Monday, 18 June 2007
Economics, Finance and Public Administration Committee; Report
It is with considerable pleasure that I speak today on the report of the House of Representatives Standing Committee on Economics, Finance and Public Administration entitled Servicing our future: inquiry into the current and future directions of Australia’s services export sector. Its origins were a conversation that was held when we were looking for a future inquiry. I acknowledge the cooperation and support of all committee members in agreeing to do an inquiry which essentially came under the banner of looking at the future of both the services industries and manufacturing beyond the resources boom.
The purpose of the inquiry was to assess whether we should take a completely hands-off approach and allow, after the resources boom tapers down, the operation of exchange rate and other market variables to bring about the necessary economic changes that would in time boost the competitiveness of our services industries and manufacturing, as the textbooks would suggest. Alternatively, we were to assess whether there might be some active government policies that could be applied to prepare Australia, in particular the manufacturing and the services industries, for life beyond the resources boom. My thanks go to all members of the committee who thought this was a good idea. Today we have one instalment on all the hard work that was done. The other, which relates to the future of the manufacturing sector in Australia, will be tabled in the not too distant future, as I understand it.
As the chair points out in this report, around 75 per cent of the nation’s gross domestic product is produced by the services economy and 85 per cent of employment is provided by our services industries, yet our services exports account for a little over 20 per cent of total exports. There is therefore some genuine capacity to lift our services industries’ export performance. It may not necessarily or even desirably get up to 75 to 85 per cent, but one dimension of the report is some recommendations on how we might lift the services industries’ exports.
Labor is pretty pleased with this report. I do not want to make this a highly partisan comment, but recommendation No. 2 is for the government to create a minister for the services sector and, as I am in fact the shadow minister for the services economy, we are in there early on that score. If Labor were to be elected at the next election, that commitment would be carried through very early on.
I will not spend too much of the time available on each of the recommendations. They are there for all to read. But I would like to point to a number of them. Recommendation No. 3 is in some senses controversial but nevertheless very worthy. We have suggested the establishment of a program of permanent migration, to address shortages in lower skilled positions in industries such as hospitality and tourism, and also the provision of incentives for Australian and overseas workers to move to rural and regional areas where skill and labour shortages are severe.
We think that is a better way of going than changing the designation of, for example, 457 visas. This country is going to have ongoing shortages of labour. The challenge of the ageing of the population means that for every older Australian there will be fewer Australians of working age. The government has lifted the immigration intake over the last few years, which has been a positive development. This report says that these problems will not disappear beyond the resources boom. There will be ongoing shortages of skilled and less-skilled labour. Therefore, we recommend a permanent increase in the immigration intake. Our argument is that, if it is good enough for people to come to Australia to work, they should have an opportunity—where feasible and consistent with the national interest—to remain here and contribute, ultimately, as citizens of this country.
Another important recommendation relates to trade negotiations. We have suggested at page 44 that it is of great importance to Australia that the focus in trade negotiations shifts towards services and that the government should attempt to prioritise services trade negotiations where possible. Indeed, we go further in recommendation No. 4 and recommend that in both bilateral and multilateral negotiations the government gives greater priority to services trade issues and that, where negotiations are stalled because of issues in one sector—for example, agriculture—the government should consider negotiating agreements for individual sectors. This is breakthrough policy development. Again, I pay tribute to all committee members for agreeing that this was the way to go. For too long, when negotiations have stalled, particularly on agriculture, we have taken the attitude that nothing else gets done while that blockage remains. The committee has said that we need to move on and do our best for agriculture but not prejudice successful negotiations in the service or manufacturing industries.
Another set of recommendations relates to the tourism sector and international airfreight. We have indicated at page 72 that the committee believes that calls in relation to avoiding long-haul flights are based on Eurocentric protectionist motives more than the desire to address climate change. The government and industry must attempt to ensure that the increasing public interest in climate change is not exploited by groups with protectionist interests. Again, thanks to all committee members for agreeing that this was the right approach. We go on to say in recommendation No. 9 that the government should be prepared to argue Australia’s case against Eurocentric protectionist policies which exploit the increasing public interest in climate change. Climate change is a very big issue in the public policy arena. Certainly we need to respond rationally to the challenge of climate change—but I emphasise rationally. Australia is a long way from the rest of the world and, if our aviation industries were to be subject to some sort of extra charge, a carbon charge, that would disadvantage Australia’s tourism industry and also its international airfreight industry. It is all very well for the Europeans to come up with these self-serving ideas, but they do not care what impact they would have on Australia—so good on the committee members for agreeing to this recommendation.
I get a bit tired of public policy institutes coming up with ideas to make the poor pay more for basic essentials such as electricity. In this context I point to a survey that the Australia Institute released today on climate change, which says that 74 per cent of Australians would prefer a greenhouse strategy based mainly on energy efficiency and renewable energy. It found that 77 per cent of Australians would prefer to get their electricity from a renewable power source. This shonky online survey had 1,034 respondents. The point I make about reason and rationality is important in these areas, particularly in the service economy and services such as electricity generation. The cost range in dollars per megawatt hour for black-coal energy supplies is between $30 and $35 but for solar voltaic is $120-plus. That is a four times higher charge for electricity. These are the charges that would be involved in the heavy emphasis that the Australia Institute thinks Australians wish to put on solar energy displacing black coal. Let us make sure that the climate change debate is a rational one, based on facts and reason. That is why we made the recommendation in the report about Eurocentric protectionist policies.
This is a very good report. Thanks to all members of the committee across the political divide. The debates we had were conducted in a non-partisan way. That is the way it should be, ideally. I recommend this report to all members of the parliament; it is groundbreaking in its breadth and coverage.
I am very pleased to rise today to speak to the report of the House of Representatives Standing Committee on Economics, Finance and Public Administration, titled Servicing our future: inquiry into the current and future directions of Australia’s services export sector. Like the previous speaker, I was particularly pleased to see such a bipartisan approach to the various issues and challenges that our committee focused on over the past 12 months. All members of the committee—and I am being generous in certain respects—were very focused on ensuring that the very best possible set of recommendations could be put forward. In many respects, I was genuinely pleased to see the bipartisan way in which this was handled. More importantly, I believe that, fundamentally, there were a number of key recommendations put forward by this committee that will bode well for the future of Australia, particularly those focusing on the services industry.
As the member for Moncrieff, representing a city like the Gold Coast, I must say that I have been very focused on the services industry. The Gold Coast is a relatively new and emerging city. It certainly is one that perhaps has more than most when it comes to possible gains that can be made with a particular focus on the services sector. With that in mind, it is exciting to know that the services sector accounts for 75 per cent of output within Australia and 85 per cent of employment and generates 20 per cent of exports, to make it one of the key sectors in the Australian economy, which, perhaps surprisingly for some, is something that is a little-appreciated or known fact. The purpose of this report was to look at ways in which the Australian economy and successive Australian government policies could further drive this output and the export of Australian services and could further increase the take-up of employment in this sector. I was particularly pleased that the Treasurer was able to commission this inquiry by the committee on 3 May last year. In many respects, his ability to recognise the need to continue developing this process is a reflection of the leadership he has shown in this area over the past several years.
As I said, there were a number of recommendations that came out of this inquiry, and I do not intend to discuss all of them. But I would like to touch upon some of the key recommendations that flowed from the report. I will go in numerical order, starting with recommendation No. 2, which was a recommendation that there be created a minister for the services sector. I must say that this is perhaps the single largest overarching recommendation the committee has put forward, which I believe will have ramifications in a very positive sense going forward. Whether it be a Liberal or a Labor government, it is very clear that a minister for the services sector would spearhead efforts to coordinate and bring together the services sector across a whole range of industries that are currently not particularly well coordinated. This has been caused by the effluxion of time and, in some respects, the various policy approaches being adopted in an inconsistent manner. Nonetheless, the creation of a services minister would, I believe, fundamentally alter the landscape going forward. Australians could have confidence that a dedicated and focused minister, who would ensure that there was a disciplined and coordinated approach to the services sector, would see this sector expand its growth beyond that which it has already achieved without this minister.
Recommendation 4, which also deals with the issue of bilateral and multilateral trade negotiations, is also a very good recommendation and one that I am pleased to highlight here. There can be no doubt that in past agreements of a bilateral and multilateral nature there has from time to time been an inability for beneficial services outcomes to be achieved because, in many respects, there has been one particular sector—and more often than not it is agriculture—which has tended to stall in these negotiations. We know that many services exports are not able to reach their true potential because of non-tariff barriers. In this respect I believe that it is very important that any future government closely examines opportunities to enhance the services side of the economy and to enhance services exports by making sure that, when it comes to services, there is a resolute focus on what is the single largest part of the Australian economy. Although media columns and a lot of media focus very much on agricultural products and agricultural exports, the fact remains that we really should do more when it comes to the services side of the economy. I believe this recommendation, in a very pointed way, reinforces the committee’s view on a bipartisan basis that there must be absolute commitment and focus if we are going to continue to drive exports of services and that this can be achieved through both bilateral and multilateral treaties to a greater extent than it has been in the past.
Recommendation 5 is one I was particularly passionate about. Recommendation 5 calls for the creation of a Brand Australia Council. In the United Kingdom, for example, the London Development Agency works on developing a London brand, a brand that applies to any external operations of UK agencies to bring them all under one brand. I have to say that, to me, that makes eminent sense. You do not see, for example, key private sector brands having various brands in various countries. What you tend to see with the Coca-Colas, the McDonald’s and the Nestles of the world is one consistent brand which applies across all of their branding across various countries. Sure, there are liable to be changes and there often are sometimes unique changes to the brand that alter it in a subtle way so that it accords with the local market that that particular brand might be operating in, but fundamentally the brand remains the same.
It seems to me that the establishment of a Brand Australia Council would do a great deal to ensure that Australia is recognised around the world in a consistent and uniform way. This is fundamentally important, because we know that Tourism Australia is out there creating brand awareness of Australia, and that is a positive thing. But we also know that there is a variety of other agencies, such as Austrade, Australia’s investment agency, and other key agencies which should be on the coat-tails of one unique brand for our country, so that internationally all people recognise an Australian brand when they see it and look forward to working with Australians, who, I think it is fair to say, are considered to be fairly lovable rogues around the world. Certainly I would hope so, and I believe that is the approach that Tourism Australia takes.
Recommendation 7 I will touch upon quickly as well in the short time that I have. Recommendation 7 is that an independent inquiry on the future of inbound tourism be established. Inbound tourism generates about $17 billion of exports for Australia, and the tourism industry employs some 550,000 Australians—a key and vital industry for our country. More importantly, from my perspective, it is the single biggest industry in my electorate on the Gold Coast. There is no doubt that tourism is certainly only the tip of the iceberg of our potential generation of wealth from services exports. In that respect an independent inquiry would bring the kind of truth that is required to the industry to highlight both the good aspects and perhaps the negative aspects which historically may not have been dwelt upon. There can be no doubt that, as a result of a number of inquiries over the past couple of decades, we have tended to focus on aspects of the industry that we like. The committee believes it is time that an independent inquiry took stock of exactly where we are, made some tough decisions and actually shone the spotlight on particular parts of the industry which perhaps in the past have not had light shone onto them. In that respect I think a full and frank assessment of the future of the industry would be a very positive and beneficial outcome.
Recommendation 8 is again another critical recommendation that the committee put forward. It deals with the recommendation that there be more emphasis placed on rogue operators and more emphasis placed on the Australian Competition and Consumer Commission to really clamp down on rogue operators. The committee heard a lot of evidence from witnesses concerned about the operations of rogue operators. I myself have witnessed firsthand on the Gold Coast rogue operators acting in a way that belittles the Australian tourism industry and does our country no great service whatsoever. The committee, on a bipartisan level again, was disappointed at the lack of action that the ACCC had taken. In this respect I think this recommendation is a very important one.
Recommendations 9 and 11 are the other two recommendations I would like to highlight with respect to climate change and, particularly under recommendation 11, with respect to niche marketing to do with the medical services export sector—no doubt a nascent industry but one that, again, could generate great wealth and income for this country. In the very short time I have left I would like to pay tribute particularly to those who played a key role: to the chairman, who has been a very fine gentleman and member—the member for Cook, Bruce Baird; I thank him for all his work—the deputy chair for his outstanding work, and all members of the committee. I also thank Gold Coast Tourism and the various tourism representatives. (Time expired)
I also rise to speak on the report Servicing our future: inquiry into the current and future directions of Australia’s services export sector presented to the parliament by the Standing Committee on Economics, Finance and Public Administration. This report was undertaken as part of our inquiry into the current status and future directions of two major industry exports sectors—services and manufacturing. While the manufacturing report is to be tabled in the next parliamentary sitting, our emphasis with both sectors was on looking ahead and preparing for the economic times post the resources boom.
As it has in most economies, the size of the services sector in Australia has increased over time. In 2005, the proportion of employment services was 75 per cent, up from 58 per cent in 1973. The parts of the services sector employing the most people are retail trade; property and business services; health and community services; and construction. Gross value added by the services sector is likely to amount to around $800 billion of Australia’s trillion-dollar economy in 2006-07. My electorate of Newcastle reflects the changing nature of our economy. Between the 1981 and 2001 censuses, the proportion of people employed in the following services industries grew rapidly: wholesale and retail trade; health, education and community services; finance, property and business services; and recreational personal services—with health, hospitality, retail and higher education our largest employers.
The committee, though, in looking at the different members of the services sector, found it was very difficult to measure the amount and nature of trade in services. There was a consensus view amongst those who appeared before the committee that services export statistics did need to be improved. This view was shared by the private sector, government departments and the Australian Bureau of Statistics itself. The committee feels that, while the ABS is measuring services exports consistent with international practice, there are areas in which improvements are needed, and the ABS has identified those. Thus, in recommendation 6 we recommended that more resources be made available to the ABS to improve its collection of data on the international trade in services.
In my electorate the nature of the services sector includes many very small or microbusinesses—SMEs—who are exporting, for instance, medical services. Voice map training systems is one service being successfully exported to the UK. Quality IVF control systems are exported to countries around the world. Another successful small business service has been setting up training colleges in Pakistan, and an IT service provider is exporting those services to countries around the world.
It is very difficult, obviously, to measure those very small businesses and the aggregated contribution they make. But the report also concluded that there is considerable scope for increasing the export effort and outcomes from the services sector, particularly with the opportunities in Asia. Submissions from the industry noted several issues limiting progress in this regard. These included non-tariff trade barriers, which are insufficiently addressed and acknowledged by our export agencies. It is easy to quantify and assist the export of goods and the manufacturing of goods but perhaps not so easy to influence and support those in the people based services sector. So there was also attention given in the report to the need for standards, attention to regulation and overregulation in this sector, and the need for some separate approaches.
Skills shortages were seen as another key barrier for our services export industry. That is generally recognised as an issue for Australian businesses across the board. However, in the services sector, being people based and a labour-intensive industry, it is a particular problem. For example, the ABS tells us that in accommodation, restaurants and cafes it takes 24 workers a year to produce $1 million in output. In mining, for example, the same output takes just two workers in that one year.
Speaking of the mining sector, the boom in that sector is one of the reasons put forward in many submissions for skills and labour shortages in the services sector. It is interesting to note that many services industry people are attached or related to that mining boom, particularly those in engineering and consultancy services. It has been argued that the big wages being paid in the mining sector are pulling people as diverse as chefs, bus drivers and mechanics out of sectors like tourism and into other sectors.
The report made 14 recommendations, and I acknowledge a previous speaker on this report, the member for Rankin, who has absolutely been ahead of the government. In recommendation 2, the report recommends the setting up of a minister for the services sector. Of course our shadow minister for the service economy, small business and independent contractors was greatly helpful to us in our work on our committee.
The report also recommended research into innovation and pointed out how innovation in the service sector can increase productivity. Given productivity rates in this country, it is one of those areas we found overlooked a great deal in the services economy. Recommendation 3 suggested that a permanent migration program was needed to address shortages, particularly in lower skilled positions—for example, hospitality and tourism. While we acknowledge that the 457 visa approach is being used, I noted today the differences in the positions of Helen Clark and the Prime Minister regarding using lower skilled workers in our region. I think specific and permanent migration programs need to be considered.
I think recommendation 5, to initiate Brand Australia Council, is a way to give oversight and coordination to all the agencies and export authorities that do look at Australian products. Their branding and approach has always been on goods rather than services. The council will look to the quality and importance of standards and the increased success of the services sector. But to do that of course we also need to take on rogue operators who can do great damage, particularly in tourism, although I think hospitality and education services were also areas where we saw rogue operators that had the potential to damage the brand of Australian services quite remarkably. Recommendations 7 to 11 particularly look at the need for assistance to the tourism service sector. We also saw a greater role for the ACCC, and we recommended that they have additional resources to actively seek out and prosecute alleged rogue operators in the tourism sector. We did suggest that there should be increased funding by both state and federal governments to the Inbound Tourism Compliance Taskforce and acknowledge that there is a need for some national coordination on this issue.
In terms of education services, recommendation 12 went to assessing the overall competitiveness of Australian student visa requirements. Is it easy to come here and access those education services or is it easier to go somewhere else? Recommendation 13 recommended a performance audit, by the ANAO, of DEST compliance and enforcement action, of alleged breaches of the Education Services for Overseas Students Act and its national codes. I think all of us are hearing in our electorates about more problems emerging from that field. Recommendation 14 encourages Tourism Australia and Australian Education International to work together to see what they can do to protect standards, recognising that there is an overlap.
There were some general areas that needed a little more attention—and certainly there is not time in each report or each inquiry to cover them all. But, in my view, there was a need for some much more flexible approaches to training. With a mobile population, when you get a boom, people are drawn to and from all over the country. I know flexible delivery is something that education institutions are working very hard on, but I think it needs some new focus and support. An emphasis on entrepreneurship is also probably missing from our overall education approaches, and we cannot help but see that SMEs that are delivering services are totally dependent on high-speed and wide-bandwidth broadband. Particularly in regional Australia and electorates like mine, without those broadband capabilities they cannot fully take advantage of the export opportunities in a global economy.
Finally, I would like to also add my thanks to the secretariat for their efforts. These sorts of inquiries require a great deal of coordination and a lot of travel around the country, and we were able to sample widely from different service sectors and from different places in regional and metropolitan Australia. I would also thank the chairman. He does run a very productive, congenial and certainly non-partisan committee. I acknowledge the non-partisan contributions of all the committee members and their willingness to support this inquiry. I recommend the report Servicing our future to the House. I know it will be well received by the services sector in general.
I welcome the attempt by the member for Batman to give something to the Standing Committee on Economics, Finance and Public Administration in the future. I am sure we would welcome the approach and the abilities of the member for Batman to the committee. It has been very noticeable that all previous committee members who have spoken in this debate have commented on the fact that there has been a bipartisan approach by the committee, chaired very well by the member for Cook and also, quite arguably, served very well by the best secretariat in this House. Secretariat members certainly help the members enormously and go to a lot of effort to ensure that the committee produces a great report.
I lament the probable outcome that as it was a bipartisan committee there will not be too much publicity in the papers because there was not much controversy. Certainly some good views have been put forward but, unfortunately, I do not think the media will give it due consideration and promotion because we are not at each other’s throats.
That might happen. I am very pleased with the report Servicing our future. The electorate of Barker, which I have the honour of representing, is a little over 64,000 square kilometres. It is larger than Tasmania. When you go through the electorate you make your way past some of the country’s great treasures. The Murraylands region of my electorate has already been identified as a future logistics and transport distribution hub for South Australia because of its ideal location, only an hour away from Adelaide. It has certainly been easier to come in and out of Adelaide via Murray Bridge or the Murraylands as a result of the money that this government spent on the Heysen tunnels, which also made access into Adelaide safer. Because of its ideal location there is very easy access via road and rail to the eastern seaboard, which is very important in a country like ours. Tourism derives a significant proportion of the electorate’s economic dollar and opportunities for tourist and sporting events, businesses, cruises and retreats are growing and receiving international acclaim and media publicity. Of course, agriculture is also a very strong base for the Barker electorate.
Nationally the services sector is responsible for 75 per cent of this country’s outputs and 85 per cent of employment. Export services make up more than 20 per cent of total exports. It is surprising to some that this is more than rural exports and about on par with manufacturing exports. That is not to say that manufacturing or agricultural exports should be derided; in fact, they are very important to our economy. Without food, for example, we do not live. It is as simple as that. Without exporting food we would be producing probably 80 per cent more than our actual needs in Australia.
Inbound tourism is, at the moment, Australia’s biggest service export industry. It is among the top export earners across all industries and has set new records for arrivals and exports. Yet, despite this, for some time the services sector has been overshadowed by Australia’s goods producing industries, such as the agricultural and manufacturing industries, and by the much publicised mining boom. It is this committee’s view that the Australian government must give greater priority to the services sector by way of government acknowledgement and assistance and by way of media attention.
This committee was charged with the responsibility of identifying challenges posed to the services sector by the current resources boom and to highlight both issues and opportunities for the sector into the future. The Servicing our future inquiry suggests that service exports are likely to be of increasing importance to the Australian economy not just in the near future or the short term but in the coming years and decades. That time is fast approaching, but before it does this government and any other future government must be ready. We must have the ability to address workforce needs such as a shortage of skills and labour, which are already present in our economy. We need to tackle the significant competitive challenges on the horizon for the educational sector, the second largest services export sector, and to remove growth-constraining issues surrounding non-tariff trade barriers. Educational export services were brought home to me when I was part of a recent trade delegation to Mexico. We are certainly growing in that area. Many students are coming to Australia and we also have students in Mexico.
There were many recommendations. Innovation, particularly in the use of information technology, has been a key driver of productivity in the services sector. I hark back to my days at university when I was doing an economics degree. Even then they were talking about innovation. We talk about it a lot, but I think we need to recognise it even more. There has been little study done of the role of research and innovation in lifting productivity in the services sector. More could be and should be done in this area. Because of this, the committee recommends that the government commission research into innovation in the services sector and its implications for productivity.
It was also the view of the committee that the services sector would benefit from improved federal government coordination. We believe that the most effective way to achieve this would be with the introduction of a minister for services. Every member of the committee has mentioned that so far, so obviously they think it is pretty important. Such a role would provide a focal point for the services sector, recognising its increasing importance, particularly in terms of exports. This position could assume a generic responsibility for the sector, informing government policy on issues that affect all service industries. As well it could be responsible for coordinating research into the services sector and formulating a government strategy to ensure the continued expansion of service exports.
We also recommended that the government consider establishing a program of permanent migration to address shortages in lower skilled positions—and we chose those words very carefully—in industries like hospitality and tourism, and provide incentives for Australian and overseas workers to move to rural and regional areas where skills and labour shortages tend to be more severe than they are in the cities. Australia’s population is ageing, and we need to look to permanently boost the supply of labour in the economy. The committee is in favour of permanent rather than temporary migration of lower skilled workers. The focus must be on younger migrants to avoid increasing the problem of the ageing population. There is a significant shortage of workers at a skill level below that which is already covered by the current skilled migration program, so it is not so much, certainly in my area, a shortage of skills but a shortage of actual people and labour to do the jobs.
We also recommended that in all future bilateral and multilateral trade negotiations the government give greater priority to services trade issues. Where negotiations are stalled because of issues in one particular sector—for example, agriculture—the government should consider negotiating agreements for individual sectors.
Whilst we talk about Australia’s good record with the export of goods, we are lagging in international brand recognition. Like the member for Moncrieff, I am very passionate about our ability as an exporter of business services, for example, not being well recognised. We must broaden our international brand. The committee recommends that the government initiate a Brand Australia Council. This council would not take over the operations of promotion agencies like Tourism Australia and Austrade but would provide an opportunity for these agencies to communicate, to work together on promotion where possible and to investigate how our brand is perceived internationally and where it needs to be improved.
There are many other recommendations that are worth listing. Very quickly, they include: that governments, both state and federal, take proactive steps to eradicate rogue tourism operators; that the government commission an independent inquiry into the future of the inbound tourism industry; and that more resources be made available to the Australian Bureau of Statistics for improving its collection of data on international trade in services. (Time expired)
I welcome the opportunity to address the report of the House of Representatives Standing Committee on Economics, Finance and Public Administration entitled Servicing our future: inquiry into the current and future directions of Australia’s services export sector, and, in doing so, indicate to the member for Barker that I pay close attention to the work of this committee. I say that because, as the shadow minister for tourism, I feel that the recommendations of this committee’s report are exceptionally important.
I also say at the outset that, like the member for Barker, I do not believe the work of the committee structure gets enough attention and recognition. I think we all appreciate that committee work is one of the most rewarding parts of being a politician, because it enables us in a bipartisan way to make some real recommendations about real policy issues of national importance—recommendations we can be proud of. As shadow minister for transport and roads and tourism, I am paying close attention to the recommendations of this report because of the importance of tourism to the export sector.
I hope that the member for Moncrieff, who has been an active participant in this committee, brings the report to the attention of the Minister for Small Business and Tourism, because I know the member for Moncrieff is highly critical of the minister’s performance. I, like him, appreciate that she needs all the assistance she can get with her portfolio work. Having said that, let me say that the report focuses heavily on tourism, a key service sector in Australia. Tourism related services account for almost $28 billion in the balance of payments and are made up of more than 60 per cent of Australia’s total services exports. The importance of the tourism industry as a whole is often forgotten, and this report reminds us that it contributes about four per cent of Australia’s GDP. I think, therefore, that it would also have been appropriate for the committee to have recommended that, in terms of the performance of the Howard government, tourism be a key cabinet portfolio rather than being in the outer cabinet, the outer ministry, as is currently the situation. The report rightly identifies a number of challenges faced by the industry and highlights the fact that the recent slowing in Australia’s services exports has been partly attributable to the stronger Australian dollar leading to slower growth in tourism related services. This is something that cannot go on without it being properly addressed.
As the report notes, there has been a decline in tourist arrivals from Japan over the last decade and, while Japan’s ageing population and modest economic growth over the last couple of years partly explains it, it should be a matter of concern to Australia that Japanese tourism to other destinations such as China, Singapore and South Korea grew over the same period. So, in that respect, I welcome the committee’s report on the findings of the action plan for Japanese tourism with respect to how we go forward. It is something that has to be pursued vigorously by the government. I consider that there is no doubt that the ‘So where the bloody hell are you?’ campaign has been a complete and utter failure in Japan, and it is time some sensible analysis and federal leadership were exercised to reverse this negative trend. The minister’s response is to want to audition for a Japanese soap opera! We need more than that.
Another challenge for Australia as a tourism destination is the growth of low-cost carriers flying within Europe and Asia, which has increased the relative price of a holiday in Australia for European and Asian tourists. At the same time there has been little development of low-cost, long-haul flights to destinations like Australia, and high world oil prices have resulted in many airlines introducing fuel surcharges of around $74 to $100 on long-haul flights, further increasing the relative cost of travel to Australia for a tourist.
Again, I support the recommendation of the committee to commission an independent inquiry on the future of the inbound tourism industry and the challenges it faces. When it comes to Australia’s challenges on inbound tourism, we need more action. That is why I also welcome the committee’s support for the development of an action plan to consider the impacts of climate change on the tourism industry and its recommendation that the action plan also consider the potential impact of carbon emission reduction policies on inbound tourism. The committee notes, appropriately, that in recent times there have been calls from within Europe for its citizens—another trade embargo—to avoid long-haul flights and give preference to consumer products that have not been freighted over long distances; another crack by the European union at Australia. The committee appropriately expressed a view that some of these calls are based on Eurocentric protectionist motives more than a desire to address climate change, and noted that government industries should attempt to ensure that the increasing public interest in climate change is not exploited by groups with protectionist objectives in mind. I could not agree more.
Let us deal with a few facts. Let us have a scientific debate about climate change and its potential impact on the tourism industry. Globally, aviation contributes just two per cent of greenhouse gas emissions but eight per cent of world GDP—that is, 28 million jobs and $US3 trillion. Recently, the less than august Australia Institute—an organisation for which I have no respect because it seems to pride itself on belting low-income people in Australia—proposed a carbon tax, an elitist tax, on domestic flights and called for an end to the promotion of the aviation industry. Never mind that, according to the Australian Greenhouse Office’s National Greenhouse Gas Inventory, civil aviation contributes just 0.9 per cent of Australia’s emissions. If we got rid of the entire aviation industry, as the Australia Institute would have it, we would still be left with 99 per cent of Australia’s emissions.
Australia’s geographic remoteness and vastly dispersed population means we rely on air travel more than the rest of the world. In Europe, distances between destinations are much shorter, and rail and road networks provide alternative modes of efficient transport. But it should also be noted that every rail journey in Europe is subsidised by between $US3 and $US9, while every air journey contributes between $US6 and $US11 to government revenues.
Air transport is, interestingly, responsible for 99 per cent of Australia’s international passenger movements each year, with about 18.1 million air passengers entering and leaving Australia—and the Australia Institute would have us kill the Australian aviation industry both domestically and internationally. They ought to have a long, hard look at themselves. Within Australia, the arrival of low-cost airlines Jetstar, Virgin Blue and, now, Tiger have connected Australians to each other and improved access to markets for Australian businesses like never before. It has also meant that ordinary people, low-income earners, can avail themselves of air travel—at long last.
But let us keep it this way. It is the responsibility of both sides of parliament to stand up to the idiots in the Australia Institute. The Australia Institute report, so far as I am concerned, is brazen in its simplicity and puts the organisation in the dubious company of the Green warriors who hope that climate change will finally bring down capitalism. While this might enable grandstanding in the media, it fails to progress the climate change debate in any meaningful way, and it damages the prospect of finding sensible scientific solutions to a complex debate that is of exceptional economic importance to the future of Australia, especially rural, remote and regional Australia.
Each year, for decades now, the airline industry has made efficiency improvements of between one and two per cent. It may not seem like much to the Australia Institute, but eliminating a single minute from every flight around the world would save 4.8 million tonnes of greenhouse emissions. That is a big incentive for the airlines to actually make progress, because emissions cost money—it is about good business. With fuel prices at record highs, it is good business to reduce emissions. It is no coincidence that the financially successful airlines are also often the greenest, as they invest heavily in new aircraft and technologies that burn fuel more efficiently. New aircraft are 70 per cent more fuel efficient than 40 years ago and 20 per cent more fuel efficient than 10 years ago. Technologies in airspace management, such as advanced navigation and scheduling systems, are advancing and achieving dramatic fuel-efficiency improvements.
I commend this report to the House, because it is about making appropriate recommendations for the future of the services sector in Australia. It also brings to a head such complex issues as climate change, which are key to the future of a number of service sector industries in Australia and key to economic growth and employment in Australia. I commend the committee for its very valuable work. (Time expired)
I rise also to talk about the report that we are discussing here today which has been created by the House of Representatives Standing Committee on Economics, Finance and Public Administration and entitled Servicing our future: inquiry into the current and future directions of Australia’s services export sector. Before I go on to my contribution, I was listening to the first few minutes of what the member for Batman had to say in his speech, so I thought I would rise and take issue with some of the points that he made which I thought were wrong and over the top. But I will not do that, because I am just in such furious agreement with the second half of his speech, where he talked about the report that was brought down by the Australia Institute. I see why he has a reputation, at least on our side of the House, for bringing a very commonsense perspective to some of these issues. His contribution was excellent.
This report makes 14 recommendations. I wanted to concentrate primarily on the first six, because recommendations 7 to 14, which deal a lot with the tourism industry in Australia, have already been extensively canvassed by the first five speakers. So I wanted to concentrate in my contribution on recommendations 1 through to 6. The first recommendation is that the government encourage more research into the services sector. That is a reasonably sensible recommendation. We hit something of a fork in a road as a committee about which direction we would take when we were framing this report. We could have taken the road of, maybe, increased government intervention or possibly suggesting that the government should spend more money doing this or that. But what has been taken in this report is a far more sensible approach. We have opted to enhance the efforts of the private sector that are already occurring and making the services industry such an important part of the Australian economy. Rather than coming in with a very heavy hand of government, these recommendations have something of a light touch. They are more about encouraging the government to coordinate. Recommendation 1 is a good indication of that.
Recommendation 2—one that I know has pleased my colleagues on the other side of the chamber today—about the creation of a minister for services is very much in that vein. We are not recommending that the government do exciting new things or take incredibly large initiatives in the services sector, but we are saying that it would be worth while for the government to have a look at the services sector and see if there is some way that we can help to coordinate things better. The creation of a minister for services would obviously be a step in that direction.
Recommendation 3 is, in my view, the most important recommendation of the committee. It is important because it deals with a factor that is heavily weighing on the Australian economy at the moment. It is, without a doubt, the No. 1 complaint that business has brought to me as the member for Stirling. That is the labour shortage, sometimes referred to as a skills shortage. The reality is that, because we have a booming economy, we are literally running out of people to work in that economy. People consistently come to see me in my electorate to complain that they cannot find workers, particularly in some of the traditionally lower paid occupations such as aged care, hospitality and of course all sorts of occupations that you would find within the tourism industry. It really is now a critical issue. If you cannot find the people to work in the economy, you cannot continue to expand the economy.
I was worried that as a committee we might squib this one, because there might be some different political imperatives for the members on either side of the committee, but I think what we have come up with is very sensible. We recommended that the government institute a process whereby more permanent migrants can come to Australia. I actually do not have a strong view about whether the migration to Australia is permanent or on a more short-term basis, but other members of the committee felt that it was important to have migrants come on a permanent basis as opposed to coming on any temporary basis. I think it is so important to solve this problem that I really did not think it was worth while taking issue about whether people come here temporarily or permanently. The most important thing is that we solve the problem and get more people here. This is a very good report. All the recommendations are worth while, but it is really vital for the government to take notice of recommendation 3. I am going to be very pleased to take this report back to my electorate and discuss it with some of the business people who have come to see me on a regular basis, begging me as their member of parliament to do what I can to encourage the government to allow more labour to come to Australia.
Recommendation 4 talks about having some more emphasis within international trade negotiations on the services sector. A lot of players within the sector were of the view that, when we come to negotiate both multilateral and bilateral trade agreements, we as a government place more emphasis on manufacturing and agriculture, which belies the fact that services is actually the largest sector of our economy. Players within the services industry felt that there needs to be more emphasis placed on the services sector within those negotiations. There is evidence to suggest that that would be a very sound thing for the government to do.
Recommendation 5 was particularly championed by the member for Moncrieff, and he has discussed it within his contribution. It is for the creation of a Brand Australia. We were given a number of examples where governments have done this quite successfully; the Italian example was one. It would promote Australia as a homogenous brand, as opposed to promoting different sectors of Australia, if you like. Australia would benefit if we were to do that in a more coordinated way.
Recommendation 6 is a reiteration of a plea that we heard from many players within the sector that the ABS provide more data from the services sector, particularly regarding its place in international trade.
In the remaining few minutes I will move on to the other recommendations, recommendations 7 through 14, which deal primarily with tourism. Recommendation 7 asks that the government has a look specifically at the inbound tourism industry. There was some concern within the sector that tourism has not been growing or that we have not been maintaining the rate, particularly from some markets, of inbound tourists. A lot of that, of course, has to do with the fact that the Australian dollar is currently so strong, which has a negative effect on Australia as a destination, particularly on the Japanese inbound tourism market, which is mentioned specifically in recommendation 10.
Recommendation 8 is about rogue operators within the tourism industry. Sadly, we as a committee heard evidence that rogue operators were not policed in an overly vigorous way. Members of the committee had received representations quite heavily, particularly members from Queensland—and the chairman was also terribly concerned—that the ACCC was not using its powers to properly police rogue operators in the tourism industry. The committee urges the ACCC to take another look at that and to increase the frequency with which they take compliance action. Importantly, we decided not to do this by putting a whole new layer of bureaucracy on the tourism sector. There was some discussion within the committee about doing that. I personally felt that that would be very unfair on the vast majority of tourism operators that do operate within the law.
I think recommendation 9 is the second most important recommendation of the committee. I could not agree more with the member for Batman’s contribution about this. We should not subscribe to some Eurocentric view that penalises hardworking Australian exporters, and we should not fall for the line—that the EU seems to be pushing very heavily at the moment—that somehow Australia should be penalised for being a long way from the rest of the world. We have really got to be alert to that sort of nonsense. Again I concur very strongly with what the member for Batman said.
Recommendation 10, about the Japanese market, I have already touched on. The depreciating yen versus the Australian dollar is obviously a substantial problem there. Recommendations 11, 12, 13 and 14 are very important to the tourism and education sectors and, specifically, coordinating between the two. I thank the chair and the other members of the committee for their work in producing a very worthwhile report. (Time expired)
Debate (on motion by Mr Baird) adjourned.