Business SA Export Awards
Friday, 10 October 2014
At the turn of the 20th Century South Australia was one of the most prolific exporters of wheat flour in the world, with more than 60 mills in operation. Now we only have 5 flour mills. We export wheat in bulk - the jobs and enterprise within flour mills is now offshore.
Last month I visited the Laucke Flour Mill in Strathalbyn. This South Australian owned business has a turnover of $60 million and employs 100 full time staff. It’s overcoming challenges to enter the lucrative export market, feeding Asia’s appetite for clean and premium food products – yet its operation is nowhere near full capacity.
In the past 80 years our focus has turned towards volume based commodity trading, in this case wheat. We could improve our momentum and capabilities to value add our natural crops by offering premium finished products to growing international markets. Currently these global export markets are supplied by large efficient flour mills in ASEAN countries and China. A similar story can be told about minerals commodity exports from South Australia. I see this as an example of the great opportunity that exists in South Australia for adding value to our product.
Equally in our advanced manufacturing industry – during World War II Australia’s Boomerang fighter jet transitioned from the drawing board to first test flight, at what was then the cutting edge of advanced technology, in less than four months. Our State was once more broadly at the technological edge – we must regain that ground. It’s another great opportunity to compete with the world by being clever about it.
What is clear is that in a globalised economy, new challenges and new opportunities exist. As a small state, export growth is in my view the single most important driver of economic prosperity. Success will take a unified approach, a ‘Team SA’ approach if you will, by government and the business community, sound leadership and targeted strategies to ensure South Australia not only remains competitive by excels.
In the 12 months to August 2014, the value of our overseas goods exports had grown – totalling $12.2 billion. South Australia’s net export position in the year to August 2014 resulted in a $4.2 billion trade surplus – an increase of 15 per cent on the previous year.
National exports totalled $273 billion in the year to August 2014, up by 9 per cent compared with the previous year.
We’ve seen pleasing gains across the majority of sectors. Total manufacturing exports in 2013-14 increased by 7 per cent from the previous year totalling $1.7 billion. Total food exports increased by 18 per cent from the previous year totalling $3.5 billion. In the same period total wine exports fell by under 2 per cent from the previous year totalling $1.12 billion, however exports of white wine increased by 2 per cent to $299 million.
In the past decade there has been a significant shift towards North Asia for Australian exports. In 2003, Australia’s top three export destinations were Japan, the United States and the United Kingdom, totalling around 34 per cent of exports. In 2013, it was China, Japan and Korea, for around 54 per cent of total exports. Just today the IMF reports that China has passed the USA as the world’s largest economy.
Well China has been a key target of South Australia’s investment and trade policies and programs for some time - through the development of the South Australia-China Engagement Strategy. I visited there in February and will go again for trade talks in December. The Premier also visited the Shandong Governor in April to explore new areas for cooperation. Ministers Close, Rankine and Gago have also led missions there this year to promote investment, trade and education. South Australian businesses are there every week!
Our focus on China has seen South Australian exports there triple over three years, totalling $3.3 billion in the 12 months to August 2014, an increase of 42 per cent from the previous year. China now accounts for more than a quarter of the state’s exports.
We are seeing the benefits of our strategy across targeted sectors – minerals and energy, education, tourism, wine and agribusiness, professional services, clean technologies and niche advanced manufacturing.
Recent data shows that our exports to India are valued at $708 million, and they increased by 9.1 per cent between August 2013 and August 2014, which is a measure of the opportunity that India represents. The Premier recently visited this region to raise our State’s profile as a destination for tourism, investment and trade.
We are now extending our focus to ASEAN nations encompassing; Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
The value of South Australia’s exports to the ASEAN region has increased by approximately 48 per cent in the past five years, and is now the second most important for South Australia, after China, at about $3 billion a year.
A wide range of merchandise is exported to the region including copper, wheat, lead, wine, metal, malt, seafood and meat. Primary agricultural, food and wine exports to South East Asia in 2013/14 totaled $923 million – this is an increase of 13 per cent from the previous year.
Japan and Indonesia are significant food export destinations for South Australia and combined, make up 23 per cent of the total value of South Australia’s food export value. We exported close to $153 million of Southern Bluefin Tuna to Japan in 2012/13 and over $29 million of Abalone to China for the same period.
Our export of premium wine is well established and traditionally we have exported wine to markets in the United Kingdom, United States and Canada. 89 per cent of all wine produced in South Australia is exported and 16 per cent of this is exported to China.
Agriculture remains a real strength - we produce 6.5 million tonnes of grain on average per year with 80 per cent exported to China, Asia and the Middle East. Ladies and gentlemen our export market is thriving and growing.
The Department of State Development’s links with Austrade, and TradeStart as well as running the Gateway Business program, are helping businesses enter and build relationships with international markets. Tradestart has been a great support to local business since it was delivered in 2006, and I’m pleased to say that we have successfully bid to deliver the Federal Government’s Tradestart network in South Australia for a further four years, starting from July this year.
This builds on an already strong track record of achievement, with advisers working with more than 630 exporters in the past year to facilitate export outcomes with a total value of close to $30 million.
We have 5 TradeStart advisors in South Australia, based in key locations including Adelaide, Naracoorte, Port Augusta and the Riverland. Many of them are here today seated at the Department of State Development table and I encourage you all to make contact.
This year there is more than $700,000 of available funds for businesses through the Gateway Business Program. It offers individual funding up to $25,000 over two years for eligible South Australian exporters to support export market development activities. These may include research, trade shows, website improvements, and supporting incoming buyers.
The Program also provides funding for companies to pursue mentoring, coaching and information to help them become ‘export ready’ before they travel to international markets. The Department of State Development is currently in the process of developing a brand new grant program that will support both aspiring and established exporters in the State.
We recognise that the export community has experienced a great deal of change over the past five years, and that a new approach towards supporting exporters is needed. In some cases, companies that have previously received State and Federal Government funding have lost a share of their international markets due to the global financial crisis and high Australian Dollar.
During my visits to exporters across the State, these companies have made it clear that financing their export endeavours is one of, if not, the most significant challenge they are currently facing. As Minister for Investment and Trade, I have listened to these concerns and am keen to support these companies in re-establishing markets and pursuing new opportunities. That is why I have asked my department to review how the Gateway fund is spent and include provisions for established exporters, regardless of whether they have received funding under the Market Access Program and Export Market Development Grant schemes.
The new program, which is still under development, will allow companies to apply multiple times in quarterly rounds, and assessment for eligibility will be based on key performance indicators and agreed milestones. The benefit of this approach will be that companies can respond to opportunities in multiple markets as their export strategy expands. Applications will be assessed on a competitive basis, with companies being able to access up to $50,000 in funding. This is double the amount currently available to companies. I look forward to launching the new program in the New Year.
More information is available from the State Development website. There are also brochures ailable on the registration desk here today, regarding TradeStart, Gateway and other Department of State Development programs. I encourage you to familiarise yourself with what support is available and seek further information.
In August the Premier announced the State Government’s vision for South Australia’s economic transformation, highlighting 10 economic priorities that aim to unlock the full potential of South Australia as a place to do business, create jobs, develop industry and attract investment.
The State Government has now initiated a Small Business Round Table comprising of 34 industry associations, which I Chair with Small Business Minister Tom Koutsantonis at Parliament House every 3 months. This has been established to improve communication between the Government and business community. The first meeting focused on the WorkCover SA reform and its potential impact on the business community.
Other issues flagged for discussion include red tape reduction, abolition of boards and committees, review of the State’s Strategic Plan, tax review, driving regional prosperity, reducing business costs, among others. The next meeting will be held in December.
The Government has started WorkCover reforms that will reduce the cost of WorkCover premiums paid by small businesses and lead to total estimated cost savings to business of $180 million a year. The reforms aim to create a financially sustainable WorkCover system and deliver better outcomes for employers and injured workers. By next year a levy rate with a 1 per cent in front of it, instead of a 3 per cent looks certain and we may extinguish around $1 billion of unfunded liability. A great achievement - well done by the Opposition for in this case, bipartisan support.
The Department of Premier and Cabinet Chief Executive Jim Hallion has taken on a new private sector development coordination role to assist lodged projects valued over $3 million to clear bureaucratic hurdles. These blockages might be related to issues such as planning, environment, council regulations, water, liquor licensing and so on.
I would also like to announce the appointment and welcome the new Director of Investment and Trade Matt Johnston who joined the Department of State Development team this week. He’s returned to Adelaide after four years in London, where based in Australia House, and working with our State’s Agent-General, Bill Muirhead, represented South Australia’s interests in the United Kingdom and Europe. He is here today with the Chief Executive Dr Don Russell - go and introduce yourself.
There are significant infrastructure projects underway in South Australia and a dedicated regeneration of the city. The South Australian Health and Biomedical Precinct will be the largest in the southern hemisphere. The State Government committed $535 million to redevelop Adelaide Oval. The Riverbank Entertainment Precinct has been established along with the North-South corridor to name just a few. There is more to come.
Exploration reached a record high of $647.6 million in 2013/14. BHP remains committed to expanding its mammoth Olympic Dam operation, Rex Minerals has been granted mineral leases for its 15-year operation on Yorke Peninsula. Our deep natural gas exploration is predicted to deliver billions of investment dollars to the state including the western flank oil play in the Cooper-Eromanga Basin. And offshore many of the major players are investing a combined $2 billion in a six year exploration within the Great Australian Bight.
This is a good time to be doing business in South Australia.
Moving forward we must decide where we want to position South Australia in the global market. A key focus for the State will be to grow jobs and enterprise through exports growth in China, India and South East Asia. I believe value adding our products will help to increase the penetration of small to medium enterprises in the export market.
Economic growth in China is expected to be a robust 7 per cent this year, which will continue to boost export sales in that market. I will be visiting Shandong in December to discuss new strategic projects under the High Level Working Group structure. There are more outbound trade missions planned for early next year.
If we look at India, we can see many opportunities for local businesses in an economy expected to grow by about 5 per cent a year. I will be leading a South Australian delegation to India in January next year. South East Asia also offers increasing opportunities for our services exports, in particular, in education and skills development, agribusiness, aquaculture, defence, infrastructure development and healthcare. We are now focused on other regions including Europe, North asia, MENA, North America and elsewhere.
In June we released - South Australia - South East Asia Engagement Directions Paper as the first step in determining how we should tailor our approach to the cultures, needs and markets of these nations. The State Government committed $1.1 million over four years out of the 2014/15 Budget to develop and implement this strategy. It is our aim to have an initial engagement strategy for South East Asia, to be finalised early next month and refined before Christmas.
I want to commend the work of the Federal Trade Minister Andrew Robb. I attended the B20 Business Summit and last month travelled to Cairns to attend the Trade and Investment Ministers meeting where I sought avenues to build on South Australia’s recent trade momentum and engaged with the Commonwealth and other jurisdictions on common trade and investment interests.
At the national level, recent Free Trade Agreements signed by the Australian Government with key trading partners will support our efforts in these targeted markets and a “Team Australia” approach. The Korea Free Trade Agreement signed in April 2014 and the Australia-Malaysia Free Trade Agreement, effective since January 2013, have increased opportunities for the export of our goods and services, particularly beef, wine and seafood.
The completion of current Free Trade Agreements under negotiation with Japan, China, India and the Trans-Pacific Partnership agreement, will further enhance access for South Australian products and services across the Asian region.
At this point let me introduce the question of submarines and surface ships. Soon the State Government will provide its submission to the Defence White Paper, one of our most important submissions to the Federal Government during this term. At risk is $250 billion of spend over the next 30 years. Every business will be affected by this decision. If the customer, the Commonwealth Government, provides regular deal flow and certainty then - “Yes we can” when it comes to advanced manufacturing and construction of submarines and surface ships. “Yes we can.”
Our proximity to rapidly expanding economies within an Asia-Pacific region presents us with opportunities to expand and garner investment. We must make the most of our geographical advantage. Government’s role is to implement programs that help South Australian businesses - many of you in the room - to grow your business, get access and achieve success in these markets.
To achieve continued success, a whole of state engagement policy will be required – involving agencies, universities and business. Increased growth supported by targeted strategies and sound leadership. We need a partnership and industry must lead on exports often Chamber to Chamber. I would like to commend Business SA – Nigel McBride and the team, for your efforts in this space.
The South Australian Government values the positive impact that our exporters and industry associations such as Business SA make to our State, which is why we are pleased to sponsor three categories again this year.
I understand that in order for us to create a more prosperous South Australia, partnerships across all tiers of Government, with business, the community and industry associations like Business SA - are absolutely crucial. Equally much of this work will be led by the new Department of State Development. The Department has been tasked by the Premier to lead this partnership with industry, to build a resilient, diverse and productive economy – one based on a highly skilled and innovative workforce.
Bringing together the various economic development functions in Government into one agency provides a unique opportunity to harness our collective resources to support a coordinated and focused state development agenda, and it will make a real difference to the long-term future of South Australia. By building stronger links between Government and industry, we will foster strategic international business relationships and generate jobs.
We require a better understanding of the business export landscape, the trends and opportunities that exist. Moving forward I have tasked the Department of State Development to embark on building an improved database of South Australian exporters. This information will provide all key stakeholders with the ability to measure the State’s ongoing performance and to deliver tailored outcomes to overcoming barriers to exporting across each sector. It will also be used to develop focused strategies including our inbound and outbound trade missions.
There will be a series of fresh announcements seen about new approaches to international engagement, including inbound and outbound trade missions, better coordination within government and with industry, along with exciting new strategies. Watch this space.
Ladies and gentlemen, South Australia’s Government is committed to fostering a supportive business environment that attracts and keeps the best and brightest, to contribute to a resilient and diverse economy.
To win, South Australia must become an even more outward looking economy and begin to think like the major trading powers of Europe, the United States and China. We must focus on increasing our knowledge, innovation and enterprise, bringing it together with entrepreneurship and seed funding venture capital – what I call a cocktail for success. We must build market penetration for Small to Medium Enterprises, by value adding our products and by attacking markets. A reforming dynamic government which is engaged with the enterprise business sector. This success will require an industry led approach. Business SA and other associations must be there to help you and the State’s multicultural community will need to help improve our engagement with international markets.
One of my first decisions when I became the Investment and Trade Minister was to fund $30,000 towards this event. It’s been a great and worthwhile investment.
Congratulations to all of the South Australian businesses that took the time to enter this year’s Business SA Export Awards and in particular those companies that will today be recognised for their outstanding achievements. Your success is our success.
Our best years are yet to come! Thank you for your time and I wish your business a profitable future of growth and good returns.