Services Exports Key to ChinaPosted 19th October 2015 by Clare O'Neil in Articles, News | 0 Comment
Earlier this year, we asked a group of Sydney bankers whether exporting financial services to China was part of their growth strategy. Their laughter was enough to reveal that without language expertise, regulatory networks and deep cultural understanding, they considered the China opportunity just too murky, complex and risky.
We’re not going to make the most of our relationship with China without policies that help remove the barriers that lie in the way. An improved China-Australia Free Trade Agreement is one way to boost our prospects, but on its own it won’t be enough.
Two stumbling blocks will limit the potential benefits of the agreement. One is the weakening of Australia’s labour market protections, which will be rectified if the government agrees to Labor’s complementary safeguards. The other is whether this government has done enough to ensure Australian businesses can take advantage of the benefits of the agreement and succeed in the post-boom, services-based economy of the future.
The role of our largest employing sector in Australia is often downplayed. Commodities steal the limelight and tariff reductions grab headlines when new trade agreements are struck. But it is the services sector that will drive the Australian economy in the decades ahead. And while this is the sector for which the China-Australia Free Trade Agreement opens up the most opportunity, it has received the least attention in the political debate surrounding the agreement.
This is especially problematic when you consider that every single one of the 10-fastest-growing high-skill jobs in Australia today is in the services economy. These are the jobs of the future: high-skill, export-facing, advanced services.
Our transition to a services-based economy should be welcomed, not feared. More developed economies have a greater share of GDP coming from services, and this is the main sector where we are likely to see significant prosperity growth in a post-boom Australia.
China is our biggest export market, our largest trading partner and the world’s most populous nation. The agreement could open up a number of Chinese markets to international providers for the first time and in many instances Australian businesses will have first access. Providers in industries such as education, finance and aged care will be able to exploit incredible new markets.
China is home to 240 million young people for our educators, 150 million cars on the road for our insurance companies and 80 million people aged over 70 for our aged-carers. Creating new high-skill services jobs depends on Australia getting our domestic policy environment right. Today, we lack the preparedness to engage with China. Worse than that, the government lacks a strategy.
The last Labor government’s blueprint for engagement with Asia, the Australia in the Asian Century white paper, has been shelved and forgotten by the Turnbull government.
Only 9 per cent of Australian businesses are operating in Asia, and only 12 per cent have any experience doing business there. ChAFTA will help, but the fact remains that only one in five Australian exporters make use of FTAs. Clearly, we need to develop a greater language and cultural understanding of Asia in our workers and businesses. Yet today, fewer than 6 per cent of our Year 12 students study an Asian language.
We also need to support the growth of the high-skill labour force needed in our region by equipping more students with the skills of international business and STEM.
This piece was first published in the Australian Financial Review on Monday, 19 October 2015 and was co-authored with Jim Chalmers, Member for Rankin.