Wednesday 25 June 2008
Output group 1
1.1 Export and trade facilitation
Mr FINCH - Minister, we read in the Age yesterday of a forecast by Access Economics of an export boom next year. It includes mining, of course, but also farm produce. I am wondering what additional measures the State Government can pursue to make sure that Tasmania participates in the predicted boom.
Ms WRIEDT - I think we already have a number of programs within the department that are designed to assist companies to become more export-ready, most particularly EMAP, the Export Market Acceleration Program, that works with individual companies to increase their international marketing activities. Some of them do not have the skills or the knowledge as to how to do that. They may have a very good product that is export-ready but not know how to translate that into penetrating export markets. Some of the businesses that take part in that program may already be engaged in either national sales or export sales. They have potential to grow those, so it is either new ones that are emerging or ones that are ready exporting in a small way and we work with those to provide them with targeted market research for the markets that they want to expand to. We give them some financial support to engage a marketing manager. We give them advice in relation to export market planning, particularly if it is a seasonal product; for example, if they are in the stone fruit industry and they can benefit to a maximum of $50 000 over two years. It is fairly substantial assistance, particularly if they are a small company.
Mr FINCH - How many are in that program, Minister?
Ms WRIEDT - We have had five businesses in that and they have so far generated more than $2.5 million in export revenue. A couple of those, Minecom Pty Ltd, Tasmanian Quality Foods, Autech Research. Autech is one that I hope most Launceston members would be aware of, Darren Alexander and Autech. I first came across Darren last year at G'Day USA when he won the innovation shoot out in New York and that was a fairly substantial win for him.
Mr DEAN - He has a room right next door to our building.
Ms WRIEDT - The best way to describe it is a digital visualisation system for the paint industry so instead of going along to the hardware store in the future and getting those tiny little -
Ms Ritchie - Sample pots?
Ms WRIEDT - No, the tiny cards that little kids love to play with. Billions of dollars every year are spent on people taking these things home and trying to work out from something that size that when you put it on your wall whether it is going to look the same and look good. There is existing software which lets you pick your paint colour and then superimpose that on to a picture of a house and see then if you can imagine that it looks like your house. That is impossible to do, but their system enables you to load digital photos of your own house and then superimpose the exact paint colours. It sounds really simple but quite a complex system needed to be put together.
This has gone international and I would say the figure of $2.5 million in export revenues is probably understated for that group of companies that we have assisted, given the way that Autech has expanded so rapidly in recent years. They are in major hardware chains now in the United States, in China and - I think from memory, the last time I spoke to Darren Alexander only a few months ago - he said he was in about 23 countries around the world, so he spends a great deal of time travelling and that is quite phenomenal. He had the potential. He was lucky we were able to give him some assistance. He had that great win that put the spotlight on his product at this high-profile event in New York and all this is being done out of Launceston.
Mr FINCH - There are five that you are assisting with the export program?
Ms WRIEDT - That we have done so far.
Mr McILFATRICK - In that little space.
Mr FINCH - In that space, yes.
Mr McILFATRICK - The other one is the assistance program which provides for small business, Minister, which is to fill a gap. The Federal program generally deals with much larger businesses so we provide direct export assistance to companies wanting to travel to new markets on a 50:50 basis and that has been quite successful over a number of years, filling a gap that is not otherwise available to our smaller EMAS.
Ms WRIEDT - That is the Exporting Marketing Assistance Scheme. If companies have a substantial base here in Tasmania and we believe there is the potential for them to expand, and if that the activity will result in some economic benefit for the State and if they have chosen a new market for their product and the product or services will be exported here from Tasmania, then we can assist them in getting to trade shows, undertaking overseas sales visits, attending international conferences and hosting inward buyer missions. These are things that particularly small businesses would not have the capacity to do when they are trying to break into export markets. It is a way of saying if you need to go to an international trade show in San Diego or wherever it might be, we can provide some contribution to that.
That scheme began back in 1999-2000; since then we have invested $1.3 million in it and the value of the initial contracts achieved has been in excess of $38.4 million. That is a return of over 28 times the investment that we have put in. Last year we assisted 28 small to medium enterprises; that program will continue and we work very closely with Austrade.
Mr FINCH - Minister, do you feel the department is well placed if other people read this story, exporters, and they see this story in The Age and Access Economics talking about the export boom? The question I have is: if they come to the department and say there might be some opportunities here for me, are you confident that your department will handle that efficaciously and that people will be encouraged to investigate and come on board?
Ms WRIEDT - Yes, provided they provide us with the proper information. I am aware of a couple of cases where people have approached the department and said 'We want to come and set up what we think will be a major export business in Tasmania and we want the State Government to give us x million dollars. Can you please give me an answer?' They write direct to me and say that. Of course, the response is: we will either get somebody to get in touch with you or could you please provide us some proper information, a sound business proposal so that we can look at it, and someone in the department will assess it and then provide some guidance -
We have just outlined two of the programs we have but there are a range of programs depending on what the business is, so yes, provided we are provided with the appropriate advice we can make sure that we give the correct information and the best guidance that we possibly can to those businesses.
Mr FINCH - From page 2.6, under 1.1 there is a drop in funds for 2009-10 and 2010-11. I like to see a little bit of a rise there, even if it is CPI. Is there a reason for the lower forward Estimates? We are $4 140 000 this year.
Mr WING - We covered that.
Mr FINCH - I missed that, okay. The other table in on 2.10. There is a big jump in exports facilitated for 2006-07 to $190.3 million. There is an explanation in note 3 that it was due to increased activity in the resources and marine manufacturing sectors. What happened or did not happen the following year for the target to drop back $70 million?
Ms WRIEDT - We only count those items that the department had a significant role in securing the export contracts for. So the big jump reflected the sale of an Incat vessel in which we had played a major role in terms of contacts and helping to facilitate that.
Mr FINCH - Is that the one that went to Japan?
Ms WRIEDT - One of them. In subsequent ferries, for example, if we had not actually played a direct role then we would not count it as one of the things that we had facilitated. So these are for ones that we have had a role in. We are not trying to claim others that we do not, so we are trying to be as honest as we can. If we have played a part then we count it; if we do not then it just gets counted as general exports for the State.
Mr FINCH - Given that, if we look back to 2005-06 it is $91 million. Have you dropped your targets too low or is that being realistic?
Mr McILFATRICK - We have just looked at table 2.3 and we have put about $4 million worth of direct effort into export marketing - that is our staff and our expenses. To be able to target $70 million for that effort is a pretty good multiplier. I guess that you could say we are being conservative but there are some large lumps in there, like the Incat vessel. If I tried to establish $190 million as a target next year I would need a lot more people. We are just trying to be as reasonable as we can about the effort we put in. That $70 million is made up of exports but also imports that we replaced. It is just as important for us to have a Tasmanian company substituting something that would have otherwise have been imported as it is to export. I think we got a pretty good result. I am probably tempted to creep the target up and put the pressure on a bit for next year.
Mr FINCH - With the boom coming.
Mr McILFATRICK - That does not say that we expect exports to be reduced; it is just that we are very particular about only claiming a result while we have had a direct effort. That is important from an audit point as well. We just do not chalk up numbers for the sake of them. They are really targeted on the effort.