PRIIMNIES 2E
SPEECH BY THE PRIME MINISTER, THE HON P. J. KEATING, MP
LAUNCH OF THE STUDY INTELLIGENT EXPORTS AND THE SILENT
REVOLUTION IN SERWICES, PARLIAMENT HOUSE, 2 SEPTEMBER 1994
For too long now, we've tended to think of exports purely as things that are
transported to our wharves, put in the holds of ships and sent overseas.
In the same way, we've tended to underestimate the critical importance of
services to our national economy.
Services are our economic oxygen.
But because they're all around us because they account for 70 per cent of
our GDP and 80 per cent of our employment we often forget just how
important they are.
I am very pleased, therefore, to launch this report Intelligent Exports and the
Silent Revolution in Services because it goes a long way to putting our
services trade in the national spotlight.
It goes a long way to redressing what I think has been a failure to appreciate
the importance of our services trade.
And it gives us a new platform from which we can move forward.
Services directly account for 20 per cent of all our exports.
And when you look at the services input into our manufactures, mining and
agricultural exports, you see that services contribute up to another 20 per
cent of our exports.
All up, that means services account for around 40 per cent of the total value
of our exports, that's two in every five export dollars.
But, as this study points out, you wouldn't know about it from our media
only one in ten articles about exports relates to services.
When last Tuesday's Financial Review ran a piece on the balance of
payments figures, it used the images of ships and mineral conveyor belts as
backdrops for its charts on the current account and export figures.
These images, while not inaccurate, do nonetheless reinforce the perception
that trade, and more particularly export, is only about physical goods, the
things you put in the holds of ships.
What they miss out on is the importance of the services side to our exports
either as exports in their own right or as vital components in our traditional
exports.
They miss out on the intelligent side to our exports, that part of our exports
whose value has been added by the skills, creativity and ingenuity of
individual Australians.
And this goes some way to explaining why the revolution in services has
been a silent revolution.
The silence is a concern because services are going to play an increasingly
important role in our trade.
The information superhighway will see to that.
As we pointed out in the White Paper on Employment and Growth, Working
Nation, Australia's future depends upon the ideas, skills and knowledge of
our workforce.
With services the fastest growing category of world trade, and with Australia
producing highly-skilled, well-educated workers, we are ideally placed to gain
a greater share of the expanding services cake, particularly in the Asia
Pacific region.
When Indonesia's Foreign Minister Ali Alatas needed vital heart surgery
recently, he didn't fly to the United States to find one of the world's most
sophisticated medical centres, he came here to Australia, to the Austin
Hospital in Melbourne.
The service Ali Alatas received was an Australian export, an Australian
services export.
When IKEA put out a world wide tender for a stock management system for
its operations in Singapore, it was won by Price Waterhouse's Australian
consulting arm.
And the reason the Australian team won the right to lead the project was
because it was multi-disciplined, it had the necessary expertise in software,
retailing, marketing and distribution as well as the experience in doing
business in Asia.
Importantly, it's a project that should lead to many others in the region.
When I visited Thailand and Laos earlier this year, I formally handed over the
Friendship Bridge which spans the Mekong River and links Thailand and
Laos by land for the first time.
This Bridge stands as a testament to the quality and capability of Australian
engineering and construction services it was designed, built and funded by
Australians. Already two companies associated with the bridge, John Holland Engineering
and Construction, and Maunsell Sinclair Knight have won flow-on work in
Laos.
They will join the likes of other Australian exporters like Transfield which
recently secured the development rights for the $ 1.2 billion Nam Theun
hydro-electric dam project.
Engineering and construction companies have won major international
tenders to design hospitals in several countries and a Melbourne based
healthcare consultancy company has undertaken a host of joint ventures
managing hospitals in the Middle East, India and Malaysia.
Our education exports are now running at $ 1.3 billion a twenty six fold
increase since 1986.
And tourism now accounts for 12 per cent of our total export earnings.
This report contains many more impressive statistics like these and countless
stories of Australian services companies out there winning against the best in
the world.
Let me then turn to the report and congratulate its authors, the LEK
Partnership, and the ten organisations which funded the project.
In particular, I want to acknowledge the role Ralph and his steering
committee played in overseeing the study.
Let me also acknowledge the role that the Australian Coalition of Service
Industries ( ACSI) has played over the past few years in upping the profile of
the services industry and also for its work with the Government on the two
vitally important areas of the Uruguay Round and APEC.
With the publication of this report, I think ACSI has gone from a fledgling
organisation to one now on a par with its international counterparts.
One of the great things about this report is that it's an international first for the
services industry.
And it builds on the McKinsey report on our emerging manufacturing exports.
It shows that services exporters are typically small, innovative and flexible,
that they rely heavily on exports to survive.
In the six years to 1991, Australia bettered both the world and regional growth
rates for the export of services.
Australian exports grew by 17 per cent per annum while the Asian average
was 14.6 per cent and the world average 13.6 per cent.
This is impressive when you consider that over the same period services
exports increased their share of total global exports from 18 to 21 per cent.
As the report points out, the competitive domestic economy that is, this
Government's opening up of the Australian economy was a big contributing
factor in the growth of our services exports, with most services exporters
pointing to our great strengths in our workforce skills, telecommunications,
education system and information technology levels.
And once the Hilmer reforms are in place this will give us an even more
competitive services sector.
Add to this economic prospects about as good as you could ever hope to get,
and the future looks very bright indeed.
Not surprising then that the companies which participated in the study expect
their export revenues to double in the five years to 1998 to reach $ 33 billion.
Not surprising also that total services exports are forecast to generate an
additional $ 18 billion and 109,000 jobs by 1998.
And as the economies of Asia continue their high growth, as APEC continues
to grow as a force for trade liberalisation in the region, we can expect to see
many more opportunities opening up.
In fact, the report predicts that by 1998, Indonesia and China will become our
most important services markets.
Japan, of course, will remain one of the most significant destinations for our
services exports.
And as you know on Sunday, I'll be heading to Japan for a short visit.
And let me emphasise it will be very much a working visit without formality or
ceremonial trappings.
I will be meeting with Prime Minister Murayama and his senior colleagues to
discuss the forthcoming APEC Leaders meeting which President Soeharto
will chair in Bogor in November.
I want to make sure that the Japanese Government understands what
aspirations Australia holds for APEC and I also want to make sure that we
understand Japan's views.
I'm particularly looking forward to renewing my contacts with senior Japanese
business people, Japan is, after all, our largest trading partner and our
largest export market.
Clearly, as this report shows, the growth in our services exports is very good
but it could be great.
Only 5 per cent of Australian service sector production is exported.
The report suggests that an export share of 8 to 10 per cent of production
could add an additional $ 10 to $ 15 billion to Australian service exports each
year. The way we're going I'd say that the 10 per cent is well within our reach by
the turn of the century.
We have an economic recovery well and truly underway.
It's a strong recovery.
With business investment now coming through and inflation locked in low, it's
a very sustainable recovery.
As we move ahead down the growth path, we can't afford to sit back and
coast along.
That would be to waste the opportunities now before us.
That would be to deny future generations of Australians.
But I don't think that will happen because competition is now well and truly
locked into our national economic psyche.
More and more potential exporters are coming to realise that if they're
competitive in Australia, odds are they're competitive internationally.
What this report has shown is that there is enormous scope for Australian
service companies to lift their export game.
It's difficult to see how the circumstances could be much better.
And that makes the export imperative greater than ever.
The world economy is growing and it's looking for the sort of high tech, high
value adding services the intelligent services that Australia can provide.
Government can help by creating the right environment and encouraging
firms. We've got the right macroeconomic settings in place and as the report
notes, in the White Paper we took additional measures to build more
competitive services firms.
We're putting in place major training initiatives to lift our skill levels and
improve productivity.
We're introducing tax initiatives to encourage investment in small to medium
sized enterprises and bring more regional headquarters to Australia.
We're making it easier to get access to finance.
We're encouraging innovation through a more generous research and
development tax concession, through assistance for the commercial isation of
new technology and through a national technology diffusion network.
We're giving industry better access to the government purchasing market
while also extending the operation of the EMDG scheme to include tourist
operators. But, as important as these measures are, at the end of the day, it's really up
to business to show vision and leadership by getting into the export game.
As I see it, it's simply a question of more Australian business people in the
services industry saying " Well, let's look at this export game. Let's give it a
go1 I don't for a moment preten~ d that it's easy. It's not.
But there are a hell of a lot of service exporters already out there making it
happen. I commend this report to anyone who's interested in our services industry and
I urge the business community to lend its support to the series of national
seminars commencing next week.