What’s happened to Australian industry? And what comes next?

Australia’s economy has transformed dramatically over the past decade. While mining remains dominant, the rise of knowledge services, the digital economy and the caring sectors is reshaping the nation’s industrial landscape. Understanding these shifts is crucial for leaders who must navigate emerging opportunities and challenges.

Here’s what’s happened to Australian industry, and what it means for the future.

The rise of the knowledge economy

A quiet revolution has taken place in Australia’s major cities. Knowledge-based industries - professional services, finance, IT and public administration - now generate nearly a third of the nation’s economic value. Over the past decade, these sectors accounted for 43% of Australia’s economic growth.

For cities looking to foster future industries, the opportunity is clear: investing in innovation ecosystems, university-industry collaboration and digital infrastructure will be critical to long-term economic success.

Mining still matters, but its growth is uneven

Mining remains Australia’s largest and most productive industry, contributing 15% of total economic value. Western Australia dominates, generating 60% of national mining output. However, mining employment remains low, and the industry’s benefits are not evenly distributed across the country.

For regional economies reliant on mining, the challenge is diversification. Governments and economic development leaders must ensure resource-rich areas also build resilience through adjacent industries such as minerals processing, advanced manufacturing and clean energy.

The digital economy is accelerating

Australia’s most dynamic industries are digital. Over the past decade, internet-related services - including telecommunications, web platforms and data processing - have grown at unprecedented rates. Some sectors have more than quadrupled in size.

Despite this growth, Australia still lags in economic complexity and innovation-driven exports. To capitalise on the digital revolution, cities and regions must support entrepreneurship, invest in digital skills and create environments where high-value technology businesses can thrive.

The caring economy is driving employment growth

The biggest job creator of the past decade has been the ‘caring economy’ - healthcare, social assistance and education. These sectors contributed 43% of new employment, reflecting Australia’s ageing population and rising demand for care services.

However, these industries have lower productivity than other sectors. Economic development leaders must balance workforce expansion with innovation to improve efficiency, particularly in publicly funded health and education systems.

Industry policy must evolve

The structure of Australian industry comes with both opportunities and risks. While mining underpins Australia’s prosperity, economic complexity remains low and productivity growth has been sluggish.

A modern industry policy agenda must do two things: first, foster the growth of emerging industries like digital services, advanced manufacturing and clean energy; second, drive productivity improvements across all sectors, including the growing care economy.

Econovation works with cities, regions, and industries to develop forward-thinking, practical strategies for economic growth. If you’re looking to adapt your economic development approach to these trends, let’s talk. Contact Andrew Wear (andrew.wear@econovation.com.au) for a discussion on how Econovation might be able to help.

This blog post draws on comprehensive research by Andrew Wear, to be published shortly.