Estimates Vote

Department for Trade and Investment, $44,811,000

Minister:

Hon. S.J.R. Patterson, Minister for Trade and Investment.

Departmental Advisers:

Ms L. Muldoon, Chief Executive, Department for Trade and Investment.

Ms M. Antcliff, Deputy Chief Executive, Department for Trade and Investment.

Ms S. Adlaf, Director, Strategic Operations, Department for Trade and Investment.

Mr J. Ross, Director, Policy and Analytics, Department for Trade and Investment.

Ms R. Lang, Manager, Finance Procurement and Facilities, Department for Trade and Investment.

The CHAIR: Good morning and welcome back to Estimates Committee B for the second time today. I will start by making an opening statement and then we will address a couple of issues. The estimates committees are a relatively informal process and, as such, there is no need to stand to ask or answer questions. I understand that the minister and the lead speaker for the opposition have agreed on an approximate time frame for the consideration of proposed payments, which will facilitate a change of departmental advisers. We will address this shortly at the conclusion of this statement.

Changes to committee membership will be notified as they occur. Members should ensure that the Chair is provided with a completed request to be discharged form. If the minister undertakes to supply information at a later date, it must be submitted to the Clerk Assistant via the answers to questions mailbox no later than Friday 5 February 2021.

I propose to allow both the minister and the lead speaker for the opposition to make opening statements of about 10 minutes each, should they wish. There will be a flexible approach to giving the call for asking questions based on about three questions per member, alternating each side. Supplementary questions will be the exception rather than the rule.

A member not on the committee may ask a question at the discretion of the Chair. Questions must be based on lines of expenditure in the budget papers and must be identifiable and referenced. Members unable to complete their questions during the proceedings may submit them as questions on notice for inclusion in the assembly Notice Paper.

There is no formal facility for the tabling of documents before the committee; however, documents can be supplied to the Chair for distribution to the committee. The incorporation of material in Hansard is permitted on the same basis as applies in the house, that is, that it is purely statistical and limited to one page in length.

All questions are to be directed to the minister, not the minister's advisers. The minister may refer questions to advisers for a response, if appropriate. The committee's examinations will be broadcast in the same manner as sittings of the house are broadcast, that is, through the IPTV system within Parliament House via the webstream link to the internet and the Parliament of South Australia video-on-demand broadcast system.

There has been a delay in our start this morning and therefore the agreed time frame for today's examination of payments has been changed. Can we have a proposal from the floor to delay examination of payments for an hour? The timetable is to remain the same but pushed back by an hour from the 9 o'clock period through to 12.15. We will then condense the lunch break to half an hour. That will be from 1.15 to 1.45 and the remainder of the session will be half an hour delayed, so the post lunch break session will start at 1.45.

Mr KNOLL: I move:

That the examination of payments be delayed for one hour.

Motion carried.

The CHAIR: The change to the program has been agreed. I will now open the proposed payments for this morning. The portfolio for examination today before Estimates Committee B is the Department for Trade and Investment. The minister appearing is the Minister for Trade and Investment. I declare the proposed payments open for examination and refer members to the Agency Statements, Volume 4. I call on the minister to make an opening statement if he so wishes and to introduce his advisers.

The Hon. S.J.R. PATTERSON: Thank you, Chair, and good morning, everyone. Thank you for the opportunity to outline the great work and achievements of the Department for Trade and Investment during the last year. It also gives me an opportunity to explain some of the key challenges that we have faced and overcome during this unprecedented period of global disruption due to the COVID-19 pandemic.

I would just like to introduce you to the departmental representatives here today. To my left is Ms Leonie Muldoon, who is the Chief Executive. Behind me are Ms Megan Antcliff, the Deputy Chief Executive; Ms Sophie Adlaf, Director, Strategic Operations; Ms Rebecca Lang, Manager, Finance Procurement and Facilities; and Mr Justin Ross, Director, Policy and Analytics.

There is no question that 2020 has been a year unlike any other. It has presented challenges and shocks, and it has fundamentally disrupted economies at local, national and global levels. 2020 has been one of the most difficult years anyone has ever experienced and perhaps will have to experience, but through this our resilience and strength to continue moving forward has triumphed, continuing to drive the Marshall government's jobs and economic growth agenda.

COVID-19 has significantly impacted the South Australian economy. The restrictions around borders, both domestic and international, have limited the movement of people within the community and, as a result, businesses and livelihoods have suffered. Impacts on trade and investment are undeniable, especially in our tourism, international education and premium food exports, which have all been affected by the reduction of international freight and passenger flights and associated border controls.

Navigating through these challenges has meant a lot of tough decisions have been made not only to protect the health of all South Australians but to minimise the impact on our economy and the devastating effects of this pandemic. It has prompted new ways of thinking and new forms of engagement. We have supported our South Australian exporters to weather the storm of these challenges, and it is a huge focus of the Department for Trade and Investment.

In May, the department launched the new eCommerce Accelerator Program (eCAP) for companies wanting to find new customers and sell their products online to international buyers. A total of 95 recipients have since been allocated funding under this program, sharing in more than $930,000 in grants. We also rolled out an Export Fundamentals Program to help around 400 emerging and existing exporters successfully market their products and services internationally and drive local jobs growth over a two-year period.

In conjunction with Austrade, we have continued to administer the South Australian Export Accelerator Program, and 91 companies have been awarded funding to date through this program, including five offered through a special bushfire round. Most recently, the department has also launched the $2.3 million Global Expansion Program. This is aimed at supporting South Australian businesses with solid local growth who are keen to diversify into new markets or boost their presence in existing markets. The program will be delivered over four years to support more South Australian businesses to expand their reach around the globe.

Our government responded quickly when the border restrictions led to the cessation of international flights by establishing the Export Recovery Taskforce. Through the task force, we have worked closely with industry to reopen trade routes and address the issues affecting our exporters, particularly those who export valuable and highly perishable foods.

The task force proved crucial in securing funding from the federal government's International Freight Assistance Mechanism (IFAM). IFAM has ensured direct international airfreight routes from Adelaide for exporters, with weekly freight flights operated by Singapore Airlines, Cathay Pacific and Qatar Airways to Singapore, Hong Kong and Doha. To date, IFAM-supported flights have delivered over 1,000 tonnes of South Australian exports to international markets.

Of course, travel restrictions have had a significant impact on international education. Despite the challenges, enrolment numbers continue to increase, which is an incredible achievement and a definite vote of confidence in our education sector. We continue to work with our international education providers and StudyAdelaide to promote South Australia as an attractive place to study and also to return international students when it is safe to do so.

In what has been an incredibly challenging year, the department has also continued to deliver on the investment front, attracting significant global companies and creating thousands of jobs. As the budget papers outline, the department has been able to attract $609 million of investments, creating 2,668 jobs. We have also seen South Australia capture 15 per cent of foreign direct investment in the year to March 2020, which is well above our national population share and above our target of 6 per cent.

Under the department's South Australian Landing Pad program we continue to attract international companies with high-growth potential such as Cellr, LGM and Lux Aerobot, to name some. A recent example of my department’s great work is attracting Accenture to establish in South Australia. Accenture is one of the world’s largest technology and professional services firms. In September this year Accenture announced they will establish the Accenture Adelaide hub. This is expected to create up to 2,000 new jobs over the next five years.

We are attracting brilliant minds from all over the globe, and in doing so, we are not just showcasing our talent; we are building our innovative ecosystem and importantly building the workforce of the future.

Other investment success stories for South Australia that have come to life this year include the establishment of the MIT Living Lab, South Korean pharma company Yuhan Pharmaceuticals, DP Energy and Perigee Aerospace. We are positioning South Australia as a magnet for investors, creators and innovators. We are creating the home to pioneering enterprise and exciting new industries as we continue to drive the southern shift, and this success will only breed more success.

Since 2019, the Department for Trade and Investment has been working closely with Food SA and Showcase SA to support local businesses through the management of the state brand and I Choose SA to ensure local businesses can leverage these valuable assets. The department is focusing on increasing the number of businesses registered for this brand.

Given the scale of the economic impact caused by the bushfires and COVID-19, the government, industry organisations and South Australian businesses came together to promote the I Choose SA message and encourage South Australians to buy local, reaching 950,000 South Australians. From 1 July 2019 to 30 September 2020, the department has approved 700 applications for the brand mark and I Choose SA. There are now 7,424 registrants in total.

To increase exports and grow international business, we have opened offices in China, Japan, the United States of America and the United Arab Emirates, along with continued representation in Hong Kong, Malaysia, and the United Kingdom. We have also placed South Australian representatives in Korea and India. I am happy to provide more information to the committee on the extensive work being done to expand our overseas presence. We will look to open our fifth office in South East Asia soon.

At this time, when our businesses and project proponents cannot travel, the overseas network provides vital support enabling them to continue to trade globally and fostering discussions and facilitation of foreign direct investment into South Australia.

Whilst the past year has presented massive unexpected challenges that have tested our response, there is reason to be optimistic. We have been able deliver significant outcomes across Trade and Investment, attracting businesses and creating jobs while assisting local exports to reach new markets and ensuring existing exports can get their products and services to market in a timely and efficient manner. It is also likely that with good seasonal conditions and commodity prices holding as well as a competitive exchange rate there are further positives for us to rebuild on.

While we are seeking every job-creating opportunity, my agency continues to implement the key strategies to support existing industry to grow while building the industries of the future through the Growth State plan that will grow South Australia’s economy. Again, I am happy to provide an update on how the department has been driving the Growth State plan to the committee later on.

The Department for Trade and Investment is positioned as the central agency behind the government’s 3 per cent growth agenda, and I look forward to continuing the work across government with my colleagues to deliver upon this. Thank you.

The CHAIR: Thank you, minister. Lead speaker for the opposition, did you wish to make an opening statement?

Dr CLOSE: Thank you, Chair. Not other than to thank the members of the department who have appeared today and to say I look forward to asking questions.

The CHAIR: Very good. And with that can we call for questions for members? The member for Port Adelaide.

Dr CLOSE: Chair, if I may, I will start with the omnibus questions, because I am not sure how long they take to read, and then we know we have disposed of them and we know how long we have to ask questions. I know it is a bit more tedium, but I will go as fast as I can.

1. For each department and agency reporting to the minister:

What is the actual FTE count at 30 June 2020 and the projected actual FTE count for each year of the forward estimates?

What is the total employment cost for each year of the forward estimates?

What is the notional FTE job reduction target that has been agreed with Treasury for each year of the forward estimates?

Does the agency or department expect to meet the target in each year of the forward estimates?

How many TVSPs are estimated to be required to meet FTE reductions over the forward estimates?

2. For each department and agency reporting to the minister:

How much is budgeted to be spent on goods and services for 2020-21, and for each of the years of the forward estimates period?

The top ten providers of goods and services by value to each agency reporting to the minister for 2019-20; and

A description of the goods and/or services provided by each of these top ten providers, and the cost to the agency for these goods and/or services?

The value of the goods and services that was supplied to the agency by South Australian suppliers.

3. Between 1 July 2019 and 30 June 2020, will the minister list the job title and total employment cost of each position with a total estimated cost of $100,000 or more which has either (1) been abolished and (2) which has been created?

4. Will the minister provide a detailed breakdown of expenditure on consultants and contractors above $10,000 between 1 July 2019 and 30 June 2020 for all departments and agencies reporting to the minister, listing:

the name of the consultant, contractor or service supplier;

cost;

work undertaken;

reason for engaging the contractor; and

method of appointment?

5. For each department and agency for which the minister has responsibility:

How many FTEs were employed to provide communication and promotion activities in 2019-20 and what was their employment expense?

How many FTEs are budgeted to provide communication and promotion activities in 2020-21, 2021-22, 2022-23 and 2023-24 and what is their estimated employment expense?

The total cost of government-paid advertising, including campaigns, across all mediums in 2019-20 and budgeted cost for 2020-21.

6. For each department and agency reporting to the minister, please provide a full itemised breakdown of attraction and retention allowances as well as non-salary benefits paid to public servants and contracts between 1 July 2019 and 30 June 2020.

7. What is the title and total employment cost of each individual staff member in the minister's office as at 30 June 2020, including all departmental employees seconded to ministerial offices?

8. For each department and agency reporting to the minister, could you detail:

(a) How much was spent on targeted voluntary separation packages in 2019-20?

(b) What department funded these TVSPs? (except for DTF estimates)

(c) What number of TVSPs were funded?;

(d) What is the budget for targeted voluntary separation packages for financial years included in the forward estimates (by year), and how are these packages funded?

(e) What is the breakdown per agency/branch of targeted voluntary separation packages for financial years included in the forward estimates (by year) by FTEs?

9. For each department and agency reporting to the minister, how many executive terminations have occurred since 1 July 2019 and what is the value of executive termination payments made?

10. For each department and agency reporting to the minister, what new executive appointments have been made since 1 July 2019, and what is the annual salary, and total employment cost for each position?

11. For each department and agency reporting to the minister, how many employees have been declared excess, how long has each employee been declared excess, and what is the salary of each excess employee?

12. In the 2019-20 financial year, for all departments and agencies reporting to the minister, what underspending on operating programs (1) was and (2) was not approved by cabinet for carryover expenditure in 2020-21?

13. In the 2019-20 financial year, for all departments and agencies reporting to the minister, what underspending on investing or capital projects or programs (1) was and (2) was not approved by cabinet for carryover expenditure in 2020-21? How was much sought and how much was approved?

14. For each grant program or fund the minister is responsible for please provide the following information for 2019-20, 2020-21, 2021-22, 2022-23 and 2023-24 financial years:

(a) Name of the program or fund;

(b) The purpose of the program or fund;

(c) Balance of the grant program or fund;

(d) Budgeted (or actual) expenditure from the program or fund;

(e) Budgeted (or actual) payments into the program or fund;

(f) Carryovers into or from the program or fund; and

(g) Details, including the value and beneficiary, of any commitments already made to be funded from the program or fund.

15. For the period of 1 July 2019 to 30 June 2020, provide a breakdown of all grants paid by the department/agency that report to the minister, including when the payment was made to the recipient, and when the grant agreement was signed by both parties.

16. For each year of the forward estimates, please provide the name and budgeted expenditure across the 2020-21, 2021-22, 2022-23 and 2023-24 financial years for each individual investing expenditure project administered by or on behalf of all departments and agencies reporting to the minister.

17. For each year of the forward estimates, please provide the name and budget for each individual program administered by or on behalf of all departments and agencies reporting to the minister.

18. For each department and agency reporting to the minister, what is the total cost of machinery of government changes since 1 July 2019 and please provide a breakdown of those costs?

19. For each department and agency reporting to the minister, what new sections of your department or agency have been established since 1 July 2019 and what is their purpose?

20. For each department and agency reporting to the minister:

What savings targets have been set for each year of the forward estimates?

What measures are you implementing to meet your savings target?

What is the estimated FTE impact of these measures?

It would be great if we could table these 20 omnibus questions. If we can look at Budget Paper 4, Volume 4, page 136, Program 1: Trade and Investment, objective. How many jobs in South Australia are related to the export of our goods and services?

The Hon. S.J.R. PATTERSON: I will just confirm that we are talking about the right line, member for Port Adelaide. My CE, Leonie, is slightly deaf, so it is hard for her to hear. Were you on page 136, highlights, the 2019-20 figures?

Dr CLOSE: That is right. It was Program 1: Trade and Investment, description/objective:

Develop and implement strategies and programs that facilitate international exports and high value jobs growth.

My question was: how many jobs are currently related to the export of goods and services in South Australia?

The Hon. S.J.R. PATTERSON: In terms of that line, 'Develop and implement strategies,' I will talk more generally to start off with in terms of how we are going with exports. Because of the coronavirus there have been substantial impacts on face-to-face meetings because of international travel restrictions, so necessarily that has meant those face-to-face meetings cannot occur. In lieu of that, the department has been working hard on providing a digital presence to connect our exporters to market and working in conjunction with our trade offices.

Some of those programs, which I can go through in more detail later, are our Export Accelerator Program. That helps our exporters get to market quickly and expand into new markets as well, or into existing markets. As they grow their exports, that means they get more income and that gives them confidence to create jobs. More fundamentally as well, to assist those exporters in South Australia, because while they are exporting out to the world they are based in South Australia, so they are subject to the cost of doing business in South Australia.

As a government we have been mindful, and this budget talks to that, of lowering the costs of doing business, lowering payroll tax specifically. Already we have put in place payroll tax reductions for small businesses, those with a payroll of $1.5 million or less. This budget also takes into account those larger businesses, up to a turnover of $4 million, that have big payrolls and requires them to put their money into basically investing in their business, investing in their employees, so we have waived that for 15 months, which is a massive assistance to them.

Out of those exporters we are able to work with them, and we are also trying to attract companies into South Australia that will also have an export focus. We want them not only to sell into South Australia, but would like to base them here and sell their products on the way out. As an example of the—

Dr CLOSE: Excuse me, Chair. I am sorry to interrupt. I appreciate there is time in this role, and I do not mean to make things difficult, but we do not have terribly long and I have asked quite a specific question about jobs associated with export of goods and services in South Australia. If the minister does not have the number of jobs that you use, then I am very happy for that to be taken on notice. The general information that is actually publicly available currently probably does not help us get through the number of questions that we have.

The Hon. S.J.R. PATTERSON: What I was alluding to was that when we create jobs, some of these jobs are providing commerce in South Australia and they are also exporting some of the attractions. I will give that to you on notice. I will take that on notice to give you an exact figure. I was just trying to be assistive at the moment. I am advised that more than half of that figure you could tie back to exports.

For example, some of the companies, as I said, have come here to set up their business, of course to sell into South Australia, so you could say some of those jobs are for South Australian commerce, but they are exporting as well. Say, for example, a company brought in 100 jobs, how many of those jobs are export and how many are just the normal cost of doing business? I am advised that more than half you could tie to exports, but I will come back on notice with an exact figure, if I can do so.

Dr CLOSE: On that same line, I understand that pre-COVID there was an estimate that the government had that something like 79,000 jobs in South Australia were associated with the export of goods and services. In coming back, it would be useful if there is a revised estimate in the wake of COVID; that would be helpful. I am also interested in how many businesses are currently considered as exporters who are based in South Australia, if there is a working estimate that the department uses.

The Hon. S.J.R. PATTERSON: In terms of an exact number, again I think that is something that we can come back to you on. In regard to your concerns, to provide a bit of information that might help you on the export frame, I am advised, as I said before in my previous answer, that we run a number of export programs to help build the capacity and capability of our businesses.

I spoke previously of the Export Fundamentals Program. That is for businesses that are starting out, looking to export. We also have the Export Accelerator Program, which is for businesses that are already exporting but seeking to boost their sales into either the existing market they are in or alternative markets. In terms of those programs, the department has delivered export services to 1,498 businesses. That was between 1 July 2019 and 30 June 2020.

Another example was the eCommerce Accelerator Program (eCAP). That had 95 applications and approved funding of $931,326. Again, that is another example. That is skilling them up. On the bigger picture about where exports are going as well, I think, yes, with coronavirus there is no doubt that it has impacted both South Australia, Australia, but also the world. Key to our getting through this has been listening to the health experts and getting the health response right to allow our exporters to continue to export.

If I look at some figures for the 12 months to September 2020, South Australia's overseas goods exports totalled $11.3 billion, which is up 0.3 per cent on the previous 12 months. There is no doubt that times are difficult, but the overall exporting of the state is still holding up and I think that is a credit to our exporters. They have had to adapt. It certainly has been a challenging year for them. By working with industry and stakeholders, the government is really trying to help our exporters because we see that they are fundamental, really, to growing our economy going forward. That then allows those companies to be profitable and, from that, create jobs.

Dr CLOSE: It is widely understood there are trade tensions with China. It is not clear what the trajectory will be, but has the department undertaken any modelling on likely impact on South Australia's gross state product and employment, should those trade tensions continue?

The CHAIR: Do you have a budget reference, member for Port Adelaide?

Dr CLOSE: It is the same budget reference: the export growth.

The Hon. S.J.R. PATTERSON: In relation to China, it is certainly true that China is a critical trading partner for South Australia. We have a long history of engagement with China. I can give you an example: the sister state agreement with the Shandong province, which has been in place for many years. I think it is worth taking a bit of a step back. This comes in the context, as I said before, of more significant challenges in terms of exports in general. We talked about, really, the major disruption that the COVID pandemic has had to trade throughout the world; so not just Australia, South Australia, but also the world.

Very early on in the piece, our department set up the Export Recovery Taskforce. That really focused on some of the key challenges that our exporters were going to have, and that includes exporting into China because, as I said before, these face-to-face meetings that would usually be relied on by exporters to try to expand their product offering and expand their export markets were taken away.

Thankfully, we have in place a very worthwhile trade office network and that has been predicated on looking at what markets are compatible with our competitive strength. We talked about those Growth State sectors and how we think it could potentially affect those. Those Growth State sectors are put in place predominately around asking what are our strengths as a state that we can compete on a global competitive market. It is undeniable that we cannot be all things to all people; we have to look to what industries are future focused.

This Export Recovery Taskforce was based around that. It got around the table representatives from Austrade, representatives from our department, key stakeholders and exporters into China and into other markets as well. Even prior to that, it was undeniable that our wine sector, for example, is a key export sector for us, growing I think towards the $2 billion mark. A significant portion of that is into China, so like many businesses as well, it is about realising that if you want to grow your sales, yes, you can grow into one single market but you can also look to grow across markets.

We have been looking to grow into other wine markets, even prior to COVID and these trade tensions. One of the mechanisms, one of the programs, was the wine industry exports recovery program. That has 10 projects and looks to go into seven markets to help promote South Australian premium wine. This will be taking place in the 2020-21 financial year. Each of these projects is supported by a representative in our overseas offices, with the program again having a strong online focus, including virtual wine-tastings, because face-to-face is not available. This has already led to some direct export contracts.

The trade tensions you speak of are principally worked through at a national level. We are very lucky in South Australia that the federal Minister for Trade, Tourism and Investment is Senator Birmingham, who is a South Australian. As the minister in South Australia, I have been working with him, providing him information about what is going on on the ground in those markets. As I said, the trade offices we have in China are able to feed through market intelligence about what is going on and what the challenges are.

I think Senator Birmingham, alongside myself, has been quite positive that our South Australian wine producers are producing a premium product. Because of that, it is priced well. Actually, the sales are quite high, and the price that is paid for them by the importers in China and throughout the world is high. We do not agree at all that the dumping allegations by the Ministry of Commerce in China are correct, so we are putting our best case forward. We are helping those wine exporters. We have to take it at face value and go through this process and help our exporters into China.

I feel we have good relations with China at a state level as well, with Madame He, who is the Chinese consul in South Australia. I have met with her and talked with her and provided an update on the health situation here and how that is impacting international students, because of course we want to ensure that the proportion of students who are Chinese are assisted. We want to know whether there is anything that we as a government can do and also give assurance to Madame He from that point of view. She has subsequently written back, and I do feel that there is a positive relationship there, because our relationship is more on the trade level. I think that is where we have to take things at face value and know that our relationship is good also.

Even most recently, we have had the RCEP (Regional Comprehensive Economic Partnership) approved, which is a partnership of 15 nations in the ASEAN-Oceania region that includes China, South Korea and Japan. We feel as confident as we can and, as the federal minister has said, we have to let the process run out and work through that. We are working with industry to ensure that we can assist them to basically put their case forward, because we recognise that China is a very valuable market. We provide high-quality produce and goods to them, which their consumer market has certainly shown a history of purchasing.

Dr CLOSE: Other than Madame He, who is based in South Australia obviously, have you had any discussions with government officials from China, particularly from the Shandong province directly—conversations about trade—since taking on this role?

The Hon. S.J.R. PATTERSON: As I said before, I have had meetings with the consul general, Madame He. She is the primary interface that we have as a government back through to China. We have our trade offices in China, four of them. They provide in-market intelligence back to us. As an example, there are also other opportunities that we have as a state around joint partnerships in terms of the establishment of five joint laboratories with the Shandong Academy of Sciences, which is in Jinan in China. That provides us an opportunity to have research into a number of our key growth sectors.

I rely on a really good working relationship, as does the Premier. I should note that the Premier has also liaised and met with Madame He. Just recently, he took her on a tour out to the Waite institute. I think there is a real opportunity, because of our expertise in this agricultural science domain, to really assist the Chinese domestic market in terms of their food growth. We share that intelligence. I see that as a real positive. Certainly, Madame He, as the Consul General in South Australia, has good connections into other official sources in China.

Dr CLOSE: If I turn to Budget Paper 4, Volume 4, page 135, one of the key agency outputs is, 'Facilitate increased and more diverse exports from South Australian businesses'. What is the strategy to increase South Australian export diversification?

The Hon. S.J.R. PATTERSON: If we look at the fundamentals of how we are going to facilitate as a government the development implication of growth for these sectors, primarily it is based around the Joyce report that was delivered back in February 2019 and outlined how we need to play to our strengths as a state, to look at some key sectors that are future focused as well, making sure we are going to try to grow those industries of the future that are going to continue to grow and be able to compete globally. We have seen the impacts on globalisation that have occurred.

One of the key tenets around this has then led to our Growth State plan. It is a 10-year industry-led growth strategy. It is developed in nine key priority sectors of the economy where we do have a competitive advantage, if I can talk to that. There is the defence industry; space industry; creative industries; high tech; energy and mining; health and medical industries; food, wine and agribusiness; international education; and tourism.

The idea is we have engaged with industry to find out what they need to be able to grow into the future over that 10-year span. Really, the aim is for them to combine to help achieve 3 per cent annual growth, on average, in our gross state product. Obviously, external shocks, such as we are experiencing now, may impact that, but I should say that those sectors even through this have been able to stand up well. So we are looking at industry leading those plans to stand up and grow into the future.

If I could talk in a way to the high-tech sector as well and some of those opportunities there, it is also about creating precincts and centres of excellence so that we can actually continue to attract those businesses that then will create that export chain out to the world. For example, Lot Fourteen is a fantastic precinct that has some real centres of excellence that are world leading. The Australian Institute of Machine Learning is based there. It is one of the top, certainly one of the top three, universities in the world to do with artificial intelligence.

Having that knowledge base there is going to be really important for our state because that will play into helping a number of these other sectors, whether that is defence, whether that is cyber, whether that is energy and mining, health and medical, for example, to use this artificial intelligence to basically increase the capability of our exporters, of all businesses in South Australia, because that then allows them to get ahead in the market and to produce an offering that will then be attractive to the world. We see that those fundamentals are really important.

Other, I suppose you would say, centres of excellence are based at Lot Fourteen. There was the fantastic announcement from the Prime Minister about the Australian Space Agency being based in South Australia. That was based here primarily because the space sector in South Australia is commercially led. Rather than the traditional old space where you have significant government investments to stand these sectors up, we now have a thriving commercial space ecosystem in South Australia. Having that there also attracts other significant businesses into South Australia that will certainly help grow, I would say, the capability of businesses.

That in turn allows for continued investments. Not only does it give a job pathway to talented graduates but it also allows our existing workforce to re-skill. We have a significant re-skilling in place in this budget, recognising that, yes, not only do you need businesses in place but to be able to attract businesses and grow businesses in South Australia you also have to have that skills base there and be able to train people effectively. We have shown as a government, by putting significant resource into that, we have had a significant uptick in those undertaking training courses in South Australia.

In terms of crystallising how that plays out, from our export point of view, you have your traditional merchandise and commodity exports but also our service exports. By growing our service exports as a percentage of our overall exports, it will provide more resilience to our exports which then in turn helps out in terms of facilitating development of these industries. The service exports, I am advised, grew by 13 per cent in the last calendar year, which is a significant growth, especially in light of some of the challenges we are facing.

We are confident in this strategy going forward and that putting in those fundamentals—and I have talked previously about lower costs of doing business—will provide development for industry-led growth. As I said, our gross state plan relies on its industry-led growth and, out of that, we will have further progress in our economy.

Dr CLOSE: Continuing with Budget Paper 4, Volume 4, page 135, as to facilitating increased and more diverse exports from South Australian businesses, does the government have any regional-specific trade strategies that are currently active?

The Hon. S.J.R. PATTERSON: As a government we value the regions and, since coming to government, we have had an additional focus on the regions. We have members of the committee here from the regions who have spoken most stridently about the benefits that their electorates and regions have had by having that concentrated focus on them. We know that the regions—say, food, wine and agriculture as an example—provide a massive share of our overall economy. They represent a big share, disproportionately to the population base as well.

We are really thankful to them. They have had challenging conditions this year, whether that be through drought, which has had some significant impacts; the bushfires as well, really challenging bushfires, whether that be Kangaroo Island, the Adelaide Hills or Yorke Peninsula. Only last week there were fires near Coomandook. It is a challenge to the regions. As a government, we recognise that the regions are a key to our growth, so via TradeStart we have representatives in the regions. We are also at this point in time advertising for further staff to work in these regions because we need them to be trade specialists, making sure we have people on the ground.

I just did a tour up to Port Pirie and Port Bonython. I went through and saw some of our grain exporters and some of the great work they do and the organisation they have to help get that grain to market. I was accompanied by one of our TradeStart officers who travelled from Port Lincoln to meet me which was fantastic.

If I could just talk to where some of those locations are, I have a regional manager in the Far North, another regional manager in the Murraylands and regional managers for the Mid North, Kangaroo Island, Fleurieu Peninsula and Adelaide Hills as well. They are key conduits between business, departments and our export markets.

I talked before about bushfires. They did have an impact on some of our exporters. As a government, we recognised this and provided a dedicated round of the South Australian Export Accelerator Program to support those exporters that had been impacted by bushfires, to allow them to recover their export activities. The bushfire round was designed to meet the needs of exporters that were impacted. The response was designed after consultation with our exporters. It has included the development of new program guidelines.

Grants were assessed by an independent panel against merit-based selection criteria. This obviously cannot overcome all the challenges from the bushfires, but they are there to help. If I could talk about some of the programs that were digitised, provided in a digital manner, I will talk about the Export Fundamentals Program, which was delivered online. That makes it really attractive for people in our regions as well. Previously, they would have to come into the city and do a full-day course. So that has taken them out of their region into the city for the full day. Rather than that—

Dr CLOSE: Sorry, Chair. Again, I really hate to interrupt, and it is a lack of clarity in my question. It is important that the regions in South Australia are able to export. What I am asking about is the global region in which we reside and specific strategies to sell into our region, the Pacific region, or any other specific region.

The Hon. S.J.R. PATTERSON: I apologise, but I enjoyed talking about the regions. Let me frame that again. I appreciate that.

Dr CLOSE: The Pacific region, the Subcontinent, the Middle East.

The CHAIR: To be clear, member for Port Adelaide, our region and any other region around the world as well.

Dr CLOSE: Indeed, any region-specific trade strategies that say, 'This is the region we now want to export to as part of our diversification program.'

The Hon. S.J.R. PATTERSON: We will now reframe it. Thank you for that, and we give credit to our near regions. In terms of where we sit in the global context, I think basically we sit in a really growing part of the world in the Asia-Pacific area. There is a massive growing middle class throughout the ASEAN region, throughout India and throughout China. As I said before, our strategy is really to play to our strengths. What sectors of the South Australian economy can compete at a global level to allow us to sell into those regions?

We really feel as a government that one of the important ways we can connect with these markets is, as I said, to look at these Growth State sectors and ask, for each region within the overall global context, how do their strengths match up with ours? It is not only looking into Asia but looking at other regions as well. The US is an important destination for us. It certainly has the most foreign direct investment.

Dr CLOSE: Do you have any published strategies that are aimed at this, 'This is what we are going to do, and this is how we are going to know if we have done it well.' That is really my question. Sorry to interrupt, but we are running out of time.

The Hon. S.J.R. PATTERSON: That is okay. The underpinnings of this is growing into our Growth State sectors. We are then looking at, okay, how can we put in place on the ground representation in our trade offices? We see that as a really important strategy to grow in these markets. It gives on the ground intelligence to them.

So if I talk to that. If I look at the time line, since coming to government we have opened up a trade office in Shanghai, in November 2018, that co-locates with Austrade, so the strategy is to work in with Austrade. We then opened up a trade office in Tokyo, in March 2019. That is working in unison with our existing presence there. We have also opened up an office in Seoul, South Korea. That is in the Asia region.

In terms of the United States, we opened a up trade office in Houston. That was opened in 2020—early days, before COVID. Most recently, we opened up the New York office. Alongside that, recognising some of the other growing regions—the Middle East and India—we have opened up a trade office in Dubai as well.

We see these really as fundamental. We also have, of course, the consulate office in the UK. That has a significant focus on commerce as well, especially in light of the fact that, with the UK leaving the European Union, there are certainly opportunities there. Out of that, these offices have business plans in place to say what are the key strengths that South Australia brings to that particular region? How can they help our exporters? How can they get investments?

If I look to these business plans, they have provided services to the South Australian companies here. To 30 June 2020, we have provided 1,200 trade services, including inbound mission support and new buyer connections; we have provided market advice and intelligence to 600 Australian companies; and we have facilitated and recruited potential importers and buyers for 14 inbound missions, collaborating with the industry.

That is one way. Another way is connecting digitally, so how can we assist South Australia? You will remember I spoke in parliament about our Invest in South Australia website. That brings together investment-ready proposals from South Australia to investors. This is a great means for investor-ready projects in South Australia to try to attract international attention. We can work in conjunction with our trade offices. This website also provides details into the department officials, so that allows interested businesses that are wanting to invest in South Australia to connect in with our department and talk to them.

This budget also looks to allocate funds for a virtual business matching program. It is effectively an equivalent website to the Invest in South Australia website, and it is designed around connecting up exporters and export-ready programs. They are some of the specific examples. I have talked about our Export Accelerator Program as well. They all work in together.

If I could talk to a specific example of how our Growth State strategy also lends itself to growing our economy in South Australia, we have fantastic renewable energy resources in South Australia, whether that is solar or wind, and of course we have a lot of land mass where we can make use of that. There are certainly emerging opportunities in the realm of capturing some of that intermittent energy. There are batteries that can be used to store it, but also there are investigations and I think some fantastic opportunities in terms of hydrogen and also green ammonia, which is another way of capturing hydrogen.

So these renewable resources, wind or solar, are able to convert water—split it apart via an electrolyser—into hydrogen. That is a big opportunity for us. This budget even looks to where those hydrogen projects could be stood up. We have recognised, as a government, that not only can this be used in South Australia, it can also lend itself to export opportunities.

I talked about RCEP before, so Japan and South Korea, two significant economies in our region, are looking at standing up a hydrogen industry. Of course, they are beset by having a small geography with a significant amount of that being covered by their population base. We see a key role that South Australia can play in terms of being able to assist them and export hydrogen into those countries.

Mitsubishi Heavy Industries is certainly very interested in this opportunity in South Australia. Their industries have got behind their government, in terms of the government's ambitions to reduce carbon emissions. We see this as fantastic for our state because not only can we help reduce emissions in South Australia, we know that on a global scale Australia's carbon emissions really represent a very small percentage of the overall global emissions, so even if we reduced ours to zero, there would be significant challenges from a global perspective.

By hooking in and really working and trying to grow this export opportunity for hydrogen, we see that as effectively a way of our state being able to assist from a carbon emissions reduction point of view globally, as well. We see that as a significant opportunity. Potentially, that could lead to, at this stage, more than $200 million of investment, looking to see if that could be stood up near, in or around Port Bonython.

This government has invested $37 million in this budget towards the maintenance of that Port Bonython jetty, in part, to make sure that it is fit for purpose should that opportunity arise. We see ourselves as being able to be the nation's capital to scale up hydrogen. I think that is a really exciting way of how our gross state sectors are looking to the future of how we can grow.

I will perhaps talk a little bit about the US market, as well. It is an important market to us.

Dr CLOSE: Sorry, Chair, is it the case that we are now out of time?

The CHAIR: No, we are until 11.30.

Dr CLOSE: It was only an hour session, though, was it not?

The CHAIR: No, an hour and a half the first session.

Dr CLOSE: It was an hour in my diary. Excellent, good news.

The CHAIR: Your diary might not necessarily be correct.

Dr CLOSE: No, I am pleased. We strayed some way from the question about whether you have region-specific trade strategies, such as an India trade strategy or a Middle East trade strategy. I wonder if we could move on.

The Hon. S.J.R. PATTERSON: We have a Growth State strategy. I will just finish on the US and some of the ways that we are working on that. Our food and agricultural sector is very important and so our Houston office has been working with one of the retailers there in the US introducing South Australian produce, premium produce into that market. I think there are great opportunities there, as well.

Dr CLOSE: In Budget Paper 4, Volume 4, page 136, agency highlights—we are now talking about investment attraction—there is a claim in the highlights of attracting $609 million of investments which created 2,668 jobs in South Australia. How many of the projects that contributed to that $609 million of investment were secured under the Investment Attraction South Australia agency?

The Hon. S.J.R. PATTERSON: If I could just give a bit of a breakdown on those: for 2019-20 the department secured 26 investment outcomes that go into that $609 million. A total of 14 of these projects were through the department's investment facilitation. Not all of them were involved. It was the department's work, but also at a broader level the state government's fundamentals around why come to South Australia. That is around the low-cost environments, but also standing up some of these centres of excellence. I will talk to that a little bit later.

Around Lot Fourteen, I talked about the Australian Institute for Machine Learning, which is a fantastic centre of excellence. We also attracted a further 12 investment outcomes, secured through facilitating the South Australian Landing Pad program. These fed into further investment into South Australia.

I am advised that all of this $609 million, which can be attributed to these projects, is directly from the department's attraction fund. None of that comes from the previous fund you spoke of. When I talk about funds, as I said before, as an agency we are trying to rely on fundamentals to attract business. Business on the whole, when thinking about where they want to set up, there are so many factors involved around that. To think that providing funds is the only way to attract business, we have proven as a government that the way about it is a low-cost environment with a concentration on our strengths.

I talked about the South Australian Institute for Machine Learning: that has been able to attract one of those projects that I spoke of, the Massachusetts Institute of Technology. They have been attracted to South Australia to set up the MIT Living Lab. They have partnered with BankSA and Optus, and this is a fantastic opportunity to really bring to South Australia researchers who are world renowned—Professor Sandy Pentland as well, who is world renowned in this regard, from MIT. It is a global institution that has come here to South Australia, having been attracted because of our environment and the great work the department has done in securing this investment outcome.

That has flow-on effects as well, because you are going to have other institutions look at this and go, 'What's going on in Adelaide, we want to be a part of this.' I talked before about Accenture, which is another one of those companies that have been attracted to South Australia based on those fundamentals. That will set up terrific opportunities for talented South Australians in cyber and defence, and will not only provide opportunities for South Australians here but also we are seeing it as becoming a magnet for South Australians who have either gone interstate or overseas to come back here and turn around that net interstate migration we were faced with.

We had a 5,000 to 8,000 net interstate migration when we came to government, and we are trying to turn that around, and we have successfully done that. I think that the latest figures show we have cancelled that net interstate migration, so it is now in positive territory. Other companies that we have attracted here include the South Korean pharmaceutical company Yuhan Pharmaceuticals, which has established a permanent clinical presence in South Australia. We see this as a fantastic example again of looking to our sector's plans. The health and medical industries are a strong sector for us, and we are really trying to bring in that.

I do not want to provide misinformation, I will get back to you to make doubly sure that all those projects stood up have been worked through the department as well. Certainly, the Landing Pad program is a great initiative we have set up in South Australia that again looks to how we can attract businesses that want to come to South Australia and be stood up here. It was established in July 2019.

We have attracted 12 businesses here. I spoke in my opening statement about a few of them, and it would be a good opportunity to talk about them in more detail. I mentioned Lux Aerobot. That is a Canadian company that specialises in the design, manufacturing and operation of atmospheric satellites for Earth observation. Their atmosats capture near real-time high resolution images of the surface of the planet. This is expected to create 30 jobs over five years. It is just, again, building them out, but then we see them building out that ecosystem in South Australia.

I talked also about Cellr. That is an Australian company. It has been approved to come here via the Landing Pad program. It is addressing the $17 billion counterfeit wine issue with world-first chip technology, providing a tracking, authentication and marketing platform. That is expected to create 16 jobs. That is another example. It will assist wine exporters as well.

Counterfeit wine throughout the world basically steals a significant amount of money every day from our premium South Australian wine and Australian wine. We see this as very important in that providence piece, making sure that you can see that our wine has come from South Australia. It has been tracked the whole way through and has not been altered.

I will talk about Tyvak International as well. They have come here. They are really important, again in satellites. Squad Australia is a French company, a cybersecurity company. They are looking to do work to assist our defence industry. We really need to make sure that we seize that opportunity. We have this significant defence program in South Australia, the shipbuilding program, the airborne electronic warfare base. For us to seize that opportunity, we need to upskill South Australian businesses to have cyber strength. Squad will be able to help out with that.

I talked about Accenture as well. They are setting up their Accenture Adelaide Hub here. One of the key focus areas they have is in cyber as well. This is some of the fantastic work that the department has done. Thank you very much for giving me the opportunity to talk through it at some length. I do not want to take up too much time. I am probably coming towards the end. As a whole, I am really confident that the majority, if not all, of those are attracted by the department. It is a real vote of confidence in our state. They have held up well in challenging times, and we have great confidence going forward.

Dr CLOSE: Budget Paper 4, Volume 4, page 138, Performance indicators, frequently makes reference to direct clients of DTI. What is the definition of a direct client, how does one become a direct client, and how many direct clients are there?

The Hon. S.J.R. PATTERSON: Can I just confirm that it is the fourth performance indicator, the number of new exports?

Dr CLOSE: The first three refer to direct clients, so I am just trying understand what it means, and how many there are.

The Hon. S.J.R. PATTERSON: When we talk about direct clients, these are clients that we directly offer services to. This is trying to delineate between investment that has occurred into the state without the department's involvement. For example, with our significant reduction in land tax, we reduced the top rate down from 3.7 per cent to more of the national average of 2.4 per cent. We know that, compared to the eastern seaboard, South Australia's land is more affordable on a rate per square metre, but one of the real inhibitors to get investment into South Australia has been that punishing land tax rate of 3.7 per cent. That has now been brought down.

I think I mentioned in parliament previously, an ASX-listed company purchased over 11 hectares of land in Hahndorf that allows them to then invest, develop the land and create jobs. That is investment that has come into South Australia that the department has not been directly involved in, but they are the settings that we have.

Moving across to, as I said, direct services that we provide to investors and to exporters as well, we track that via a CRM system. They come into the system and we have a database that allows us to track them. The sector directors have to sign off in the CRM system that their team has made a real contribution to an outcome as well, so not only that they are in the system but that they actually assisted them to come to South Australia. That is quite important, as I said.

That is done through some specific programs. I talked about the Invest in South Australia website, which is a digital mechanism to provide investment-ready proposals to investors. There are also on that website the contact details of a number of department directors to have direct contact with. They are some of the means through which they can come in and then work through.

Another example of these programs that we offer that allow for trackable outcomes is our virtual wine-tasting program. Again, our wine producers cannot get to market in traditional ways and that means they cannot do traditional wine-tasting. These virtual wine-tasting programs allow the trade offices to curate importers that want to import this terrific wine and then have them preregister. The wineries that are going to participate in this can send over their samples so that these importers and agents are able to sit there and virtually be guided through a wine-tasting session.

I was able to open one of these that introduced some of our McLaren Vale wineries to Malaysia. This was out of this wine export recovery program that we are running as well. We tracked numbers out of that as well. We ran a similar wine-tasting program into China. I think there are some numbers that we have there as well. Out of that, there were 788 visitors, and 120 business connections were made. That actually translated into over $2 million of commercial deals.

I suppose it is the sales pipeline as well: you have to get your prospects and then you have to talk through them. That is where the direct contact comes in and that is where they would get flagged and, as I said, signed off by the directors in the Department for Trade and Investment to confirm that it was actually a worthwhile assistance. What we want for that is for it to actually come through into concrete results as well. I will see if there is any other direct information I can provide.

Dr CLOSE: How many direct clients? That would be useful.

The Hon. S.J.R. PATTERSON: I do not have the exact figures, but I am advised that the CRM system has only been set up in the previous year, so effectively the numbers that are in that CRM system would be the introductions that have occurred over this period. I am advised that the department's exporter database has over 2,500 companies that we are helping. The TradeStart database has 1,300 companies that are actively engaged with the department and our overseas network.

Dr CLOSE: I turn to trade offices in Budget Paper 4, Volume 4, page 137, Explanation of significant movements. The second dot point refers to the expansion of new trade and investment offices. What is the total cost, thus far, for the creation and maintenance of these trade offices since the last election—a breakdown for the cost of each trade office and how you measure the performance of those trade offices?

The Hon. S.J.R. PATTERSON: Can I confirm whether you are asking for the spend to date or for the budgeted amount?

Dr CLOSE: The spend to date.

The Hon. S.J.R. PATTERSON: We have budgeted numbers, certainly, but I want to make sure that we give you accurate information. What I might do is take that question on notice and give you accurate figures for that.

Dr CLOSE: I appreciate that. Budget Paper 4, Volume 4, page 132 is about administered items and includes a reference to the role of the Agent General. Given that there have been media reports that Bill Muirhead is returning to South Australia and will not be South Australia's Agent General in London anymore, do you intend to start a recruitment process for a new Agent General?

The Hon. S.J.R. PATTERSON: As I said before, these trade offices are really important conduits into key markets. Certainly, our office over there, the Office of the Agent General in London, represents the South Australian government in the UK but also in Europe. It is there to provide services to South Australians, especially during difficult times for some South Australians at the moment. COVID has taken a big toll on their health.

In the UK it has led to lockdowns. In my virtual meetings with Bill, there have been significant challenges around that. He has been fantastic in terms of really trying to keep South Australians informed about what is going on, how they can return to South Australia, because many South Australians are trapped over there still. They really look with admiration at what our response has been in South Australia compared to what they are having to go through. We really sympathise with them, and we thank Bill and his team for continuing to work on the behalf of South Australians. They are also helping us with trade from a perspective of some of our key sectors in the UK.

The CHAIR: The time allotted and agreed has expired. Would you like to take the remainder of the question on notice?

The Hon. S.J.R. PATTERSON: Yes, certainly. Just to finish it, I will just mention that the Department of the Premier and Cabinet is in charge of the Office of the Agent General. I think you could direct that question to him.

The CHAIR: Given the time allotted and agreed has now expired, there are no further questions. I declare the examination of the portfolio agency Department for Trade and Investment completed and the estimate of payments for the Department for Trade and Investment closed.

Sitting suspended from 11:31 to 11:45.