Bruce Baird (Cook, Liberal Party) Share this | Link to this | Hansard source

On behalf of the Standing Committee on Economics, Finance and Public Administration, I present the committee’s report entitled Servicing our future: inquiry into the current and future directions of Australia’s services export sector, together with the minutes of proceedings.

Ordered that the report be made a parliamentary paper.

It is my pleasure to present this report to the House today and to commend the secretariat of the economics committee—Stephen Boyd and Andrew McGowan in particular, but the rest of the staff also—on a very professional piece of work in terms of the report before the House. When people think about the Australian economy, thoughts usually centre on the agriculture and mining sectors, but it is in fact the services sector which dominates Australia’s economy, accounting for around 75 per cent of output and 85 per cent of employment. Exports of services account for more than 20 per cent of total exports—much more than rural exports, and of a similar size to manufacturing exports.

The inquiry was referred to the committee by the Treasurer, the Hon. Peter Costello MP, in May 2006. The committee was tasked with identifying the challenges posed to the sector by the resources boom as well as highlighting issues and opportunities for the sector into the future. The report title, Servicing our future, is indicative of the committee’s view that services exports will become increasingly important to the Australian economy.

The resources sector is currently experiencing a well-publicised boom. A boom is by definition a temporary occurrence, but predicting how long it will last is very difficult. Indeed, most of Australia’s leading economists have made incorrect forecasts about the length of the boom. Commodity prices have stabilised over the past year but remain around their peaks. It is unlikely that demand from China and other emerging economies will subside anytime soon. However, a huge amount of mining investment continues to occur around the world, indicating that the world’s mining capacity will increase markedly in the coming years. As capacity increases, some fall in commodity prices is likely. If, as a result, the Australian dollar depreciates there will be increased opportunity for Australia’s other export sectors, including services.

It was evident throughout the inquiry that there are a number of issues relevant to the services sector as a whole. This degree of commonality gives cause for the committee’s recommendation for a minister for the services sector. The committee believes that the sector would benefit from enhanced government recognition and coordination.

An issue common across the services sector is the shortage of skills and labour. The strategies to make training more flexible and relevant are undoubtedly the most important solution to the shortage. However, because of the time it takes to learn new skills, training cannot provide solutions to the shortages that exist now. The committee believes that there is a need to introduce a program of lower-skill migration to fill shortages in industries such as tourism.

Inbound tourism is Australia’s biggest services export and amongst the top export earners across all industries. The industry set new records in terms of arrivals and exports in 2005-06, but in real terms it has performed modestly since the Olympics. The committee believes that, given its importance and recent variable performance, there is scope for an independent examination of the future of inbound tourism.

The committee believes that the issue of rogue operators in the tourism industry must be addressed. The industry cannot afford to continue to have its reputation compromised, and, as importantly, international tourists should not be subjected to illegal practices. The committee is concerned by the ACCC’s inaction on this matter and recommends that more federal and state resources be committed to eradicating rogue operators.

I would like to thank my colleagues the members of the committee for their cooperation and dedication to the task in preparing this in a very bipartisan way. International education is the second largest services export. A $10 billion industry in 2005-06, the industry is expected to continue good growth in the near term but significant competitive challenges are on the horizon.

The committee received evidence on a range of other service industries during this inquiry. In general these industries are important domestically, and there appears to be scope for them to significantly increase their level of exports. The common growth-constraining issue was non-tariff trade barriers. The committee recommends that the government give greater priority to services trade issues in future trade negotiations. Finally, on behalf of the committee, I would like to thank the organisations and individuals that participated in this inquiry, and the members of my committee in producing this report. (Time expired)

Sharon Bird (Cunningham, Australian Labor Party) Share this | Link to this | Hansard source

I would like to take the opportunity before the House today to join my colleague the member for Cook, Chair of the House of Representatives Standing Committee on Economics, Finance and Public Administration, in addressing its report on the services sector—in particular, the role of the services sector into the future in a potential postboom period. I should acknowledge that I came to the committee quite late in the inquiry, and I would like to thank the members of the committee and the secretariat for their efforts in ensuring that I was brought up to speed very quickly on the details of what had gone before in the inquiry. I would also like to acknowledge a member of my staff, Brett Reed, who did some extensive research on the evidence that had been presented to the committee prior to my joining it, so that I was able to join well informed.

The important issue to take out of this report is that there is no doubt that the services sector is a critical component of not only our domestic economy but also our export future. It was particularly heartening at some of the public inquiry meetings to hear from industries and groups that were doing extraordinarily innovative things in developing and producing service products that are doing very well as export earners. It epitomised very much why Australia has punched above its weight economically for so long. These people came to their particular sector of the services industry with the view that they were problem solvers, innovative thinkers, friendly and professional and all of those aspects that one automatically thinks of with regard to Australians dealing and trading in the international scene. You could see the excitement around what they were doing and the enthusiasm that they brought to that. That was evident in the two big sectors of the service industries—the tourism and education sectors—but it was also evident, I think far more significantly, among some of the emerging services sector providers, in particular the finance sector, the medical sector and the construction and engineering sectors, with some of the things that are being achieved in those areas.

What also became glaringly obvious throughout the inquiry was that to some extent in Australia we are just getting on with doing it and there is not enough analysis and review of what works and what does not work, what the barriers are and what the government could do to intervene. The chair on numerous occasions had to strongly encourage people to tell us what they would like government to do in order to facilitate the growth of this sector. There was some good evidence. Our trade recommendations take up some important recommendations about how too often we focus in trade negotiations on what we see as our crisis sectors—sectors which we are certainly aware can be under great threat and therefore give greater focus to. Agriculture and manufacturing are obviously those two sectors.

When involved in trade negotiations, people in the services sector encounter serious barriers that are slightly different to those we are used to dealing with in trade negotiations but that are no less important. In particular, that relates to things like the regulations that may be imposed in the nation in which they are trying to do business—for example, regulations around qualifications and the percentage of foreign work that can be done on jobs. We heard particularly from the engineering sector that these sorts of things can be extraordinarily complex. An example is one piece of evidence related to the United States: if you are trying to do business in the engineering and building sector, you have different codes, requirements and regulations from state to state there. For many Australian businesses attempting to work in that environment, these can become quite obstructive to the expansion of their business.

In the report there are some very important recommendations about not only the government getting more proactive in promoting and understanding the services sector but also trade liberalisation issues. (Time expired)

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The time allotted for statements on this report has expired. Does the member for Cook wish to move a motion in connection with the report to enable it to be debated on a later occasion?

I move:

That the House take note of the report.

In accordance with standing order 39, the debate is adjourned. The resumption of the debate will be made an order of the day for a later hour this day.