'Driving Forces on the New Silk Road' and 'Creating a Clearway on the New Silk Road'

Speech by the Hon Tim Fischer MP, Deputy Prime Minister, Leader of the National Party & Minister for Trade
to mark the launch of the reports 'Driving Forces on the New Silk Road' and 'Creating a Clearway on the New Silk Road'

Wangaratta, 12 February 1999

(Check Against Delivery)

It's great to be back in Wangaratta, a place very familiar to my wife, Judy, and I, and the kind of go-getting centre that shows what regional Australia can achieve when it exploits its full potential.

The reason for my visit is to launch two new studies on Internet commerce - Driving Forces on the New Silk Road and Creating a Clearway on the New Silk Road.

These reports, which have been prepared by the Department of Foreign Affairs and Trade, build on the first New Silk Road report I launched in September 1997.

The reports are no esoteric academic exercise. They are based on the very real and practical experiences of Australian companies. They draw heavily on extensive discussions with the business community and other stakeholders, and include case studies of 44 firms and organisations around Australia that are using the Internet to trade nationally and internationally.

Key themes of the reports

Ladies and gentlemen, these reports convey three principal messages.

First, they drive home the point that Internet commerce is important now, and it will very soon start to affect the competitiveness of almost every firm and organisation involved in trade

Second, they demonstrate that Internet commerce presents Australia with opportunities in a wide range of areas to export more goods and services and create better paying jobs.

Third, they provide a basis for developing an online trade strategy for Australia.

I would like to take up each of these themes today. Each reveals how the information revolution is transforming the ways we work, learn and interact. Each underscores the importance of Australia having the skills, strategies and commitment to take on this new challenge and succeed.

Growth of Global Internet commerce

The first message centres on the extraordinary growth of Global Internet commerce - the most rapidly developed mass technology in history.

When I launched the first New Silk Road report a little over a year ago, experts were predicting global commerce over the Internet would be around US$100 to 150 billion by 2000. Now, conservative estimates start at around US$500 billion and estimates as high as US$1.5 trillion cannot be ruled out.

The number of people using the Internet around the world was a mere two million in 1995; now there are well over 300 million users, and this could approach one billion in the next couple of years.

At a minimum, the value of global Internet commerce could be equivalent to the size of the Australian economy by around 2000-2001; more plausibly, it could be two or three times larger. If as little as 20 per cent of this commerce is traded across borders, enormous new opportunities will arise for international trade.

This growth potential for Internet commerce may sound fantastic, but it is based squarely on what is happening now. Some large companies are procuring billions of dollars of goods and services through the Internet each year. And thousands of firms - large and small - around the world are buying and selling online, or more typically using the Internet to improve market intelligence, to lift marketing and service levels and to increase efficiency.

Broad-based opportunities for Australia

This rapid growth presents major opportunities for Australia in all sectors of our economy including:

• services, particularly travel and tourism, publishing, the media, finance, professional services, education and entertainment.
• in the manufacturing sector, opportunities are arising from improved inventory and distribution systems and our capacity to participate in new Internet-based supply chains beginning spread around the world
• for primary producers, the Internet seems set to become a major marketing tool for some commodities and a channel for producers and marketing authorities to develop closer relationships with overseas customers.

The Internet provides the means for many more Australian firms to display their inventiveness and creativity to a global market. With the right skills and business strategies, I would not be exaggerating to say the Internet could lead to a doubling or even trebling in the number of Australian firms able to trade across borders. This, of course, will generate a lot of jobs.

Opportunities for rural and regional Australia

The opportunities that the Internet will create will not be limited to the major commercial centres, so it is no accident that I chose to launch Driving Forces on the New Silk Road and Creating a Clearway on the New Silk Road in Wangaratta.

I am very aware of the isolation felt by some Australians who live outside Australia's major population centres. But I am also very aware of how the Internet will increasingly make a real difference to the lives of people in the bush.

The Internet makes a difference for regional Australia because it enables users to tap routinely into hundreds of services from monitoring water quality and erosion in different catchment areas, to updates during the bushfire season, to the latest commodity prices in different stock exchanges.

Regional centres such as Wangaratta can use the Internet to create tangible trading and job opportunities by:

• presenting a regional image to the world
• creating focal points for inquiries about local businesses and their offerings
• creating local businesses
• developing new products and services.

On the Internet, local wineries can sell their offerings to global markets; tourist operators can promote this magnificent region; software developers can establish strategic partnerships with other firms in Australia and overseas to market their products and develop new ones. The tyranny of distance, which has plagued us for more than 200 years, is coming to an end.

In making these points here today, in the offices of the North East Telecommunications Cooperative, I am accutely aware of the role the NETC is already playing to doing these kinds of things for North East Victoria.

The Government's Regional Australia Strategy is a key part of ensuring the tyranny of distance remains a fascinating topic for historians but is not a daily frustration for people in the bush. The strategy aims to provide the economic, environmental and social infrastructure necessary for Australia's regions to realise their potential. A guiding principle is that all Australians should be able to access sufficient bandwidth at an affordable price.

This principle is a key element of the Government's strategic framework for the Information Economy, which was released last month.

Developing an Australian approach to online trade

The third message from these reports is the importance of developing an integrated Australian approach to online trade. Such an online trade strategy should address four major areas.

First, it will need to contribute to a domestic environment where change can occur at a faster pace than it otherwise might. Specifically, this means:

• ensuring Australia continues to have good and affordable telecommunications
• creating a broad and shared understanding of the importance of the information economy in generating jobs, wealth and social opportunity
• increasing public awareness and understanding of the opportunities from a more open economy.

Second, the online trade strategy should facilitate international trade through initiatives that increase provision of timely, relevant and accessible information. There are many options available to the Government to develop new information services relevant to online and offline trade; some are explored in Driving Forces on the New Silk Road.

Third, the online trade stategy will need to facilitate international trade in other ways. The key challenges are to promote Australia as a rich source of intellectual property and reduce the cost of border administration.

Finally, Australia faces a number of key challenges internationally that need to be reflected in the online trade strategy. They include:

• working to develop norms and conventions for cross-border electronic trade
• working bilaterally, regionally and multilaterally to ensure governments around the world are fully aware of their own limitations in regulating electronic commerce
• working to ensure differences in the technology for delivering goods and services do not become a pretext for new rules that discriminate between online and offline trade.

While there are quite a few strands to this online strategy, I would like to highlight two areas where the Government is already taking some very practical steps to assist exporters.

The first of these relates to education and awareness of E-commerce. Austrade is currently developing a seminar program on e-commerce for exporters, covering issues such as effective web-site design, and using the Web for market research and information gathering.

I have asked Austrade to draw together the key elements of this seminar series, together with best practice examples from around the world, into an Exporters' Guide to the Internet - a practical guide for exporters on how to best use the Internet as part of an effective export strategy.

The second area relates to the promotion of Australian capability overseas. Austrade has been promoting Australian goods and services through its Austrade Online web-site for some time. Building on this foundation, I have asked them to explore the potential of "virtual trade fairs" to further showcase Australia's world-class technology.

These are just two examples of the role that this Government can play in ensuring Australian companies do not miss the Electronic Commerce bus.

Before concluding, I would like to thank all those who contributed to these reports, particularly the people and organisations, such as the NETC, that participated in the case studies, surveys, and round-tables - the real meat in these reports. The project would not have been possible without their sustained interest and support.

I would also like to recognise the hard work of Mike Adams and his team in the Department of Foreign Affairs, who have spent many long hours drawing the reports together.

Conclusions

Ladies and gentlemen, the message for us all is clear. Internet commerce is happening here and now. The businesses, regions and countries that will thrive in the information economy will be those that understand this message and do something about it.

Retreating from change is not the answer to dealing with a complex and changing world, if it ever was. As the businesses represented in this room demonstrate, jobs, growth and exports come from embracing change and increasing our international competitiveness over the long term.

I urge you all to look carefully at the lessons contained in these two reports and I look forward to the continuing participation of Australian business and others in the development and implementation of an online trade strategy for Australia.