The Hon. Simon Crean, MP
The Hon Simon Crean MP
AUSTRALIAN MINISTER FOR TRADE

Speech at The Art Gallery of South Australia, Adelaide

Opening of the 2008 South Australian and Australian Export Awards

21 May 2008

Acknowledgments

Introduction

I’m delighted to have the opportunity to address members of Australia’s export community at tonight’s joint launch of the 2008 South Australian Export Awards and the national Australian Export Awards. These awards are a great way of recognising not only the importance of exports to our national economy, but of recognising exporters as well.

To participate in the awards, companies first enter their respective state or territory programs, such as the one here in South Australia, with winners progressing to the national Australian Export Awards.

Importantly these Awards not only recognise the outstanding international business success of individual enterprises, they also serve to highlight the critical importance of expanding our international commercial engagement which helps to grow wealth and employment opportunities for all Australians. They recognise your performance, your work, your achievements. In short, they underline why trade matters.

Why Trade matters

Over the past fifty years, world trade has grown at three times the rate of world output growth. But in the past five years it’s only grown twice as fast. Trade growth should have been growing more strongly. Part of the reason it hasn’t is that we have not been able to conclude the Doha Round of WTO trade negotiations.

Each successful round of trade liberalisation has fuelled world growth. And in times of economic uncertainty like those we face now, a successful round would be a tremendous boost to the confidence of the world economy.

That’s why trade matters.

We’re aggressively pushing for a successful outcome in Doha because each round of trade liberalisation has provided further impetus to growth in world trade.

Changing nature of trade

In pushing for trade reform we must also recognise – even though the previous government failed to see it - that the nature of international trade is changing rapidly. It’s not just about produce and ship anymore. It’s also about investment. Australia’s own foreign direct investment is growing rapidly. This is the major new dynamic in Australia’s relationships with the world economy.

As at December 2007, we reached the point where direct investment abroad by Australian companies of A$318 billion rivals foreign direct investment in Australia of A$357 billion.

What this means is that behind the border issues are important and affect our trade performance.

Despite the resources boom, Australia’s trade performance has been woeful. Since the late 1990s– despite the tremendous efforts of companies such as the ones represented here tonight – Australia’s export performance has not realised its true potential.

As a share of GDP, export volumes have grown little since 2000. Total export revenues grew at an annual average rate of only 5.8 per cent over the six years to 2007, compared with 10.7 per cent in the 18 years following the float of the dollar in 1983. All this at a time when export volumes in world trade continue to expand strongly, and China and India have driven a global resources boom.

Our poor trade performance is highlighted by a report that received little press attention last week. The 2008 World Competitiveness Yearbook – issued by the Swiss-based Institute of Management Development – showed how Australia has been underperforming as a trading nation. While it found Australia was the 7th most competitive country overall, the IMD report showed that in export of goods relative to GDP, we rank behind 50 other countries. Fifty.

The report showed our poor trade performance is a fundamental drag on our economy.

Net exports made a positive contribution to growth in just 2 of the past 11 years. Compare that with 10 out of the 13 years of the previous Labor government.

How much better could we have been if we had got our export performance up to scratch? These sort of findings show how important it is that we lift our export performance and look at the policy settings that impact on output and performance.

Twin pillars

So let me talk about how we’ve set about to change this, to lift our trade performance. Since we came to office in November, we’ve been recalibrating Australia’s approach to trade.

The previous government never understood the integrated nature of trade and domestic economic policy.

Trade is more than trade negotiations. It’s got to be about both trade reform at the border and about economic reform behind the border. That’s what we call the twin pillars approach. This idea was at the heart of our approach in Opposition and since coming to Government I have set out our twin pillars approach to trade.

Through reform at the border, we are working to liberalise trade between all nations in the Doha Round of world trade negotiations, through improvements to the regional trade architecture and through free trade agreements with individual countries. We’ve put the primacy back on multilateral reform through Doha and the Rudd Government has been working constantly to push the agenda on Doha.

In the past 48 hours I’ve welcomed the release of new negotiating texts on agriculture and industrials. Obviously there will be areas of disagreement, but the important thing is that we are narrowing areas of difference.

Of course, Doha won’t be a perfect outcome, but each new world trade round brings the biggest gains. We continue to work towards regional reform and on bilateral agreements as well, but the important thing with bilaterals is that they have to be WTO plus.

Doha is where the big breakthroughs are going to come.

The task is not to diminish Doha’s significance but to try to enhance it best – where we can enhance it is though the regional and bilateral effort.

Reform at the border by improving market access is important. But that access isn’t much use if we’re not productive enough, we don’t have a competitive edge and we can’t take advantage of it. That’s why we also need to focus on reform behind the border.

Reform behind the border means investing in the drivers of economic growth, such as education, skills formation, infrastructure, innovation, smarter regulation, and trade facilitation.

Because all these factors affect our trade competitiveness, the Rudd Government is committed to looking at economic policy decisions through the prism of trade competitiveness – focussing not just on our productive capacity but on our international competitiveness. That is, to look at our domestic settings through the prism of trade competitiveness.

The big ticket items you’ve heard us talk about – Infrastructure Australia, building skills through the Education Investment fund, the National Broadband Network – these policy initiatives are all important in their own right. But they’ll also be viewed through that prism of trade competitiveness.

The twin pillars approach provides opportunities for government and business to work together in pursuit of trade and economic reform. So our approach includes facilitation of business to business, government to government and government to business links.

I urge you as exporters and state governments to take the opportunity to inject that focus into what you do.

It’s not just a whole-of-government approach which we will develop. It’s a whole of governments approach.

COAG Ministerial Council on International Trade

Earlier this year the Council of Australian Governments (COAG) agreed to establish a new Ministerial Council on International Trade to better coordinate trade-related activities and reforms by Australia’s federal and state governments.

A key focus of this Council will be to restore Australia’s level of productivity and international competitiveness through better dialogue and cooperation on a broad range of trade-related issues.

To push us in this direction I have commissioned leading businessman David Mortimer to review our export policies and programs. The review will benefit from the input of stakeholders from across the export community, and I hope many of you here tonight have taken the opportunity to contribute.

But while we wait for the results of the Mortimer review, we haven’t stood still.

Revitalised Export Market Development Grants scheme

In last week’s budget the Government made a solid down-payment on initiatives to improve our export performance. We delivered on our election commitment to revitalise the Export Market Development Grants (EMDG) scheme.

It is now apparent how significant the under-resourcing of the scheme was by the previous government.

We’re providing an additional $50 million, bringing the total amount available to exporters under the scheme to $190 million for expenditures incurred during 2008-09.

In addition, we have introduced legislation that provides businesses with the ability to claim grants under more generous assessment criteria than those in place in recent years, including lowering minimum expenditure thresholds and raising the maximum grant by $50,000 to $200,000.

The Budget will also improve Australia’s export capacity by reversing years of inactivity and neglect under the previous government, by investing in infrastructure via the Building Australia Fund.

The Government will develop the skills base of the Australian workforce through the $11 billion Education Investment fund that will rejuvenate our schools.

And we are responding to climate change not only as an environmental challenge but also as an economic opportunity for our business community through the $500 million Renewable Energy Fund, the $500 million National Clean Coal Fund and the $500 million Clean Car Innovation Fund.

While we work on implementing our election commitment to build a National Broadband Network covering 98 per cent of the country, we’ve committed $270 million over the next four years and are looking at longer term solutions to ensure Australians remote areas can access improved broadband services.

As I’ve said, we, unlike the previous government, have moved quickly to respond to the changing nature of trade. That’s why we also used last week’s Budget to bring programs associated with investment and supporting global supply chains – through Invest Australia and Global Opportunities – back into the trade portfolio. This reflects how important it is for us to take a co-ordinated approach to improving trade performance.

Through the Budget the Government has laid the foundation for building a strong economy through responsible economic management.

In all these measures, the Rudd Government is determined to adapt to change and to repair the malaise of recent years, starting by encouraging an increasing number of businesses to follow your example and to rebuild Australia’s will to export.

Building an Export Culture

What’s critical in lifting Australia’s trade performance is to build an export culture in this country, and that’s where these awards play a part.

By bringing national attention to the international business success of participating enterprises, the Australian Export Awards play an important role in our future export success.

These Awards reinforce to business people and to the broader community the possibilities and the rewards of success in overseas markets. They highlight the value of global aspirations and international readiness. They remind us that South Australian businesses are reaching out internationally, with exports of close to $11 billion a year. Look at copper, with sales of $1.3 billion in 2006-07, up 21 per cent in a year. Alcoholic beverage sales of $1.7 billion, or water exports of some $400 million a year.

The South Australian water industry is growing at 15 per cent a year, and now exports to major destinations like Japan, the United Arab Emirates, the United Kingdom, the United States, Brazil and Canada.

Despite the drought and the decline in wheat exports, exports from South Australia grew by one per cent last year. 

The diversity of this economy now underscores the changing nature of trade and has cushioned South Australia from what would otherwise have been a severe drought related impact.

The awards recognise your work and South Australia’s achievements. They recognise your efforts. We’re signalling we want to develop a partnership to deliver on your efforts. You’re the people who will deliver the entrepreneurship. Our job is to get the policy settings right.

As I’ve said, in recent years our trade performance has been woeful. An export culture is something that has been lacking for a long time in Australia and it has had a detrimental effect on economic growth. It’s been a drag on our economy. We want to do better.

If we do that, it will help you build Australia’s export culture. Strengthening this export culture has never been more important. An export culture brings many benefits:

Done properly, it will position us beyond the resources boom.

Announcement: “PM’s Australian Exporter of the Year”

Underscoring this determination and reflecting the Prime Minister’s personal commitment to improving our nation’s trade competitiveness, I am pleased to announce that the overall winner of the Australian Export Awards – Australia’s most outstanding exporter – will henceforth be known as “The Prime Minister’s Australian Exporter of the Year”. The Prime Minister will announce and present this award at the national awards presentation in Melbourne, in December.

Export champions lauded

The Government is working on many fronts to ensure that Australia has a broader and deeper export base.

While Governments endeavour to provide the best possible business environment and support services, it is ultimately enterprises, such as those of you here tonight, that drive the international success that we recognise through the Australian Export Awards

The hallmarks of Australia’s export community are determination, ideas, boldness and enthusiasm.

Companies such as last year’s Australian Exporter of the Year, Cochlear Limited, whose innovation has given the gift of hearing to more than 100,000 people around the world;

The readiness and willingness of South Australian businesses to take on the challenges and reap the benefits of success in global markets is well represented by two of last year’s Australian Export awards winners here tonight:

Through the state and territory programs and the national Australian Export Awards we applaud your efforts. You provide role models for other companies––many of them SMEs––that have yet to discover that they too can be winners in international trade.

Conclusion: Call to action

If you are building an export business, I encourage you to nominate for the 2008 Australian Export Awards.

The winners, and indeed all the participants, are helping to build the export culture we need to drive Australia’s economic growth in the years ahead and to ensure our economy remains on a more sustainable footing.

Media contact: Mr Crean's Office (02) 6277 7420 - Departmental (02) 6261 1555

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