Australia's widening services deficit

Australia's widening services deficit

Summary: If Australia wants to position itself as a net exporter of digital services, it has a long way to go. For a start, it has to reverse a trend that’s been worsening over the last decade.

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Figures from the Australian Bureau of Statistics' (ABS) International Trade in Goods and Services report released last week show that technology has never played a big part in Australia's services exports. Telecommunications, computer, and information services accounted for AU$433 million in the December quarter — a mere 3 percent of our services output. Travel takes up 60 percent of the total.

The vast majority of our exports in this sector came from computer hardware and software consultancy, clocking in at AU$318 million. With Asia on our doorstep, and the internet making the world smaller, that surely has to be a big opportunity for Australia.

Sadly, it's not showing much promise. There hasn't been any growth, in actual terms, for the last seven years. Accounting for inflation, we're really going backwards. What's more, we import about the same amount of hardware and software consultancy as we export. Clearly, we can't claim any advantage in terms of expertise in this space.

Yet, we do need to manoeuvre ourselves to a services-led economy in a post-mining era, and the digital services economy is often touted as the successor. That revenue might not come from technology businesses per se, but from other business service sectors that will develop given emerging technologies — services like management consulting and research and development.

That might be the plan, but right now the graph for business services is heading south. We've switched from a healthy net export position in 2006 to being a sizeable net importer. Take technical and trade-related business services, for example: We sold AU$912 million worth of services in the December quarter, but imported AU$1.5 billion dollars' worth.

net-trade-in-services
(Image: Phil Dobbie/ZDNet)

The biggest concern, though, is our net position when it comes to intellectual property. This is money from the sale of licences, franchises, trademarks, and the like. We do not export a lot, just AU$278 million last quarter, but it's a rising proportion of our service imports, at AU$1.07 billion.

So we're paying for these tools, but we're not finding an effective way to use them that will see us generating positive trade figures in our technical and business services sector.

Building a new Adobe, Apple, or Microsoft on Australian soil might be an implausible hope, but adding our brainpower to their software to advise businesses around the world is surely the end game. Unless we're willing to accept that Australia will always have a trade deficit when it comes to the information and professional services sector.

On that, I note that in the government's 31-page National Digital Economy Strategy, the word "export" isn't mentioned once.

Topics: Australia, Tech Industry

About

Phil Dobbie has a wealth of radio and business experience. He started his career in commercial radio in the UK and, since coming to Australia in 1991, has held senior marketing and management roles with Telstra, OzEmail, the British Tourist Authority and other telecommunications, media, travel and advertising businesses.

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  • Holy carp

    Hey Phil, great subject for discussion, decision and action. This should be a confronting story for our federal government, but I wonder who is listening/reading. Given the declining trend since 2006, my fear is for the effort it will take to turn this around. Would be great for you to speak to leaders of these organisations and government/industry to hear their views on addressing this worsening trend. I am not sure everyone would understand the seriousness of this situation and the missed opportunity it represents...
    Lukeharveypalmer