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Address to the Australian Services Roundtable 2010, Sydney



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Senator the Hon Nick Sherry Minister for Small Business, Minister Assisting the Minister for Tourism, Senator for Tasmania

Senator the Hon Nick Sherry

03 Nov 2010

ADDRESS TO THE AUSTRALIAN SERVICES ROUNDTABLE 2010

Sydney

[check against delivery]

It’s a pleasure to be here to address the Australian Services Roundtable.

We all know how central the service economy is to Australia:

• Services account for 85 per cent of the workforce - employing over 90 per cent of university graduates. • They earned export income in excess of $50 billion last financial year. • They account for nearly 80 per cent of industry value added.

By any measure services are critical to our economic well being and our future prosperity.

Nature of the Service Economy

Because the service economy is so large and diverse - it can be difficult to articulate a clear vision of where the service economy as a whole should be heading and the policies needed to get it there.

Naturally, the issues facing the construction sector will differ somewhat from the issues facing the retail sector.

Specific policies will always be needed for these individual service industries.

But services also have their own unique characteristics:

• They are intangible. • They usually cannot be stored. • And they are frequently the ‘intelligent’ value-adding input.

Accordingly, there is a need to understand the service economy and provide policies which address issues of common concern to all its participants.

I note my colleague Craig Emerson officiated earlier this month at the launch of the New Economic Challenge publication.

The report highlights trends in services growth, trade and innovation and points to a number of issues such as raising productivity in the service economy and the imperative of a sound regulatory environment.

Services and Sustainable Prosperity

The great allure of the service economy is that it promises a sustainable and renewable source of competitive advantage and wealth generation.

Other economic activities are relatively finite.

The mining, manufacturing and agriculture sectors are all limited to some degree by resource constraints.

And as beneficial as the mining boom is, it would be naive to think the boom will last indefinitely.

Once our mineral reserves are exhausted - they will be gone forever.

In contrast, many services are based on intellectual capital - which is completely renewable.

In the global economy, this knowledge has become a commodity in its own right and with the right policies, this ‘factor of service production’ can virtually be created and applied endlessly.

By having the right policies in place to foster knowledge based services, there is no limit to the value we can add and the benefits we can reap.

We can carve out a competitive niche that will deliver a sustainable economic advantage without the constraints connected with other economic activities.

This possibility of sustainable national wealth and ongoing prosperity is tantalising. Our great challenge is to transform that potential into a tangible reality.

Services Policy

The Government is committed to helping the service economy flourish.

We recognise its enormous potential to be an integral part of an economy that is multifaceted and resilient; an economy where all sections of the community and all parts of the country contribute to and share in our national wealth.

In this scenario, there is no two speed economy.

To ensure we have more than one string to our bow, the Government has in place an overarching strategy to encourage the service economy to reach its full potential without impediment or constraint.

This strategy comprises:

• The creation of a sound macroeconomic environment that supports sustainable growth. • Increasing the productivity and competitiveness of the service economy by removing impediments to growth. • Enhancing the capacity of service-based businesses.

The latest figures show that both CPI inflation and underlying inflation in the Australian economy continued to moderate through the year. In fact, underlying inflation eased to its lowest level since December 2005.

The Consumer Price Index increased by 0.7 per cent in the September quarter 2010, to be 2.8 per cent through the year, down from 3.1 per cent in the June quarter.

In through-the-year terms, underlying inflation continued to moderate to 2.4 per cent, compared with 2.7 per cent in the June quarter.

The Government’s agenda is dedicated to building capacity and making sure we can grow as sustainably as we possibly can with inflation as low as possible.

Our macro-economic and monetary settings focus on providing the stability business needs.

And our micro reform agenda is focusing on eliminating unnecessary duplication of regulation, ensuring markets are working efficiently and removing impediments to productivity and economic growth.

In particular, the service economy will benefit from the appointment of a Minister for Finance and Deregulation, Senator Penny Wong, who has a seat at the Cabinet table.

In my role as Minister Assisting on Deregulation, I will be working with Senator Wong to deliver the COAG’s National Partnership to Deliver a Seamless National Economy.

Through this partnership, we are driving States and Territories to deliver a seamless national market by removing inefficient and costly regulation which imposes a significant burden on businesses and the Australian economy.

Many of these reforms will have real and tangible benefits for services industries in Australia. For example:

• Standard Business Reporting allows business to quickly and efficiently prepare and lodge business information electronically to a range of Commonwealth and State and Territory agencies. Once fully operational in 2014, this is estimated to save business $800 million per annum.

• A new national system for Registering Business Names, currently in development, will mean businesses no longer have to register a business name separately in each jurisdiction. The net benefits for this project are expected to be more than $1.5 billion over eight years to business, government and consumers.

• The national Occupational Health and Safety system will bring benefits to business around of $179 million a year. • National Consumer Credit Protection legislation slashing red tape for business by putting in place one, single, standard national regime to

support a truly national consumer credit market. The new law has replaced inconsistent State and Territory laws and will significantly reduce the amount of credit legislation across Australia from up to 2,500 pages over eight jurisdictions down to one comprehensive regime. • Electronic conveyancing will save consumers and the economy $150

million a year. • A national maritime safety system will bring total net benefits of between $100 million and $125 million.

At the Commonwealth level we are also eliminating regulatory burdens through Better Regulation Ministerial Partnerships. For example:

• the length of disclosure documents for financial products has been reduced to just a few pages making them more readable for consumers and less costly for business to produce; and

• the assessment process for new medical devices and procedures has been changed so new health technologies can be accessed sooner.

We also recognise that a skilled workforce is the essential ‘raw material’ of the service economy.

We have established Skills Australia to advise on national skills needs and training priorities.

And our trade training centres focus on not just the traditional trades, but also on emerging industries - many of which are services sectors.

Finally - there is the issue of international engagement, in particular trade liberalisation and its critical role in freeing up the opportunities of the global marketplace.

A global service economy can only ever reach its full potential if the international market is open and transparent.

I know Minister Emerson addressed trade issues - so I won’t retrace his steps.

I would simply make the point that this Government is working hard - multilaterally, bi-laterally and through regional trade negotiations to improve market access and address behind the border barriers.

The Prime Minister has expressed her desire for the WTO Doha Round to be promptly concluded to promote global economic recovery and reject protectionism.

And the establishment of the ASEAN - Australia - NZ Free Trade Area has in place arrangements exceeding WTO commitments.

The service economy needs open trade and progress is being made across a number of fronts.

Conclusion

Services can help secure Australia’s future for generations to come.

They can help us forge a sustainable future as a dynamic knowledge based economy.

Our task is to help the service economy develop and capitalise on the opportunities the global economy offers.

Thank you for the opportunity to be with you this evening.

I wish you well with your work.