Australia’s trade sector in peril unless urgent action is taken

Australia is in danger of slipping down the global trade ladder unless it completely overhauls its tax and industrial relations sectors, recruits skilled migrants, banishes red tape, improves its internet services, and reduces its reliance on China.

That’s the blunt message from UniSA Professor of International Business, Susan Freeman, the principal author of the 2021 Australian Chamber of Commerce and Industry (ACCI) National Trade Survey Report, officially launched by Federal Trade Minister Dan Tehan this morning.

The survey, undertaken during the worst pandemic in a century, reveals that COVID-19 has been a mixed blessing for Australian businesses. It has highlighted the nation’s reliance on global supply chains and lack of sovereign capability, decimated the tourism and international education sectors, but also given the manufacturing and e-commerce sectors a chance to shine.

Heightened geopolitical tensions and a serious trade war with China in the past 12 months have exposed Australia’s vulnerabilities, Prof Freeman says, but even more concerning are the key trade issues cited by business leaders.

“Five trade reports have been produced over the past six years, reflecting the concerns of small, medium and large businesses in Australia. Every year the same issues are raised, which shows they still haven’t been addressed by successive state governments and the Federal Government,” Prof Freeman says.

“Australian businesses are adaptable, entrepreneurial, innovative and smart. The problem is not solely with them, but with entrenched structural issues that need urgent reform.”

The main obstacles identified by more than 200 business leaders in the Fifth Trade ACCI Report are:

• Inability to compete in global markets
• Red tape
• Non-tariff barriers (quotas, embargos, sanctions and levies)
• High exchange rates
• Poor internet connectivity
• Restrictive tax system
• Strikes, industrial activity
• High cost of labour and lack of skilled workers
• Increasing cost of freight and shipping
• Geopolitical issues
• Over reliance on China and very little engagement with Europe, Africa and Latin America
• Too much emphasis on minerals and not enough on renewable energy sources

Prof Freeman also interviewed more than 30 senior managers, CEOs, founders and export managers, some of whom highlighted the domestic industrial action at shipping ports which coincided with the outbreak of COVID-19 in February 2020.

“Ongoing maritime strikes have compounded the supply chain disruption for Australian businesses during the pandemic, which has made life even more stressful for companies reliant on goods either coming in or going out,” she says.

“If you’re waiting up to six weeks to get things moved from our own ports, that is not a reflection on businesses. That is something that is completely within the control of Federal and State Governments – to better manage industrial relations. It needs a government and industry joint effort.”

Closing Australia’s borders in 2020 was a necessary step, Prof Freeman says, but the longer they remain closed the harder it will be for businesses to compete.

“Australia needs access to highly skilled, quality people. If you shut interstate and international borders indefinitely you not only make it very difficult for firms to fill key roles but you also risk being left behind by the rest of the world whose borders are opening.

“We are an island, which has some advantages in a pandemic, but there’s a downside. Because we are not sitting in the middle of Asia or Europe, surrounded by other countries, it is incredibly important we remain connected.

“The minute you close down a border you say to a company ‘you can’t trade’. And you can’t rely solely on the internet. There are some fundamental things about building relationships and trust that need to be done face to face.”

The Fifth ACCI 2021 Trade Report makes 20 recommendations, including the need for more free trade agreements, a “cleaner and greener” approach, and a focus on ensuring reliable high-speed internet across the whole country to effectively compete in a digital world.

“Australia has been extremely fortunate for a long time because we are very good at digging minerals up from the ground, not doing a single thing to them, putting them on a ship and sending them elsewhere,” Prof Freeman says.

“The love affair with black coal is ending and the world is looking for alternative energy sources. It’s time that governments sat down with industry and worked together on a clear plan for the future.”