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The state is an economic success, but we shouldn't rest on those laurels, writes Wayne Kayler-Thomson.

As the fog of the global financial crisis begins to lift from Australia's economic landscape, it is opportune to take stock of where we stand and the challenges ahead.

Despite the financial crisis' impact on global markets, the drive for greater productivity, innovation, sustainability and a competitive edge will continue to shape the future for modern economies.

Victoria has, for the best part of the past two decades, been more successful than most in identifying the challenges confronting the economy and implementing the necessary policy responses.

The transition of the state's economic base from mainly manufacturing to one of much greater diversity, coupled with the privatisation of key state assets, growth in the services sector and a booming population and housing market has seen Victoria record strong economic growth.

Despite all that has been achieved, we cannot afford to stand still. A prime example will be how Victoria adapts to an emissions trading system.

This is particularly pertinent for Victorian businesses that have historically benefited from access to cheap electricity, courtesy of the Latrobe Valley's vast supply of brown coal.

But beyond the state-wide implications of the need to move to greater use of renewable energy sources, how do we adapt to the need to incorporate environmental awareness at an individual and organisational level?

What will government policy and a carbon pollution reduction scheme mean for input costs and consumer reaction? Where are the opportunities to export our innovation and expertise?

In other words, how do our businesses become greener, yet stay in the black? Our industries must find their place in the world again as interest rates rise, as the Australian dollar hits new highs, and as the market sees increasing competition and innovation.
 
How do we drive the innovation that is needed to compete, not just through the research and development of our largest corporations, but in our service sector and small businesses?

Our infrastructure needs fundamental upgrading and expansion if it is to meet the needs of a booming population and increased trade both in Melbourne, and more than ever, in regional Victoria.

The Federal and State governments have committed vast amounts to finance new capital works, but how do we prioritise what is really needed? Are we overlooking the need to maintain and upgrade what we have, in the rush to embrace the next major project?

Our workplaces must find, keep and maximise the abilities of good staff at a time of skills shortages, an ageing population and greater expectations of work and workplace flexibility.

How do we respond to the trend of people wanting to work from home? How do we seamlessly integrate subcontractors into our organisations and market offerings? Is the communications infrastructure in place or around the corner?

How do we find the skilled staff we need? What do we want from our education and training system and from skilled migration programs?

And what is necessary to keep the baby-boomer generation productive and happy? Perhaps the most important thread running through these themes is the possibility of the emergence of Victoria as a national leader in these areas.

In many ways, this is already happening. Melbourne's population is growing more rapidly in raw numerical terms than other capital cities, and Melbourne will possibly be Australia's largest city in coming decades.

Victoria is Australia's most vibrant state, and Melbourne is the country's most vibrant city, with a strong major events calendar.

Our key infrastructure — for example, our airports and ports — have plenty of capacity for growth. We continue to attract direct flights and international and overseas visitors, while other states have fallen away.

For the first time in a decade, Melbourne has more prime office space than Sydney. For the first time ever, in the December quarter of last year, we shifted more air freight than Sydney did, as a result of more direct passenger flights.

In true Victorian style, our leadership should not be jingoistic or triumphalist. The VECCI Summit will focus on what Victoria could be like in 2025 if we don't confront the challenges of change that are real, profound and transformational.

On the positive flip-side, what do we want Victoria to be?

We have a vision for Victoria in 2025 that has a more skilled and highly educated workforce, is competitive and innovative, highly liveable, resource efficient and socially inclusive.

As an industrial leader, Victoria should be a vibrant services economy, an advanced manufacturing and technology hub, the Asia-Pacific region's premier food producer, and an international tourism leader as the world's best nature-based, sustainable destination with the world's best major events.


This is an extract from a speech by Wayne Kayler-Thomson, chief executive of the Victorian Employers Chamber of Commerce and Industry, at the 2009 VECCI summit at Parliament House, Melbourne.