COVER SHEET

Group: Strength

Group Members

ID

Name

Surname

Mobile

Tutorial Time

4509241

Rajdeep

Kaur

0469786884

5-6 pm

4490617

Ambica

Isukapatla

0452342452

6-7 pm

4366373

Kisha

Vadhyaphal

0490072485

6-7 pm

Business Economics

PART-A
Introduction
The Intergenerational report is published by the Australian Government to examine the longterm feasibility of the present Governmental policies and the impact of the variations in
Australias population size and age profile on the economic growth, workforce and public
finances for the next 40 years. This essay will discuss the challenges and opportunities facing
the Eyewear Industry as per the Intergenerational Report with respect to the three drivers of
economic growth-Population, Participation and Productivity.
1) Population
Population affects the performance of eyewear industries in Australia. A large portion of
population now require spectacles and a few need contact lenses for proper visualizations, but
sunglasses are an essential consumer goods to protect from countrys hot climate and high
ultraviolet (UV) levels. The central cause of wearing glasses is to protect the population from
eye disease. Young generation spend most of their time in front of TV, computers, mobile
phones which effects their eye sides and a huge portion of audience use eye glasses to avoid
the blindness. Consumers prefer to wear spectacles with designer frame which convert it from
a medical necessity to a fashion statement. With the arrival of contact lenses consumers feel
more comfort and it improve the performance of eyewear industry(Ehrlich and Holdren,
1971). In Australia 61% people use ether glasses or contact lenses. Australia's ageing
population familiar with the concept of technology, and they prefer to buy products online.
The falling economic climate caused many consumers to migrate online to achieve lower
prices, convenience and a wide availability of products. There are about 11 million people in
Australia who require prescription glasses and, with an ageing population the market is
expected to grow by at least 2 per cent a year. The global financial crisis has seen more
customers change their buying habits and switch to more affordable brands like Prada, Gucci,
and Ray-ban etc(Ehrlich and Holdren).
Under this situation the use of eye wears increase with in recent years. According to
Appendix 1, the use of different products having fluctuations with the change in age group. It
also shows that the use of glasses is more than the lenses about more than lenses. Total use of
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lenses, glasses or no wearing is 5%, 56% or 42% respectively. But with the change of age
glass wear comforts are increases.
Eyewear in Australia offers a complete guide to the size and shape of the market at national
levels. It provides the sales information to identify the industries driving growth and also
identifies the leading companys strategies to analysis the market. The whole industry covers
strong growth all around such as wholesales, retails area, stores sales etc. and this growth also
calculated in profitability. In this market spectacle frames create more sales as compare to
lenses, cause behind the arrivals of designer frames which become the preference of every
generation or gender(Taylor, 2002).
The future performance of eyewear in Australia will be impacted by increased competition,
online retailing and forceful price promotions. Volume growth is expected to pay costs value
growth as average unit prices experience a steady decline due to consumers pursuit of the
lowest prices. Australias population is ageing at a rapid rate and, as the median age continues
to increase, so will the rate of those with vision enhancements and the need for vision
correction products, supporting volume and value growth in the future.

2) Participation
Participation of the Ageing population will be a challenge for the eye wear glass industry. As
the population of aged grows, the employment rate in the workforce is expected to decrease.
This decreases the labour supply to the market. The aged have developed an image that they
have no employment opportunities in the market due to which they refuse to take part in the
workforce actively(Booth et al., 2000). When people do not work, the income rates they
receive will be less due to which they cannot afford to purchase the eyewear products. As the
aged population increase the need for the eyewear goods increase, the industry will produce
more goods. However, as the income rates reduce, the sales of the products reduce resulting
in a surplus of goods. This tends the market to reduce the prices.
According to the IGA 2015, with the increase in aged population the supply of the workforce
decreases with the increase in demand. This results in a lack of people to produce goods due
to which the minimum wage reduces to a massive level (Appendix 1). In Australia, 50% of
the population being aged, 40% the middle age people age 16-65 and rest 10% 0-14, the
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participation in the workforce will be only the middle age population who go by the trends
and purchase contact lenses rather than eyewear glasses which are cheaper(IGA, 2015). The
aged population would spend their money in services rather than buying goods which reduce
the sales of the eyewear glasses which are surplus. Therefore, competition of contact lenses
and increase in the need of services will reduce the revenue of the eyewear glass industry.
This will be an opportunity; if retirement age is increased to 75 from 65then the supply of the
labour to the industry can increase the minimum wage above equilibrium that helps the
industry sell the surplus goods(Economics, 2001). The age group that buy contact lenses as
an importance to trend are less in number compared to the aged, the number of people who
would buy the eye wear glasses would be more. If the retirement age is increased then the
income earned would enable the increasing aged to afford the goods. Eyewear industry has an
inelastic demand. Even though the aged participation affects the income of the individual,
the need for eye care and reduced prices can increase the sales of the eyewear glasses. As the
population of skilled a healthy aged is expected to increase, the skilled workers who produce
the good increase as well which benefit the sales of the industry.
There are several myths related to older workers in relation to their working habits and
learning abilities. Based on research conducted in Australia however, these myths do not
represent the reality. For instance, the myth that older workers are less flexible and adaptable
was proved to be inaccurate by the Drake management research group(Adair et al., 2013,
Thompson et al., 2013). The research group found that employees over the age of 45 were
generally more adaptable and flexible about their working hours and conditions at their
workplace compared to younger workers. If the Australian employers realize the fact that
most myths are untrue, they would certainly encourage older workers to participate and
contribute to the Australian workforce. Consequently, this creates opportunities for older
workers to generate income and sponsor their own optical needs. This in return benefits the
eyewear glass industry.
3) Productivity
The decrease in productivity growth rate of ageing population in Australia since the 1990s
can serve to be an opportunity for the eyewear industry because the reforms of 1990s inspired
the businesses to implement and make the most of new and improved technologies including
the ones implanted in new capital like for instance Information and Communications
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technologies and thus the most of the companies have become paperless and are doing most
of their work on the computers which means employees are spending more time on the
computers now-a-days and also they are getting older. However, it has been noted that a longterm staring at the computer screens can cause eye strain, tired eyes headache, muscle aches
and some other symptoms of Computer Vision Syndrome (CVS). According to the American
Optometric Association (AOA), vision-related health complaints are very common among the
computer workers. Studies suggest that 50-90%of employees working on the computers
experience visual symptoms of Computer Vision Syndrome (CVS) which includes blurred
vision, eye irritation and double vision. A study carried out by the University of Alabama at
Birmingham (UAB) School of Optometry has found a direct link between vision of computer
workers and their productivity at the workplace. Studies have shown that the businesses can
increase their profits by facilitating their employees with vision care benefits and computer
glasses which will help them to enhance their productivity, reduce the amount of mistakes
done by them and also the amount of their disability claims. According to Kent Daum, OD,
PhD, the studys chief investigator, enhancing the visual status of employees using computers
can result in a high level of productivity among the workforce and also an enhanced visual
comfort. Thus, the demand for eyewear glasses is expected to increase as more and more
companies with computer workers will buy the safety glasses for their employees due to the
vision they face due to their increasing age and due to their long hours spent on computers
with the ultimate purpose of profit maximisation and cost effectiveness which will cause a
demand curve to shift to the right due to the macroeconomics influences.

Conclusion
Overall it can be seen that, ageing population will be an opportunity for the ageing
population because with the increasing age the people suffer more from the eye diseases and
their eyesight starts getting weak, gaining the participation of the ageing population will be
an opportunity for the eyewear industry because as the people grow it becomes difficult in
participate more in the economic growth and the productivity will be an opportunity as well
due to the increasing need of eyewear glasses to increase the productivity of the ageing
employees.

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PART B
China Australia Free Trade Agreement:Introduction
Prime Minister Tony Abott and President Xi Jinping have declared the results of interventions
for the China-Australia Free Trade Agreement (ChAFTA) on 17 November 2014. This
agreement has opened up endless opportunities for Australia. Australias largest export
market is that of China for goods and services covering nearly one-third of the total exports,
and a developing source of foreign investment. This agreement will result into 95% of the
Australian exports to China as tariff-free. This essay will discuss the industry that will be
benefited by this agreement and the one that will be disadvantaged by the removal of tariff.

Tourism-A benefitted industry from the Free Trade Agreement

It has been said by the Trade and Investment Minister Andrew Robb that the Tourism
Industry of Australia will be the one most benefitted by the China FTA. China has been the

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second largest inward market with more than 750,000 arrivals in the last financial year and
also the biggest means of Tourism expenditure.
Key outcomes: Through the high investigated thresholds for private Chinese investment, ChAFT will guide
the rising Chinese investment in Australian Tourism industry. Investment in tourism
infrastructure will also be inspired by the Innovative new Investment Facilitation
Arrangements which will assist in meeting the demands of 1.5 million Chinese who are
estimated to visit Australia by 2022-23 and contribute more than $10.2 billion to Australian
economy.
Due to the strengthening business and study links with China through ChAFT, business and
study related travel is also expected to grow significantly. Besides ChAFT, A Work and
Holiday Arrangements have also declared that they will permit 5000 Chinese and workers
and visitors annually which will cause a rise in demand of tourism services and provide
support for the growth of particularly rural Australia where Chinese Tourism is considerably
expanding.
Moreover, under ChAFT, the Australian Tourism Service providers will benefit with the
assured entry to the developing tourism market of China. For instance, Australian service
suppliers have been granted a guaranteed freedom China to establish, refurbish and run a
fully owned Australian hotels and restaurants in China and also to create subsidiaries and
render travel services, hotel accommodations and tours to domestic and foreign travellers in
China directly.

ChAFT will enhance the governments obligation to support the

Australian Tourism Industry further higher through: A noticeable financing of $143 million annually to Tourism Australia.
An amount of $43 million will be granted to the Infrastructure Programme that will help to
increase the demand of Tourism Industry.
Moreover, the China Approved Destination Status (ADS) scheme will be granted $10 million.
By communicating the advantages of investments focusing on Tourism in various journals
like Australia Week in China and Australia Business Week in Indian events.
By awarding Tourism as one of the five investment preferences of Australia from now.
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Thus, ChAFT will tend to increase the Governments obligation to the Tourism Industry to
provide more jobs, more investment and economic opportunities for communities across
Australia.
Economic effects on the industry
With the agreement being fully implemented, the Australian economy will flourish with the
increased job opportunities for the people in Australia because as more and more people will
travel to Australia from China the demand for their accommodation and other basic
necessities like food will increase which will lead to an increase in demand for labour in
order to provide the better services to visitors. Moreover, with the government decision of
adding up 77 educational institutions providing the education to international students, more
and more students from China will travel to Australia for study purposes which are expected
to be more motivated and productive than the current Australians as per the Intergenerational
Report 2015 which will lead to an increase in Income of the people that can ultimately lead to
an increase in GDP and also the increased growth rate of Productivity which is seen to be
decreasing since 1990 as per the Intergenerational Report. This agreement will increase
investment opportunities because as the Tourism industry will grow rapidly the investors
would start investing more because of the advantage of assured benefits associated with the
rapidly growing industry. However, there are also chances that the study related to Tourism
and hospitality may again be included in the skilled occupation and eligible for skilled
migration because of the increased requirements of labour or varieties of the skills to provide
the excellent services as it was in the past but was eliminated due to the increase in the labour
supply. Thus, the agreement will result in a tremendous economic growth.
The idea of free trade is that it leads to a net benefit but surely does come along with a few
casualties. Free trade has always taken consideration of the big picture of competitive
advantage and the inefficiencies are swept aside. The critics of these ideas are that if a
manufacturer cannot give results in optimal price and value for product then the competitors
in the other part of the world will dominate the market and bankrupt the enterprise of the
home country.

Manufacturing Industry- Disadvantaged Industry with the

removal of tariffs
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There are many sectors that Australia is succeeding in terms of exports which exclude the
FTA with China. The Australian economy stands to be the loser in the manufacturing and
service sector in the FTA deal(Adams et al., 1994). Chinese exports to Australia are, with no
doubt, improving by the day but at the same instance the other side of the coin is to be judged
whether, does this or not, refuge the manufacturing of Australia. For instance, within the
manufacturing sector, the Furnishing Industry Association of Australia has the biggest threat
for demolition of business if the Chinese move into the business with cheap but good quality
furniture(Mai et al., 2005).
Australian manufacturing sector has various industries under it which are strongly affected by
the Free Trade. The metal production industry fears negative effects as the free trade and no
barriers on imports is hammering the production of the home country. Textiles, clothing,
footwear, furniture and other manufacturing have excessive imports compared to the exports,
which affects the economy(Clarke and Gao, 2007). China has effective and cheap
manufacturing in the machinery and equipment sector. Small sectors of manufacturing with a
count of 50 or less employees will face a huge loss in the trade as the demand will decrease
for home production as the imported products will be available cheaper.
An FTA with a trading partner, who is not the lowest cost producer risks creating trade
diversions, and a country shifts its focus on buying from efficient and low cost goods country
whose goods are subject to tariff towards the less efficient and high cost economy FTA
country where goods are not subject to tariff(Onselen, 2013). According to Australian
Manufacturing Workers Union, even in the best case scenario, Australia would suffer a net
job loss of 7,000 including 22,000 lost jobs in manufacturing(Stanford et al., 2007). The
simulations indicate that a further job loss of 170,000 will increase the unemployment ratio.
The entire section of manufacturing which consists of textile and apparel will be virtually
wiped out. To balance the economy, manufacturing sector needs to be at a stable position and
can be possible only when there is balance of trade(Stanford et al., 2007). The statistics surely
dont state the balance as equal considering the previous FTA agreements show only 10% of
exports when compared to imports.
The highest amount of competition that Australia faces is from China. An FTA agreement
with the highest competitive country will bring a lot of advantages but at the same time kill
the market slowly; creating unemployment in areas in which goods are imported and the
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labour in the country is lost at a rapid rate(Hufbauer and Schott, 1992). You can see the
statistics in the Appendix 3.
Appendix 4 shows the manufacturing growth rate in each country where China has the
maximum growth rate.
This factor of manufacturing will affect the economy of Australia if the manufacturing is
cheap and affordable. This takes the labour rate down, increases the unemployment.
Manufacturing is a massive part of the Australian economy and many people make a living
out of it. This simply means that China will dominate the economy of Australia within the
coming years in manufacturing of goods and services.
This certainly is a strong disadvantage to the economy of Australia, but like the two sides of a
coin, is highly advantageous for China.

Conclusion
Though Chinas growth rate has slowed down it is still expected to grow at a steady pace and
eventually become the worlds largest economy by 2020. Australian exports will play a major
role in fuelling Chinas enormous resource needs. On the other side cheap imports from
China will help propel Australias consumption. Canberra however has to make sure that
cheap imports from China shall not prove to be a detriment to the Australian domestic
manufacturing industry. Therefore, Australia should refrain from removing all of its tariff and
non-tariff barriers on products which form a core of the manufacturing industry and which
provide jobs to a large population. The ChAFTA should not be seen only in a negative light.
It will definitely stimulate a lot of growth in tourism sector for Australia. This is because
Chinese people form a large part of inbound tourism for Australia mostly for holiday and
education tourism. Therefore, this agreement will remove a lot of obstacles for the inbound
tourism. In addition the outbound tourists will also be at an advantage because Australians
have increasingly shown propensity to travel to China, and this subsequent cultural exchange
will help forge stronger relations between the two countries and eventually help the
Australian economy.

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PART-C

Date/Time

Activity Description

Reflective learning notes

Name/Names of
members who
completed activity

19/05/2015

Population

Researches, read articles

Rajdeep Kaur

18/05/2015

Participation

Video clips, journals

Ambica Isukapatla

18/05/2015

Productivity

Company research on

Kisha Vadhyaphal

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productivity issues
20/05/2015

International trade

Australian tourism sites

Kisha, Ambica

We hereby declare that we have completed the above activities and each
member of our group has equally contributed to the group task.

Names
Rajdeep Kaur
Kisha Vadhyaphal
Ambica Isukapatla

References
Australian

Government-

Department

of

Foreign

Affairs

and

Trade,

http://dfat.gov.au/trade/agreements/chafta/Pages/australia-china-fta.aspx
Gary Heiting, 2004, Worker Productivity and Computer Vision Syndrome, American
Optometric Association, viewed 15 May 2015,
http://www.allaboutvision.com/cvs/productivity.htm
ADAIR, T., TEMPLE, J., ORTEGA, L. & WILLIAM, R. 2013. Age discrimination in the
labour market: experiences and perceptions of mature age Australians.
ADAMS, P. D., DIXON, P. B., MCDONALD, D., MEAGHER, G. A. & PARMENTER, B. R.
1994. Forecasts for the Australian economy using the MONASH model.
International Journal of forecasting, 10, 557-571.

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BOOTH, M. L., OWEN, N., BAUMAN, A., CLAVISI, O. & LESLIE, E. 2000. Social
cognitive and perceived environment influences associated with physical
activity in older Australians. Preventive medicine, 31, 15-22.
CLARKE, A. & GAO, X. 2007. Bilateral Free Trade Agreements: A Comparative
Analysis of the Australia-United States FTA an the Forthcoming AustraliaChina FTA. UNSWLJ, 30, 842.
ECONOMICS, A. 2001. Population ageing and the economy.
EHRLICH, P. R. & HOLDREN, J. P. 1971. Impact of population growth.
HUFBAUER, G. C. & SCHOTT, J. J. 1992. North American free trade: Issues and
recommendations, Peterson Institute.
IGA.

2015.
Australia
in
2055
[Online].
Available:
http://www.treasury.gov.au/PublicationsAndMedia/Publications/2015/2015Intergenerational-Report [Accessed 18th May 2015].

MAI, Y., ADAMS, P., FAN, M., LI, R. & ZHENG, Z. 2005. Modelling the Potential
Benefits of an Australia-China Free Trade Agreement, Department of
Foreign Affairs and Trade Canberra.
ONSELEN, L. V. 2013. Why Abbott should dump Free Trade Agreements [Online].
Available:
http://www.abc.net.au/news/2013-10-08/vanonselen-whyabbott-should-dump-ftas/5008478 [Accessed 20th May 2015].
STANFORD, J., CONROY, P. & WORKERS' UNION, A. M. 2007. The Potential
Employment Impacts of an Australia-China Free Trade Agreement,
Australian Manufacturing Workers' Union.
TAYLOR, H. R. 2002. Eye care for the community. Clinical & experimental
ophthalmology, 30, 151-154.
THOMPSON, S., GRIFFIN, J. & BOWMAN, K. 2013. The ageing population: new
opportunities for adult and community education.

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Appendices:Appendix 1

Appendix 2

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Figure1: supply and demand graph showing the participation and income of
the growing population
Appendix 3:

Appendix 4:

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