Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Joint Standing Committee on Trade and Investment Growth
09/02/2018
Australia's trade system and the digital economy

DEBENHAM, Ms Kim, Director, Department of Foreign Affairs and Trade

LOCKE, Dr Chris, First Assistant Secretary, Portfolio Policy and Innovation Strategy Division, Department of Industry, Innovation and Science

McCARTHY, Ms Caroline, Assistant Secretary, Department of Foreign Affairs and Trade

MINA, Mr George, First Assistant Secretary, Department of Foreign Affairs and Trade

REES, Mr Christopher, Assistant General Manager, Austrade

[11.16]

CHAIR: I now call representatives from the Department of Foreign Affairs and Trade, Austrade and the Department of Industry, Innovation and Science. Although you are not required to give evidence under oath, this hearing is a formal proceeding of parliament. Giving false or misleading evidence is a serious matter and may be regarded as a contempt of parliament. I will now invite you to make an opening statement, and then we will follow up with questions.

Dr Locke : I am happy to start. The Department of Industry, Innovation and Science strategic objective is about facilitating the growth and productivity of globally competitive industries. We are very interested in this as a topic and particularly the way that trade has moved away from purely physical goods and the boundary between physical and digital products is getting increasingly blurred. We are doing a fair bit of work in our portfolio to understand digital economy issues and digital trade issues. We have formal responsibility for the digital economy—that is, national approaches to the digital economy—and we are leading the development of a whole-of-government digital economy strategy at the moment. That has been out in the public domain. We have been meeting, consulting and getting views from a wide range of stakeholders, and it has been very interesting to us that international issues feature very strongly in the feedback that we are getting from stakeholders on things they care about in the digital economy—that is, particularly issues around free digital trade, digital issues around foreign investment and consistency of standards and rules around new technology and data flows. So there is a range of really complex issues in that space that we are quite interested in and that we are doing work across government to better understand. We are really interested in the concept that building a digital economy is not just about transforming physical products and services into digital products but that the data can be a product in itself. So the flow of data is an important product. It can create digital goods and services and can be a source of information that can change competitive advantage. Trying to understand that is a key thing for us. It is a growing part of the economy.

As to the digital trade issues that are associated with that, we are not the portfolio experts in that, but we think that is a really important debate to pursue. As part of that, we have been working with the Brookings Institution to prepare an independent research paper on Australia's digital trade settings and opportunities. We expect that to be released in March. We are hoping that will add to the understanding of what digital economies and digital trade mean for Australia, and I think it will nicely complement the work that is being done by this committee. In short, the topic of this committee is very important to us and we are very pleased to be part of the discussion today. Thank you.

CHAIR: Considering it is a greenfield area—or for the last two years it has been greenfield; it is still greenfield—our job as the committee is to report back to government on the shortfalls. I know it is a changing game. It changes every day. But we want to get to the real issues that you see as of today. We realise there will be other issues tomorrow and this time next year. I would like to just have a discussion on that. Is there any particular field where our government, do you think, is falling behind?

Dr Locke : I think there are a lot of emerging issues. My colleagues in DFAT and Austrade will talk more about the formal trading relationships we are entering into and how they position the economy. But I think I would not say so much falling behind as that there are a lot of things moving. I think it is not a space to be complacent in. That would probably be the shorthand summary of where we think the challenge is. For our end of the story, it is around connecting arms of government to make sure we are talking domestically about the same thing. So that is the Digital Economy Strategy issue. We are also interested in standards and conformance issues around digital technologies that are part of the supporting infrastructure for trade arrangements. But my colleagues might want to add something on this as well.

CHAIR: Do your colleagues want to make an opening statement too?

Mr Mina : We would be grateful if you would allow us the time, Chair. Thank you for this opportunity. Of course, we have spoken to you before, so we will keep it brief. The subject of this inquiry, as Dr Locke has already said, cuts across the portfolios of many departments, so we welcome the opportunity for this roundtable format. In our initial statement we spoke a lot about the opportunities but also some of the challenges of getting to grips with digital trade. As you know, what we do in our trade policy divisions of DFAT is seek to shape the international environment for digital trade in a way that helps our market access commitments, improves opportunities for Australian business and supports regulatory cooperation on digital trade issues and harmonisation of standards through fora like APEC and the G20. We also advocate to other governments the importance of minimising restrictions on trade when considering new security laws or other laws that could affect digital trade. As James Baxter said on the last occasion, we work through our Aid for Trade efforts to build capacity in developing countries to participate in digital trade.

Of course, Dr Feakin spoke to you this morning, so I will not cut across any of the evidence he will have given you on our broader cyber engagement strategy, including on cybersecurity issues. But, on digital trade, and digital trade policy in particular, the point I would make on this occasion is that we really are leading in Australia in the development of trade policy and practice in public international law on the digital trade issue. A couple of examples: at the recent World Trade Organization Ministerial Conference in Buenos Aires, at which Minister Ciobo represented Australia, we led the recent initiative on e-commerce at the WTO. That initiative attracted the support of 71 members—about two-thirds of global trade—at a time when negotiating prospects at the WTO more broadly were at a low point. We were crucial players, as I am sure you know, in breathing new life back into the Trans-Pacific Partnership—the TPP 11. That is an architecture or a trade deal that embodies the very high point of disciplines internationally on digital trade and e-commerce issues. We are continuing to pursue high-quality e-commerce and digital trade provisions in our other trade negotiations, including the Regional Comprehensive Economic Partnership, the Pacific Alliance bilateral treaty, and free trade agreements with Indonesia and, of course, with Hong Kong. We are also addressing other barriers to digital trade through questions like customs procedures, trade facilitation rules, and services chapters and commitments. I will leave it there. In summing up, I want to say that we do work very closely with business. We are joined up across government, obviously, within our various portfolios but also across those portfolios. We are being led very much by the priorities that business articulates to us. We have a very close partnership with the Australian business community, whether it is large or small. I will leave it there by way of opening remarks. I know that Austrade may also have some opening remarks before we look forward to your questions.

CHAIR: Mr Rees, do you want to make a statement?

Mr Rees : Thank you very much. As essentially a service provider to help Australian companies succeed internationally, we certainly needed to have an overall view of what we are calling the digital economy. But, of course, it has many facets from the Australian business point of view. There are technology developers that can play in that space. There is the impact of digital platforms and how our companies can access them. Then there are the ways that the digital economy is influencing the way others are doing their business.

I want to talk a bit about those and about what it means to us—what our position is. I think we see that the international nature of the transformation that the digital economy is making really requires us to be able to provide up-to-date advice to businesses as well as understand what the needs of our businesses are. In many cases, as you know, one of the biggest trade barriers is, of course, lack of information. We think digital technologies offer opportunities for business to scale up by accessing new customers locally and globally by integrating into global value chains and by accessing more information and data for increased efficiency and increased productivity. Of course, with the Prime Minister's Industry 4.0 Taskforce, a key element of that is supporting SMEs to prepare for a digital economy and to access applications and skills. Aligned with that focus, we have been promoting trade and investment opportunities for digital goods and services, but this has been embedded within each of our sectoral or industry teams rather than having a separate digital group. So it is very much informing the way we do our core business.

As part of those efforts to maximise digital trade opportunities, we have contributed to the development of a whole-of-government Digital Economy Strategy led by the department of industry. In terms our activities—what we are actually doing and the partnerships we are engaging in in this space—we are engaged by using our extensive international network and the deep industry knowledge we have to help Australian firms to seize export opportunities but also to attract productive foreign direct investment that will assist in these aims. We have considered not only how digital transformation impacts on how businesses operate but also how global changes will redefine exporting, redefine investment and create both new opportunities and new barriers.

As to some of the things we are doing, adhering to digital transformation across government is very important. We recognise the need for government participation in digital transformation. We are looking at incorporating solutions ourselves that increase efficiency through digital service delivery. I think an agency like ours has very much been a high-touch, high-value organisation. We deal very much one on one. We are now looking at understanding the need of the business community to be dealt with on a different platform. That also allows us to reach more companies as well, so we are very much doing that along with other government agencies. I think you have heard there is very much—a lot of momentum around that.

As to some of the more specific things, working with the National Innovation and Science Agenda we established five landing pads around the world, in San Francisco, Berlin, Tel Aviv, Shanghai and—the one I had responsibility for setting up myself—Singapore. These are operations set up within incubators overseas—third-party providers—allowing Australian start-ups a 90-day residency in these spaces and giving those entrepreneurs access to support, information, partners, venture capital and so forth. We have hired landing pad managers in each of those locations from industry—I guess in industry they would be called entrepreneurs in residence—to bring their expertise. Then we draw on that expertise for the rest of our network as well.

As an extension of that, we have looked at sector-specific mapping and engagement with innovation ecosystems in key overseas markets to make sure that we understand those spaces and can effectively get Australian companies into those. We have commissioned research in particular areas to understand, if you like, Australia's supply capability into the digital economy. I will not go into too much detail, but one example of that was around the disruptive technology ecosystem. Another was around cybersecurity. We have also partnered very closely with folk like CSIRO. We mentioned Data61 before. There are a couple of very large programs we are working with Data61 on, including a program to map land tenure across Northern Australia to help people dealing in that area to understand the nature and the challenges but also the opportunities that land tenure can provide and also to encourage them to be working directly with traditional owners to look at some of those other drivers of investment in the area. We are working with them also on a prototype trade analytics and visualisation dashboard. Basically, that is looking at the export opportunities under the free trade agreements and using free trade agreement and UN Comtrade data so that people can go in, look at what their own business is all about and understand where those FTAs have granted them greater access.

We work with the Entrepreneurs' Program on how we can assist more SMEs to enter global value chains. As you know, a large percentage of world trade is done through global value chains. That does not mean that our companies are not already accessing them. They may be accessing them on a point-to-point basis. An understanding of the total value chain, however, makes companies far more able to articulate their value to that. We have been collaborating with the industry growth centres on trade and the digital economy—with people like Austcyber, for example, and also with IP Australia.

The last point I would make is on our Export Market Development Grants Scheme, which, as you know, is one of the major financial support programs to support the promotion of trade overseas. I think in the last full financial year we paid grants to about 3,166 businesses—a total of about $131 million. These are really aimed at the SME community. We have been very closely monitoring our criteria around that to make sure that companies, either as technology start-ups or as companies looking to promote themselves into digital platforms, are well aware of that and have access to it as well as identifying overseas what some of those platforms are. You might have seen the e-Commerce in China publication that we did about 18 months ago. That was a very exhaustive hit-out on the China e-commerce scene, who the players were and how to access them. We are close to finishing up a more general how-to guide for e-commerce for small to medium sized enterprises.

Mr HART: Thank you. I have really been assisted by your opening statement. It really emphasises the level of our disappointment with respect to the submission that was delivered to this committee. We received one and a half pages of very general material from Austrade in contrast to what we have just heard. To say that I was disappointed is an understatement. Also, when you look at your website, there is a significant bias towards physical goods. Even when I searched your website it was not immediately obvious as to how much emphasis was delivered towards export of services and, indeed, digital services. It would have assisted the committee if your opening statement had been incorporated into the submission. Your website makes no obvious mention of digital economy issues, and it is important that we understand that you have mentioned that you have integrated this into the various areas within your enterprise. Again, that is of concern to the committee because it was not immediately obvious to us as to what engagement Austrade had with the digital services. One thing that is of interest to me is the implication for accidental traders—that is, people who are not engaging with Austrade and who are exporting, essentially, digital services because they have created a small enterprise and they are now exporting from Australia, whether it is services or physical goods. What assistance are you providing by way of information to people in those circumstances? How can that be accessed considering what I consider to be an incredibly dense website?

Mr Rees : Thank you for those comments. I would probably make a couple of comments. On the website, I guess, primarily we are a provider of tailored services to companies. So I guess up to this point providing large amounts of actionable information on our website, as opposed to dealing with companies one on one in terms of their specific needs, has not necessarily been a priority. That probably comes across as not having much about it, whereas we work one on one with companies to a very high degree of detail. That said, I guess I made the point that we are reviewing how we can actually look at our digital footprint as at-distance service provision rather than perhaps as a driver of traffic to us. Your comment is quite timely and I think that, as you said, it is certainly incumbent on all organisations like ours to understand how that information needs to go out to the people who need to hear it.

You raise a very good point about the accidental exporter, as you called it. That accidental nature comes about because of those very changes we are talking about. The provision of services no longer happens across apparent physical borders or based on apparent overseas relationships. It is often simply done digitally. It is incumbent upon all of us to understand how that changes the environment that our companies are working in. In the case of some services it almost does not matter. Their customer could be anywhere. But when you are looking at things like an e-commerce platform, there are issues that that company may not be aware of and a bigger company may be, such as protocols for the products that are going across or customs issues, the competitive environment they are going into or the history of a product like that in that market. China would be a good example. You might say, 'I'd like to buy this product from you' and you just sign up, but actually you are going into a fairly complex and crowded area.

Questions of capacity also become very great then because if you are going out of that area that we are quite used to—of building relationships, understanding the size of the market and working out how you are going to provide that—into an environment where you are selling online, you actually have no pre-warning of how large that market is going to be. You do not know if you have all of those other corporate commitments in place to be able to meet those increased demands. So that is why, I guess, we do a lot of that in-market research so that people can get a handle on what they are getting themselves into. Many go in with their eyes open. Many do fantastic research.

The other thing about the digital economy is that companies are much better informed now than they ever used to be because there is such access to information in a way there never was before. We try to help them to make sense of the information they have come across, perhaps weed out some of the more dubious bits of information and help them to focus on what is actually pertinent to them. But some small ones are time poor. I think you hit the nail on the head. How do we make sure there is a cultural shift in those people to understand that the digital economy—I was listening to the previous hearing session. I think you said there is no such thing as a digital economy and a non-digital economy anymore. The digital aspects now are in all aspects of the economy.

Mr HART: I am a lawyer by profession. The Law Council of Australia has been pushing this for decades. The export of services has been a significant area for potential. Of course, that has now transformed to digital services, because the delivery of those high-value services can occur here. I would very much like your website—understanding that the focus is on one to one—to contemplate expressly the delivery of digital services and/or services generally because, while there is a recognition of the fact that you need to look at freight and things like that, there is a bias towards physical goods. I think an SME would look at Austrade and say, 'This is not for me'. In the case of the accidental exporter, they would not even know to ask. That is a question of perception.

Mr Rees : I think that perception is entirely valid. I would reflect on the very high percentage of our total client base that are services exporters. But I think you are talking about something slightly different. It is that public perception and whether we are actually appealing to the people who we need to talk to. I very much take that on board.

Mr HART: If I was simply searching for answers and I happened across Austrade, even using the gateway that is Google, which would look into your website, I do not think I would find a great deal of assistance. That troubles me.

Mr Rees : Thank you. That is an important perspective.

Mr RICK WILSON: This is possibly a question for DFAT. With the high-profile trade agreements—they are all very significant, I guess, but particularly ChAFTA—what does the reference to e-commerce and the digital economy look like in that document? What progress have we made with the signing of that document and what opportunities and perhaps challenges does that open up for our digital economy in particular?

Mr Mina : Thank you very much for the question. Perhaps I will start by referencing some of the evolution of the way in which these provisions have been dealt with in various different free trade agreements and zero in a bit on the China agreement as you have requested. The first thing I would say is that over time—over the last decade, really—the provisions that we have adopted have evolved. They have become deeper and more ambitious. We have started with provisions that deal with trade of goods and services at the border—questions like electronic signatures and electronic authentication. As we have moved through the suite of our FTA agreements right through the last decade also, we have started to look at much deeper provisions—provisions that deal with data flows; provisions that deal with this question of localisation, which we can go into later—and started to deal with data as a capture of value in digital trade as a question in its own right.

ChAFTA has a range of provisions in it. ChAFTA, of course, entered into force in late 2015. The commitments in ChAFTA provide a framework for the growth of e-commerce and they assist business in harnessing the efficiencies of e-commerce. But they also work on ensuring the protection of consumers. Some of the commitments in the e-commerce provisions of ChAFTA include a provision on customs duties to maintain the practice of not imposing customs duties on electronic transmissions between the two countries. That is subject to the ongoing work at the World Trade Organization. There is a provision on online consumer protection. That protects consumers who are engaged in e-commerce in a manner equivalent to protections for consumers engaged in other forms of commerce, so it is bringing across those normal consumer protections. There is a provision on paperless trading. That includes accepting electronic versions of trade administration documents at the border. There is also a provision on cooperation—that is, to build up the sharing of information and experiences in relation to online consumer protection. They are the main elements of the China agreement. As I said, over time and, in particular, in the big achievement, which is the Trans-Pacific Partnership 11 grouping, we have started to incorporate much deeper provisions on data flows—the facilitation of free data flows, the prevention of localisation requirements and so forth.

Ms McCarthy : I would just add that we will be doing—a review of the whole agreement of ChAFTA is mandated by the end of 2018. Through that review we can have another look at things like the e-commerce chapter in ChAFTA and see if we can bolster the commitments that have been made there. Certainly, we will be reviewing that and hopefully strengthening those commitments.

Dr Locke : Can I add that I think the tricky thing in all of that is trying to work out what matters. I guess from our industry portfolio's point of view we would feel like we are covering the things that matter. So the things that are near the top of our list are things that enable competition—that is front and foremost—and expanding data access. Data is a big topic. There are social licence and regulatory issues and so on that flow around data. But enabling that environment is very positive. There are issues that are bespoke and technical related to IP and how that is managed. There are manufacturing systems and enabling things like Industry 4.0 type manufacturing. There are things that go around linking to global value chains using digital technology, as Austrade was talking about, and there are also things that relate to particular areas where we think we have strength, like financial services and so on. Then measurement and other issues float around the global discussions as well. So, when we think about what businesses are telling us about what matters, it is hard to think of a gap. There are lots of moving agendas, and I think the sense that we get is that we are keeping up with, if not driving, parts of that leading agenda. But it is not a space that sits still for very long. I think that is probably a fair summary.

Mr HART: On the issue of social licence, the issue of data security and privacy is paramount, recognising that data in itself is a very important product and digital service. But there is a great deal of disquiet out there with respect to the potential for data breaches. The amount of information that is shared or made available in any identifiable form—you hear stories about how big data can be manipulated, even when it has no identification material, down to the level where you can pick out people who are aged between particular ages, who have particular qualifications and who live in a particular suburb, so that you almost can identify people. So it really needs to be a priority for regulation, because otherwise that social licence will be withdrawn.

Dr Locke : I agree. As we know, it is a very complicated space because consumers have diverse and sometimes conflicting approaches to their privacy and data. They sign away data to Woolworths and Coles for loyalty cards and licence information on computer software very quickly. But, of course, when it comes to trusted government datasets, there is a very high standard that is attached to that, and that is appropriate. But the intriguing thing for us is: are there ways that you can allow data to be used in a way that has appropriate informed consent from consumers about how it is used; are there both technologies that protect the data and technologies that allow you to interrogate it, which is where Data61 is doing lots of work; and can you preserve the anonymous data but still be able to learn from it.

Mr HART: I have been to the CBA's innovation centre and I have seen live visualisation of transactions. They stop at suburb level because they know if they go deeper than suburb level—and they have the capability—you will be identifying particular individuals from transactions.

Dr Locke : It is a very big issue, but it is also one that, if used in the right way, obviously can give consumers considerable advantages and new products and services as well.

Mr HART: For example, they will show patterns of purchases of services in particular areas at particular times using real-time visualisation. So, for example, they can see when people are purchasing movie tickets. It can be restaurants, types of restaurants, hotels et cetera. Even when you are using touch-and-go payWave, that is sending information about what services are being acquired by a group of people at a particular time.

Dr Locke : There is a growing discussion around artificial intelligence and machine learning that I am sure you are aware of. But one of the things that Innovation and Science Australia, our advisory board, has said to government is that this is a significant area of competitive advantage where Australia is being left behind, and more work needs to be done building on Australia's strength in that. A big part of that is understanding the ethical treatment of data, whether it is a privacy or a security discussion. But it is certainly an ethical treatment of data discussion that I think we would say we would have to have.

Mr Mina : Can I make a comment on an aspect of this debate as it is relevant to the terms of reference for this inquiry on international trade. Clearly, our stance internationally is one that looks for the free and open flow of data in trade agreements. But I might just add that Australia's approach is one that very much balances that general desire for freedom of data flows with the sufficient policy flexibility to protect legitimate public policy objectives such as privacy. A good example of that and where we have made sure that we are trying to strike that balance correctly to preserve the kind of social support that you were just describing is in the TPP 11 deal. There are specific carve-outs from our general orientation to pursue free flow of data to preserve public policy flexibility in the areas of privacy—for instance, the Australian Privacy Act and the Australian Personally Controlled Electronic Health Records Act. If we wish to do this, preserve the space and protect people's health records locally and not have them subject to the broader provisions on the free flow of data, it is within our right to do so.

Mr HART: Thank you. That is very useful.

CHAIR: I know we have touched on the edges of this. The business sector refers to government policy and they say or are telling us that it is fragmented and difficult to access. How can we go about improving that or fixing the problem? That is probably one for all of you.

Dr Locke : I am happy to start on that. The Digital Economy Strategy is designed to do that or at least to be a start of that process. Perhaps to help to frame where this is going, the challenge with anything to do with the digital economy is how you define it—how big the topic is. I am sure you have found that with this committee. What we have done is gone out and spoken to a large number of people. We have had 200 stakeholder meetings and got 170 submissions in on digital economy issues. Most of those are now sitting on our website. We have had a number of digital engagements and one-on-one engagements trying to understand what people think are the burning issues in the digital economy space. We have been working with other portfolios across government on that journey. You can break it down in lots of ways, but I guess the sum of all of that feedback that we have got thus far we kind of put into eight categories. The No. 1, top issue that everybody raises is digital skills. That is from businesses or consumers or any other group. No matter what your sector, digital skills is seen as the biggest issue. I think what that means is probably different things to different people, but actually having the capacity in businesses to have the right types of skills to support digitally enabled businesses and accessing digital markets is the critical thing. So businesses need to know that they need those skills and suppliers of skills need to know what sorts of skills should actually be supplied. There needs to be a market that settles that in an effective way. That is a big story, from education to business incentives, but that is the No. 1 topic that comes out. It probably relates to how you would answer questions about the Austrade services. If you were a business with a high digital capacity then you are quite capable of going to Amazon or Ali Baba or eBay or whoever you need to go to do your bespoke digital engagement. But that is the No. 1.

I will skip through the others and we can talk to them as you need to. Infrastructure is the other one—NBN, 5G and the access issues. Data—this is the broad data topic we have already talked about. Trust, confidence and cybersecurity comes up a lot. I know you have spent time on that. You could argue about whether that is part of data or of infrastructure, but it is a key thing. Standards and regulation—that is both standards around digital technologies like who sets the standard for cyber-technology or blockchain or others that might define markets where we go, but it is also how do we think about regulatory issues around the emergence of platform economies and so on. International trade issues—we have already talked about those. Digital inclusion also comes up a lot. People have been concerned about being left behind in the digital economy, and that has lots of different dimensions to it. The last thing is digital government—how does the government act as an exemplar in digital technology but also improve the way it delivers services using appropriate digital technologies.

So from that sea of comment they are the main things we have got back. As I said, all of those topics are very important and have lots of complexity associated with them, but digital skills is probably the starting point for all of them. Skill delivery, matching that to businesses and getting that market to work is an incredibly complex area of policy. When we talk to the business associations they raise lots of other topics, but that is the one they focus on as being the one that, if we could crack it, would actually deal with a lot of other challenges.

Mr HART: That goes back to our earlier conversation with a previous witness with respect to reimagining processes and your architecture around the digital future as opposed to an add-on.

Dr Locke : Correct.

CHAIR: Do DFAT or Austrade want to make some comments?

Mr Mina : Perhaps just on this point on coordination, if you like, or fragmentation, I think very much analogous to what Dr Locke has just explained in our domestic engagement, we are doing the same, of course, with the international engagement. Dr Feakin explained to you this morning that the recent or very young document the International Cyber Engagement Strategy is an attempt to do that kind of re-engineering that we have just been speaking about. That does cover the questions of security. It does cover questions of getting our operating environment, writ large, right. That includes questions of internet governance. Of course, chapter 1 of that strategy includes our efforts on trade. It is very much an attempt to set out and signal for the Australian business sector precisely what it is we as a whole, the joined-up set of agencies, want to do to support and enable that creation of a digitally open and opportunity-rich future for our business communities in this area. So there is all of that, plus Dr Locke has outlined very clearly what is going on with domestic business consultation. We have a pretty extensive program that I can take you though as well with respect to the trade policy and trade law part of that. I think we are very much re-engineering that whole question of our engagement internationally as well.

Mr Rees : I guess from our perspective it is about how we make sure we put the client at the centre of our business—how they get what they want. There are probably two areas to that. As I mentioned before, we are re-examining how we deliver our services not only in light of what companies expect in a digital economy but also in terms of, actually, to be honest, what we are capable of in the digital economy. There are a lot of ideas that we have had around service delivery that probably sounded like good ideas but science fiction about 10 years ago. Now, with the ability to more easily and more cheaply access and manipulate data, they are suddenly becoming things that we can quite plausibly make as part of our service offering. Certainly, that is the direction we are going in. The other, as you are hearing, is partnering. If you look at organisations, like the department of industry, that have carriage of certain parts of a company's growth process, as do we, having those as discrete blocks just does not work anymore. We need to come together and actually, to use an expression, map out that client journey and make sure that those clients get what they need without tasking them to work out which part of government they are meant to be calling on a certain day. I was responsible for some client research that we did about 10 years ago on what our client base would want from an ideal trade promotion organisation. It was very interesting. There was a very clear message that they did not expect us to be able to provide all of the services they needed to be successful in international business, but they did expect us to know who could. I think for me that has always been something of a touchstone on how we approach this. I think that, with partnering and the sort of work that we are already doing with our two agencies and also with other agencies in that area who are providing part of that story, we have to make it one story. I think that is getting a lot easier with the technology. I think the challenges that the digital economy present also help us to solve some of those problems.

Mr HART: Another aspect of the benefits that come from technology is that it is not how something is done; it is the end user experience. We talk about the magical aspects of this and science fiction. We do not need to know how it is that Apple or Google or whoever manufactures it gets so much processing power, but we expect that the user experience will deliver particular capability. I remember when these things were first launched. They were so revolutionary that people did not understand that it was necessary or appropriate for there to be mapping capability or GPS location capability. But, of course, there are whole businesses that are now built around location services et cetera. So I think you have hit the nail on the head. We need to be conscious of the fact that digital data is in itself a potential market and that some of the services that are going to be delivered have not even been invented yet. In business circles, particularly business planning and imagining services circles, you can look at the age of Google or Facebook—most of the largest companies now on the Nasdaq were not in existence 20 years ago. You have mature companies like Microsoft and Apple looking positively ancient compared with Facebook. A lot of those companies are in essence selling services—they are not selling physical goods, although they can deliver services.

Dr Locke : I would agree that we are only really starting to understand what those market structures look like and, therefore, where is the role for government, where can you regulate and where can you promote competition. For example, part of our portfolio is Geoscience Australia, which deals with spatial data. We do not launch satellites, but we are excellent at using data that comes from satellites. As it happens, our part of the sky has lots of them. So Geoscience Australia has the capacity to do the huge data capture and correction exercises to get you a substrate of data that only a very large company could manage to do otherwise. But if the government does that then you get others that can produce algorithms and then data analytical tools and apps and so on that build off that. That is quite a complex market structure that the government does not need to be in as long as we work out where our appropriate role is.

Mr HART: In my former life I had a client who came up with a business that involved digitally mapping agricultural farms—in other words, locating particular points of interest on a farm. They initially were focused on that as a service. I urged them to look at the fact that the data that they were capturing was in fact the business and that they should focus on licensing the data from the farmer and using that, because then they could explore further interaction and further capability in putting other datasets on top of it.

Mr Mina : Increasingly, this is where the value is going. Some of us who have had experience as policy makers in the past thinking about these things through the very prismed way of services trade and so forth have been in the last few years turning our focus to the intellectual property elements of value as they are created by Australian industry, whether that be content in our arts industries or, as you say, intellectual property involved in production and use of certain data. But, increasingly, it is about the accretions of value that manipulation of that data can give you. That is why businesses are increasingly turning to us and saying, 'When you think about these things in respect of trade agreements, think about the simple question of the freedom of flow. Make sure that, when the billions of dollars' worth of data to go from one jurisdiction to another for a slight accretion of value, whether it be a manipulation or an assessment for the market value of that data or a particular 3D printing application or whatever it is, just give us the technologically neutral possibility to move that data quickly and to be able to do so without barriers'. So that is why we keep hearing from business that, in the trade law and trade policy spaces, as Chris said earlier, the data is the product and the freedom of movement of that data needs to be the objective.

Mr HART: That raises then the question of abolition or potential abolition of net neutrality rules. That should be of significant concern to us—the open flow of information and an open internet. What are we doing in policy terms with respect to those sorts of movements?

Mr Mina : Those policy areas are outside of our jurisdiction. I would suggest engaging probably the Department of Communications and the Arts on that particular question, especially in respect of the IP and communications policy aspects of that question.

Mr HART: But, from our perspective, with us, at a policy level, being attracted to the concept of open flow of data subject to limitations of privacy et cetera, can we use that as the potential to attract business to Australia?

Mr Mina : I think so. The Australian Government has been working very hard in the last few years to demonstrate that we are not only open for business domestically with respect to the free flow of data but also a fairly active shaper of the global trading environment on this question. So that is why we, Singapore and Japan were the leaders of this new initiative at the World Trade Organization Ministerial Conference in Buenos Aires. It has been a sensitive issue over the years for a number of governments at the WTO—this question of e-commerce and digital trade. But what Minister Ciobo was able to do with his Singaporean and Japanese colleagues in December was say, 'Let's break through this log jam. It has been 20 years since the WTO last made serious inroads into rule making in this area. We won't wait for a multilateral outcome, as has been the norm at the WTO. We will work with a coalition of the willing on this issue' and work with those who are keen to respond to business priorities on questions we have been discussing—on the free flow of data and other issues. He set out a statement saying that we are going to work towards negotiations in this area. We went into that conference with something like 13 or so members supporting us. We came out of that conference with 71 members supporting us. So there is a very strong realisation, I think, that Australia is at the forefront of these efforts. Australia is starting to be seen as a shaper of the international environment on these issues. So I think very much, as you are saying, Mr Hart, business internationally is taking notice of our role in this area of rule making.

Mr HART: Good.

Mr RICK WILSON: What are our other areas of competitive advantage? We are up against the United States, where most of the platforms are based. We have India, which, as we have heard and we all know, has an army of programmers who work very cheaply. We have China, which is the massive market. What is Australia's pitch to the world to attract industry and activity here in the digital space?

Dr Locke : It has a few different sides to it. Data and data analytics is a big part of our story. That appears in a range of spaces. It touches on cyber, machine learning and spatial data and the Geoscience Australia story. It depends how you think of it, but I would probably start with the data analytical capacity. That is a rapidly moving space. It is an area that needs investment in the infrastructure—the data systems that go around that, the skills development and some of the standards and things that enable that continued leadership. But probably I would say that data and data analytics are our strength at the moment.

Mr Rees : I would make a couple of observations. There are certain models out there. Singapore is one example of a jurisdiction that has learned how to use big data as a leveraging tool for investment attraction, and it has been successful in attracting people like Unilever to set up innovation centres there by offering access to big data that the government has actually gathered themselves and that can be applied to product development and marketing, for example. I think we have the potential to be in that space too. The other, though, is that we find there is a fairly high level of understanding amongst overseas markets of the quality of our ideas and the quality of the technologies that our companies are developing. It is sometimes suggested that we are better in that area than at commercialisation. That is a bit of a cliché that I do not believe stands up to too much scrutiny. However, the understanding that the quality of our ideas is very powerful is both true and increasingly widely accepted. So, when we talk about people partnering with Australian companies on technologies, we find that we are pushing against an open door—that people do accept that we can probably back up those sorts of claims. I think you would certainly be seeing—

Dr Locke : I agree. There are areas where we are recognised for particular things. We have significant leadership in silicon quantum computing technology as part of the quantum computing race. We have leadership in some aspects of blockchain technology. Australia is basically leading international standards development on that. So there are pockets of things, but they are probably a bit more bespoke.

CHAIR: You mentioned that we have had METS Ignited in, and they have had partnerships with different Australian companies. It is turning over big dollars.

Dr Locke : I would say that part of the message on standards—and I think you have heard from Standards Australia and others—is that, for us, aside from the major structures of the trade deals, it is really the standards and the conformance architecture that sits underneath that that really set the rules of racing for a lot of digital technologies. You have lots of big businesses, global businesses and other countries getting into that standard development to shape the way that standards are set to suit their competitive advantage. It is incredibly important that Australia has a seat at the table and certainly drives some standard development where we think we have a particular long-term prospect.

CHAIR: This is probably one for you, Dr Locke. The Brookings Institution research paper—how far is that away? I think we would like to look at that before we produce our report.

Dr Locke : It is very soon. It is up to them, with the final content, when they release it. But I guess our expectation would be that it is next month. We have seen bits of it and offered comments, but they are certainly independent in the way that they go about it. We are happy to try to facilitate contact.

CHAIR: Would there be a chance of getting a copy of that as soon as it is available?

Dr Locke : Yes, certainly, as soon as it is available. But we can certainly talk about what else we can give the secretariat or you. There is a range of products that the lead author, Josh Meltzer, has done on digital trade issues for other countries. I guess we are expecting that what we see will be akin to those products. We can certainly provide what he has done already. He has published a lot of open material on digital trade. But the actual report might take a few more weeks to get settled.

CHAIR: Thank you. I think we have covered a fair bit there. I would like to thank you for your presence today. You will be given a copy of the transcript. Once again, thank you very much for coming in.

Proceedings suspended from 12 : 15 to 13 : 33