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Australian exporters will suffer under this out-of-date commission of audit report

By Export Council of Australia · May 07, 2014

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Accepting the export based recommendations of the National Commission of Audit would be a recipe for disaster and introducing these changes would put Australia out of step with every other country in the world says the Export Council of Australia.

Recommendation 33 of the National Commission of Audit has sparked an overwhelming amount of interest with heads of departments astounded at the considerations put forward.

Executive Chairman of the Export Council of Australia Ian Murray says being internationally competitive is vital to Australia rebuilding its export performance outside of resources, following the GFC and the burden of an exceptionally high dollar.

“The USA and UK have grown their international trade promotion activity in well financed 'export led recovery'" programs. Australia must act like a true global player and these recommendations are isolationist, Mr Murray said.

Research undertaken by the Export Council of Australia proves that the Export Market Development Scheme (EMDG) is a highly successful program with every government review supporting the program and demonstrating a substantial payback from the grant.

“Given finance remains one of the greatest hurdles to global expansion, EFIC should be expanded to better service the SME sector where despite the Commissions dialogue, the SME sector remains the employment driver in Australia.

“The Export Council of Australia (ECA) has severe reservations about downsizing Austrade and absorbing it into the Department of Foreign Affairs. Austrade is a marketing agency and if anything it's DFAT that needs to take a greater interest in trade. If putting Austrade into DFAT can achieve that outcome well and good, but it's highly unlikely.

“It's not a matter of being brave to introduce these recommendations, as to do so would take Australia backwards at a time when the argument for being internationally competitive has never been stronger,” Mr Murray said.

In a recent study of more than 1,600 Australian exporters, Australian businesses had the following to say about what has helped them:

· “Continuing support from Austrade and their overseas staff.”

· "The EDMG program was of tremendous benefit to our company in securing distribution of our products into North America"

· “Expand and extend the EDMG scheme which I believe is a fantastic investment in SME export development.”

· "Availability of EMDG to enhance the level of marketing we can do.”

Further supporting the need for Austrade and the Export Finance and Insurance Corporation, 59% of respondents say the lack of information about local culture, business practices and language was a barrier to doing business and a third of respondents feel that borrowing from financial institutions for international business is either very difficult or difficult.

To download the full Australia's International Business Survey report, please go to: www.export.org.au.

For interviews or a summary of the report please contact Lisa McAuley │Export Council of Australia │lisamcauley@export.org.au or 0430 172 458

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1 Comment

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Peter Linford wrote almost 3 years ago

Dear ECA,
Having been an Australian Trade Commissioner for 15 years until mid 2012, I read your article with interest and for the most part in agreement with your proposition.
Certainly the EMDG program has been a huge success for Australian business providing support for committed export companies that have spent funds to develop markets, and only after doing so they are considered for partial financial support against legitimate business development costs.  The program is managed with high intengrity and with capped limits requires companies to comprehensively present justification to be eligible for a grant.  For SME companies in particular it might not drive their car, but certianly gives extra fuel mileage for the journey - it should continue.
As to the future of Austrade, during my fifteen years I had always felt that we provided a high quality of service to Australians, and Australian companies.  With my colleagues I always felt it was an honour to represent Australia officially and I took tremendous satisfaction when delivering successful outcomes and solving challenging problems for Australian businesses in international markets. 
A proposed merger between DFAT and Austrade would reduce much of the waste and duplication of services in Australia, eliminating the need for two HR departments, two finance departments, IT, property and general administrative services etc. which is precisely where cuts need to be made. At post however, such a merger would not produce an optimal outcome for Australian business as you have stated in your article. There are DFAT Ambassadors with a strong trade and commercial focus, but they have a broad range of responsibilities with their main focus being policy and Government to Government relations – not business to business trade outcomes.
A far more practical, though challenging recommendation would be to merge Austrade with the State Government trade and investment programs.  While they should be aligned, Austrade and the State Government initiatives are too often conflicting and competitive, doubling up on roles unnecessarily with obvious cost implications and causing confusion for Australian companies, and even more so for the international companies they are trying to connect with. While we can readily understand why States would want to run their own programs they can never hope to develop the foot print, access and networks of Austrade off shore, nor have the expertise of Austrade locally engaged staff internationally.  Equally, Austrade lacks the networks and depth of industry contact in Australia that the State Governments have (and have the potential to build), especially with investment delivery.
One solution that would deliver the Audit Commission objectives, but which would deliver a far more effective organisation and partnerships would be to:
  • Have all Austrade functions, services and staffing co-located / absorbed within State Government offices under State Government management.  No Austrade offices in Australia, no duplication of services, no mixed messages, and projects / programs aligned for international delivery
  • Have all State Government off shore programs, offices and staff to be co-located / absorbed into the Austrade off shore network of offices, again eliminating duplication and competition and providing a far more powerful and capable network of access by highly experienced staff for all Australian States.
Under DFAT oversight at overseas posts, the linkages between Federal and State offices will be significantly enhanced and business development will become more efficient and transparent. The elimination of the Austrade infrastructure in Australia will deliver dollar savings for the Federal Government and the utilisation of Austrade networks and personnel overseas will deliver dollar savings for the State Governments.
In my experience as a Senior Trade Commissioner, Austrade has always been well regarded by like minded ally countries and many were envious of the results Austrade delivered off shore.  Times change of course and we need to ensure we are continually growing and connecting with the needs of our Australian business clients, as well as with our international business customers.  I would agree that Australia needs a focused and empowered trade facilitation agency, but the challenges and questions on the value of Austrade do resonate, at least in Australia.
I anticipate some players in the State Government machines would be protective at such a suggestion, others may be licking their lips at the prospect of Austrade exiting overseas posts, but without the means and people to deliver complex business programs they will struggle. If we are all honest with eachother an Austrade / State Government partnership option is worth genuine discussion and consideration, and one that is significantly more workable than the suggested DFAT merger.
Peter Linford
CEO
OGMTI
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