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Libs lash Govt’s China strategy as exports crash

Aug 21, 2015
Trade Minister Martin Hamilton-Smith in India last week. Photo: Twitter.

Trade Minister Martin Hamilton-Smith in India last week. Photo: Twitter.

Local merchandise exports to China have slumped by more than $1 billion in the year since the Weatherill Government’s latest China Strategy was published, with the Opposition branding Labor’s trade agenda a failure.

It comes as Premier Jay Weatherill leads a trade delegation, including ministers Martin Hamilton-Smith and Gail Gago and several business leaders and bureaucrats, through South East Asia, taking in Singapore, Malaysia and Thailand.

Weatherill returns to Adelaide on Sunday, with his office promising some big-ticket announcements.

The current delegation was preceded by a similar outing to India last week, and followed the state’s biggest ever trade mission in May, to China and Hong Kong. On that mission, the Premier led 250 delegates in a bid to strengthen ties, as outlined in his Government’s strategy published in July 2014.

In that document, Hamilton-Smith stated: “Understandably many other countries are also vying for attention in China, so our engagement needs to extend beyond trade in goods and services.”

But the Opposition argues dwindling Chinese exports in the interim suggest the Government’s approach has not paid off.

“We have a China engagement strategy which has led to an almost 30 per cent reduction in exports to China,” Liberal leader Steven Marshall told InDaily.

Since the strategy was published in July 2014, merchandise exports to the region have fallen by $1.01 billion.

Marshall said the plan was “too focussed on cultural exchanges and not practical opportunities for SA firms to export to that market”.

“Essentially the problem with the Government is they’ve got these little programs that are so bureaucratic and so narrow and so defined that hardly anyone applies for them.”

Marshall proposes: “We’d have a sum of money, where people put in innovative ideas matched with their own expenditure, in markets they’ve defined for themselves.”

“We’d let businesses themselves determine where their product offering has the best opportunity, and we’d put very few restrictions on it,” he said.

“(For example), a group may want to open up an office in Colorado, or go to a trade show in Malaysia for $100,000; we’d put in 50 grand and say ‘you put in 50’.

“We want to increase the creative responses which are built by businesses themselves, rather than the Government saying ‘we’ve got a program – tick all these boxes and you’re in’.

He said the closure of SA trade offices following the 2012 Hartley review has also been an own goal in some cases, coupled with a $10 million decline in the annual budget for investment promotion programs since 2011-12.

“This is like a business which needs to increase its sales and actually halves the marketing budget,” he said.

Hamilton-Smith conceded that “like any minister, I would like to see more investment in my portfolio because it is an important job creator”.

“But at the end of the day our agency has to prove that we are delivering on our mandate. I have regular conversations with the Treasurer about the importance of my portfolio, but I recognise we need to deliver a Budget surplus, tax cuts and government services as well.

“At the same time, we are actually bringing more companies with better prepared market plans into market than we did before.”

He said the old model of maintaining “bricks-and-mortar” offices in international centres “was not performing” and was “far more expensive than our current approach” of embedding dedicated staff within established Austrade offices.

“I can’t justify establishing a standalone office to the taxpayers if I know that we can deliver better services leveraging off of Austrade’s capability,” said Hamilton-Smith.

However, InDaily can reveal the cost of a major delegation is roughly equivalent to maintaining a dedicated office for a year.

Hamilton-Smith’s office confirmed the estimated cost of the 256-delegate China mission was $187,000, “which is about the cost of our single person office in Jinan of $180,885.46”.

“A good export development program will use both elements (international offices and trade missions) because they benefit from one another,” said Hamilton-Smith.

“There’s no point having international offices without any businesses to use them, and there’s no point getting on a plane unless you have someone with in-country expertise helping you navigate the market.”

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Jay Weatherill in Malaysia this week. Photo: Twitter.

The latest figures published on the Government’s own website show SA’s total international goods exports declined rapidly in the past year, down $957 million in the year to May 2015.

But the minister insists the recent decline in exports is “directly related to the massive slump in mineral commodity prices over the past 12 months”.

“This export sector is driven in South Australia by the large resource producers, such as BHP Billiton and OZ Minerals … these exporters do not require state government export assistance,” said Hamilton-Smith.

“The State Government can do all the international market development it wants – unless the price is right, mineral resources will not be exported.

“The State Government’s main role in mineral resource development is providing efficient and transparent regulatory processes to encourage investment. On the other hand, export sectors to China that the State Government has a substantive role in developing have been growing steadily; specifically food and services.”

He said meat, wine, fruit and vegetables, tourism and international education “have all been experienced steady growth in the Chinese market over the period”.

“China remains our largest export market and even under the most pessimistic growth scenarios will continue to dominate our export profile for the decade ahead,” he said.

Nonetheless, Marshall maintains merchandise exports, an area in which he worked successfully before entering parliament, have suffered under Labor long-term.

“We haven’t performed well, on any measure, in terms of exports,” he said.

“In terms of the overall position it’s not just China that’s fallen; our entire export performance is down 8.2 per cent.

“Over the long term we have at best been treading water … we haven’t kept pace with inflation, that’s how bad it’s been.”

He said the Government was “obsessed with finding a one-month variation” that paints a positive picture.

“But that’s just not useful,” he said.

“If you look over the long term, when they came to power we had just over 8 per cent of the nation’s exports … it’s now around 4 per cent.

“All the money goes into writing these glossy documents and taking ministers overseas to sign MOUs that never reach fruition.”

The Government has announced the signing of three Memoranda of Understanding from its Asian sojourn so far this week.

It is developing a trade mission agenda for other markets including North Asia, the North Atlantic, and Middle East and North Africa.

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