Over the last five years we’ve heard much about the transition taking place in Australia’s economy. The end of the resources boom. The need to harness future growth sectors. The emergence of more knowledge-intensive industries. A rising Asian middle class presenting new opportunities and the need to be flexible to take advantage of them.

Each of these trends puts our service sector at the heart of our future economy; Australian education – in itself our largest services export – will be the key factor in determining how well services can drive our future economic performance.

So how does education need to change in order to elevate the growth and productivity of our services sector? And how does education itself further cement its place as a major global export?

To answer the first question, our education and training models need to adapt to rapid changes in the way the world works. Current modes of delivery were set up for standardisation, not rapid response and adaption. This model is not meeting future workforce needs, where constant change and constant learning will be the norm. Alternative, technologically disruptive models and new providers are taking the lead and must be embraced.

Skilling for the jobs of the future is crucial.  Increased automation of routine and rule-based tasks means employees will be focused more and more on work requiring creativity, and social, emotional and digital intelligence or what the Institute for the Future has described as ‘novel and adaptive thinking’. This means the Australia’s education and training system must deliver work-ready graduates with a capacity for adaptive thinking and the ability to generate new ideas.

The work by Alpha Beta for the Foundation for Young Australians last year confirms the importance of what they identified as ‘enterprise skills’. These eight skills – problem solving, communication, financial literacy, digital literacy, critical thinking, creativity, teamwork and presentation skills – are sought after in all industries, but are essential in service sectors such as education, tourism, health, and financial and professional services.

To respond to the second question, education is not only an enabler of the service sector; it is a driving force of export value in its own right. Given the focus on the success of our resources, financial services and banking sectors, it is unlikely many Australians understand just how big a contributor education is to our economy.

Worth over $22.4 billion in 2016, international education is our third-largest export overall, contributing more than 130,000 jobs to the Australian economy and accounting for 1.3 per cent of Australia’s total employment. In 2016, international student numbers and related export earnings reached new highs with 554,179 international students in Australia, a 10 per cent increase on the previous year.

In order to continue to grow the number of international students studying onshore in Australia, it is vital we aren’t complacent. There are close to a million learners forecast to be in Australia in 2025. They all need safe and affordable housing, opportunities for meaningful work and work experience and, most importantly, a community that accepts and welcomes their contribution. The collaborative approach to capturing these opportunities from all levels of government and the sector that has been evident in recent years is a positive step. However, more long-term planning and investment is needed.

Australia must also continue to increase its investment in borderless education – online and face-to-face transnational delivery. Australia has great potential to leverage its existing reputation for quality education and training by developing technology-enabled, scalable education platforms. In 2015, Deloitte Access Economics and EduWorld estimated the potential market size for borderless education to be over one billion learners by 2025. If Australia captures even one per cent, it would equate to 11 million learners globally – and a 10 per cent share would exceed 110 million learners. It is an aspiration that requires ‘novel and adaptive thinking’.

This piece is a summary of the education chapter of a 2017 CEDA research report examining the economic consequences of Australia’s productivity performance in the service sector.

The full report is available to download, here.