Senator the Hon Helen Coonan
Minister for Communications, Information Technology and the Arts

Deputy Leader of the Government  in the Senate

Address to Chamber Reception

Tel Aviv Israel

Tuesday 7 November 2006

INTRODUCTION

It is a pleasure to join you this evening at this distinguished gathering to reflect on the relationship between our two countries and to talk about how we can extend and deepen this relationship even further.

Whilst not my first visit to Israel, I am delighted to be back in a country in which politics is best described as a national pastime and where even former Prime Minister, Golda Meir, once remarked is a nation of “3 million Prime Ministers.”

Back home, I sometimes feel that there are at least 3 million Communications Ministers in Australia ready to comment on media ownership reform and the privatisation of the major telecommunication provider – Telstra.

But here in Israel I have been gaining first hand a more strategic understanding of the challenging political climate in which your country operates.

As well holding the Communications Portfolio, I also represent the Foreign Affairs Minister and the Trade Minister in the Australian Senate, so these issues are of significant interest to me.

ISRAEL’S SUCCESS

Israel, of course, is no longer perceived as just a land of prophets and a land of ancient miracles. Israel is now widely recognised internationally as a country of the future – a land of innovation and a land of ‘modern’ miracles.

Israel’s investment in R&D has consistently been among the highest in the world and it is one of the most important centres of high-tech development, entrepreneurship and advanced technological R&D outside the United States.

The success of Israel’s high tech sector was recognised recently by Bill Gates when he said:
“There is a greater concentration of talented hi-tech manpower here in comparison to other countries – almost to the extent of Silicon Valley.”

This statement is further reinforced by the fact that Israel has the second highest number of high tech companies listed on the NASDAQ.

TRADE MISSIONS TO ISRAEL

So it is an enormous honour to be leading this important Australian Trade Mission to Israel. I am certainly following in auspicious footsteps.

The benefits of these trade missions are obvious, with bilateral trade between Australia and Israel escalating from $10m in 1970 to over $800 million today.

However, there is plenty of room for further improvement which I would like discuss with you this evening and indeed throughout the week.

MISSION OBJECTIVES

This week we are sharing and examining each others commercial successes and from my perspective, the policies and framework that might be adapted or improved from these experiences.

But the trade delegation is also acting as a facilitator to enhance business relationships between Australian and overseas companies.

From what I have seen, I am confident the trade delegation to Israel will accomplish these important objectives.

I would like to acknowledge the exceptional efforts of Leon Kempler and Marcus Mandie from the Australia Israel Chamber of Commerce.

They have put together an outstanding program and their tireless planning for this mission over the past six months is greatly appreciated.

The AICC is highly regarded in circles of Government and the Australian Private Sector and they have been instrumental in building the trade links between our two countries.

RELATIONSHIPS

Australia and Israel have so much in common. We are both vibrant democracies with small populations, we both seek to expand our presence globally, and we both place a great importance on education and business innovation.

For over half a century, our two nations have enjoyed a strong political and economic relationship.

It was actually an Australian, Dr H.V. Evatt, when President of the General Assembly of the United Nations, who proclaimed Israel as a state in May 1948.

And strong cultural links exist between Australia and Israel. With one hundred thousand Jews living in Australia, our Jewish community is very large by world standards.

The Jewish people have made a significant contribution to Australia in areas as diverse as the arts, medicine, the military, law and business.

But it is the similarities between the two countries that makes our business relationship even stronger.

For instance:

We face similar challenges in areas such as resource management – especially water.

We are both major R&D hubs with highly skilled workforces.

And, with relatively small populations, we have both harnessed technology as a means of positioning ourselves in the global economy.

In these areas, and others, there is great potential for Australia and Israel to collaborate and take on the bigger players in the world market.

THE POSSIBILITIES

I firmly believe we can achieve much more from our positive and long standing relationship and that Australia can be a more significant trading partner and industrial collaborator with Israel.

With our similar attitudes and strategies, our strong cultural links, and the all important people to people ties, business opportunities between our two countries abound.

But our mutual trade is still relatively small for both countries despite the considerable escalation since the 1970s.

The total bilateral merchandise trade between Australia and Israel was about AUD$742 million in 2005.

Exports from Israel to Australia were worth AUD$584 million in 2005 while exports from Australia to Israel totalled AUD$157 million.

Unfortunately, over the past five years Israel’s exports to Australia have increased only marginally whereas our exports to Israel have actually dropped.

This is mostly because Israel is buying a lot less of our primary products such as coal and gemstones.

So the clear challenge if Australia is to rebalance this trade flow is to find additional export markets.

For instance, there are some synergies between Australia and Israel in the security sector and a number of Israeli ICT companies are already active investors in these areas in Australia.

Israel may also find some useful links to investment in areas such as agricultural and engineering services where Australia has well developed skills.

And we should also explore knowledge based areas such as biotechnology and medical devices technology where both Australia and Israel have some clear research based strengths.

Australia provides a powerful combination of world class ICT infrastructure and a market which rapidly takes up new technology - providing an excellent environment for business.

We actively seek foreign investment proposals—some 99 per cent of which are approved through our Foreign Investment Review Board process.

And there are over 50 Israeli companies with local offices in Australia. 

Many of these are from the communications industry such as Amdocs, Converse, Rad Data Communications and Gilat Satellite.

From an individual perspective a recent Israeli export to Australia has also made an impact.

Ori Allon, while studying for a PhD at University of NSW, developed a search engine tool that will greatly enhance internet use.

Ori, along with his search engine tool, was snapped up by Google in California and is now a huge success story.

But considering that he holds dual citizenship with Australia, we will claim him also!

WHY AUSTRALIA SHOULD BE ON YOUR RADAR

The Australian economy has proven to be one of the world's most robust, but this is just one of the reasons that many multinationals are establishing a presence in Australia.

For instance, Australia is one of the top countries globally for the availability of skilled labour, IT professionals, finance skills and qualified engineers.

This impressive skills base is underpinned by an exceptional tertiary education system that places Australia in the top four countries in the world in meeting the needs of a competitive economy.

But perhaps the most attractive reason to invest in Australia is that fact that the OECD ranks us as one of the lowest cost business locations in the industrialised world.

This is largely a result of our highly competitive property prices, our high quality work force, and the fact that Australia 's overall tax burden is at about the OECD average.

Of course, another obvious advantage of having a presence in Australia is our physical and temporal proximity to Asia. The time difference between Australia and much of Asia, including Singapore, Hong Kong and Malaysia, is only 2 to 3 hours.

So the ability of companies to service their Asian clients in 'real time' is very attractive.

With around 47 per cent of global trade now focused in the Asia-Pacific, Australia s popularity as a regional hub is well justified.

ICT IN AUSTRALIA

In relation to ICT, the OECD recently found that Australia was second only to the United States in deriving productivity benefits from its use of ICT.

This is because ICT is so deeply embedded across the Australian economy.

It is interesting that only 45 per cent of Australia's ICT professionals actually work in the ICT sector. The rest—55 per cent—are distributed across the economy including services, transport, manufacturing and agriculture.

For example, Australia provides 60 per cent of the world's mining software. On the back of its strength in the minerals sector, the largest Australian company in this area – Mincom – is now seeing increasing revenue growth in areas like transport, logistics and defence industries.

ICT SOLVES NATIONAL PROBLEMS

And ICT can also be front and centre of solving major national challenges. A good case in point is local Australian company, ‘Mediaware’, whose core business has been in developing digital video compression technology for broadcasters.

Mediaware has increasingly found its digital video technology in high demand by the defence sector. Several months ago it was awarded a $2.2 million contract from the Australian Defence Department to develop video exploitation technologies in areas such as object tracking and recognition.

Having a client list that includes the ABC, CNN and NBC, as well as Raytheon, General Dynamics and the US Airforce, demonstrates a very different form of convergence.

ICT KEY TO FUTURE INNOVATION

ICT is also underpinning much of the innovation that occurs across the Australian economy.
Australia's total ICT research and development expenditure has grown to $30 billion, including industry and government funding.
Business Research and Development in ICT across the economy was around $2.6 billion in 2003-04 which was an amazing 40 per cent of all business R&D investment.

There are a couple of good reasons for this increasing investment in ICT research and development across the economy.

First, research by DCITA has shown that the rate of return on ICT R&D is much higher than on other forms of R&D conducted in Australia.

Secondly, because ICT is a general purpose technology, innovation in one sector or field often has broader applications.

GOVERNMENT SUPPORT FOR ICT

The Government is also contributing significant funding towards innovation in ICT – most notably in our $380 million commitment to establish a National ICT Australia Centre for Excellence, better known as NICTA.

NICTA and other research organisations, such as the Commonwealth Scientific and Industrial Organisation—CSIRO—are working hard to engage industry and to establish international linkages, to build clusters of interest in ICT and its applications.

With over 300 research staff and over 250 PhD students, NICTA is conducting leading edge, use-inspired research in areas such as security, telecommunications, water management, traffic systems, life sciences, health, embedded systems and software development.

The CSIRO ICT Centre has strong expertise in communications networking technology.

I am pleased to have as a member of the Australian Delegation, Dr Alex Zilinsky who heads CSIRO’s ICT research.

As Israel has been particularly successful in ICT enterprise creation, the CSIRO is interested in Israel’s incubation programs for public sector and defence research.

The CSIRO is also interested in interaction between public sector research and SMEs.

The CSIRO ICT Centre has recently appointed an Israeli senior science leader to its Networking Technologies Laboratory.

This provides a linkage for academia and industry between Israel and Australia.

TELECOMMUNICATIONS

And I would like to also briefly mention the Government’s $3.1 billion investment in telecommunications and broadband infrastructure – the Connect Australia package.

Given the critical importance of broadband as fundamental economic infrastructure – Connect Australia is a true nation-building investment and will be critical to our future.

We are currently in a tender process for large scale new broadband infrastructure networks and the funding will be awarded next year.

CONCLUSION

So, in summary, Australia is an ideal location to perform high value, core research and development to service the global market.

Australia is not just a purchaser of technology — we are creatively developing applications to meet our national needs and to target global markets.

Australia has some clear areas of strength – particularly in the research and services sectors which could easily be complementary to Israel’s undoubted strengths in emerging technology.

In addition, we have growing strengths of our own in ICT research and there is very clear scope for increased longer term collaboration between our two countries.

We do have a long history of strong historical and cultural ties and of a growing trade and investment relationship.

And I am confident that Australia will become a more significant trading partner and industrial collaborator with Israel in the future.

I invite you to join the growing list of global companies who are taking advantage of the trade and investment opportunities, especially in IT, that Australia offers.

Finally, thank you for being such gracious hosts – we are planning already to reciprocate when visit the land down under.