
terms of our use of transport, for example, you know,
our use of heating and power in our homes and just,
(12:32):
just generally organising our lives. So, so in that sense,
you know, it can make a real meaningful contribution to
to efficiency and productivity and therefore economic growth.
Speaker 1 (12:42):
How can businesses tap technological transformation to buffer themselves from
the impact of ongoing economic disruption through this year and
into 2023? This is a
Speaker 2 (12:52):
bit of a tricky one because technological adoption and and
and technological transformation takes time, right, but it, it is
very true at the moment from a macroeconomic perspective that
we're being buffeted by a lot of shocks, and there's
a lot of disruption in general, so I think for business,
Businesses, flexibility really is, is key, and you know, technology
(13:17):
can enable businesses to be, to be flexible, right, so
they can, you know, facilitate flexible working. it can facilitate
flexible working, for example, which is, uh, you know, as
we mentioned before, is currently being demanded by a lot
of employees. It can boost the productivity of employees, and
you know, which is likely to be to be key
when when faced with tight labour markets.
(13:38):
And you know, it can also be used to improve
service levels to to customers and clients alike in in
many ways. So I think overall there are myriad ways
that businesses can use technology to their advantage, um, and,
and they really should be, because they're going to need
to over the next sort of 12 months, 12 to
24 months or so, given the, the operating environment that
(13:58):
we're in.
Speaker 1 (14:00):
Now Daniel, if you had one wish or request for
all business and government leaders, what would it be and
Speaker 2 (14:07):
why? It would be to stay in your lane and focus.
Now maybe that sounds a little bit controversial, but what
I mean by that is that.
You know the world faces a lot of challenges at
the moment, and in my view, and so what we
really need is a high level of competence from from
each of society's components, you know, if we are, you know,
(14:30):
to get through this period well and and and for
prosperity to continue, so,
You know, for governments, I think what that means is avoiding,
you know, band-aid or or shortcut type solutions to problems,
and really focusing on medium to long-term policy outcomes and
and delivering, you know, the right frameworks and the right
(14:51):
incentives for business and households, you know, to operate in
the best and most efficient way uh possible. For businesses,
I think this means,
You know, a laser-like focus on delivering for your shareholders,
your employees, and your other stakeholders. I don't think businesses
have to solve all of the world's problems. I, I
(15:12):
don't think businesses, you know, have to opine on, on
every political issue in the world. Uh, they just need
to focus on what they do well.
If they do that, that will really help to make
the world a better place and all is likely to
be well with the world. So I would just ask
people to really focus on delivering in their area of expertise.
(15:34):
And if that's brought together, that can result in some
pretty good outcomes for society writ large.
Speaker 1 (15:40):
Now Daniel, we're gonna go into a rapid fire section.
I'm gonna throw quick questions at you. I want to
hear the first answer that pops into your head. First,
what's your favourite piece of technology?
Speaker 2 (15:50):
The most interesting and, and I believe the most consequential
is AI. It's, it's, it's applications are effectively endless and.
From an economic point of view, it's what economists call
a general purpose technology because it can be applied to
pretty much everything, its capacity to boost productivity is just enormous.
So if AI ultimately works, it could be a real
(16:12):
game changer for us as a society, but also economically.
Speaker 1 (16:16):
How do you disconnect?
Speaker 2 (16:18):
Read or spend time with my wife and daughter, that's,
that's an easy one. What's
Speaker 1 (16:22):
the most important thing you do for your own wellbeing?
Speaker 2 (16:25):
Again, that's an easy one, and that is turn off
electronic devices, particularly my work computer, but really it applies
to to everything. I think these devices are wonderful.
Well, you know, they're an amazing source of information and communication,
and I value them very, very highly, but I, I
need a break from them and physically switching them off
(16:47):
or or moving them to another room is really the
only way to do that, to do that properly, um,
so I find that, that really important.
Speaker 1 (16:56):
What's the one thing that would surprise people about you?
Speaker 2 (16:59):
Surprise, well.
I, I don't really know, but, but it may surprise
people to know that I'm sort of a closet, closet
adrenaline junkie, you know, I, I like to, to skydive,
I like to dive, so any chance I get to
engage in in those kind of, kind of activities I,
I do.
Speaker 1 (17:18):
What's the one personal trait most important to success?
Speaker 2 (17:24):
Persistence. I, I don't think it's undoubtedly persistence. I mean,
I'm reminded of, of, you know, Edison's quote that sort
of genius is, is, is 1% inspiration and, and 99% perspiration. I,
I think that applies to success as, as well, you know, it's,
it's about turning up day after day, uh, and, and,
and
Speaker 1 (17:45):
delivering. And what's the one thing there needs to be
more of in business today?
Speaker 2 (17:51):
I don't know whether it's the most important thing, but
I think humility is really important, right, in business. So
humility about what our areas of expertise are, humility about
what we should focus on, humility about how businesses
Should interact with their stakeholders, you know, their employees and
their communities. I think there is some of that, but
(18:13):
you know it's a really important aspect, I think, of
how businesses should behave. So the more of that that
we have, the better.
Speaker 1 (18:22):
Daniel McCormack, it's been so great having you on the podcast,
really appreciate all of your insights.
Thanks so much for listening. I hope you've enjoyed this
episode of Focus Inspire, and we look forward to bringing
you more inspiration in coming episodes. If you've enjoyed this conversation,
we've got so much more to share with you. We've
just released a detailed report called Connectivity 4.0, The New
(18:47):
Business Imperative, featuring trends and insights from industry leaders and
experts and importantly, practical steps.
To help you lead your organisation through change. Head to
our website at Focus.com.au to download the full report. And
don't forget, if you want more inspiration and more episodes,
head to vocus.com.au/podcast. You can follow us on LinkedIn and
(19:10):
Twitter to stay up to date with all things Vocus.
Listen out for the next episode of the Vocus Inspire podcast.
Welcome to Vocus Inspire, the podcast full of brilliant ideas
for business.
Hi, I'm Luke Coleman, head of government and corporate affairs
at Vocus, Australia's leading specialist fibre and network solutions provider.
Before we get things underway, we want to acknowledge and
pay our respects to the traditional custodians of the land
(00:24):
from wherever you're listening. In this podcast, we dive headfirst
into what's on the minds of Australian business and government
leaders to help inspire you and your organisation to go forward,
go further, and go faster. So let's go.
Today we're talking to Daniel McCormack, managing director and head
(00:46):
of thought leadership at Macquarie Asset Management. Daniel works globally
across infrastructure, real estate, agriculture and private credit sectors to
produce insights on their performance and their return drivers. His
team also produces research on the energy transition,
And the opportunities and threats that it creates for real
assets investors. Prior to joining Macquarie Asset Management, Daniel worked
(01:11):
for 10 years as an economist, and equity market strategist,
covering a broad range of economies and markets, including the US,
UK and Europe area, as well as China and Australia.
Daniel, thanks for joining us on the podcast.
Speaker 2 (01:25):
Thanks, Luke, and hi everybody.
Speaker 1 (01:27):
Daniel, is it fair to say that the world is
facing some challenges that it hasn't seen before, or at
least for a very long time? And how would you
rank them in terms of the biggest impact or the
toughest to work our way out of?
Speaker 2 (01:40):
Geopolitically, I think the biggest challenge at the moment is, is,
is undoubtedly China.
After 40 years of of robust economic growth, China is
really now starting to assert itself geopolitically, and that is happening,
whether by coincidence or not, at the same time that
there's a bit of a backlash going on against globalisation
(02:01):
in the developed world and the US in particular, I
would say is going through a period, as it has
been wont to do throughout its history periodically, of becoming
a bit more isolationist and and pulling back from global
commitments and pulling back,
From enforcing or enforcement of of the global order. So,
so geopolitically, I think that that is definitely the biggest challenge,
(02:23):
how that, how that process is managed. Economically, the biggest
challenge right now is, is in my view, adjusting to
slower supply side growth. So, you know, for the last
30 years or so, we've had very rapid supply.
side growth from the global economy in my view, and
that is pretty much good for everything. But that, you know,
has really changed now and how households sort of policy makers,
(02:47):
corporates adjust to this new world, I think will be,
will be absolutely key.
If it's a clear-eyed, smooth adjustment, I think that can
result in decent economic outcomes, but if agents adjust in
a very disjointed way or if they underestimate the challenge
that is, that is before us, you know, the economic
(03:07):
costs could be, could be somewhat higher. Um, so getting,
you know, getting that adjustment right I think is, is
really important.
Speaker 1 (03:14):
We were all looking forward to this year being a
time of economic recovery, but it just hasn't worked out
that way. Can you go further into what's causing the
supply side issues in the economic environment and what's it
going to take to overcome these
Speaker 2 (03:28):
issues? So right now, the supply disruption has really come from,
from two areas, so one is supply chains.
And, and that has been a direct consequence of the
disruption that that COVID caused from a, from an economics
and a logistics point of view, and the other is
the labour market where in many instances,
(03:49):
Certain cohorts have not returned to the workplace in the
numbers that they participated in prior to COVID. So, so
both of those things have, have constrained supply and have
added to inflationary pressures globally. The the good news is
that the data are now starting to show that some
of these supply chain pressures are starting,
To ease up, and my guess would be that that
(04:11):
process continues over the next 6 to 12 months, notwithstanding
the fact that China is maintaining its zero COVID policy,
I'd expect that some of those pressures continue to ease.
At the same time, um, I think the labour market
adjustment is occurring, but it's occurring at a much slower pace.
So, you know, overall, over the course of the next
(04:32):
12 months or so, I think supply pressures will ease.
I think demand pressures will, will also ease. So I'd
anticipate that, you know, inflation 12 months from now is
quite a bit lower than it is now, but I,
I don't think it'll go back to, to 2% over that.
And I don't think it'll go back to 2% or
(04:52):
below in in any great hurry. So even though it'll
go down, I think 12 months from now, inflation will
still be at a level that is, that is problematic
for policymakers and and problematic for investors. How
Speaker 1 (05:04):
do you see geopolitical issues and risks influencing economies and
trading environments?
Speaker 2 (05:11):
So geopolitical risks are certainly on on the rise, and
I think that to a degree, this was inevitable. Military
and geopolitical power tends to follow economic power just like
night follows day, and I think, so I think it
was only a matter of time before China started to
(05:31):
assert its interests more forcefully around the world and particularly
in the, in the Asia Pacific.
Uh, region, so I, I think that was unavoidable and
it's really just a matter of, of managing uh China's
rise and managing that process. But there are other ones,
I would say coming from places such as, you know, China, Iran,
(05:52):
North Korea, for example,
That with good sort of strong and well thought through
foreign policy decisions, you know, those risks can be, can
be minimised. So I think that's that's an area, both
areas we can, we can move the needle, but you know,
in the, in the second category, I think, I think
we can, we can do more to remove the geopolitical risks, whereas,
(06:13):
whereas in the first category with China, it, it's more
a matter of, of, of managing.
It in a in a smooth a way as possible.
Speaker 1 (06:20):
Skills shortages, low unemployment, recruiting and retaining talent, helping keep
people safe, happy and engaged in their work. These are
all key issues facing organisations today. What impact are labour
market issues having on economies, and what do you see
as some of the necessary conditions to provide some relief
in the short-term?
Speaker 2 (06:41):
labour markets are certainly very, very tight, look, I think
pretty much every developed world economy we've got either the
lowest unemployment rate on on record or the lowest unemployment
rate since, since the 1960s. I, I think the key
thing that's going on here is, you know, is, is
tight labour markets are naturally contributing to an increase in
employee bargaining power. And, and in a lot of the
(07:03):
developed world, employees didn't have much bargaining power, you know,
for a very long, long time.
But, but that is, that is changing, and, and, and,
and what are the consequences of that? Well, the consequences
of that are of course that wages are starting to rise,
um more, more rapidly than they have for a long
period of time now.
And at the same time, uh employees are, are able
to demand more things, right, so, so one of those
(07:25):
things I think that they're demanding at the moment is,
is flexible working and employers are having, uh, to adjust
just to that.
Um, you know, there's not a lot that you can
do about tight labour markets and this situation in the
near term if you're an employer. Of course, central banks
are trying to slow demand growth, which will help a little.
(07:46):
And rising wages may induce some people to come back
into the labour market. That's a normal cyclical phenomenon, but
some of those folk that that didn't come back post-COVID
may start to come back, you know, if they get
the right offer, right, in terms of, in terms of
pay and in terms of workplace workplace arrangements. But you know,
these things will, will take some time now.
(08:08):
In a longer term, what of course you can do
is you can, you can boost productivity, you know, if
labour is constrained, you can boost the productivity of your
workforce by investing in capital, investing in education and training, and,
and those, those things can make a difference, but again,
you know, that, that takes time. So, uh, overall, I
(08:29):
think this is an issue that
Really, you know, isn't going away in the near term,
absent a very large recession in the developed world, which is,
which is unlikely.
Speaker 1 (08:38):
How important in your view are environmental, social and governance
or ESG obligations for national economic growth? For example, we're
seeing a rapid acceleration in the transition to renewable energy.
How do you see that influencing economic conditions in the
near to medium term? It's
Speaker 2 (08:57):
clearly a very important area for for a whole range
of reasons. Um, in the near term, the push to
a net zero carbon world is clearly having a pretty.
Found impact on specific sectors. So I'm thinking about electricity
generation here and what's going on with renewables in that space,
and also road transport with the electrification, particularly of light
(09:19):
duty vehicles, but also potentially down the track, heavy, heavy
duty vehicles.
But longer term, I think that the real opportunity here, uh,
from an economic growth perspective is around is around cheaper energy.
If you look back through economic history, you know, cheaper
energy has been, you know, a major stimulus to economic
growth at certain points. So if you take the industrial revolution,
(09:40):
which was really a spectacular increase in the growth rate
at the time, you know, that process in part was
brought about by the
Discovery of a of a new cheap form of energy
in terms of coal. There were many other factors contributing
to the revolution, but, but that, that was certainly one.
You know, similarly, in the post-World War II economic boom
(10:00):
that we experienced, you know, that was in part driven
by the emergence of very cheap, you know, Middle Eastern
oil at the time. So, you know, cheap energy can
be a real boon for economic activity.
And renewables really hold out that promise over the longer term.
So for example, if you look at analysts projections by 2050,
you know, power from solar is expected to be about
(10:22):
1/6 the cost of coal, and about 1/5 the cost
of of gas. So that is a very pronounced decline
or potential decline.
In the cost of energy. Now, you know, there are
uncertainties in those projections for sure, and there will be
adjustments that need to be made to get us there.
But if realised, that kind of cost reduction in such
(10:45):
a key input to virtually all economic activity, you know,
could provide tremendous support over many.
Years and and and even decades to economic growth and
prosperity
Speaker 1 (10:55):
generally. A big enabler of business opportunity and growth that's
emerged in the last decade or two has been digital
connectivity and the possibility to connect everything that can be connected.
It's been referred to as the 4th industrial revolution or
industry 4.0.
How do you see the impact of digital transformation on
(11:16):
economic growth today and into the future, and what are
some of the key trends or the biggest opportunities from
an economic perspective?
Speaker 2 (11:24):
This is an extremely exciting area, no doubt about it.
There are a number of, of really exciting technologies on
the horizon, but digitalization and connectivity is, is certainly one
of those.
In my mind, I liken it a bit to the
smartphone revolution that occurred through the 2000s, but I think
digitalization and connectivity will probably be even more powerful than that.
(11:47):
So what did smartphones do for us? Well, they really
increased our productivity, our workplace productivity, our personal productivity. We
were just able to get a lot more out of
our lives.
And we were able to be a lot more efficient.
So for example, you could book and pay for travel,
you could order items from the home, you could read
the paper, do your banking, you could do all of
that from your phone on the way to work. And
(12:09):
that was just a tremendous increase overall in our capacity
to do things and enrich our lives. And I think
the connectivity promise that IoT technology.
Uh, is we'll take that to another level. It will
just enable us to be so much more efficient in
terms of our use of transport, for example, you know,
our use of heating and power in our homes and just,
(12:32):
just generally organising our lives. So, so in that sense,
you know, it can make a real meaningful contribution to
to efficiency and productivity and therefore economic growth.
Speaker 1 (12:42):
How can businesses tap technological transformation to buffer themselves from
the impact of ongoing economic disruption through this year and
into 2023? This is a
Speaker 2 (12:52):
bit of a tricky one because technological adoption and and
and technological transformation takes time, right, but it, it is
very true at the moment from a macroeconomic perspective that
we're being buffeted by a lot of shocks, and there's
a lot of disruption in general, so I think for business,
Businesses, flexibility really is, is key, and you know, technology
(13:17):
can enable businesses to be, to be flexible, right, so
they can, you know, facilitate flexible working. it can facilitate
flexible working, for example, which is, uh, you know, as
we mentioned before, is currently being demanded by a lot
of employees. It can boost the productivity of employees, and
you know, which is likely to be to be key
when when faced with tight labour markets.
(13:38):
And you know, it can also be used to improve
service levels to to customers and clients alike in in
many ways. So I think overall there are myriad ways
that businesses can use technology to their advantage, um, and,
and they really should be, because they're going to need
to over the next sort of 12 months, 12 to
24 months or so, given the, the operating environment that
(13:58):
we're in.
Speaker 1 (14:00):
Now Daniel, if you had one wish or request for
all business and government leaders, what would it be and
Speaker 2 (14:07):
why? It would be to stay in your lane and focus.
Now maybe that sounds a little bit controversial, but what
I mean by that is that.
You know the world faces a lot of challenges at
the moment, and in my view, and so what we
really need is a high level of competence from from
each of society's components, you know, if we are, you know,
(14:30):
to get through this period well and and and for
prosperity to continue, so,
You know, for governments, I think what that means is avoiding,
you know, band-aid or or shortcut type solutions to problems,
and really focusing on medium to long-term policy outcomes and
and delivering, you know, the right frameworks and the right
(14:51):
incentives for business and households, you know, to operate in
the best and most efficient way uh possible. For businesses,
I think this means,
You know, a laser-like focus on delivering for your shareholders,
your employees, and your other stakeholders. I don't think businesses
have to solve all of the world's problems. I, I
(15:12):
don't think businesses, you know, have to opine on, on
every political issue in the world. Uh, they just need
to focus on what they do well.
If they do that, that will really help to make
the world a better place and all is likely to
be well with the world. So I would just ask
people to really focus on delivering in their area of expertise.
(15:34):
And if that's brought together, that can result in some
pretty good outcomes for society writ large.
Speaker 1 (15:40):
Now Daniel, we're gonna go into a rapid fire section.
I'm gonna throw quick questions at you. I want to
hear the first answer that pops into your head. First,
what's your favourite piece of technology?
Speaker 2 (15:50):
The most interesting and, and I believe the most consequential
is AI. It's, it's, it's applications are effectively endless and.
From an economic point of view, it's what economists call
a general purpose technology because it can be applied to
pretty much everything, its capacity to boost productivity is just enormous.
So if AI ultimately works, it could be a real
(16:12):
game changer for us as a society, but also economically.
Speaker 1 (16:16):
How do you disconnect?
Speaker 2 (16:18):
Read or spend time with my wife and daughter, that's,
that's an easy one. What's
Speaker 1 (16:22):
the most important thing you do for your own wellbeing?
Speaker 2 (16:25):
Again, that's an easy one, and that is turn off
electronic devices, particularly my work computer, but really it applies
to to everything. I think these devices are wonderful.
Well, you know, they're an amazing source of information and communication,
and I value them very, very highly, but I, I
need a break from them and physically switching them off
(16:47):
or or moving them to another room is really the
only way to do that, to do that properly, um,
so I find that, that really important.
Speaker 1 (16:56):
What's the one thing that would surprise people about you?
Speaker 2 (16:59):
Surprise, well.
I, I don't really know, but, but it may surprise
people to know that I'm sort of a closet, closet
adrenaline junkie, you know, I, I like to, to skydive,
I like to dive, so any chance I get to
engage in in those kind of, kind of activities I,
I do.
Speaker 1 (17:18):
What's the one personal trait most important to success?
Speaker 2 (17:24):
Persistence. I, I don't think it's undoubtedly persistence. I mean,
I'm reminded of, of, you know, Edison's quote that sort
of genius is, is, is 1% inspiration and, and 99% perspiration. I,
I think that applies to success as, as well, you know, it's,
it's about turning up day after day, uh, and, and,
and
Speaker 1 (17:45):
delivering. And what's the one thing there needs to be
more of in business today?
Speaker 2 (17:51):
I don't know whether it's the most important thing, but
I think humility is really important, right, in business. So
humility about what our areas of expertise are, humility about
what we should focus on, humility about how businesses
Should interact with their stakeholders, you know, their employees and
their communities. I think there is some of that, but
(18:13):
you know it's a really important aspect, I think, of
how businesses should behave. So the more of that that
we have, the better.
Speaker 1 (18:22):
Daniel McCormack, it's been so great having you on the podcast,
really appreciate all of your insights.
Thanks so much for listening. I hope you've enjoyed this
episode of Focus Inspire, and we look forward to bringing
you more inspiration in coming episodes. If you've enjoyed this conversation,
we've got so much more to share with you. We've
just released a detailed report called Connectivity 4.0, The New
(18:47):
Business Imperative, featuring trends and insights from industry leaders and
experts and importantly, practical steps.
To help you lead your organisation through change. Head to
our website at Focus.com.au to download the full report. And
don't forget, if you want more inspiration and more episodes,
head to vocus.com.au/podcast. You can follow us on LinkedIn and
(19:10):
Twitter to stay up to date with all things Vocus.
Listen out for the next episode of the Vocus Inspire podcast.
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