EFIC 50th Anniversary Celebration
10 July 2007, Sydney
Introduction
Thank you, Peter. (Peter Young, Chairman of EFIC)
Good evening ladies and gentlemen.
Tonight we mark the achievements of a great organisation and a great ally of Australian exporters. Over the past 50 years, EFIC has been supporting Australia’s remarkable development as a trading nation. EFIC underpins Australian businesses as they grow internationally. The Corporation embodies the forward thinking, resilience and determination of our exporters.
I want to talk tonight about the wonderful success story of Australia’s export industry. Exports today are at record levels and new investment is coming onstream to drive continued export growth.
It was a different world when EFIC was born in 1957 as the Export Payments Insurance Corporation. Back then, Australia was overwhelmingly an agricultural exporter. Wool then accounted for a massive 49 per cent of Australia’s total exports. Grains and meats combined accounted for 13 per cent and dairy and fruit for three per cent each.
So you can understand the challenge facing Australia’s then Trade Minister, John McEwen. He knew that external trade was vital to generate much-needed income to drive Australia’s post-war nation building. 'Black Jack' McEwen recognised the importance of agriculture as an export powerhouse but, staring at a balance of payments crisis, McEwen also recognised that our trade had to be multi-faceted. His vision was to guide Australia away from its long-standing dependence on agricultural exports to Britain and push Australia into new and deeper trading relationships.
This vision took political courage. It included signing the Australia-Japan Agreement on Commerce– the foundation for Australia’s greatest trading relationship for the past 50 years – so soon after World War Two. In fact, we just marked the 50th anniversary of the landmark Agreement at a ceremony in Cairns during the APEC meeting of the Ministers responsible for Trade.
And McEwen’s vision for global trade also included a mission for EFIC to assist exporters to compete on international markets.
EFIC’s mission
This mission is just as relevant in the 21st century.
EFIC’s modern client base, ranging from small and medium-sized exporters to large corporations, shows how much Australia’s exports have changed. Now, in one speech I can’t do justice to all the great Australian businesses that have worked with EFIC over the years but let me mention a few sectors and companies that EFIC has successfully backed up.
In manufacturing, Sydney-based Bronx International has recently used EFIC finance packages to export its metal galvanizing lines to Mexico and Russia.
Engineering firm, the Chadwick Group, has used financial support from EFIC to sell its composite roofing systems to Asia and the Middle East.
In the shipbuilding industry, EFIC has helped fast ferries from manufacturers such as Tasmania’s Incat and Western Australia’s Austal ply the world’s waterways.
In the growing services export sector, EFIC has assisted companies like Leighton Holdings to provide construction services for the Manila-North Luzon expressway in the Philippines, and Melbourne-based Oceanis to design Bangkok’s first aquarium.
In the mining sector, EFIC helped GRD Minproc export engineering services to Brazil and DBT Australia to export coal-mining equipment to Russia.
EFIC is also helping Australian miners expand abroad. Perth-based Equinox Minerals Limited is investing $715 million in Africa’s largest open-pit copper mine. This move was underpinned by debt financing and political risk insurance led by EFIC.
A growing number of smaller exporters across Australia are using additional working capital through the new EFIC Headway product, exporters such as Queensland’s Frosty Boy, whose soft-serve ice cream is now available in around 30 countries, including China and Korea.
These are just a few examples of Australian export success stories. I appreciate there are too many to mention but I’m glad that many businesses that have contributed to Australia’s export success are here tonight.
Australia transformed
During EFIC’s lifetime, Australia has made the transition from protectionism to embracing and influencing free trade as a vehicle for economic growth and improving living standards here and abroad. The evidence of the transformation runs deep. In 2006, Australian exports reached $210 billion for the first time. Exports have doubled in value in the 10 years from 1996. Exports now account for 21 per cent of Australia’s GDP – five per cent higher than 20 years ago. One in five Australian jobs is linked to exports. The ratio is even higher in regional Australia – it’s one in four jobs. Forty per cent of Australian-made passenger vehicles are exported. Twenty years ago it was just five per cent. Most of the earnings of Australia’s top 100 global enterprises now come from offshore.
As EFIC’s experience attests, exporting is dynamic, always changing, always adapting and, overwhelmingly, always challenging.
Imagine for a moment how different things might have been had we, as a nation and as exporters, failed to make the transition from a protectionist mindset to one of thinking globally.
You might have heard the recent story about the good citizens of Tulsa, Oklahoma, who unearthed a motor car, the Plymouth Belvedere, that was buried in a time capsule in 1957. Time was not kind to the once pristine Belvedere. It was not just the 50 years of mud and rust that had done their damage. With its flamboyant tail fins and copious chrome trim, the Belvedere bears little resemblance to modern motor vehicle design or materials.
In the same way, Australian trade policy bears little resemblance to how it was when EFIC began 50 years ago. Time has never been allowed to stand still here.
As we celebrate EFIC’s 50 years of expanding business horizons, we see how Australian trade policy has constantly evolved. From our 2007 vantage point, we see the rationale and the positive results of cutting tariffs, floating the dollar, encouraging foreign competition and playing a leading role in international trade negotiations.
Throughout all the changes of the past 50 years, one thing has remained constant: the responsibility of government to back our exporters. EFIC’s provision of finance and insurance to help Australian businesses export and invest abroad is vital to this commitment to export growth.
Since its inception in 1957, EFIC has constantly adapted to the changing needs of Australian exporters and investors. The past five years, in particular, demonstrate EFIC’s ability to reshape itself.
In 2003, EFIC sold its short-term export credit insurance business to Atradius, recognising the emergence of private market capacity in that area. In 2006, EFIC launched EFIC Headway, a new product that enables small and medium-sized exporters to access additional working capital from their banks to fund export growth. And in May this year, I announced an expansion of EFIC’s powers to give EFIC greater flexibility to help small and medium-sized exporters globalise.
Australia is performing strongly right across the export sector. Export prices are historically high relative to import prices - this combination last occurred in the 1950s wool boom at the time of the Korean War. Resources and agriculture remain major export sectors but today there is so much more to our export story.
EFIC has played an effective role in assisting exporters to maintain and create new export markets in manufactures and services, in addition to the mining and agribusiness sectors.
The economies of our trading partners in Japan, the United States and European Union are performing well and this has contributed to Australia’s export growth. However, it is the remarkable industrial growth in China and India that has provided the biggest boost. Our exports to these countries increased by more than 24 per cent in 2006.
The Australian Government takes its responsibility to open up world markets very seriously. Opening up markets allows Australian businesses to take advantage of export opportunities.
Breaking down barriers to trade is critical to give our exporters the best chance of success. The Howard/Vaile Government has an all-round strategy in this regard, encompassing multilateral, regional and bilateral approaches to trade liberalisation.
In spite of the recent setback in negotiations, Australia remains committed to the successful conclusion of the World Trade Organization’s Doha Development Round. Its successful conclusion would be the single most significant thing that we can do to open up new trade opportunities across the board for Australian exporters.
The Government also has a very active agenda on free trade agreements. We already have FTAs with New Zealand, the United States, Singapore and Thailand. Negotiations are under way with the Gulf Cooperation Council, ASEAN, China, Japan and Malaysia, and we are working towards negotiations with Chile and Pacific Island countries.
We are prepared for the APEC Economic Leaders’ meeting in Sydney in September. It is the most important gathering of world leaders that Australia has ever hosted. As host, our challenge is to reinvigorate APEC as the pre-eminent forum for economic cooperation in the region. We will take advantage of Australia’s hosting of the Leaders’ meeting in September to press for a strong statement of support for the Doha Round.
The Government has worked hard to ensure we have a domestic environment that encourages an export culture. The Government’s $1.4 billion Industry Statement includes a $254 million global opportunities program to help small and medium-sized enterprises identify global supply opportunities. The establishment of a network of Australian Productivity Centres will enable companies in manufacturing and services to measure their performance against the world’s best.
Physical infrastructure to support export industries is vital. The Government’s AusLink plan is spending $15.8 billion in the five years to 2008-2009. A further $22.3 billion is committed for the five years beyond that, all with the aim of linking ports, rail and roads in a national infrastructure network.
As Australia continues to expand business horizons, I know that EFIC will be playing a very significant part in the success of our exporters. To the entire EFIC team, I’d like to offer my congratulations on what has been achieved to date and on your continuing efforts.
EFIC’s mission – to create opportunities for exporters by providing finance beyond what is available in the commercial market – is as relevant today as it was in 1957.
The EFIC client base reflects the diversity and growth of Australia’s exports. Your clients highlight the best qualities of our exporters.
Their ethos for global success is well summed up by Michael Lavis, who heads the JML Group, a successful construction design company in the Hunter Valley. JML is an EFIC Headway client. It is using funds from EFIC and their bank, HSBC, for a major project fitting out the terminal and concourse of the new Dubai International Airport. Reflecting a global outlook in a vintage Australian way, Michael noted that when companies like his look beyond their own backyard for business opportunities they find the ‘backyard goes on forever.’ Michael said: ‘Export markets are just another extension of our business.’
It’s the vast international ‘backyard’ in which EFIC is working and it’s where the Government is implementing a trade agenda that is the most ambitious in Australia’s history.
Congratulations to EFIC and I wish you another 50 years of success.
Thank you.
Ends