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Going global: Why exporting services is key to Australia’s long-term growth


Lemia Bickalo

By

March 22nd, 2018


Lemia Bickalo discusses why exporting services is the key to Australia’s new road to prosperity.


Given the current economic climate, where trade disputes are more and more conceivable, it is worth considering the impact on our potential exports. While exported goods are subject to tariffs, exported services are less vulnerable to such measures. Services are instead beholden to regulation in the foreign nations they operate in. Not only does this provide a degree of security, it also allows Australia to further reap the benefits of our competitive advantage in education and healthcare services.

An opportunity for growth

Education is already Australia’s third largest export, and we now have the opportunity to further reap the rewards of our world class healthcare system.[1] Our healthcare system, ranked the second-best health system in the developed world, has the potential to increase our shift towards exporting more services.[2] PwC Strategy& has outlined in its 2016 report ‘Australia’s healthcare system: An opportunity for economic growth’ the potential of healthcare in becoming a key contributor to the Australian economy through ‘GDP, employment, innovation, and exports’. The report estimates that by 2020, ‘Australia could raise annual revenue of as much as $3 billion through medical tourism, and close to $1.9 billion for delivering ‘telemedicine’ and teleradiology overseas’. This highlights the vast opportunities for Australia to export into a growing market, one which we already ‘excel’ in.[3]

Disrupt or be disrupted

Exporting services is crucial to Australia’s long-term vision where, in order to compete with the rest of the Asia-Pacific region, we must utilise our comparative advantages. Moreover, by exporting healthcare, we encourage foreign investment in scientific and technological research. Consequently, we will be able to fund our innovations that can improve healthcare for Australians, providing cheaper yet higher quality services and products. As such, more research in science and technology will ensure Australia continues to be a world leader in healthcare, an industry that is surely to also be disrupted with the rise of new technology.[4]

A paradigm shift

Our nation’s economic affluence was built on resource mining, and while mining is still our largest export, Australia’s mining boom has come to an end. Coupled with China’s falling coal consumption, combined with a growth in demand for Australian education, tourism and health services has indicated a shift in our trade relationship with China, our largest trading partner.[5][6] According to CBA’s Julie Hunter, ‘China could claim almost the same proportion of Australian healthcare-social assistance exports by 2025’ as it does ‘Australian mining exports’.[2] It is perhaps time to move on from a dependence on non-renewable resources to a future that will be powered sustainably by the infinite resource of knowledge.  In the words of Professor Margaret Gardner AO, President and Vice-Chancellor of Monash University, Australia’s ‘internationalised’ university system ‘builds its links and its place in the Asia-Pacific region’.[7] These links are vital in the innovation needed to address challenges globally.

In her speech at the National Press Club Address, Professor Emma Johnston, President of Science and Technology Australia, succinctly described where we are as a nation and where our potential lies. To quote,

‘Australia’s isolation and our long Indigenous history of knowledge making has inspired us and forced us to innovate and work together, but our isolation has also left us vulnerable, in a rapidly changing world we are at risk of being a backwater.’

Improving prospects for generations to come and ensuring the growth of a sustainable economy requires building and developing industries that can continue well into the future.

 

References

[1] Dodd, T. (2017, October 8). Education exports are worth $28 billion a year, nearly 20pc more than we thought. Australian Financial Review. Retrieved from http://www.afr.com/leadership/education-exports-are-worth-28-billion-a-year-nearly-20pc-more-than-we-thought-20171005-gyvc8v

[2] Worthington, J. (2018, February 22). Sector growing in importance as innovation takes hold. Australian Financial Review, p. 46-47.

[3] Bartlett, C., Butler, S., & Rogan, C. (2016, June 22). Australia’s healthcare system: An opportunity for economic growth. Retrieved from https://www.strategyand.pwc.com/reports/australias-healthcare-system  

[4] Machaiah, P. (2017, March 2). Artificial intelligence, healthcare & the fourth industrial revolution. Huffington Post. Retrieved from https://www.huffingtonpost.com/entry/artificial-intelligence-healthcare-the-fourth-industrial_us_58941bd1e4b0985224db540a

[5] Henderson, C., Song, R., & Joffe, P. (2017, January 17). China’s decline in coal consumption drives global slowdown in emissions [Web blog post]. Retrieved from http://www.wri.org/blog/2017/01/china’s-decline-coal-consumption-drives-global-slowdown-emissions 

[6] [6] Australian Institute of International Affairs. (2017). Waves of Chinese Tourism May Be Worth More Than Mounds of Commodities. Retrieved from http://www.internationalaffairs.org.au/australianoutlook/wave-of-china-tourism-worth-more-than-commodities/

[7] Gardner, M. (2017). Internationalising Australian Higher Education. Retrieved from http://www.internationalaffairs.org.au/australianoutlook/internationalising-australian-higher-education

Image: http://maxpixel.freegreatpicture.com/Pharmaceuticals-Healthcare-Pill-World-Map-Earth-1185076

The views expressed within this article are those of the author and do not represent the views of the ESSA Committee or the Society's sponsors. Use of any content from this article should clearly attribute the work to the author and not to ESSA or its sponsors.

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