Western Suburbs Business Association Breakfast, Perth

//Western Suburbs Business Association Breakfast, Perth

Western Suburbs Business Association Breakfast, Perth

E&OE…

JULIE BISHOP: I liked your analogy of the number of Andrews compared with the number of female CEOs. I also understand that there are more men named Andrew in the Federal Parliament than there are women in the federal Cabinet. #justsaying.

Thank you for your introduction and Nicole, thank you for your kind and generous words. You talked about your dream job. Well, a couple of weeks ago, I lost my dream job – with the end of the footy season, I’m no longer the number one ticket with the West Coast Eagles!

It’s good to be here in the western suburbs, in my electorate, and I acknowledge the mayor of Subiaco, Penny Taylor, the mayor of Cambridge, Keri Shannon, and all of the members of the Western Suburbs Business Association. And although people are from various organisations, large businesses, NGOs, I want to pay particular credit to the owners and managers of small businesses here in our part of the world. You are the backbone of our local economy but small business is the backbone of the Australian economy. And small business employs about half the private sector workforce across Australia. It represents about a third of the value-adding industries in this country and it’s absolutely vital for our economic growth.

Australia has a great story to tell. We are currently in our 27th consecutive year of uninterrupted economic growth, averaging about 3.3 per cent. That is a world record. No other country at any time in contemporary history has ever achieved that. But it comes about because of people who are prepared to take risks; to start a business; to grow a business; to employ people; to create wealth for themselves and their families and others; and to take advantage of the fact that Australia is an open export-oriented market economy. Our standard of living depends upon our ability to sell our goods and services not only locally, but around the world. You see 53rd in terms of population size, but we’re the 13th largest economy, and that doesn’t come about by selling to yourself. It comes about by selling your goods and services around the world.

I do come from a small business background and I identify very much with the challenges and the opportunities that are presented to small business. It’s in fact in my DNA. On my mother’s side, I’m a fifth generation daughter of her family, who were small farmers in the mid-west- well, mid-north really of South Australia, and my mother came from a sheep and wheat property. On my father’s side, I’m fifth generation also. We had an apple and cherry orchard in the Adelaide Hills. The year before I was born, the property, which had been nurtured over almost 100 years by that stage by our family, was burned to the ground in a devastating bushfire known as Black Sunday. And so my entire childhood was overshadowed by recovery from the bushfire. Everything my parents owned was gone so they started from scratch and this was before government handouts were as generous as they are today; and so it was very much the work ethic – you just had to get up and get on with it to rebuild the business. And we were a bit like a commune on the same property with my grandparents, our family, and my siblings, my father’s brother and or his family and my father’s cousin and or his family. So it was one great, big family but we all pitched in and we all worked – picking cherries, packing apples, tending to the sheep.

And so I understand the sacrifices that people make; the risks that they take; the hardship but also the huge bonds that are built when you work in a small business, particularly a family business. That’s why I’m a member of the Liberal Party because the Liberal Party recognised the importance of small business from its very beginnings. Robert Menzies’ famous speech, The Forgotten People, in 1942 during the deepest and darkest hours of World War II, put forward a vision of life in Australia after the war whenever that would be; and The Forgotten People referred to the small business owners and operators who would drive Australia’s economy out of the darkness. Well, that obviously resonated with my parents. I was brought up as a Liberal and to this day, my values and my experience reflect the philosophy and the ideals and the values of the Liberal Party; and that manifests to this day in the policies that we’ve introduced, supporting small business. The fact that we’re bringing corporate tax rates down to 25 cents on the dollar by 2021. The fact that we’ve announced a $2 billion Australian Business Securitisation Fund that’s designed to make it easier for small banks and non-bank lenders to provide credit to small businesses on more favourable terms.

Now, all of this is helping drive the Western Australian economy. We had the good news that the GST legislation has passed the Federal Parliament. That means that Western Australia at last gets its fair share of GST – an additional $4.7 billion – but also there would be a floor in the legislation so no state will ever end up as we did getting 30 cents on the dollar. There will be a floor of 70 cents. And I think there’s some good news on the horizon for Western Australia coming out of the lull after the end of the construction phase in the mining sector; and the October figures show that unemployment is coming down to 5.7 per cent. We’ve still got a way to go; the national average is 5.1 per cent, but I think there’s some good news for Western Australia.

We are living in a highly interconnected world, and no business can escape the impact of what happens outside their local community. So small businesses are essentially operating in three interlinked economies -your local economy where your customers are; the national economy which impacts on what you do; but the global economy in ways that we have not experienced before. And what happens in one part of the world can impact on what happens in the other. For example, there’s a lot of discussion about the challenges facing the European banking system and the risks to the stability of the European banking system. If those risks realise that will impact on the global economy and because we are such an integrated economy with the global economy, it will impact in Australia.

What I wanted to mention today are two global issues, that can have a significant impact here in Perth. The first is the rise of China. China’s economic growth is nothing short of a miracle. Hundreds of millions of people have been lifted out of poverty. They have mobilised the human resources at their 1.4 billion population to create a model of economic growth we’ve not seen before. The political and economic model is quite different from our experience where high-income countries are generally democracies – open, free, liberal democracies.

China has defied all predictions and today is the largest trading partner of probably 120, 130 countries around the world including Australia. And we have been a significant partner and will continue to be a significant partner with China because we’re supplying so much of the minerals and resources that China has needed to underpin its massive economic growth and the urbanisation of its population. Its model of low cost manufacturing – large scale, low cost manufacturing, has been immensely successful for China. But it has challenged established industries, particularly manufacturing industries around the world, because it’s created new supply chains. And the component manufacturers around the world are sending their bits and pieces to China for assembly in China.

Some of the practices have attracted a lot of criticism and countries feel threatened by China’s model of economic growth. And we have seen it recently – President Trump described China’s growth model as containing unfair practices that have disadvantaged the United States. They have also got complaints about intellectual property theft and data theft and the like. And what this has led to is the United States imposing tariffs on Chinese goods. China has retaliated and imposed tariffs on US goods. This is bad news for Australia. The idea of a trade war between the United States and China is in no one’s interest, and we, as a significant ally of the United States and as a significant trading partner of China, have urged both sides to resolve their differences through the World Trade Organization; after all, that’s the global umpire. However, the WTO is proving incapable of resolving the differences.

What I expect will happen is that there’ll be a bilateral settling of the differences. It will be a transactional deal between China and the US. And what we need to focus on is our opportunities to leverage our relationship with China. You see, what we have that the United States doesn’t have is a free trade agreement with China; and that was negotiated a few years ago. It’s been in operation for a couple of years now and all businesses across Australia have the opportunity to tap into those regional supply chains or directly to China, this massive consumer market of 1.4 billion people, under the terms of our free trade agreement which gives us favourable treatment. And I urge you to talk to your local Austrade representatives here in Department Foreign Affairs and Trade if you’re not already engaging with China under the free trade agreement because I suspect that that’s where the US may find common cause with China. They may well end up with a free trade agreement.

Now, the US is a competitor of ours in many areas. For example, we have a free trade agreement with South Korea that we negotiated just prior to the China Free Trade Agreement and we were getting Western Australian beef and Western Australian lobster into Korea in favourable terms. That was undercutting the United States, so the United States rushed to conclude a free trade agreement with South Korea. So, when you’re looking at the news about the potential of a trade war between the US and China, let’s hope that that never occurs because history shows that would be catastrophic for the global economy, but also recognise that the United States may well be leveraging an opportunity. We should be making the most of the chance we have now to establish markets or enhance markets in China and under our existing free trade agreement.

The second global phenomenon I wanted to talk about is what they’re calling the fourth industrial revolution. This is the unprecedented scale and pace of technological advances that are disrupting the way we live, and work, and travel, and engage. And automation, AI, robotics, the internet of things is transforming the way we do business.

Last weekend, as Katriona said, I was in Dubai chairing a meeting of the World Economic Forum, and the topic was the Fourth Industrial Revolution and its impact on the globe. The World Economic Forum had produced a report called the Future of Jobs 2018. Have a look at it, it’s fascinating and I’ll just give you a summary. They spoke to about 300 companies across 20 countries, representing a workforce of about 15 million people; so, it’s a pretty extensive survey. It concluded that the respondents thought they were for particular technologies that would utterly transform the way they do business. The first is much wider access to high speed mobile Internet. The second was artificial intelligence. Third was access to big data and, of course, with cloud based technologies. How this impacts on businesses was rather interesting. About half of those surveyed said: as a result of automation, they expected to sack a number of staff over the next four years; they would reduce their workforce. But interestingly, 40 per cent said that they would in fact increase their workforce supported by new technologies, which would increase productivity and grow the size of their business. And about 25 per cent of those surveyed said that they would be creating new jobs that don’t currently exist new jobs as a result of technology.

So the question for businesses is really: where do we focus our priorities; do we focus on automating tasks that are currently being carried out by our human employees or do we focus on upskilling our staff so that they augment the technologies? And the report concluded that all businesses should have a strategy of augmentation. In other words: embracing technology to better support your staff, your employees. So, that would mean retraining, reskilling, upskilling so that people are still employed; their work is enhanced, their productivity is enhanced by the use of technology. And I think that’s a very serious lesson for us all to consider now, how are we going to embrace technology, but in a way that ensures our human workforce is as efficient and productive as possible?

Here in Western Australia, we know all about challenges to the workforce. I mentioned the phasing down of the construction period in the mining sector, and that means people are losing jobs, having to go elsewhere to find new jobs, reskill and the like. And then when the mining sector picks up again, as it currently is, then we’ll need those jobs again. So, we’re used to this phase of having to rethink our employment and our employment opportunities. But I think it is going to impact on all businesses across this State and this nation. And the better prepared we are for it, obviously, the more successful we will be. In addition to the technological challenges, there’s also a change in the way people want to work. They call it the gig economy, you know, like a gig.
Technological advances do not mean we all have to be data coders and in STEM subjects, that’s not in fact the case. While that is exceedingly important we are also going to have a greater need for human skills such emotional intelligence and judgement and compassion and empathy – that cannot be replaced. It is an exciting time ahead for business and I think that this business association has a significant role to play in giving people the opportunity to share ideas, share experiences, share best practice. You all have a lot in common in terms of the risks you take, the challenges you face, the environments in which you work. I commend the Western Suburbs Business Association for the opportunity to talk with you and meet with you. And all I can say is if you are into naked networking, I think the membership will only swell.

– Ends –

2018-11-26T16:29:05+00:00November 16th, 2018|