More than a mine

The sweeping reforms made to Austrade have received surprisingly strong support from export advisers, who usually aren’t afraid to take the long handle to our key export agency.

At the heart of the changes is a shift in focus, away from North America and Europe (where most SME exporters head first, mainly because language barriers are low) and towards emerging markets, such as Mongolia, western China, Latin America and Africa.

As Austrade chief Peter Grey told me today, the rationale is simple – while an Austrade consultant in London can be helpful, a consultant in inner Mongolia or western Africa is even more valuable to an exporter who doesn’t speak the language, doesn’t understand local customs and has precious few contacts.

The argument is understandable and certainly received the support of the experts I spoke to today.

However, the changes will make Austrade a lot more focused on the mining sector, companies from which are clamouring to get into places like Africa and Mongolia.

Grey says the focus will be on helping the SME service providers (consultants, engineers, etc) that come in behind the big miners, but it could be argued that this is yet another example of an Australian government putting its eggs in the resources basket.

In the short-term, that’s certainty going to deliver a good return. But what about the long-term? What happens when the mining boom stops?

Austrade plans to rationalise its domestic services, cutting back on local contact with exporters and potential exporters and instead referring them to government agencies and private sector organisations that provide exporting advice.

Austrade says this will reduce duplication and allow it to invest more in international staff.

Fair enough, but Austrade – and indeed governments – need to get the balance right here, particularly over the next few years when mining will continue to dominate exporting.

Supporting established mining exporters is fine, but Austrade needs to encourage and support new generation of non-mining SME exporters who can play a crucial role in keeping the economy stable when the mining boom fades.

Yesterday, the relatively new head of the Federal Treasury, Martin Parkinson, delivered a pretty upbeat assessment of Australia’s long-term impacts and particularly our reliance on exports to China.

“Volatility in China’s future growth path cannot be ruled out,” he told a post-budget event.

“While we have a downside risk to our forecasts, we also face the possibility of positive effects from factors outside our influence.”

“In the case of China, these are short-term risks around a positive long-term outlook for growth.”

It all sounds pretty rosy, but that “volatility” and those “short-term risks” could be fairly ugly for Australia. And that’s why it’s important to ensure that we are working now to ensure we are helping to build fast-growing businesses – and exporters – outside the mining sector.

Let’s hope Austrade – and indeed all government agencies – get this delicate balance right.