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

World ranking slides for Australia’s International Competitiveness

“The fall in Australia’s competitiveness ranking should be taken very seriously by Government & Industry,” said Ian Murray Executive Director of the Export Council of Australia. Today’s announcement in the Australian Financial Review has Australia’s world ranking falling to fifteen, ten places lower than it was two years ago.

Mr. Murray said that “the report by the Committee for Economic Development in Australia (CEDA) and the comments expressed by CEDA Chief Executive Professor the Hon Stephen Martin reflect what the council has seen emerging in export now for the last two years.”

 “Australia’s 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 high Aussie dollar.”

Quoting a recent paper prepared by the Export Council of Australia, where it argued that while resources are booming there was clear evidence that even that sector was being hamstrung by unnecessary regulation, high taxes and massive difficulties in securing labour. The debate on ‘guest labour’ is but another issue that if not handled properly will result in the slowdown of projects vital to Australia’s wellbeing.

“The issue on whether the resources sector will continue to boom while important it is not the only issue on the table. Diversity of exports was a key factor,” Mr Murray said in “assisting Australia handle the GFC and it will continue to be a factor in the future. Those countries that concentrated on the services industry for example were really hurt during the crisis.”

Australia, Mr Murray said “needed to have a strongly balanced portfolio and focus attention on high value high technology sectors.”

“The Export Council,” he said “strongly supported the comments expressed by Professor Martin particularly those relating to the need for an increased investment in skills, particularly in science, research and technology. Despite the high dollar Australian companies in high-tech manufacturing and services to the resources sector, to name just two, remain quite strong.” Mr Murray said.

“On the issue of what should be done,” Mr Murray said “they had no argument at all with Professor Martin. Government needs to promote skills development, focus on skilled migration, including those under Enterprise Migration Agreements as well as promote R&D and most importantly attack over-regulation and trade facilitation costs. Companies must focus on innovation driven by excellence in R&D that will strengthen their competitive advantage and enhance their margins.”

“Being number fifteen is simply not good enough in a country blessed with resources, good education and natural ability.  Australia cannot afford to be apathetic. Government and business,” Mr Murray said “need to work together to realise the potential we have sitting right at our feet even if that means making decisions that some sectors won’t like.”

Ian C Murray AM
Executive Director
Export Council of Australia

Resources….an opportunity of a lifetime, let’s not let it slip

Every time I visit Western Australia I’m reminded of the line from the Aussie movie ‘The Castle’: “It’s the vibe...it’s the vibe” and there certainly is a vibe. All Australian’s are aware of the resources boom, but I’m not sure if everyone really knows what this means to Australia in terms of employment, advances in technology and the impact on companies that service and build infrastructure for the sector. It can, in my view, only be described as a once in a lifetime opportunity which if managed well, will be of enormous benefit to all Australian’s but if managed badly will simply be a wasted opportunity.

In late May, Perth hosted a “Careers in Mining and Resources forum” which was reported in a special feature for “The Western Australian”. One only has to flick though the pages to see its magnitude and the impact it is having on the State and to our export earnings. The Chamber of Mining and Energy of Western Australia (CME) is quoted as saying “Currently the sector has total export income of more than $100 billion and produces a royalty for the WA Government of $4.9 billion”. In 2010/11 the WA resources sector accounted for 95 per cent of the state and 46 per cent of Australia’s merchandise export income and direct employment of over 100,000 people in mining, oil and gas. A Department of Mining and Petroleum report claims there are over $180 billion worth of projects committed or under consideration which will create more than 57,000 construction jobs and 18,000 permanent jobs. When you look at the sheer scope of what’s happening and the impact it is having, you have to wonder why the unions are trying to create havoc for Hancock Prospecting for planning to engage 1700 guest workers when their Roy Hill project is reported to employ 6000 Australians.

The feature also puts a personal touch to this massive industry and tells the story of Christopher Turland, a dump truck driver with Fortescue Metals Group who wanted to become a train driver.  Christopher decided to take advantage of the opportunity and after completing a fifteen month traineeship become Fortescue’s first qualified Indigenous train driver. He is not alone, in May 2012, Aboriginal people comprised 10 per cent of Fortescue’s workforce and the company has awarded $580 million in contracts to Aboriginal businesses across its operations and growth projects. Nobody could argue that this anything but a fabulous outcome and I am sure there are more.

Opportunities of course can be realised and opportunities, even those of a lifetime, can also be wasted. Gina Rinehart, one of our Australian Export Heroes, in her article in Australian Resources and Investment draws comparisons between Australia and Singapore and highlights some clear differences between the two. “Despite the country’s small size, low population and lack of resources and local water supply, Singaporeans benefit significantly from the country’s policies”. “Its neighbour Australia,” she says, “is the complete opposite despite wealth generated from vast resources”. Australian’s, Ms Rinehart says “drown in red and green tape, taxes and government costs that make us less competitive.”  Singapore she says on the other hand “makes a real effort to minimise red tape, has lower tax rates, enables guest labour and has no debt”.  This view is reinforced by a World Bank study which placed Australia as the 34th easiest economy for trade access. Singapore, I understand tops the list.

There are enormous opportunities flowing from the resources boom for all Australian’s. They will not be realised unless we lift our game in cleaning up our act in terms trade facilitation and processes, reducing not increasing taxes and charges, having duplication and waste eliminated and encouraging not discouraging our entrepreneurs. Undertaking these fundamental disciplines will also have positive impact on the other side of the economy that is facing great hardship in this two speed economy.  Failure to address these issues will simply mean the once in lifetime opportunity will be wasted while those exporters in the ‘slower lane’ will be sacrificed.

- Ian Murray, Executive Director- Export Council of Australia

New Directions in Exporting

I had the pleasure to provide a “Getting Started in Export” workshop to a group of current and intending exporters last Friday on the northern beaches, working with the Trade & Investment team from NSW State Government.

There were two case study presenters at the workshop, who in their own way, indicate where export is heading for at least some Australian exporters.  The first presenter was Christelle Damiens, the MD of Exportia.   Chistelle’s focus is on helping Australian companies enter the European markets of France and Germany.  Having this country focus allows Exportia to tailor a strategy for each client, with a strong understanding of the language and business culture and any local barriers in mind. This can, and has helped many companies with the transition into what might otherwise be daunting new markets.

That understanding of how things work on the ground is imperative, and with the change in focus by Austrade in Europe, companies like Exportia are filling the gap and providing that advice and guidance that new entrants really need.

The second presenter was Paul Waddy, CEO of Antoine+Stanley.  Antoine+Stanley are primarily shoe retailers, however have combined the best of shopfront (using David Jones as a stockist) as well as their own on-line site, and listings on sites such as ASOS, The Iconic and Styletread.

There remains the need to develop a brand and following, but using a variety of distribution methods allows greater reach and different audiences. Of course, managing all the logistics is not without problems, and Paul seems to have these sorted.

With the world becoming more of a global village, and speed to market being essential in the fashion industry, the on-line shopping capability in different markets is certainly a good model to follow.

The key point for me with these two stories, is that in most industries now, a company (exporter) often can’t efficiently take on all parts of the process themselves. Managing the bits that really represent the “IP” in the business is vital, and then looking at avenues and partners to take care of the other pieces allows a company to conserve capital, move quickly, and hopefully adapt quickly to continue to grow.

So perhaps it’s time to evaluate the various parts of your business and see what parts may be holding you back, and whether those parts could be better provided by a specialist third party.

- Peter Mace, General Manager- Australian Institute of Export/ Export Council of Australia

Malaysian Free Trade Agreement

The Export Council of Australia welcomes the signing today of the Malaysian Free Trade Agreement and congratulates the Government and the Department of Foreign Affairs in bringing it to fruition.

Mr Murray, Executive Director of the Council said today ‘’the timing of the agreement was particularly good. Exporters are having a tough run given the Global Financial Crisis still hovers above our heads and the high Australian dollar has had a detrimental impact on margins, which usually results in the loss of jobs.”  Asia is Australia’s biggest trading partner and Malaysia is the eighth biggest in the region.

“Complacency,” Mr Murray said “must not creep onto the agenda. As the USA, the UK and many other European governments are putting substantial resources behind their export drive into Asia. This agreement and those to follow, including the Trans Pacific Partnership are vital to Australia’s wellbeing. They demonstrate not only Australia’s commitment to the region but its recognition of being part of the Asian Century.”

There are two areas of great importance in this agreement. Firstly, the opportunity for service exports including education, telecommunications and professional services and secondly the new arrangement for Australian equity in Malaysian companies.  Australian Senior Management will also now find it easier to work in Malaysia.

Mr Murray said “Overall, this is good step for exporters and the Export Council of Australia looks forward to seeing further progress made on agreements with our Asian neighbours and trading partners, including the long anticipated China and Japan agreements.”

Ian Murray
Executive Director
Export Council of Australia

Export Council of Australia- a new voice for Australia's exporters

This month heralds a major change for the Australian Institute of Export. Following extensive research the Institute after fifty five years officially on the 28th May will reposition its events and advocacy activities under the name Export Council of Australia while retaining the Australian Institute of Export for the delivery of education and training in international trade.

With a new contemporary look the Council, which represents predominantly SME exporters, will tackle the wide range of issues affecting this important sector of the Australian economy. At the same time under the banner of the Australian Institute of Export, the council will continue to provide first class skills development programs for exporters, importers, service providers and especially those new to international trade who need the process demystified.

While this change has been brought about for a range of reasons, the primary purpose is to create a body that can represent exporters and work with other sector specific organisations to effectively engage with Government. At the same time the Council will continue to run seminars, workshops and awards programs, represent the Export Consultants Group and provide exporters with advice and information aimed at enhancing their capability and international trade performance.

Another key activity of the Council will be research. Working with universities, Government agencies and other associations, the Council aims to undertake research on issues that focus on providing input to enhance the export process and Australia’s competitiveness in international markets. The Council too will provide a vehicle for research work undertaken by other associations to expand their reach and influence to Government.

Prioritising issues is always a key factor. To address this, the Council will form working groups for key industry sectors to provide advice, prioritise projects and address key issues, particularly that of competitiveness, particularly that of competitiveness.  At same the time, given the diversity of export activity between various states, local committees will be formed to address each state’s specific needs and to ensure their issues get onto the Councils national agenda.

While the Council’s activities will evolve over time, the immediate priorities will be building membership, forming the Council and developing relationships with other bodies and associations that share common goals. High on its list will be researching the cost of trade facilitation in Australia and making recommendations to Government on what issues need to be addressed to both enhance Australia’s competitiveness and streamline the process of doing business offshore. High on the agenda too will be suggested modification to the Export Market Development Grants Scheme, Trade Finance issues concerning SME exporters and promoting an all of Government/Industry approach to “pitching” for major international projects particularly in the services sector.

At the same time the importance of continued improvement in the content and delivery of education and training will remain an important Council agenda item. Free of all the other programs the Australian Institute of Export will focus on its core activity of skills development which is where it all began fifty five years ago. In 2013 the Institute will launch a program under the banner “Certified Trade Professional”. Aimed at both companies and service providers, this comprehensive on-line program will allow participants to gain certification for the levels achieved and build skills over time via a disciplined professional development program. While CTP will form an important element of the Institutes activities, face to face public and in-house courses will continue so too the accredited distance delivered Advanced Diploma, Graduate Certificate and Graduate Diploma of International Business Management.

This is a new beginning for what has been one of Australia’s longest serving associations. It comes at a time when Australia’s export activity is experiencing severe change led by a resources boom, a high dollar and a persistent Global Financial Crisis. Our manufacturing, education and tourism sectors to name just three are experiencing great difficulty and the light at the end of the tunnel seems quite some distance away. This is the time when we need to assess and address issues that impact on our competitiveness.  The Council looks forward to working with Government, its members, sponsors and allies to address these issues and achieve outcomes that will benefit Australia’s wellbeing.
For further information regarding the Export Council of Australia please contact either:

Ian Murray, Executive Director- Export Council of Australia on 02 8243 7410 or ianmurray@export.org.au

Lisa McAuley, National Manager- Export Council of Australia on 02 8243 7400 or lisamcauley@export.org.au

DHL Export Barometer

Given the importance of International Trade to the Australia economy and the role export in particular plays employment, research & development, innovation and building our nations competitiveness,  researching trends and behaviours in global business is critical and therefore major priority of the Export Council of Australia. As such we would like to invite you to take part in the DHL Export Barometer.

The DHL Barometer surveys exporters around Australia each year about their views on the exchange rate, share market, skill shortages and other important issues that impact on their global business prospects.

The DHL Export Barometer is used by the Reserve Bank of Australia, other economic policy institutions and reported widely throughout the Australian media.
Your views as a current exporter would be highly appreciated and will help DHL to provide a more accurate snapshot of the experience and views of Australian exporters in the current global economic environment.

If you are an Australian company selling goods or services overseas, please take a few minutes to complete the survey, please use the following link:  http://www.informinsights.com/InformEVMStatic/Documents/6140/intro.html

The online multiple-choice survey takes less than 10 minutes to complete and you will be responding directly to DHL. Please note that the survey is open only to Australian exporters only.

Should you decide to participate, a copy of the DHL Export Barometer executive summary will be emailed to you in late July 2012, giving you a head start on identifying key international business trends and planning your export strategies for the coming year.

Lisa McAuley
National Manager
Export Council of Australia