Speech
Address by: Peter O'Byrne, Austrade CEO
Event: Sustainable Economic Growth for Regional Australia (SEGRA) Conference
Location: Hotel Grand Chancellor Launceston
Date: 29 August 2006
Thank you …
- Senator Eric Abetz, (Minister for Fisheries, Forestry and Conservation)
- Michael Ferguson, (Members for Bass)
- Lois Peeler, (Chairperson, Aboriginal Tourism Australia)
- Annabel Fulton, (Federal Regional Women’s Advisory Council, CEO Rural Development Services)
- Michael Workman, (Senior Economist, Commonwealth Bank)
- Professor Andrew Beer, (Flinders University)
- Simon Smith, (CEO, AEC Group)
- Our Tradestart partners
- Distinguished guests, ladies and gentlemen
Good morning … as Chief Executive Officer of Austrade – the Australian Government’s export promotion agency – it gives me great pleasure to have this opportunity to address you today at the tenth SEGRA Conference.
Mrs DeAnne Kelly, the Parliamentary Secretary to the Deputy Prime Minister and Minister for Trade, Mark Vaile, had been scheduled to speak to you; however, conflicting commitments have meant she is unable to attend.
I know Mrs Kelly would want me to convey her regrets as she shares with you an interest in seeking effective ways to ensure that businesses and communities, in regional Australia, can achieve sustainable economic growth – and continue to build local wealth and employment.
Importance of exports for regional businesses and communities
International trade – and access to global markets – continues to be an important factor in determining the economic well-being of our country.
… and while exports in traditional commodities remain a significant part of our trade story, the profile of Australia’s exporters is changing rapidly.
Increasingly, more Australian companies – including those in regional and rural areas – are finding themselves compelled to consider overseas markets.
Companies are adapting their business models to meet shifts in the global trading environment, to maintain competitive advantage, looking to overseas markets to launch a new ‘born global’ enterprise – or sometimes, taking their product or service beyond the domestic market in order to simply stay in business.
Our exporters cover a surprising range of businesses which operate across all sectors and regions – from high-tech manufacturers to service providers… from educational institutions to tourism… and from gourmet food to fashion.
This is particularly true of enterprises in rural and regional Australia. Finding global markets for their products and services is even more critical for them to be able to sustain and grow their businesses.
Indeed, in regional Australia, exporters are growing at three times the rate of their metropolitan counterparts.
Non-metropolitan Australia now generates about half of this country’s export revenue and employs more than one third of the nation’s workforce.
What we are seeing is regional businesses clearly identifying their strengths, and using international markets to their advantage.
The ongoing ability of these local businesses to grow is a major contributor to the economic growth and well-being of our regional communities.
Austrade research shows that businesses that export are, on average, more profitable: they also offer higher wages than businesses that stay focused on home markets.
Regional businesses often lack enough customers in their local areas to be sustainable. To remain competitive, these regional enterprises must work hard to develop innovative products and take advantage of international opportunities.
In keeping with today’s theme, the strategy for many businesses in regional and rural Australia will inevitably involve much closer engagement with the global market. The challenge is finding the best way to enter and develop sustainable export business.
Committed to helping business
That is why the Australian Government is fully committed to ensuring that businesses in rural and regional Australia have access to the services and knowledge that they need to become sustainable exporters.
As the Australian Government’s export promotion agency, Austrade assists Australian companies win overseas business for their products and services by reducing the time, cost and risk involved in selecting, entering and developing international markets.
We offer practical advice, market intelligence, and ongoing support to Australian businesses through our export advisors, our industry specialists and our global network – and we have representation in more than 140 locations, in over 60 countries, around the world.
Last week I was fortunate enough to visit Thailand as part of a delegation led by Agriculture, Fisheries and Forestry Minister Peter McGuaran. Along with a range of fruit growers, horticulturalists and industry representatives we visited potential buyers for Australian fruit and horticultural products, especially Australian citrus fruits. The companies we visited included Talaad Thai, a major importer of fresh produce, and Villa Market, an upscale supermarket. One of Austrade’s priorities is helping Australian growers take advantage of gains under the Thailand-Australia Free Trade agreement, and I am pleased to report there was enthusiasm on both sides about the opportunities being created under TAFTA.
Austrade’s presence in Thailand is also another example of how Austrade can help identify opportunities and support exporters in a wide range of global markets.
While our network provides global reach to our exporters – we also work to ensure they have ready access to our services, wherever they are based in Australia.
Austrade manages a network of more than 60 TradeStart offices throughout rural, regional and outer-metropolitan Australia, in partnership with a range of allies – many of whom are represented at this conference.
Since the current TradeStart program commenced in 2002, TradeStart offices have helped over 1,300 businesses achieve export success for the first time, with total sales exceeding $612 million.
TradeStart offices in rural and regional Australia make up around half the network, and have helped more than 500 new exporters over the same period, with total sales exceeding $309 million. Survey responses show that 86 per cent of successful TradeStart client businesses continue to export two years after their first overseas sale.
Austrade and TradeStart deliver the New Exporter Development Program, which provides one-on-one coaching to new exporters to help them develop sustainable export businesses.
Here in Tasmania, Austrade works closely with the Tasmanian Department of Economic Development.
As part of the budget handed down last May, Minister Vaile announced the continuation of the TradeStart program for a further four years – that is, until the end of 2009-2010.
Export Hubs
Last year, along with AusIndustry, Austrade launched eight new Export Hubs in regional centres around the country to provide local businesses with a one-stop shop for accessing Australian Government business services.
These Export Hubs create a critical mass of expertise, infrastructure and resources, and provide pathways to the international marketplace. We now have Export Hubs in Ballarat, Bega, Bundaberg, Carnarvon, Darwin, Port Augusta, Tweed Heads – and, of course, here in Launceston, launched in July last year by Deputy Prime Minister Vaile and the Member for Bass, Michael Ferguson.
One company to benefit from these new Export Hubs is DOBMAC Agricultural Machinery – based in Ulverstone near Davenport. This company specialises in the design, manufacture, supply, and maintenance of a broad range of agricultural equipment for the root crop industry.
Their products include Australia’s only commercial potato planters and potato seed cutters, with their potato planters recognised as one of the most accurate in the world. Another product, the DOBMAC Onion Harvester, has been successful in markets such as South Korea, boasting the harvesting power of 80 manual onion pickers.
Companies such as DOBMAC can now develop and enhance their competitiveness by accessing both AusIndustry and TradeStart services to deliver their capabilities to the world stage – all from a single location.
Distance no longer a tyranny
Distance was once one of the major obstacles for regional businesses looking to gain access to international markets. Now, new technologies are opening up exciting new ways for even small businesses to find customers across the globe.
Austrade runs a series of E-business workshops to help companies better understand how they can utilise the opportunities opened up by these new technologies. Many of these workshops are held in regional areas. They focus on the practicalities of developing and maximising an online presence so that they can use the internet to sell their products and services to customers around world.
One local business using the web to create international sales is Casaveen, located in Oatlands, south of Launceston. This company manufacturers high-quality woollen garments for men, women and children. Casaveen launched a new website in 2004 which allows customers to purchase from the company’s entire product range online. The website gives the business access to international markets that were previously untapped. Not only has this led to an increase in the number of overall sales, but it has enabled the business to increase sales in Europe during the Australian summer months – previously the company’s slowest trading period.
Export Market Development Grants
In addition to export services, businesses also need access to finance to help promote their goods and services in global markets.
On behalf of the Australian Government, Austrade manages the Export Market Development Grants scheme, which helps exporters by reimbursing up to 50% of export promotion costs above a threshold of $15,000.
This scheme helps with costs such as overseas representation, marketing consultants, advertising, product samples, and visits to export markets.
In 2005-2006, the scheme provided 833 grants, worth over $25 million, to businesses in regional Australia. This includes 41 grants to businesses in regional Tasmania. I am happy to report that these grants were associated with export sales worth over $740 million.
In January this year, Minister Vaile announced the continuation of this scheme for a further five years – that is, until the end of 2010-2011.
EFIC Headway
Other innovations introduced by the Government to help more Australian exporters venture overseas include a range of export finance and insurance products.
In addition to my role at Austrade, I’m also on the Board of the Export Finance and Insurance Corporation, commonly know as EFIC.
To expand their product offering, EFIC has recently launched a new product – EFIC Headway – to help SME exporters who have reached their maximum loan capacity and need to extend their existing lending facilities.
EFIC Headway is a guarantee to the bank, by the Government, for the additional amount. It increases access to working capital for SMEs by up to 20 per cent.
One of the first businesses to use EFIC Headway is the Newcastle-based Sykes Group which manufactures and supplies automatic prime pumping equipment to the mining, construction and engineering industries. Sykes’ products were used to help drain New Orleans after Hurricane Katrina.
Regional Businesses – Tasmania
So far I’ve talked about the support that is available to exporters, but I am always mindful of the fact that it is the innovation of individual businesses that is the most important component of export success.
One of the privileges of my job at Austrade is the many inspiring business people I get to meet.
Two months ago I was in Hobart and had the pleasure of meeting representatives from a number of really innovative regional Tasmanian companies.
In discussions, I found these people to be not only knowledgeable but also adept in steering their companies towards new opportunities.
An excellent example of this is Caterpillar Underground, a company based in Burnie that many of you will be aware of, who export mining equipment. They sell their products in many locations around the world, particularly South America. In 2005, Caterpillar Underground won the Australian Export Awards Large Advanced Manufacturer category, and it’s pleasing to see that they are now participating in the Australian Export Awards as a sponsor.
Another example of a company adept at taking advantage of new opportunities is Tasmanian Quality Foods, which was a finalist in the Agribusiness Award for the second time last year. Tasmanian Quality Foods was the first company in Australia to provide a consistent supply of oysters to a major international market under a brand identity. In 2005, their exports grew by a massive 784 per cent – and that was from an already impressive base.
This company has demonstrated ground-breaking innovation in nitrogen-freezing its Pacific oysters, and in developing new techniques for packaging and production.
It would be fair to say that Tasmanian companies have always known that they had to develop their markets, both nationally and internationally, because the local market is relatively small.
Tasmania’s merchandise exports increased by 9 per cent in 2005-2006 to reach $2.9 billion – a record level. And these strong results are not a one-off. Global economic growth is one of the factors contributing to this success, but the results are also an indication of Tasmania’s strong base of world-class capability, diversity and innovation.
This is a similar story to what we see in other regional areas in Australia.
Tropical Expertise
While I don’t need to work hard to convince you that regional Tasmania is a great place to develop a world-class business, I would now like to talk about regional expertise that is creating export opportunities in Australia’s tropical north.
Sometimes we need to remind ourselves that fifty per cent of the world’s population lives in the tropics – a climate type which poses unique challenges for infrastructure, health, agriculture and resource management.
In the northern parts of Australia, people are all too aware of these challenges. Think of the impact of recent cyclones and flooding.
Building and construction in the tropics requires specialised solutions. Australian companies are developing these solutions and now they are selling them to other tropical parts of the world.
I understand the Parliamentary secretary to the Deputy Prime Minister De-Anne Kelly has taken a keen interest in developing the export potential of this sector.
One such company is Homefab, based near Cairns. This company has developed a unique building construction system, designed especially for the high-wind conditions of the tropics. Homefab’s impressive software package, which was developed in association with James Cook University, allows the user to custom-design cyclone-proof steel frame houses, and to pre-determine the exact building materials and the final price of the housing.
Homefab has already sold its steel housing directly into Papua New Guinea – and is now researching new international markets for its software with Austrade’s assistance.
Trade Agenda -- DOHA round
I’d also like to take the opportunity to talk today about the importance of Australia’s trade liberalisation agenda.
Of course, access to effective services, intelligence, and finances, is only part of the trade picture for businesses planning to take their products and services off-shore. Many businesses continue to face entry barriers to key international markets.
This is why the Australian Government continues to pursue improved market access for our exporters.
You will no doubt be aware that the current Doha round of World Trade Organisation negotiations has been suspended, essentially because of disagreements about how far agricultural trade should be freed up.
As the Deputy Prime Minister and Minister for Trade, Mark Vaile, stated recently, the Australian Government remains committed to pursuing multi-lateral trade liberalisation through the WTO as the best way to improve market access for our exporters.
Last week while attending the annual ASEAN Economic Ministers – Closer Economic Relations (ASEAN-CER) meeting in Kuala Lumpur, Mr Vaile took the opportunity to urge ASEAN ministers and other WTO members to continue working to overcome their differences in the current round of global trade talks.
Free trade agreements
In the absence of a multi-lateral consensus, the Australian Government continues to pursue bilateral or regional trade agreements – which can often reduce barriers faster than multi-lateral negotiations.
They can also cover important areas beyond the WTO, such as investment, competition policy and regulatory issues.
Australia now has comprehensive agreements with four of our strategically important markets – the United States, New Zealand, Singapore and Thailand.
Last week Mr Vaile welcomed the commitment expressed by ASEAN, New Zealand and Australia to conclude a high quality, comprehensive free trade agreement in 2007.
The ten countries of ASEAN taken as a single group are a larger trading partner for Australia than Japan, the US or China.
At the same time we are negotiating an FTA with our second largest individual export market, China.
Beyond ASEAN and China, we are also negotiating an FTA with Malaysia, arguing for FTAs with Japan and Korea, and considering an FTA with the Gulf Cooperation Council.
Australia-United States Free Trade Agreement (AUSFTA)
Of our existing Free Trade Agreements, the most important is with the United States.
Since this FTA came into effect over eighteen months ago, the Australian Government has enabled Austrade to provide expanded support for Australian businesses so that they can take advantage of these new opportunities.
Austrade has expanded its presence in the United States by 23 additional staff – including two new teams – Agriculture and Selling to Government – and by expanding its Services team. Exporters can now draw upon representation in 19 US cities and a dedicated network of USA Export Advisers around Australia.
Recent research conducted by Austrade and Sensis, reveals that the United States is now the leading export destination amongst exporting small and medium size enterprises.
In 2005-2006, Austrade directly assisted 485 Australian businesses to achieve export sales to the United States. This is an increase of more than 30 per cent over the previous year, while the value of the deals grew by more than 60 per cent.
One of the many regional businesses that are taking advantage of the improved market access to the United States created by the AUSFTA, is Suncoast Gold Macadamias. A co-operative based in Gympie Queensland, Suncoast Gold is having great success exporting flavoured nuts into the United States. They report that the Free Trade Agreement has been very beneficial for them. The tariff on their value-added macadamias used to be 17.9%. Under the Free Trade Agreement this has dropped sharply and will be zero within a couple of years.
Conclusion
In conclusion, I would say that with the world-class products and services which we now have in regional Australia – plus the increased market access – the opportunities continue to improve for regional exporters.
Many of you here today are regional development practitioners across a range of sectors. All of you play an essential role in supporting local exporters, and encouraging businesses with their export plans.
Further developing our export culture will mean sustainability for regional communities, improved GDP, and a stronger trade balance.
Conferences such as this serve a vital role in sharing our knowledge.
I commend the energy and drive of the delegates here this week. In developing your own communities, you’re also benefiting the nation.
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