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FOREIGN AFFAIRS, DEFENCE AND TRADE LEGISLATION COMMITTEE
Australian Trade Commission (Austrade)
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FOREIGN AFFAIRS, DEFENCE AND TRADE LEGISLATION COMMITTEE
Australian Trade Commission (Austrade)
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FOREIGN AFFAIRS, DEFENCE AND TRADE LEGISLATION COMMITTEE
(SENATE-Wednesday, 31 May 2000)
- Start of Business
FOREIGN AFFAIRS AND TRADE PORTFOLIO
- Output 1.1—Protection and advancement of Australia's international interests through the diplomatic network and Canberra based diplomatic activity
- Output 1.2—Provision of policy advice and analysis to portfolio ministers
- Senator SCHACHT
Australian Trade Commission (Austrade)
- Output 1.1.2—South Asia
- Ourputs 1.1.3 and 1.2.3—Americas ands Europe
Output 1.1.4 and 1.2.4—South Pacific, Middle East and Africa
- Outputs 1.1.5 and 1.2.5—Multilateral Trade Negotiations
- Outputs 1.1.6 and 1.2.6—Trade development/coordination and Asia-Pacific Economic Cooperation
- Outputs 1.1.7 and 1.2.7--International organisations, legal and environment
- Outputs 1.1.8 and 1.2.8—Security, nuclear disarmament and non-proliferation
- Output 1.3—Secure government communications and security of overseas missions
- Output 1.4—International services to other agencies in Australia and overseas
- Output 2.1—Consular and passport services
- Senator SCHACHT
- Output 3.1—Consular, passport and immigration services
- Mr Faulks
Content WindowFOREIGN AFFAIRS, DEFENCE AND TRADE LEGISLATION COMMITTEE - 31/05/2000 - Australian Trade Commission (Austrade)
—In his budget night press release Minister Vaile announced that Austrade had been allocated nearly $6 million, $5.913 million over four years for `a series of initiatives aimed at maximising the commercial and trade opportunities for Australia arising out of the Sydney Olympics'. Can you tell us how this money will be spent?
Mr Faulks —It is purely to do with Olympics and sport at Austrade, Senator. The money that has been allocated, clearly we have been working on it over the last three years and it comes to a climax at the time of the Olympics in Sydney. Essentially the $5.913 million was divided into three different areas of funding when it was appropriated to us. A total of $2.005 million was allocated for a high level visitor program through which we were to host to Australia high level potential investment and trade targets in the lead-up to the games and some at the time of the games.
A further $2 million—in fact with some supplementation it ended up being $2.3 million—was allocated for a program that we called Olympic business links. The majority of that funding has gone into the development of our core program called Business Club Australia which is the focal point for our activity to connect Australian business people with international business people especially at the time of the games. A further $1.5 million or thereabouts was allocated for a program of what was called Olympic sports linkages. That was specifically allocated to promote the Australian sports industry because of the special opportunity associated with the Olympics.
Senator COOK —Is it too soon or do we know now which of your targets in the high level visitor program will be coming?
Mr Faulks —Some of them have already visited, Senator. The funding that we had—
Senator COOK —This is not just related to at the time of the Olympics.
Mr Faulks —No, it is not. It was designed to take into account added interest pre-Olympics as well as at the time of the Olympics. On the visitor side there were two component programs. One was an investment by us in an organisation called Investment 2000 along with Westpac, Telstra and the New South Wales government. In that program at the moment there have already been in excess of 200 visitors to Australia. Those visitors have had the opportunity not only to meet with government officials and senior business officials but to visit specific sites and the Olympic site. At this stage there are 20 new investments that have come out of that specific activity.
In addition to that, the remaining funding we had—because that was $1.2 million—$800,000 has gone into a program called Trade Visitors Australia 2000 through which Austrade is hosting, on behalf of the government, 60 high level trade visitors. There are still about 40 of those visits to take place—or slightly more than that; in fact about 45—and 26 of those will actually be at the time of the Olympics and we know exactly who they all are.
Senator COOK —Are there any household names in the international business community that we should be aware of?
Mr Faulks —There are senior business people from various different markets but the information on those is not in the public arena at the moment, Senator. We would be happy to provide you with a separate brief on them if you like.
Senator COOK —I am not sure I necessarily want to know if it is not in the public arena. What I would be interested in is knowing which industry sectors they come from and, if it is possible, in the case of major international corporations, at what level in those companies they come from.
—Certainly. We can give you a breakdown of that. They do come from a range of industries. They are almost exclusively at chief executive or director level and, in some cases, chairs of key companies. For instance, there are a couple of visitors from the automotive industry, one from Europe and one from North-East Asia, who are chairmen or chief executives of key companies that are well known in this market.
Senator COOK —Your second program, the Olympic business linkages or the Business Club Australia, is to get Australian business people involved with whatever other international business communities are coming to the Olympic Games.
Mr Faulks —That is correct. It was in fact launched in September 1998, two years out from the games. It currently has 8,000 members of the club. They are all individual business people. About 6,700 of those are international business people and 1,300 are Australian, at this point. Those who are members of the club at the moment are deriving value through an online networking club facility where they can do business matching and direct business contacting online. At the time of the games we are hosting a major business club centre at Darling Harbour at wharf 7, which will incorporate a building at wharf 7 and an Incat fast ferry which is coming in for three weeks of the Olympic period.
We will be providing there a generic showcase of Australian business, a significant program of business events which are hosted by everyone from business leaders through to ministers and other government officials. It will also provide business services and business matching services on site. We have it fully staffed by up to 20 trade specialists at any given time. We are aware of what the top 20 countries are going to be, in terms of business visitation, at games time. We have relationship managers appointed to each of those countries. Our current activity is to ensure that we register as members of the club the key business people who are going to be visiting from those different countries.
Senator COOK —I want to talk to you about the sports linkages program in a moment, but just sticking with these two programs for the time being, how would you characterise the take-up of these programs?
Mr Faulks —In terms of the visit program, Senator, the take--up has been very positive and very strong. Bear in mind that that is a proactive program through which we are identifying key people we want to bring out and there has been a very high level of interest both on the investment and the trade side of things. In fact, when you see an analysis of the people who are coming out—for instance at games time Australia has been able to attract a number of key business people who would not normally come to Australia—that was the nature of the program and what we tried to achieve with the program. The take-up of that has been strong.
In terms of Business Club Australia, I think there are different ways to look at how effectively the take-up has been there. An initial one is actually the involvement of different stakeholders. If you leave the membership aside for a moment, all of the states and the ACT are partners in the club. There are three other Commonwealth government agencies involved. There are two industry groups involved and there are five Olympic sponsors who are sponsoring the club and are directly involved in it which helps us with the link. In that sense we have met our targets there which, of course, has assisted with the funding program as well, but it also helps to open doors to some of the key players who will be involved.
On the membership side the proof is really in the pudding over the next two to three months. The membership at the moment is on target and is strong at 8,000 but, in terms of how we derive specific value from the club at the time of the games, what we need to ensure is that we capture the international visitors at the time of the games. We have programs in place to do that. Also we have to maximise the connection with Australian companies. We have a major promotional campaign at the moment to enhance our domestic membership, which means we are not only hosting international business people but we are connecting them with Australian business people at the same time.
Senator COOK —I know Austrade is very careful to audit its performance—independently audit it—so that it can be accountable for how it spends its dollars and can better govern its use of funding. What performance indicators do you have, or what method of review do you have in place, to assess whether or not you have achieved under this program?
Mr Faulks —The performance indicators for any of these programs contain those consistent with our other key performance indicators such as export impact, investment impact, new exporters into the market, et cetera. We are measuring those as we go through. The issue with the types of relationships that we are building through this promotional campaign is that they are not all going to reap immediate benefit in terms of bottom-line new business. We have set targets accordingly. When the program was first designed we set a target of $1 billion in new investment and trade business coming out of the total program. We are progressively measuring that, but it is a reality that some of the business that comes out of it will come out of it 10 to 15 years after the games and not immediately.
In addition, we are looking at what we would determine are some key activity indicators more than performance indicators. That includes the level of membership of the club, the visitation, the number of business matches that are taken up, the number of events we are holding. If you like, some immediately concrete things in terms of actual participation levels in the longer term will lead to bottom-line results. It is a combination of those two, Senator.
Senator COOK —Would you regard it as a runaway success if you hit the $1 billion of new business target or is it still regarded by you as a success if you fall short of that?
Mr Faulks —It is a target that we have set and if we do not achieve that target in the longer term, we would not be happy.
Senator COOK —How long is `in the longer term'?
Mr Faulks —It is 10 years after the Olympics.
Senator COOK —Maybe some of us will not be around here to assess how well you have done in that length of time. Are there any shorter term business performance indicators that you have?
Mr Faulks —We are measuring it progressively, Senator.
Senator COOK —What I am trying to come to, Mr Faulks, is that this is an interesting program. It has had a high take-up rate and there has been no difficulty necessarily in landing the big fish that you have targeted and it is all to the credit of Austrade, but how do we assess this as an expenditure of public moneys? Is it worth while or not? Does it repay itself?
Mr Faulks —I think the manner in which we assess that is, as I said, in terms of new business, which we are assessing progressively. For instance, on the sports side of things there is already $10 million in new export out of an industry—
Senator COOK —This is the sports linkages program?
Mr Faulks —The sports industry.
Senator COOK —Yes, I am coming to that in a minute. I am focusing on these two business programs now.
—As I said, on the visitor side of things, from the visits that have taken place at the moment, on the investment side there are 20 new investments that have come out of that which can be quantified for you. I do not have that detail in front of me at the moment. On the trade side, after each visit we are actually assessing the predicted export impact over a two-year period, and if there is any actual export impact immediately, we are assessing that as well, so for each of those visits there is a level of achievement set. On the club side of things it is a little bit harder to determine. We have case studies of individual companies. There is, for instance, a food company in Western Australia that has about $6 million new business out of using the online facility and it has validated that publicly.
Senator COOK —Are you able to mention the name of this food company in my electorate?
Mr Faulks —It is the Australia Food Company.
Senator COOK —In Perth?
Mr Faulks —Yes.
Senator COOK —Good. Sorry, I interrupted you.
Mr Faulks —There are examples of business coming through at the moment. But at the time of the games, for instance—as we are aiming for and as we are predicting—if we have up to 1,000 people through the club per day through individual event programs, six different events each day, progressively through that we are matching people with Australian companies and Australian business objectives and we are affecting them with a message that Australia is interesting in a business sense and not just in some of the other perhaps better known areas such as tourism and so forth, then we will be achieving objectives. We will be measuring that through a post-Olympic contact program with people. That will be done at the time of and after the Olympics, but we are not going to have the bottom-line results in the drawer at the time because not all of that will happen at the time of the games.
Senator COOK —You have obviously spent a lot of time and attention on this program. From what you know about it, is this value for money, do you think?
Mr Faulks —Of course it is, Senator.
Senator COOK —Should we spend more money and get greater value?
Mr Faulks —We have designed the program now to fit within the resources that are available to us.
Senator COOK —I know, but had we greater resources would we have got a bigger bang for our buck?
Mr Faulks —It is conceivable that we could have done a lot more internationally in a promotional sense, associated with the program, if the funds were greater. We have been restricted in what we could do with that and with the international media on the business side. However, within the budget that we have available and how we have been able to supplement that with non-public funding, we have been able to build something that will be quite worthwhile.
Senator COOK —Thanks very much. The Olympics, on present experience, comes around once every 44 years for Australia. It is not surprising that you should put an effort into it. There are other international sporting events in Australia that come around more frequently—the grand prix is one.
Senator COOK —Is this a model for looking at using those as a hook to attract business interests in Australia as well?
Mr Faulks —I believe it is, Senator. Firstly, we are breaking new ground with this. No other Olympic host country has done all the things that we are doing. We went to them and we learnt from them but, essentially, we are breaking some new ground and that is acknowledged right through the Olympic movement and by other host cities that have been involved. It is our belief that the type of program we have been involved in here could be translated to other major promotional activity Australia is involved in. It could be sporting events or it could be other major business events and so forth.
Senator COOK —Do you have any funds for such events?
Mr Faulks —Not presently.
Senator COOK —There was a report in the Australian Financial Review on the 23rd of this month, stating that Australia had placed curbs on the access of international journalists to the Sydney Olympics that might be in breach of WTO rules. Are you aware of that?
Mr Faulks —No, I am not, Senator. That would be an issue for DFAT.
Senator COOK —Would it?
Mr Faulks —They are handling the media related program with the Olympics.
Senator COOK —Perhaps I should ask DFAT about it. Ms Pru Goward is the coordinator of the Commonwealth Olympics media strategy. What contact have you had with this Commonwealth agency?
Mr Faulks —Our own media and corporate communications area has worked with my team on a media strategy specific to our program. The contact we have had with Ms Goward has been to ensure that she is fully informed of our program and can speak about it as opportunities arise andfind promotional opportunities for it within her portfolio of activity, and to contribute to an issues management brief which she has put together with her team, or is progressively putting together, related to issues that might need to be managed at the time of the games.
Senator COOK —So how intense is that liaison? Is it weekly, monthly, irregularly? How would you characterise it?
Mr Faulks —From my own role, it is irregular and probably once every couple of months. However, the head of Austrade's corporate communications area would be in communication with her, I imagine, once every couple of weeks or once every three weeks.
Senator COOK —Let us see if we can cut the speculation out of it. Mr Langhorne.
Mr Langhorne —As far as the corporate communications area is concerned, it participates in the briefings at the Department of Prime Minister and Cabinet on Olympic issues. Pru Goward attends those briefing sessions. Ms Goward has visited Austrade on at least one occasion and we provided her with materials. We will continue, as Mr Faulks said, to liaise with her up to and during the Olympics. Our view is, of course, that the maximum exposure we can get for the commercial and business interests for the games, the better for everyone.
Ms Goward will be a part of our program as well in that context. In other words, we will be looking to utilise her services to the maximum extent we can, to ensure that we do get maximum exposure and coverage from the games. So we will continue to liaise with her and her team up to and during the games. The way we view it is that she is the overall Commonwealth Olympics spokesperson and, with other government agencies, we will naturally work very closely with her to assure the maximum return for Australian business.
Senator COOK —I have located the press items—a couple from the Sydney Morning Herald, one from the Australian and one in the Financial Review. The one today from the SMH has the Minister for Trade, Mr Vaile, saying he has warned the Olympics minister, Mr Knight, that restrictions on international broadcasters filming in public areas of Homebush Bay may breach Australia's international trade obligations. It goes on to say that `The move comes as British and Japanese rights-holding broadcasters raise concern ...' et cetera. Is Austrade aware of this?
Mr Langhorne —Senator, we are aware of the issue. As far as the handling of the issue directly, that is a matter really for the department who handles the WTO issues and obviously the minister's office and the minister.
Senator COOK —Has it come up in discussions with Ms Goward?
Mr Faulks —Not that I am aware of, Senator.
Mr Langhorne —No.
Senator COOK —Let me move on. How many staff are employed in Austrade's San Francisco office?
Mr Langhorne —If you will just give us one minute, Senator, we will be able to tell you that.
Senator COOK —While you are looking that up, perhaps I should ask a second question which you might find because it puts it in context. Is it true, though, that over the last eight months five staff from Austrade's San Francisco office have left to join IT start-ups in Silicon Valley?
Mr Langhorne —It is true that a number of staff from Austrade's office in San Francisco have left to join IT companies. I am not too sure whether the number is five. I would have to check on that for you. I am aware that those staff cut across a wide cross-section of people, in other words, people that have been working in the area of IT marketing and administration. In other words, some of our administrative staff have also left to take opportunities with start-up companies as well as our marketing people.
Senator COOK —Is Austrade in San Francisco regarded as a sort of stepping stone to an IT exec's job in Silicon Valley or what?
Mr Langhorne —The staff who have left are what we term locally engaged staff so they are staff who are employed in the San Francisco office and would be United States citizens. The short answer is, as far as locally engaged staff are concerned, it appears that Austrade San Francisco does provide an opportunity for them to get the skills and they can then advance into the private sector in Silicon Valley.
Senator COOK —One hopes they leave in good relations with Austrade and can refer—
—I can assure you that is the case. While I am not too sure of the numbers, I am aware of the couple of the people who have left. Firstly, they have benefited from working with us in San Francisco in the IT sector and, secondly, they have left retaining good relations with Austrade. I make the point in that regard, Senator, that we see that as having an advantage for us as well, because those individuals go into companies in Silicon Valley and operations in Silicon Valley and if we can maintain good relationships with them then it often gives us a competitive advantage when dealing with those companies.
In answer to the initial question, the figure I have is 11 people who have been working in San Francisco.
Senator COOK —So you have lost just under half of them in the last eight months to the IT sector.
Mr Langhorne —If that figure is correct, Senator.
Senator COOK —If that figure is correct.
Mr Langhorne —I had, by the way, the view that it was less than that, but we will definitely check for you.
Senator COOK —Thanks. I have a couple of questions on the Export Market Development Grants Scheme. What is the situation with the scheme at the moment? Have the funds been expended up to the ceiling for the last year of operation?
Mr Tindall —We are actually in the last two weeks of assessing the claims relating to the 1999-2000 financial year and at the moment it is pretty much lineball. So it looks like the outcome will be that demand will be very close to available funds.
Senator COOK —You will not have to go through a reassessment to reduce the claims, according to the funds you have available this year?
Mr Tindall —No. If we are talking about the grant funding—
Senator COOK —Yes.
Mr Tindall —the way it works is that at the end of the year there is a pro rating.
Senator COOK —Yes, that is what I meant. You will not have to pro rata anyone?
Mr Tindall —We probably will not have to pro rata.
Senator COOK —The demand for the MDG Scheme is less this last year than it has been in previous years in that case, isn't it?
Mr Tindall —That is true, Senator.
Senator COOK —To what do you ascribe the downturn in demand?
Mr Tindall —It is a little bit hard to be definitive. The analysis that we have done to date suggests that the Asian crisis has been a significant factor in the reduced demand this year.
Senator COOK —In the next two weeks you will be in a situation where you have finalised your accounts for the last year.
Mr Tindall —Yes.
Senator COOK —Could you, when you have done that, give me a comparison of what the demand for the scheme has been last year and the last couple of years before that, reaching back about five years.
Mr Tindall —I could do that now for you if you wanted, Senator.
Senator COOK —Please.
—Last year demand for the scheme exceeded available funds by something around $500,000 and the final payout figure was 98.94 per cent. The year before that there was an underspend of about $3 million which meant people were paid their grants in full at 100 per cent.
Senator COOK —What was the reason for such a gigantic underspend?
Mr Tindall —In the first year?
Senator COOK —No, the year before that.
Mr Tindall —In the year in which we underspent by $3 million that was the first year that the $150 million cap applied.
Senator COOK —This is the first year you were capped?
Mr Tindall —Yes. There was a significant adjustment there.
Senator COOK —In the years prior to that, how much was expended under this scheme?
Mr Tindall —Just bear with me.
Senator COOK —In the previous three years, to take a sample period.
Mr Tindall —I would have to take that on notice, Senator.
Senator COOK —Okay. I would just like to see how the demand has fluctuated. Given that the year before last, the 1998-99 year, you were half a million dollars under demand and people were not remunerated for all the costs they incurred—98.94 I think was the figure you gave me—is there a deterrent effect in that you can put in your claim but you may not get the full amount now?
Mr Tindall —We did some extensive client survey work through a news poll after the first year of the capping mechanism. The evidence from that survey suggested the split payment system was not a major cause of dissatisfaction amongst recipients of grants. Since that time we have not had any suggestion from business that the situation has changed.
Senator COOK —Was that in the year in which there was a $3 million underspend?
Mr Tindall —Yes, it was.
Senator COOK —You have done nothing since?
Mr Tindall —Nothing that specific, no.
ACTING CHAIR —Thank you very much for your attendance before the committee today. We will now move back to outputs 1.1.2 and 1.2.2.