A Level playing field is great but not when you are the only one playing on it!!

I find it very easy for people to talk the talk when it comes to Australia’s position on being internationally competitive however I can’t see a lot happening to improve the situation or make life a bit easier for our exporters, many of whom remain under pressure from a whole host of issues not to mention the dollar. The fact is, and it’s quite sad really, that it’s the Governments across Australia that by and large are the major culprits. They are pushing up cost through inflicting yet more and more regulation and believing  the world of trade is a ‘level playing field’ and therefore market forces will be the only factor in sorting things out in this very complex situation. I really wish it was that easy.

Let me reference three pieces of data that I recently read. The first is the World Bank’s annual “Doing Business” review for 2012 which looks at the rules and regulations that affect companies in 183 economies. When measuring ‘Ease of doing Business’, Australia’s ranking has fallen from 11 in 2011 to 15, the largest fall among any of the major economies. More importantly in terms of ‘Trading across Borders’ Australia ranks 30, behind Singapore number 1, Korea 4, and Finland 6. With the USA, New Zealand and the UK all ranking ahead of Australia.

The fall of, course is one thing and perhaps the high dollar has influenced that to some extent, but ranking 30 in terms of ease of trading across borders is not something to be proud of. If memory serves me correct that’s not much improvement on where we were three years ago.

The second report I would like to reference is the IMD 2012 World Competitiveness Rankings which ranks Australia’s international competitiveness at 15, compared to 9 in 2011 and 5 two years ago. Hong Kong, USA, Sweden, Norway, Germany, and Canada are all ahead of Australia. Why? The simple truth is these countries do it better and cheaper than we do and while again the dollar has had an impact we cannot blame that alone for a fall in rankings like that.

The third is the Productivity Commission draft report on Export Credit Arrangements which was released in May. Those of us in export were astonished and the number of submissions sent in after the draft was released would support this view. Here we are facing really difficult trade conditions and the commission recommends shutting down the assistance given by the Export Finance & Insurance Corporation for major projects and recommending that they focus all their attention on companies at the smaller end of the SME sector for a limited number of export transactions. Quite unbelievable I know. First, it can be quite strongly argued that the banks will not service these major projects that EFIC supports, so who in the world is? Second, if EFIC is confined to a limited number of transactions among smaller SME’s, how, may I ask, can EFIC survive? Is this recommendation going to make Australia more competitive? Not really.   

I have to admit that I agree fully with the Hon Stephen Martin the CEO of CEDA who was quoted recently in the Australian Financial Review, “Australian exports” he said “are being strangled by the high cost of labour, red tape upon red tape, duplication of Government regulation, the GFC and of course the Aussie dollar.”

There are obviously a significant number of things that need to done.  I agree with Professor Martin that Government needs to promote skills development particularly in sciences, research and technology, but I would add that it’s equally a business responsibility. At the same time Government must go all out in attacking unnecessary regulation and cost and bureaucratic impasses which serve no other purpose than creating non productive jobs. Government too needs to look at the levels of support provided by other Governments, including finance support, around the world and focus on programs that will build our potential rather than assisting only when market failure, in someone’s opinion, may result.

Being internationally competitive should be a major priority for all of us. A level playing field is great but not when you are the only one playing on it.  Come on Australia, let’s get aggressive!!!

On 24th August 2012 the Export Council of Australia and Shipping Australia are holding a seminar in Sydney on International Competitiveness. Look out for the announcement on our website: www.export.org.au

Ian Murray is the Executive Director of the Export Council of Australia