Department of Foreign Affairs and Trade

7. Trade and the Australian way of life

Why trade matters

'Our standard of living - the quality of our communities, the prosperity of our families, the security of our jobs - depends more than ever on our ability to compete in the global marketplace.'
Mark Vaile, Minister for Trade, April 2002

Trade puts more money in the pockets of Australians and raises our standard of living. We cannot grow our country's economy by only doing business with ourselves.

Exporting gives Australian businesses access to a global marketplace of more than 6 billion people. Imports give Australians a wider range of affordable, quality products and provide Australian producers with a better range of business supplies that help make their products more competitively priced. By doing business with people outside Australia we increase our understanding of other people and their understanding of us. The act of trading also develops relationships that help underpin Australia's international political interests and security.

Trade also has a direct impact on the fabric of Australian society, shaping how we live day to day, how we earn a living, our education and training opportunities, and our prospects for the future. It is important to the wellbeing of individual Australians as well as to the nation as a whole.

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Significant policy reforms since the early 1980s saw the floating of the dollar, deregulation of the banking and financial sectors, and reductions in tariffs, quotas and subsidies. By the 1990s service industries had come to the fore in Australia, with the development of tourism and the influence of the so-called new economy (the impact on business activity of new technologies such as the Internet). Services now comprise about 70 per cent of the Australian economy.

Australia's rising productivity levels and strong education and skills base, and our growing reputation for finding new and practical ways of doing things have made our services capabilities very attractive to people worldwide who want to buy that expertise, energy and innovation. The 2000 Olympics displayed not only Australia's traditional sporting prowess, but also showed the world our management capabilities and technological inventiveness.

In the past, Australia's physical distance from other countries posed many challenges. Not least, it was costly to promote and sell our products around the world. But with the advent of e-commerce the marketplaces of the world have come to Australia's doorstep. And new technologies have also put regional and rural Australia in more direct contact with the rest of the world, and in closer contact with metropolitan areas of Australia.

Many of Australia's regional areas have shared in the benefits of a growing Australian economy. Their population, income and employment levels have all increased. The role of trade and trade policy in regional Australia is discussed in the Department of Foreign Affairs and Trade (DFAT) publication From Sheep's Back to Cyberspace and in the Exporting to the World series of brochures showcasing the export activities of 32 Australian regions.

Innovation and trade: shaping the Australian way of life in the 21st century

Having an abundance of natural resources no longer guarantees success in the international marketplace. It will be how Australia uses its natural resources that will determine its international competitiveness.

Innovative Australian businesses are typically the ones exporting. And by choosing to be exposed to the world market, they also get the benefits of bringing overseas innovations back home. Innovation arising from export activities is not just about new technologies. It can be about finding new ways of producing goods or services, adding services to products, configuring supplier and distribution networks, and attracting and keeping good employees. Exporters tend to invest more in educating and training their employees than their non-exporter counterparts. And what's more, that training tends to be of better quality and variety, with links to formal educational institutions such as universities and TAFEs.

Australian exporting businesses, in both the cities and the regions, also tend to pay higher wages and offer better conditions than non-exporting businesses.

For more on why Australia needs exports (PDF)

Around one in five jobs in Australia relies on exports - rising to one in four jobs in regional Australia. Exports also have flow-on benefits for regional communities - they generate income and improve the capacity of regional communities to provide their citizens with better access to services and infrastructure, and give them more control over their own futures.

Technological advances in Australia have also paved the way for hi-tech industries to set up in smaller centres and more remote locations. New employment opportunities are opening up in business activities such as ceramics, computer software, industrial services, environmental equipment, control and automation equipment, and veterinary pharmaceuticals.

Foreign investment in Australia is sometimes contentious. But we do know that there is not enough money within Australia to finance the new technologies necessary to develop our exports, and thereby to provide the standard of living and quality of life Australians aspire to. The environmental challenge facing us all is a prime example. It is developed countries with a growing standard of living that will be able to finance clean and green technologies. And foreign investment will have an important role to play in doing that.

Foreign-sourced investment finance accounts for around one-fifth of Australia's total investment. In many cases foreign investment supplies the money to develop a business or industry that local finance is unable or unwilling to support. And Australian companies are themselves foreign investors, setting up overseas operations for their businesses where this gives them a competitive advantage.

Australians have shown they have the skills, ingenuity, adaptability and determination necessary to succeed in the complex and competitive international environment. The Australian Government is providing the platform - through tax and trade policy reform and deregulation - from which they can direct that energy and inventiveness towards creating the best possible quality of life for all Australians in the future.