Digital economy adds more to Aussie GDP than mining

Australia's digital businesses add more value than mining to the GDP

The digital economy contributed an estimated $79 billion to Australia's GDP in FY14 - more than traditional industry sectors including agriculture, retail and transport.

This is among the key findings of a report prepared for Google Australia by Deloitte exploring the value of all things digital to the Australian economy.

Deloitte estimates that the digital economy contributed 5.1% of Australia's GDP in FY14 and predicts that this will rise to 7.3% of GDP - or $139 billion - by 2020.

A similar report prepared in 2011 predicted that the digital economy would grow to $70 billion by 2016. But this latest research shows that the segment is already 50% larger in real terms than these estimates.

Digital technologies improve productivity through mechanisms including increased competition, reduced prices, enabling efficiencies within businesses and improved innovation.

The digital economy also makes significant contributions to employment - the report estimates that there are 451,000 ICT specialists in Australia, representing around 4% of jobs.

The vast majority (97%) of ICT specialists work outside the ICT industry itself - around 2.5 million employees, or 22% of the workforce, fall under a broad definition of ICT workers that also includes intensive users of ICT.

Broken down by industry, the largest share of ICT workers works in health care and social assistance (16%), followed by education and training (15%) and professional, scientific and technical industries (15%).

According to the report, this demonstrates that the digital economy is changing from being a standalone industry to one embedded in businesses across the economy.

Deloitte also estimates that the digital economy offers consumer benefits worth around $75 billion annually and affords government productivity benefits worth around $7 billion a year.

Benefits to Australians come from advantages including the ability to easily search for jobs, houses and goods or services, the ability to purchase content that is not locally available and the ability to access commercial and government services online.

In a finding that has implications for the impact of the NBN, the report suggests that a 10 percentage-point increase in broadband penetration likely translates to a 0.9 to 1.5 percentage-point growth in annual per capita growth.

For the report, Deloitte chose four businesses in the retail, manufacturing, finance and business services sectors and examined how their business has been transformed using digital technology. Deloitte said analysis shows that businesses across sectors are pursuing internal business transformational change through cloud, data analytics and M2M technologies.

In the retail sector, South Australian confectionery brand Haigh's Chocolates has been using data analytics to improve its ordering and delivery process, while engaging in brand-building via social platforms including Facebook, Twitter and YouTube.

In finance, ANZ Bank is working to develop a company-wide agile digital culture focused on growth and improving the customer experience. The company has established ANZ Digital to achieve this transformation and has adopted new technology including upgraded CMS platforms, enhanced ICT security and data analytic capabilities.

In business services, software company Xero is seeing strong growth opportunities in the cloud computing segment. Shifts in how businesses are using technology are also affecting Xero's products - for example, the company is transitioning its account reconciliation tool into a real-time financial status monitoring service.

In the struggling manufacturing sector, the remaining businesses still have opportunities to adopt digital technologies to reach more customers and undertake their operations more productively. Furniture and homeware manufacturer Jimmy Possum responded to the challenges posed by cheap overseas imports by establishing its own retail presence, complete with an online store. Digital technologies have also allowed the company to streamline the production process, manage an Australia-wide customer base and communicate more efficiently