Speech

Address by: Peter O'Byrne, Austrade CEO
Event: Trade Connections Event, Minter Ellison
Location: Minter Ellison Building, Canberra
Date: 1 November 2006

As Chief Executive Officer of Austrade – the Australian Government’s export promotion agency – it gives me great pleasure to have the opportunity to address today’s Trade Connections seminar.

Since their inception last year, the Trade Connections seminars have proved a valuable forum for promoting the benefits of exporting to the Canberra business community. 

The importance of exports

Promoting the benefits of export is a central tenet of Austrade’s mission, and a goal of many export stakeholders in Australia, including Minter Ellison.

International trade – and access to global markets – is a vital determining factor underpinning Australia’s future economic well-being.

I am pleased to report Australia's exports grew by a total of 17 per cent for the 2005-06 financial year to reach $192 billion – the strongest result on record.

While exports in traditional commodities such as resources – which grew by 15% in 2005/06 – remain a significant and growing part of our trade story, the profile of Australia’s export community has broadly diversified over the past two decades.

Our exporters now come from a wide range of industries in all parts of the country – from high-tech manufacturers to service providers … from educational institutions to tourism … and from gourmet food to fashion. 

Wine

One example I often like to cite as an example of our diversifying export base is Australia’s wine sector.

As recently as 1981, imports of wine to Australia exceeded exports. In only a quarter of a century we have become the 7th largest wine producing nation in the world, and the 4th largest exporter of wine. In 2005-06, our wine exports reached 722 million litres worth A$2.75 billion. Within five years, the AWBC predicts this will rise to around $4 billion.

Australian winemakers not only sell in markets from London to Buenos Aries, their success has fostered export industries in viticulture and winemaking expertise – worth more than $51 million a year.

The sector is actively targeting growth markets of the future, such as India and China, were wine consumption levels can only increase as these markets open to western influence.

Education

While our success in wine is well known, you may not be aware that we export more than twice the value of wine in education, at almost $7 billion per annum. 320,000 international students will benefit from innovative Australian education programs this year alone.

Many universities are pursuing the model of ‘globalised education’ and now operate offshore campuses. Three out of the five private universities operating in Malaysia are Australian owned. Wollongong University has operated a Dubai Campus for over a decade. UNSW will open a campus in Singapore early next year.

Biotechnology

Australia is the number one biotechnology centre in the Asia Pacific, and number six worldwide. The Australian-developed drug Relenza is now being stockpiled by countries around the world as a front-line defence against a possible avian flu pandemic.

Tourism

Tourism now represents half our services exports at approximately $17 billion a year.  The Tourism Forecasting Committee expects the total economic value of inbound tourism will grow in real terms at an average annual rate of 7.1 per cent to reach $35.6 billion by 2015. By that time Australia will be welcoming over 1 million Chinese and over 200,000 Indian visitors each year.

Manufacturing

An export manufacturing sector barely existed 20 years ago. Australia’s Manufacturers have embraced transformation to meet the challenges of domestic reform and shifts in the international trading environment. Last year our manufactured exports rose by 8%, to almost $40 billion. Sophisticated or Elaborately Transformed manufactures exports, at almost $27 billion, were more than double the value of our simply transformed manufactures exports. 

Manufacturing provides a strong example of how our increasing openness to international trade can drive Australia’s export industries.

Companies that succeed in Australia against international competition, are well-placed to repeat this success against the same competitors in international markets. 

Mining

Our traditional export industries are also providing a platform to foster new export industries – our mining sector is a classic case. 

As the third largest mineral producer in the world, mineral exports have provided more than $500 billion to Australia’s wealth in the last 20 years – 55 billion alone in 2005.

The level of expertise that comes from such a history of success means Australian mining capability has a role to play in helping maximizing safety, efficiency and profitability in mining and mining related industries the world over.

ABARE reports that mining equipment, technology and services generated earnings in excess of $2 billion in 2005, and predicts that the export potential of this sector could reach $6 billion by the end of the decade. 

In India for example, to meet planned GDP growth, the country aims to triple its current volume of steel production and significantly enhance its production of coal, copper and bauxite. 

One company leading the way in India is Melbourne’s MINEMAN Systems, who signed a 10 year contract with India’s Sterlite Industries, announced only a month ago.

Sterlite runs the largest copper smelting and refining operation in India. MINEMAN Systems’ technology will enhance Sterlite’s smelter operations by supplying software that controls planning and scheduling, workflow automation, financial management and strategic analysis.

The software, controlled by Sterlite staff in a data centre near Mumbai, also allows the company to manage smelter operations remotely.

Beef

Our beef industry produces 2 million tonnes of beef and veal each year – making Australia the 2nd largest beef exporter after Brazil.

Our advanced farm management, breeding and processing techniques, and strict quality assurance systems are now sought after by beef producers the world over.

In Uruguay alone there are now 4,000 calves that have originated from Australian genetics.

These examples represent just some brushstrokes in the diversifying picture of Australia’s innovative export community.
 
Who is Austrade, and what do we do?

As the Australian Government’s export promotion agency, Austrade works to help Australian companies from all industries, to 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 through our export advisors, our industry specialists and our global network, represented in more than 140 locations in over 60 countries.

Our mission is to provide Australia’s diverse business community with the support it needs to enter into export – with a particular focus on small to medium enterprises.

The importance of SMEs

Currently, 86% of Australia’s exporters are small to medium enterprises.

80 percent of Australia’s tourism operators – a sector generating half of all our services exports – are SMEs.

Business Review Weekly recently published its Fast 100 list, a list of Australia’s fastest growing SMEs. Not surprisingly, many of these emerging companies, the nation builders and employers of the future, have factored in the promise of the international market early on in their business plans – often from day one.

More than half of the companies on the Fast 100 list reported they had a global strategy, and a quarter had operations outside Australia. 

While our most outstanding emerging businesses are increasingly defining themselves in the context of global opportunity, out of all SMEs operating in Australia, only 13% export – a relatively low number by international standards.

This is the sector with the greatest growth potential across the entire Australian export community, and the reason why Austrade has a particular commitment to helping SMEs internationalise.

Women in Export, Gekko Systems’ Elizabeth Lewis-Gray

One dimension to this strategy is encouraging the leadership of women in export. Women run approximately one-third of Australia’s 1.6 million SMEs.

Austrade runs the Women in Export seminar series to encourage more women in business, offering the chance to hear from our top women exporters, learn more about the range of services available to them through Austrade.

Elizabeth Lewis-Gray, CEO of Ballarat’s Gekko Systems’ CEO, is an excellent example of a program participant, having taken on the biggest players in the world in her industry – and won. Gekko sell their innovative gold and diamond separation systems to 33 countries, with 80% of their total business export related. Gekko Systems has used the services and assistance of both Austrade and AusIndustry, and won several CSIRO awards for innovation. Elizabeth spoke to gathering of regional Victorian women business leaders at a Women in Export event held in Ballarat last month.

Corporate Partnerships

Austrade research shows that companies are also increasingly looking to their accountants, lawyers, bankers, insurers, consulting firms and logistics providers for help navigating the challenges of internationalisation.

Currently Austrade is working collaboratively with nearly 30 professional services firms, and has formal non-exclusive partnership agreements in place with 13 such companies.

These partnerships are about extending reach and enhancing service delivery, through a wide range of initiatives, from collaborative research and the publishing of trade data, to in-house professional development and training.

Trade Connections is an excellent example of the mutual benefit offered by this approach, and the reason why we are keen to continue and expand our work with Minter Ellison.

Regional Australia

Regional Australia is also a vital source of export growth. Regional exporters are growing at three times the rate of their metropolitan counterparts, generate about half of the country’s export revenue, and employ more than one third of the nation’s workforce.

Austrade manages a network of more than 60 TradeStart offices throughout rural, regional and outer-metropolitan Australia, in partnership with a range of regional allies. 

Since the current TradeStart program commenced in 2002, TradeStart has helped over 1,300 businesses achieve export success for the first time, with total sales exceeding $612 million. 

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.

Export Hubs

Last year, along with AusIndustry, Austrade also launched eight new Export Hubs in regional centres.  The Export Hubs create a critical mass of expertise, infrastructure and resources, to help more companies develop their business and find pathways into the international marketplace.  We now have Export Hubs in Ballarat, Launceston, Bundaberg, Carnarvon, Darwin, Port Augusta, Tweed Heads and Bega.

Export Market Development Grants

As well as 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 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

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 was 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. 

Trade Agenda - DOHA round

I’d also like to take the opportunity today to reaffirm the importance of Australia’s trade liberalisation agenda.

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.

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.

Free Trade Agreements

In the absence of a multi-lateral consensus, the 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. We are also negotiating FTAs with China, ASEAN and New Zealand, Malaysia, and promoting the possibility of 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, perhaps the most important is with the United States.

Since the AUSFTA came into effect over eighteen months ago, Austrade has expanded its support for businesses to help them take advantage of emerging opportunities.

Austrade has 23 additional US staff and has created two new teams – Agriculture and Selling to Government – and expanded its Services team.  Exporters can now draw upon representation in 19 US cities and a dedicated network of USA Export Advisers around Australia.

In 2005-2006, Austrade directly assisted 485 Australian businesses to achieve export sales to the United States – an increase of more than 30 per cent over the previous year. The value of all deals grew by more than 60 per cent.

One ACT company taking advantage of the enhanced business environment provided under the AUSFTA is Powdersafe, based here in Phillip. Powdersafe produce a contaminated mail isolation system that is now helping US Government agencies and corporates meet demanding US mail security requirements.

Prior to the AUSFTA, Powdersafe’s products faced a 5.3 per cent tariff, a tariff now eliminated, offering the company a boost in its US export margin. Powdersafe’s Tim Roberts says the AUSFTA has also helped ease US parochialism when it came to considering using the products of suppliers from outside the US.

Mega-markets of the Future

ASEAN

The 10 ASEAN nations represent a market of 592 million people with a combined GDP of US$682 billion. As a single group they represent a larger trading partner for Australia than Japan, the US or China – and a growing source of opportunity for our exporters.

Australia’s exports to the ASEAN region grew 13 per cent last financial year.

ASEAN, New Zealand and Australia recently committed to conclude a high quality, comprehensive free trade agreement by 2007, which will help position Australian exporters within the dynamic growth mix of inter-ASEAN trade.

China and North East Asia

At the same time we are negotiating an FTA with our second largest and fastest growing individual export market, China.

Australia’s Exports to China increased 38 per cent last financial year.

Six rounds of negotiations for a free trade agreement with China have been completed, and both sides have recognised that concrete progress has been made. 

In December, market access negotiations under the FTA will commence, and discussions will also continue on how to eliminate existing barriers in investment.

Just two weeks ago Austrade officially opened our 15th office in China, in Xian, in the geographical heart of China, adding to a network of offices and new industry teams, and bringing the total number of specialist marketers to almost 100.

One company looking to grow their business with the support of Austrade Xian is South Australia-based Greatstone Wines. The company was started 18 months ago by concerned grape growers determined to beat the wine glut by targeting international sales, and they have a created a range of wines to complement the spicy food popular in China.

Having already exported around 40,000 cases of wine, the company is hoping to expand its China presence, through the support of Austrade’s Wine specialists and the Xian office.

Japan

In Japan, outgoing Prime Minister Koizumi’s reforms have seen Japan resume growth, predicted to reach 2.8% in 2006.

Japan has been Australia’s largest export market for almost 40 years.  Exports to Japan increased 24 per cent last financial year!

A vast and sophisticated consumer market, Japan offers Australian companies great opportunities to increase export sales, particularly in quality industrial products and technologies, in professional services, and a plethora of niche consumer products.

India

India has been Australia's fastest growing merchandise export market over the past five years with trend growth in merchandise exports at 26.4 per cent, the highest among Australia's top 30 markets. India has now overtaken the UK to become Australia's sixth largest export market.

India is not only expanding rapidly, but reforms introduced by Prime Minister Monmohan Singh are seeing the country welcome new forms of entrepreneurship, and an openness to international trade,  creating opportunities that didn’t feature on the Australian business radar only a few short years ago.

For example, services now comprise 51% of India’s GDP and the sector is growing rapidly – offering huge opportunities for Australian companies, particularly in education.

Another distinctive feature of India’s growth is that 50% of India’s population is under 25 years of age. The youthful consumers of India’s expanding middle class of nearly 200 million are keen to sample global trends, creating niches for new categories of products in fashion, consumer electronics, and travel and leisure.

The retail revolution is being complemented by expanding urbanisation.  More than 200 malls are planned for construction in the next 18 months alone – the fastest growing mall development in the world.

Tremendous potential exists for Australian businesses willing to introduce their product offering to this vibrant mix of growth and change. 

To further assist businesses looking to capture emerging opportunities, the Government has expanded Austrade’s India network, which now boasts offices in New Delhi, Mumbai, and Chennai, as well as representation in Kolkata, Hyderabad and Bangalore.

Conclusion

With the world-class products and services Australia boasts, the promise of emerging markets, and the increased access offered by Australia’s ambitious trade liberalisation agenda – the opportunities will continue to improve for our exporters.

Last financial year Austrade helped 5098 clients achieve export success.

Of all the businesses assisted by Austrade last financial year, 1777 were new or irregular exporters.

The total value of exports achieved by all clients was over $18 billion.

Further developing our export culture will mean prosperity for Australian communities, improved GDP, and a stronger trade balance. 

Events such as this play an important role in promoting the importance of exports – an important goal in itself for Austrade and our many allies and partners, and the business community at large. 

I thank Minter Ellison for organising today’s event and for their commitment to this shared purpose.

Thank you.