Published daily by the Lowy Institute

Why Australia needs Austrade

Why Australia needs Austrade

Bruno Mascitelli is editor of the newly released The Austrade Story: Export and Investment Facilitation Under the Microscope.

The Australian Trade Commission, or Austrade as it is commonly known, turns 30 in 2016.

It came into existence in 1986 as a statutory government agency for export promotion, arising out of a merger of five segments of export-related activities within various ministries. The creation of Austrade was meant to be the most ambitious change on the government trade promotion landscape since the creation of the Trade Commissioner Service in 1933. But for decades funding for Austrade has been declining in real terms under governments from both sides of politics.

As a prelude to the delivery of the first Abbott Government budget in May 2014, the Government-appointed Commission of Audit brought down its findings on government expenditure. Austrade was among an extensive list of agencies singled out by the Commission for waste. According to the Audit Commission, Austrade was assisting a relatively small level of export sales; its $335 million annual budget didn't appear to represent value for money. The Commission recommended that the Government 'significantly reduce the activities of Austrade and incorporate any residual functions into a commercial arm of the Department of Foreign Affairs and Trade'. The Commission of Audit also called for the scrapping of the Export Market Developments Grants and as well as the Export Finance Insurance Corporation.

Despite these bombshell recommendations, the Abbott Government made no reference to Austrade in the 2014 budget or in any of the subsequent budget discussions. [fold]

The merging of Austrade with DFAT and its ultimate demise would be a step in the wrong direction if we are concerned about remaining a strong trading country. After all, 25% of Australian GDP is dependent on trade.

Trade agreements, as important as they are, do not produce results without some level of guidance, support and direction provided by an assisting body. To date, Austrade has undertaken this role.

Governments are quick to make cuts to entities which do not appear as though they are providing immediate and tangible returns, and Austrade falls into this category. Austrade's advocacy for Australian business, its effect on Australian trade enhancement, as well as the ability to attract investment, are not immediately noticeable. Results from its activities can take months or years. The electorate sees and understands little of an organisation like Austrade (and they are mostly off-shore), and therefore the temptation for government to remove these 'costly' entities can be attractive.

Merging Austrade into Foreign Affairs, while appearing to be more efficient, runs the risk of reverting back to old habits of leaving the trade work purely at the policy level — Australian trade representation abroad has been through this scenario and we learned from our mistakes. The actual task of helping Australian companies in foreign markets (especially smaller exporters) requires genuine assistance and in-market support.

Austrade has been Australia's primary government export facilitator since the 1980s. But ever since its establishment it has lived a precarious existence, wary of each change of government and each budgetary cycle. At times, Austrade's fortunes have been dependent on the attitude and approach of individual government ministers. The activism and effectiveness of Minister Andrew Robb has postponed any pessimistic scenario for Austrade; he has highlighted the organisation's invaluable features in enhancing international business.

In all likelihood Austrade will remain a feature of the international business landscape in the short term. Beyond that it is difficult to tell. 

Photo courtesy of Flickr user Austrade.

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