BEYOND 2030: GLOBAL MEGATRENDS AND THE IMPACT ON NEW ZEALAND'S PROSPERITY - Ross Buckley Executive Chairman, KPMG 22 April 2015
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BEYOND 2030: GLOBAL MEGATRENDS AND THE IMPACT ON NEW ZEALAND’S PROSPERITY Ross Buckley Executive Chairman, KPMG 22 April 2015 kpmg.com/nz
BEYOND 2030
Period of unprecedented change
Demographics
Rise of the individual
Digital disruption
Enabling technology
Economic shift to Asia
Infrastructure investment
The environment
Customer Centricity
New Zealand’s place in the world
2
PAST
3
PRESENT
4
THE ADOPTION OF TECHNOLOGY
HAS GOT MUCH QUICKER
Source: New York Times, July 2014
5
AVERAGE NUMBER OF YEARS
A COMPANY SPENDS IN S&P 500 INDEX*
Source: The Economist, April 16 2011
6
NZX 20 INDEX – 2015
Air New Zealand Mighty River Power
Auckland International Airport Port of Tauranga
Contact Energy Precinct Properties
Fisher & Paykel Healthcare Ryman Healthcare
Fletcher Building SkyCity Entertainment
Goodman Property Trust Sky Network Television
Infratil Spark
Kiwi Income Property Trade Me
Mainfreight Xero
Meridian Energy Z Energy
7
NZX 20 INDEX – 2015, LISTED PRE 1995
Air New Zealand Mighty River Power
Auckland International Airport Port of Tauranga
Contact Energy Precinct Properties
Fisher & Paykel Healthcare Ryman Healthcare
Fletcher Building SkyCity Entertainment
Goodman Property Trust Sky Network Television
Infratil Spark
Kiwi Income Property Trade Me
Mainfreight Xero
Meridian Energy Z Energy
8
VOLATILITY IS THE NEW NORM
PRICES IN USD
110
NZD-AUD 0.9812
100
GOLD $1220
90
80
70
MILK POWDER$1220
60
OIL $55
IRON $62
50
40
Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15
Source: Bloomberg Finance L.P
9
FUTURE STATE 2030
INDIVIDUALS
Demographics
Rise of the individual
Enabling technology
PHYSICAL GLOBAL
ENVIRONMENT ECONOMY
Climate change Economic
Resource stress interconnectedness
Urbanisation Public debt
Economic
power shift
10DEMOGRAPHICS
11SUPER AGED SOCIETIES
More than 20% of the population is 65 years or older
TODAY 2020 2030
Germany France New Zealand
Italy Netherlands USA
Japan Portugal UK
Sweden Hong Kong
Slovenia Singapore
Croatia Korea
Finland Canada
Greece Spain
3 13 34
12AN EXPLOSION IN SLOW MOTION
NZ and Australian population projection 85yrs+ (000s)
Australia 4-5x
New Zealand
2x 2,153
843
420
329
73 147
2011 2031 2051
13RISE OF THE INDIVIDUAL
14THE MIDDLE CLASS IS GROWING
GLOBAL POPULATION BY INCOME
1965
3,267,422,420 PEOPLE
6,820,730,223 PEOPLE 2012 2030
8,011,521,525 PEOPLE
15GROWTH IN MIDDLE CLASS CUSTOMERS
NUMBER OF PEOPLE (IN MILLIONS) IN THE POPULATION CATEGORISED AS MIDDLE CLASS
3500
3000
2500
2000
1500
1000
500
0
2009 2020 2030
North America Europe Central and South America ASPAC Sub-Saharan Africa Middle East/North Africa
Source: Organisation for economic cooperation and development
16THE IMPACT OF
TECHNOLOGY
75% of the world’s
population has
access to a mobile
47% of phone users in
Asia will have smart
phones by 2018
Data use will
grow by a factor
of 11 by 2018
17COMPUTING IS GETTING CHEAPER
ENIAC
$1,000,000,000,000
IBM 7090
$10,000,000,000
2010 Dollars (Log Scale)
$100,000,000 Commodore 64
Atari 8800
$1,000,000
Mac II
$10,000
Gateway G6-200 iPad2
$100
1940 1950 1960 1970 1980 1990 2000 2010
18PROCESSING POWER OF AN IPHONE
UP TO
50x FASTER
2008 2014
Source: iamwire.com
19DIGITAL DISRUPTION
INDUSTRY OLD WORLD NEW WORLD EXAMPLES
Many industries have seen significant change from digitisation
Real Estate Classified adds in newspapers, Specialist real estate websites connect
physical real estate agent offices buyers and sellers (still predominantly
real estate agents), e.g. REA, Domain
Music Purchase CDs in music stores such Physical CDs widely obsolete. Access
as HMV and Virgin music by downloading using services
such as iTunes or stream using Spotify
or Pandora
Books Purchase physical copy of a book at Download to read on mobile device
a bookstore such as iPad or Kindle
Recruitment Classified ads in newspapers, speak Specialist recruitment websites
to recruitment agents connect jobseekers and employers,
such as Seek
Newspapers Purchase hard copy of newspaper Read news online at newspaper
website or receive news or other
social media source
Source: KPMG; Macquarie Research
20BARRIERS TO ENTRY FOR DIGITAL
DISRUPTORS ARE FALLING
THE COST OF ESTABLISHING A START-UP HAS FALLEN CONSIDERABLY
$5m
Open source and
horizontal scaling
Cloud and AWS
$500k
Developers starts
companies
$50k
$5k
2000 2005 2009 2011
Source: Reinventure
21ENABLING TECHNOLOGY
B2C ecommerce Asia Pacific Yet penetration By 2020, 5 billion
sales to hit ecommerce market of ecommerce internet users, 80
USD1.5 trillion in will be the world’s will be less billion connected
2014 (est) largest from 2014 than 17% devices
2223
THE IMPACT OF THE DRONE
24THE RISE OF THE ROBOTS
25OXFORD MARTIN
INSTITUTE HAVE A
FORECAST THAT OF
702 OCCUPATIONS IN
THE UNITED STATES
47% OF JOBS COULD
BE AUTOMATED
WITHIN 20 YEARS
Source: “The future of Employment: How Susceptible are Jobs to Computerisation?” by C.Frey and M.Osborne (2013)
26BRING ON THE PERSONAL TRAINERS
Probability that computerisation will lead to job losses within the next two decades
JOB PROBABILITY JOB PROBABILITY
Telemarketers 0.99 Health technologist 0.40
Accountants and auditors 0.94 Actors 0.37
Retail salespersons 0.92 Firefighters 0.17
Technical writers 0.89 Editors 0.06
Real estate sales agents 0.86 Chemical engineers 0.02
Work processors and typists 0.81 Clergy 0.008
Machinists 0.65 Athletic trainers 0.007
Commercial pilots 0.55 Dentists 0.004
Economist 0.43 Recreational therapists 0.003
Source: “The future of Employment: How Susceptible are Jobs to Computerisation?” by C.Frey and M.Osborne (2013)
27WORLDWIDE INDUSTRIAL
ROBOT INSTALLATION
300
250
200
THOUSAND
150
100
50
0
1995 2000 2005 2010 2015
28TECHNOLOGICAL ADVANCEMENT
The rapid pace of technological advancement will continue with new companies
seeking to significantly alter the financial services landscape
FINANCIAL
SERVICES
Despite these threats, KPMG research reveals that “53 per cent of consumers
trust their banks the most when it comes to making financial transactions.”
29CHANGING CONSUMER BEHAVIOUR
AND DEMANDS…
…are putting greater pressure on traditional providers
Consideration of non-traditional Reduced information
alternatives asymmetry
Growing advice from peers Personalised services
Willingness to adopt new Less loyal
technology
MILLENNIAL Banking most Innovation will Excited by financial
DISRUPTION 85% at risk of being 49% from outside 73% offers from global
INDEX disrupted of the industry Internet giants
30MORE AND MORE COMPANIES
WILL COLLABORATE IN THE FUTURE
Some partnerships will be less obvious
31THE ECONOMIC SHIFT TO ASIA
Europe Savings rates are Accessing 1.3m People will
currently has highest in Asia food, water move to cities
7% population where social and energy each week until
25% GDP, & protection is will cost more 2050
50% of welfare comparatively low
32“THE WORLD ECONOMY IS CHANGING” –
PERCENTAGE SHARE OF GLOBAL GDP
2011 2030 2060
India India USA India USA
6 USA 11 16
China 18 18
23 Japan, 3
17 Japan,
China 4 Europe
Other Japan 9
28 Europe
non - 7 12 China Other
OECD
12 Other Europe Other Other 28 Other OECD
17 non- OECD non- 14
OECD OECD 15 OECD
18 12 12
Source: NZ National Infrastructure Unit, OECD 2012
33TOP 10 LARGEST ECONOMIES
BY 2050
GDP in USD $000bn
COUNTRY 2014 2030 2050
1. China 18 36 61
2. India 7 17 42
3. USA 17 25 41
4. Indonesia 3 5 12
5. Brazil 3 5 9
6. Mexico 2 4 8
7. Japan 5 6 8
8. Russia 4 5 8
9. Nigeria 1 3 7
10. Germany 4 5 6
Outside top 10: UK 11th , South Korea 17th, Italy 18th, Spain 26th, Australia 28th
Source: IMF World Economic Outlook database
34URBANISATION AND MEGA CITIES
By 2030, Urban China will have Two thirds of
37 cities will population in an urban ASEAN urban
have populations Indonesia has population of population will
of > 10m tripled in the last 1bn by 2030 live in 5 mega
20 years cities by 2020
35GLOBAL INFRASTRUCTURE INVESTMENT
2010 – 2030
US$TRILLION | CONSTANT 2010 DOLLARS
Source: 'Global Infrastructure: How To Fill A $500 Billion Hole,' Standard & Poors, 2014; ' The credit fund opportunity,' Citi, 2013; Financial Times; KPMG analysis
36NZ INFRASTRUCTURE – 10 YEAR OUTLOOK
$NZD BILLION
CENTRAL GOVT LOCAL GOVT PRIVATE SECTOR TOTAL
Social 30.1 6.0 0.3 36.4
Transport 16.5 15.6 4.7 36.7
Water - 11.3 - 11.3
Energy - 0 5.9 5.9
Environment - 1.6 - 1.6
Land - 0 - 0
46.6 34.7 10.9 92.0
# of projects 260 2,833 100 3,153
Source: NZ National Infrastructure Unit
37WATER MANAGEMENT
AND INFRASTRUCTURE
ANNUAL RENEWABLE WATER SUPPLY MILLION LITERS PER CAPITA
75.6
42.6
26.5
22.5 20.8
10.4 10 8.5
5.6 3.5 2.1 1.6
Americas Europe Africa Asia China India AUS NZ USA Malaysia Indonesia Brazil
38Cup of coffee Cotton Shirt Rice (1 kg) Chicken (1 kg) Beef (1kg)
140 L 2700 L 3400 L 3900 L 15,500L
39CALIFORNIA DROUGHT
THE DROUGHT HAS
DRAINED CALIFORNIA'S
RESERVOIRS, LIKE LAKE
OROVILLE, SEEN HERE
IN 2011 (TOP LEFT) AND
2014 (BOTTOM RIGHT)
40WHAT IS DRIVING CUSTOMER
PURCHASING DECISIONS
The Top 6 purchasing attributes – based on the views
of KPMG agribusiness professionals in 15 countries
01 / 02 / 03 /
Price of Certified Security
the product safety of the of supply
product
04 / 05 / 06 /
Eating Personal Traceability
attributes of market of product
the products relationships
41NEW ZEALAND’S PLACE IN THE WORLD
Easy to do business
STRENGTHS
High education participation
High quality of life
High transparency
Low corruption
Geographical location
Dependence on primary sector
WEAKNESSES Weak innovation system
No ‘international’ city
Low education attainment
Low incomes
Churning not creating wealth
42NEW ZEALAND’S PLACE IN THE WORLD
RISK: NZ’S SMALL SIZE RESULTS IN THE COUNTRY BEING SQUEEZED
IN THE FUTURE BECAUSE WE ARE TOO SMALL TO BE RELEVANT
A Prescription for New Zealand’s Prosperity
World class infrastructure
High broadband connectivity
Focus on educational attainment
City strategies
Scrutiny of government spending
Greater co-ordination with West Island
Asia focused education
Innovation ecosystem
More collaboration
43SOME HOPES FOR NEW ZEALAND 2030
Our young
We zig when New Zealand
people see
the rest of companies
a world
the world is are born
without
zagging global
boundaries
A nation
Every New Zealand
connected to
company is home to
its future but
acts like a the world’s
valuing its
start up delicatessen
past
44TOP TEN QUESTIONS TO CONSIDER:
What will your clients of the future Have you got the right operating
01 06
look like? model for the future?
How will the industry value chain be How are you capturing and leveraging
02 impacted and what role do you want internal and external data to help you
07
to play? better engage with clients and remain
relevant?
How will your proposition and
03 service model need to change to How are you ensuring that a risk
meet evolving client needs? 08 focus is embedded within your
organisation?
What are the implications for your
04
brand and market profile? What people skills and capabilities
09
will you require in the future?
What opportunities are available to
extend or reshape your existing Where do you see the key risk of
05 10
geographical footprint to take advantage market discontinuity coming from?
of emerging market developments?
45DISCUSSION THANK YOU Ross Buckley Executive Chairman © 2015 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International Cooperative.
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