Australia Chinese Business Council Canberra Networking Day

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Thank you for inviting me along to this important networking opportunity that captures a defining moment, not only in China’s development, but the relationship between our two countries. It has enormous implications for both of our countries and I think we are ideally suited to be good partners together, particularly in the small business space.

I would put to you that shared values amongst enterprising people in China and Australia are very competitive and are the driving force behind many small businesses. Enterprise and entrepreneurship are percolated within our veins and it’s something that for many of us, puts the sparkle in our eyes and the fire in our belly each day. It’s a very common outlook on the world that we should share.

Australia and China share many things in common including the love of family; the ambition to bring credit to one’s family, to nurture opportunities, to build better prospects for the future and a real appetite to be engaged in the local community. As I travel around talking with Australian-Chinese and Chinese-Australian business people, this is a very common ground that we can discuss and it brings that start of the relationship that is so important to us in the engagement – it’s something that is very much in common.

But as we look to China we see a remarkable story, one of great transformation since the opening up of the economy and the landmark reforms that began in the 70s when I was a wee lad. To see that transformation over time is quite remarkable. Reshaping not only the country itself and its economy, but those supply chains.

There is a young entrepreneur in my electorate that makes outstanding motorcycles and that supply chain reaches all the way back to China. I’m lead to believe he is one of the only businesses from outside China showing at their manufacturing expo this year. He has built strong business relationships and through that is reaching new markets to build not only his business here, but a quality supply chain for parts and componentry and design. But as we look forward we see China becoming the world’s largest economy by 2025 and a nation that may look very different. We will see 70 per cent of Chinese people living in cities with the expected urbanisation transformation.

The burgeoning middle class in China, what a story of opportunity and one of ambition, with both the citizens engaging in that transformation and the supply chains and services that will look to meet the country’s needs.

And there we have the small business community – nimble, ready, responsive, able to build the kinds of durable relationships that are looked for in Australia-China business partnerships. But just talking about it isn’t enough. You would have seen recently changes in the way the export market development grant program orientates itself to be more pro small business but also opening the door for another engagement. You may well have invested for many years, building up overseas markets and the GFC has had an enormous impact potentially on those markets and a need to go again.

A small business is a profoundly personal commitment that’s all consumable and that is something that’s understood between people of whatever origin and that is a wonderful starting point to build solid and durable relationships that I think are at the heart of doing business well between Australia and China.

But for many, it is a challenge that may seem overwhelming. It’s a courageous move and it’s a move that we don’t think is well supported by just saying to people ‘good luck.’ It needs more than that.

The work we are doing in the international readiness index to help small businesses self-evaluate their ability to engage in those opportunities. I know in my own community there’s some deep relationships and agriculture with China and businesses have been working hard to build those opportunities.

To provide the volume and the quality, the predictability needs a collaboration domestically to aggregate supply and meet those opportunities and these are the sorts of things that have been successfully embarked upon previously and we are keen to share that journey.

Now is the time to celebrate the pathfinders, those that have made that journey have succeeded, have learned much and to share that experience, knowledge and wisdom can help those who are contemplating that journey.

There’s advice how to handle the commercial relationships, the ‘Doing Business in China’ initiative is a very important educative journey on the potential risks of misunderstanding, at a time when we are operating with different cultures and different commercial environments. So that’s exciting and I’ll be part of the delegation into China to try and add momentum to build that kind of rapport and shared purpose that can be nurtured and best supports the kind of ongoing commercial relationships that we think are available to the benefit of both countries.

Now on the domestic agenda we are unashamedly trying to play to our strengths, recognising there are great economic strengths in our economy and that we should support those. You’ve heard us talk about transforming manufacturing, agriculture, the services industry, mining and resources, world class education and research– these are all competitive advantages we think we should play to. That’s why you have seen some of our tax agenda look to support those strengths rather than to mitigate them or to inhibit them.

This red-tape reduction process, $1 billion we are aiming to lift off small business particularly. While you don’t have a compliance department when you are a small enterprise – too often the proprietors can spend more time trying to remove burdens that may not be adding any great value to the economy and the wellbeing of our country and communities.

My portfolio has moved out of the industry portfolio and has been put into Treasury. Now that hasn’t been without its challenges, and we keep working those through. The central idea is small business isn’t a discreet industry sector that has an industry plan. There are diverse, wonderfully different enterprises that operate within the broader economy, so many of the broader economic settings are determined within Treasury including the tax settings, incentives to recruit, to invest, to grow and develop.

The way the Australian Prudential and Regulatory Authority and ASIC operate are shaped within Treasury. Our ambition is to have family enterprises and businesses front of mind. I’m in Cabinet and I sit at the adults table to ensure every decision has that small business and family enterprise perspective brought to it.

When there is a discussion about the Australian Building and Construction Commission – this is of course big unions and big builders having their argy bargy but no one is run over the top more than a small on-site contractor. To bring that field evidence to the decision making

We need to make some changes: our procurement processes for small and medium enterprises needs some refinement to make that work; the way in which we impose burdens on being a pay clerk for the paid parental leave scheme serves no good purpose. We also need to look at that entrepreneurial ecosystem that I mentioned earlier and the environment within which businesses and enterprising people seek to secure those opportunities and create wealth and opportunity for our nation and themselves.

We have committed to a competition policy review, which is very important for our economy. Some 22 years ago Professor Hilmer did excellent work but the economy has changed dramatically and we haven’t seen a re-examination where those policy settings are right for today. We need to consider whether the laws that seek to implement those policy settings behave in which the way we anticipate and whether we are supporting our capacity to thrive and prosper as we engage in an increasingly global market place. That’s why this ‘root and branch’ review is so important and why we are making sure that efficient businesses big and small know that they have an opportunity to grow and prosper in this country.

This is the focus of that work because we will all benefit from removing legislative or regulatory settings that don’t reflect the current emerging economy and there is plenty of work to be done in that space.

Another important area is around skills and training and that’s why this group is so important and thank you all for engaging in it. By sharing what you know will help those who come next understand the footsteps and the journey required. To be informed, energised and wiser through the sharing of this information is crucial.

We provide support through our advisory services and support line – again it’s about building that capacity, confidence and competence to engage those opportunities that enterprising Australians see and want to make.

In 2010-11 there were almost 18,000 SMEs that engaged in the journey of export. That’s about 41.6 per cent of all export activity and I’m proud it was driven by smaller enterprises. We want to drive this even further. The estimated value is about $1.25 billion of activity and this is where we have so much to build upon. I think a small business person in Australia working collaboratively with our partners and colleagues in China is a natural fit and if we can support it to be productive and beneficial for all involved, that will carry forward opportunities into the future.

I remind you this is personal – small businesses are personal. Relationships that drive them and sustain them are personal. That’s the kind of engagement that I think will best support economic opportunities to the mutual benefit of Australia and China and our citizens. People to people, enterprise to enterprise, two nations respecting each other’s ambitions and opportunities and being actively involved in seeing the benefits as well. Thank you.