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Review of Trade & Investment Queensland

Geoffrey Thomas John Mickel

January 2013

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Contents SECTION 1 – INTRODUCTION & EXECUTIVE SUMMARY......................................................................... 5

Introduction........................................................................................................................................ 5

Review Team .................................................................................................................................. 5

Geoffrey Thomas ............................................................................................................................ 5

John Mickel -‐................................................................................................................................... 5

Terms of Reference ........................................................................................................................ 5

Alignment with Queensland Government Priorities .......................................................................... 6

Treasurer and Minister for Trade’s Charter Letter ......................................................................... 6

Priority Sectors ............................................................................................................................... 6

Constraints ..................................................................................................................................... 7

Economic Indicators impacting Trade & Investment Queensland ..................................................... 7

Background..................................................................................................................................... 7

Economic Trends ............................................................................................................................ 8

Key Industry Sectors ..................................................................................................................... 10

Key Markets.................................................................................................................................. 10

Executive Summary .......................................................................................................................... 12

SECTION 2 – REVIEW ANALYSIS ............................................................................................................ 24

Impact of Machinery of Government Changes ................................................................................ 24

Current Situation .......................................................................................................................... 24

Issues Arising ................................................................................................................................ 26

Proposed Solution ........................................................................................................................ 26

Recommendations ....................................................................................................................... 26

Corporate Governance ..................................................................................................................... 27


Issues Arising ................................................................................................................................ 27



Brand Queensland............................................................................................................................ 28


Issues Arising ................................................................................................................................ 28



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Corporate Mission ............................................................................................................................ 29


Issues Arising ................................................................................................................................ 29



Key Client Groups ............................................................................................................................. 31


Issues Arising ................................................................................................................................ 31



Corporate Performance.................................................................................................................... 32


Issues Arising ................................................................................................................................ 32



Overseas Network ............................................................................................................................ 35


Issues Arising ................................................................................................................................ 36



Queensland Operations.................................................................................................................... 40


Issues Arising ................................................................................................................................ 41



Queensland Operations – Food & Agriculture ................................................................................. 46


Issues Arising ................................................................................................................................ 47



Queensland Operations -‐ International Education and Training Unit .............................................. 47


Issues Arising ................................................................................................................................ 47



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Sister State Agreements ................................................................................................................... 48


Issues Arising ................................................................................................................................ 49



Trade Missions and Representation................................................................................................. 50


Issues Arising ................................................................................................................................ 50



Investment ....................................................................................................................................... 53


Issues Arising ................................................................................................................................ 53



Corporate Processes, Red Tape and Systems................................................................................... 54


Issues Arising ................................................................................................................................ 54



Budget .............................................................................................................................................. 55


Issues Arising ................................................................................................................................ 57



SECTION 3 – SUMMARY OF RECOMMENDATIONS .............................................................................. 60

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SECTION 1 – INTRODUCTION & EXECUTIVE SUMMARY

Introduction

Review Team

The review team appointed by the Treasurer and Minister for Trade is:

Geoffrey Thomas -‐ Geoffrey is a successful Queensland-‐born international businessman with interests in Australia, the US, Indonesia and Thailand. In 2001 he was appointed Special Commissioner to North America by the then Queensland Premier, Peter Beattie. He continues to act on behalf of the Queensland Government as an Honorary Advisor in the US. John Mickel - John served as a Member of the Queensland Parliament for almost 14 years, during which time he spent three years as Speaker of the Legislative Assembly and held numerous ministerial portfolios, including Trade. He retired from politics at the March 2012 election.

The team was supported by staff from Queensland Treasury & Trade.

Terms of Reference

The Treasurer and Minister for Trade as part of the establishment of the Review provided the following Terms of Reference:

The Queensland Government as part of the Machinery of Government changes announced in April 2012 moved Trade & Investment Queensland into Queensland Treasury, to create Queensland Treasury and Trade. The Honourable the Treasurer and Minister for Trade is the responsible Minister. Given the current tight budgetary situation and the Charter from the Premier to the Treasurer and Minister for Trade (Premier’s Charter letter to the Treasurer) to:

• Ensure trade is tasked with focusing on frontline services and not on producing statistical measures that are not realistic.

• Set the priorities for Trade and Investment Queensland. • Examine the Trade and Investment Queensland Review, and make necessary

reforms and taking into consideration the content of the previous review referred to, this Review is to:

• Develop a profile of Trade & Investment Queensland’s budget (by function and initiative) staffing (both Australian based and locally employed), information systems, financial processes and delegation structures

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• Analyse the alignment of these resources with key current and emerging markets, clients and industry sectors

• Provide an economic analysis of Queensland industry sectors, exports and export markets that are in scope for assistance from Trade & Investment Queensland

• Consider the effectiveness of current service delivery models both domestic and overseas

• Analyse models for successful trade partnerships • Review Trade & Investment Queensland performance measures • Consider opportunities for utilising expertise from other State departments

and Australian jurisdictions • Analyse intelligence and planning mechanisms to ensure that Trade &

Investment Queensland is able to respond to changing environments • Identify key priorities in the short and medium term for Trade & Investment

Queensland. and make recommendations that emerge from these issues.

Alignment with Queensland Government Priorities

Treasurer and Minister for Trade’s Charter Letter

At the commencement of the current term of Government, the Premier presented a Charter letter to the Treasurer, outlining objectives for the first term of Government. Several of these tasks relate directly to the Trade & Investment function and are a key driver for establishing this Review and identifying the Terms of Reference. This Letter is publically available.

The relevant extract is outlined below:

“First Term Tasks

In addition to these early milestones, the following tasks within your area of ministerial responsibility are to be achieved within the first term of government:

• Ensure Trade is tasked with focusing on frontline services and not on producing statistical measures that are not realistic.

• Set the priorities for Trade & Investment Queensland. • Examine the Trade & Investment Queensland Review, and make necessary

reforms.”

The Review noted that its Terms of Reference were consistent with the Charter letter and indeed directly addressed key issues relating to the Trade Portfolio.

Priority Sectors

The Government is committed to renewing its focus on initiatives that address the Four Pillars of:

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• Tourism • Agriculture • Resources and • Construction.

The Review noted that development of Tourism in Queensland and overseas is the responsibility of Tourism and Events Queensland, and no further input into this Pillar was developed. However, the nature of the overall Queensland presence overseas in terms of what the Review labelled as Brand Queensland did give rise to recommendations in relation to the way that Brand Queensland is presented and the joint role of Trade & Investment Queensland and Tourism and Events Queensland in promoting and facilitating trade and tourism in Queensland.

Agriculture, and specifically Agribusiness and Food, has been and remains a focus for Trade & Investment Queensland given the target client group of small to medium enterprises. Construction in its many forms is also a focus particularly given the need of many developing economies for infrastructure and construction services.

Resources are generally thought to be the province of large business including national and multinational organisations. There is a strong opportunity however in the Small and Medium Enterprises (SMEs) resources sector for provision of Mining Equipment, Technology & Services (METS), particularly in new markets in Indonesia, Africa and South America. In addition, the Education and Training sector is the fourth most important export earner for Queensland and is a critical sector for Trade & Investment Queensland (TIQ).

Constraints

The first term of the Government elected in 2012 in Queensland has been focussed on Fiscal repair, and a clear set of objectives enunciated by the Government around the need to reduce expenditure and reign in State debt. Each Department in Government has been challenged to identify areas of cost saving and to ensure that services are delivered in the most efficient possible way.

This is the context in which this review has been undertaken – it is clear that the outcomes must align with the tight budgetary approach adopted by the Government and be responsible in seeking to generate value for money in any additional funding proposals.

Additionally, the Government is committed to reducing Red Tape and encouraging economic growth across all sectors, and recommendations have been made which support these objectives and do not result in additional complexity or process for clients.

Economic Indicators impacting Trade & Investment Queensland

Background

If Queensland were a nation, it would rank 120th in the World by population, 57th by exports and 36th in terms of nominal Gross Domestic Product.

This global economy is rapidly changing, and will continue to change in the medium term:

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• From 1980 to 1990, the USA and Japan lead global growth • From 1990-‐2000, the USA dominated growth • From 2000 to 2010, the USA grew early, China caught up but then the GFC impacted

across the board • The 2010 to 2017 period of growth will belong to the BRICS nations – Brazil, Russia,

India, China and South Africa with the International Monetary Fund (IMF) estimating that these five nations alone will contribute 28.6% of incremental global GDP growth

• This growth in GDP terms would mean the BRICS economies would rank globally as:

From an investment perspective, the newly coined concept of the CASSH economies (Canada, Australia, Singapore, Switzerland and Hong Kong) identified for their strong credit ratings and their survival of the GFC, places Australia and therefore Queensland in a good position when clients are considering Foreign Direct Investment (FDI). These differentiators need to be leveraged in the market by Trade and Investment Queensland.

In this changing global economy, Queensland needs to present a strong and viable shopfront to the world, to identify destinations for its exports and attract investment for its continued economic development.

Economic Trends

The table below indicates that in broad terms, the composition of the Queensland economy has not changed significantly in the last decade. The industries that have recorded small reductions in % share of Queensland GSP are Mining and Manufacturing, with increases in Construction and Services (all categories).

Table 1: Gross value added by industry, Queensland (CVM, 2009–10 reference year) 2010–11

1990-91 2010-11

($m) % of total ($m) % of total

Agriculture, forestry & fishing 3,418 3.4 7,475 3.2 Mining 9,899 9.8 18,887 8.0 Manufacturing 12,576 12.5 19,407 8.2

Country 2010 Global Rank

(IMF est.) 2017

Global Rank

Growth projected

GDP, current prices Billions Billions

Brazil $US $ 2,142 7 $ 3,254 5 52%

China $US $ 5,930 2 $ 13,212 2 123%

India $US $ 1,630 9 $ 3,171 6 94%

Russia $US $ 1,487 11 $ 2,976 8 100%

South Africa $US $ 363 25 $ 549 26 51%

Total $ 11,552 $ 23,162. 100%

International Monetary Fund, World Economic Outlook Database, October 2012

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Electricity, gas, water & waste services 2,903 2.9 5,785 2.5 Construction 8,552 8.5 23,154 9.8 Wholesale trade 4,799 4.8 12,353 5.2 Retail trade 5,405 5.4 13,079 5.6 Accommodation & food services 3,500 3.5 5,988 2.5

Transport, postal & warehousing 6,184 6.1 16,258 6.9

Information, media & telecommunications 1,655 1.6 5,309 2.3

Finance & insurance services 4,556 4.5 17,223 7.3

Rental, hiring & real estate services 1,889 1.9 5,375 2.3

Professional, scientific & technical services 3,997 4.0 13,950 5.9

Administrative & support services 1,736 1.7 4,827 2.0

Public administration & safety 6,083 6.0 13,312 5.7

Education & training 5,347 5.3 10,332 4.4

Health care & social assistance 6,554 6.5 15,128 6.4

Arts & recreation services 560 0.6 1,589 0.7

Other services 2,394 2.4 4,155 1.8

Ownership of dwellings 10,066 10.0 21,923 9.3

Gross value added at basic prices 100,685 100.0 235,510

100.0

Taxes less subsidies 9,000 16,679

Statistical discrepancy -3,186 -573

Gross state product 106,513 251,616

Source: ABS 5220.0.

The expenditure component contribution to GSP set out below shows that gross international exports (i.e. before netting off international imports) have maintained their share of GSP, reinforcing the importance of the export industries in Queensland. The major change in this table over the decade is the sharp increase in imports leading to a decrease in net international exports.

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Table 2: Gross state product by expenditure component, Queensland (CVM, 2009–10 reference year)1990–91 2010–11

($m) % of total ($m) % of total

Household consumption 59,836 56.2 141,802 56.4

Private investment 16,808 15.8 59,662 23.7

Dwelling investment 7,521 7.1 14,110 5.6

Business investment 7,583 7.1 36,852 14.6

Non-dwelling construction 4,867 4.6 19,543 7.8

Machinery & equipment 2,716 2.5 17,309 6.9

Public final demand 27,234 25.6 63,475 25.2

General government consumption 20,810 19.5 43,531 17.3

Public investment 6,424 6.0 19,944 7.9

Net international exports 13,554 12.7 8,242 3.3

International exports 21,922 20.6 49,339 19.6

International imports 8,368 7.9 41,097 16.3

Balancing item(a) -14,505 -13.6 -21,349 -8.5

Statistical discrepancy 4,465 4.2 320 0.1

Gross state product 106,513 100.0 251,616 100.0

(a) includes interstate trade, change in inventories and balancing item discrepancy. Source: ABS 5220.0.

Key Industry Sectors

While it is evident from Table 1 that agricultural produce has held its GSP share, the percentage share of exports attributable to this sector have fallen significantly over the decade with a corresponding and significant rise in crude and processed materials, although some primary products are also included in confidential and special items.

Table 3: Major merchandise export items, Queensland (nominal) 1990-91 2011-12

($m) % of total

($m) % of total

Rural* 3,750.6 35.0 7,457.7 14.1 Meat 1,525.0 14.2 3,358.7 6.3 Cereals 279.8 2.6 615.8 1.2 Textile fibres 418.8 3.9 1,478.6 2.8 Crude materials 4,549.6 42.4 28,840.8 54.5 Metalliferous ores 730.8 6.8 3,590.3 6.8 Coal# 3,634.4 33.9 24,987.8 47.2 Processed minerals 1,061.5 9.9 4,387.9 8.3 Non-ferrous metals 955.8 8.9 4,137.0 7.8 Other manufactures 499.9 4.7 2,967.0 5.6 Confidential and special 865.9 8.1 9,245.3 17.5 Total 10,727.5 100.0 52,898.7 100.0 * Sugar exports have been confidentialised since 1998. # Semi-soft/PCI coal exports have been confidentialised since 2002. Source: Unpublished ABS trade data

Key Markets

The key observation from the tables below is the rise of India and China in the last decade. Japan has held its place as the major destination in this category, but with a reduced share, and the United States of America (USA) has broadly held its value in exports but reduced significantly in its market share.

Table 4: Major destinations of merchandise exports, Queensland

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The export of education and training remains a high priority. The number of enrolments has virtually doubled in the last decade, with strong growth expected as the rise of the Asian middle classes continues. The composition of the market has changed significantly in this last decade, with China recording a five-‐times increase, and India, Brazil and Saudi Arabia making the top ten where they did not rank a decade ago. The impact of China and India’s rise is that these two nations now represent 30% of the total education market. In Trade & Investment Queensland terms, education is still a strong performer and it is on this basis that the sector has been included in Trade & Investment Queensland’s priority sectors for the next planning period. The key structural issue for education exports is that there is an opportunity for a better, more co-‐ordinated approach across all Queensland elements of the sector.

1990-91 2011-12 ($m) % of total ($m) % of total Japan 3,947.8 36.8 Japan 11,781.4 22.3 The US 1,075.8 10.0 China 7,875.1 14.9 Korea 633.0 5.9 Korea 6,548.6 12.4 The UK 441.3 4.1 India 6,048.1 11.4 Taiwan 384.0 3.6 Taiwan 2,761.9 5.2 Netherlands 361.9 3.4 The UK 1,491.1 2.8 India 350.9 3.3 The US 1,436.8 2.7 Total 10,727.5 100.0 Total 52,898.7 100.0 Source: Unpublished ABS trade data

Table 5: Top 5 destinations - selected export items, Queensland (2011-12) 1st 2nd 3rd 4th 5th Hard coking coal Japan India Korea China Netherlands Semi-soft/PCI China Japan Korea India Taiwan Thermal coal Japan Korea China Taiwan Malaysia Base metals China Korea Japan The UK Taiwan Meat Japan The US Korea Taiwan Russia Sugar Korea Indonesia Malaysia Japan New

Zealand Cereals Indonesia Japan New Zealand Vietnam Sudan Cotton China Indonesia Thailand Korea Bangladesh Sources: Unpublished ABS trade data, ABARES, Department of Natural Resources and Mines

Table 6: Major overseas education exports markets, Queensland (number of enrolments) Sep. 2002 Sep. 2012 level % of total level % of total Japan 4,655 11.4 China 17,547 22.2 China 3,749 9.2 India 8,775 11.1 Korea 3,418 8.4 Korea 5,586 7.1 Taiwan 3,266 8.0 Brazil 3,986 5.1 The US 3,128 7.7 Saudi Arabia 3,194 4.0 Hong Kong 2,379 5.8 Japan 3,154 4.0 Singapore 2,333 5.7 Taiwan 2,688 3.4 Norway 1,914 4.7 The US 2,661 3.4 Malaysia 1,820 4.5 Colombia 2,612 3.3 Thailand 1,538 3.8 Malaysia 2,386 3.0 Other 12,678 31.0 Other 26,310 33.3 Total 40,878 100.0 Total 78,899 100.0 Source: Australian Education International

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Executive Summary

Queensland is a great State with a strong and growing economy. It has diverse exporting businesses and is an ideal destination for overseas investment.

The Review believes that the Mission of Trade & Investment Queensland is:

.

This Mission and the global nature of Trade & Investment Queensland’s operations means that it does not fit into the mould of a normal government activity – with nineteen points of representation in thirteen countries and ten Trade Commissioners it is truly a global facilitator of export and investment business. It does not measure success by profit nor sell products but it works within diverse and complex local markets across the world to support Queensland businesses, identify market opportunities and generate investment.

With different time zones, and cultural differences where one office works on our weekend, somewhere in the world a Queensland Trade and Investment Office is open, 24 hours a day, seven days a week.

However, fitting such an organization into standard Government structures does not equip nor enable the organization to fully deliver on its Mission.

From an administrative and operational perspective, the Trade & Investment Queensland function is not, and cannot, work effectively in its present form.

It is the strong belief of the Review that if Trade & Investment Queensland is the shopfront for Queensland in the global economy, then it should be established, resourced, structured and managed in a way that allows it to be effective – in short, either the function is resourced adequately, or its scope is reduced so that an effective job can be done in fewer key markets that Queensland wants to see as priorities.

Alternatively, leave the trade and investment role to Austrade. This is not desirable as Austrade’s main operational centres are in Sydney, Melbourne and Canberra, with only a small regional office in Brisbane, which would find it difficult to service a large decentralised State such as Queensland.

In what is now a global trading environment, this important function needs a permanent home with oversight and reporting directly to a senior economic Minister, either the

To grow Queensland’s economy by supporting exporters and investors, while building Brand Queensland globally.

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Premier, the Deputy Premier or the Treasurer. These Ministers are key to promoting its stability from within Government, and are the necessary ‘Ambassadors’ to successfully promote Queensland businesses overseas. Queensland operates in significant overseas markets where only senior Government representation is sufficient to open doors and remove access barriers.

Globalisation has seen the emergence of new economic powers and emerging markets, and as a result, the Review believes Trade & Investment Queensland needs an overseas presence that is built around flexibility and speed into market. It sees opportunities for each market to have a central office, with all contracts (staff, accommodation, supports) built on a local medium term basis which will allow relocation or changing priorities to be met in a simple way. This central office responds to regional demand by despatching business development managers on regular trips into those markets. The Review believes that the opportunity exists for Queensland to be aggressive in looking for new horizons and that those growth markets and speciality niche markets that are emerging provide exciting opportunity for this (for example METS into Africa, infrastructure into Sri Lanka).

In the last decade alone, Trade & Investment Queensland has served seven Ministers and had a similar number of changes to the departmental structure that it operates in. Being the size it is, and having a facilitation role rather than an essential service delivery role, Trade & Investment Queensland is always the target of change and always suffers as a result of this “orphan” approach where no permanent home or structure has ever emerged.

It has been reviewed twice in the last two years. As a result of reviews and MoGs, its Corporate Services have been developed internally, then removed, then partially built back by diverting resources away from core business. The flexibility of its Corporate Services is not aligned with the 24/7 and global nature of its business.

Its systems sit on four different department’s servers as a result of Machinery of Government changes. Demand for ICT support world-‐wide is 24/7, and there are two different email addresses for staff. Aged software struggles to deal with new versions of documents sent by clients. A parallel systems and process review by Crowe-‐Horwath identified a range of recommendations to free up processes and improve basic systems sustainability. The Customer Relationship Management system, the lifeblood of this business and critical to the work of a client focused organization, resides in another department and has now been decommissioned.

The Brisbane Office had one person working on Foreign Direct Investment attraction activities at the commencement of this Review, and that is in an environment where two other Government Departments (Department of State Development, Infrastructure and Planning; and Department of Tourism, Major Events, Small Business and the Commonwealth Games) have specific investment attraction units.

These issues make it critical that Trade & Investment Queensland be established in a corporate structure that allows it to fulfil its mission without an undue administrative

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burden. The Review found that successive Machinery of Government (MoG) changes and new departmental structures have built up layers of administration which bog down the true functions of the organisation. For example, Crowe-‐Horwath accountants in reviewing procedures found that:

Trade Commissioner buying a cup of coffee for a client ($10 expense)

• Pre-‐approval is required for a commissioner from their Director (an email approval is sufficient here)

• The coffee is purchased on the credit card.

• On completing the SDOL reconciliation, the expenses summary is printed out, and the receipt for the coffee needs to be attached to this.

• This is signed off by the Director in Brisbane (i.e. paper work is sent to Brisbane for sign off) Note this is signed off on the paper copies as proof that the receipt was sighted and pre-‐approval obtained.

• SDOL needs to be checked as reviewed and signed off once the director has signed off the paper work.

• Paper work relating to the commissioner is sent to Brisbane (both scanned and originals) and originals are kept in Brisbane.

• SDOL requires a 50 character description to avoid query under the Unusual Transaction Report.

If the Trade Commissioner takes the client out for a meal after that –which amounts to $140 – the $150 threshold has been reached and at this point the expense needs to go into the Gifts and Benefits register. The process is as follows:

• two declarations of benefit forms need to be completed i.e. one given, one received.

• Form requires all details of the benefit, date, description, value and reason.

• Supporting documentation, including the pre-‐approval to provide the gift or benefit is required.

• If the benefit is between $0 and $150 this can be approved by Director or Commissioner.

• Where the benefit is between $150 and $350 this needs to be approved by the Managing Director, and where in excess of $350 it needs to be approved by the Under Treasurer.

Reporting, financial approvals, international financial transactions, travel approvals all have the opportunity to be simplified to both reduce the overall cost of administration for Trade & Investment Queensland but also to free up field staff to do the job that they were engaged to do – promote Brand Queensland, facilitate Queensland business into key export

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markets, and attract much needed FDI for the State. Budgets should be developed, written into business plans which receive CEO approval and then managers allowed to get on and manage these budgets to get results – a normal “Management 101” approach to management of an organisation.

Each additional accountability measure designed for domestic activities and introduced by Government, the home Department or Trade & Investment Queensland management has added to the administrative burden of the organisation, with estimates by senior management of up to 60% of their time spent on administration.

The situation that Trade & Investment Queensland finds itself in is serious enough that fundamental decisions need to be made by Government about the continuation of the function – however, the Review team believes that given the dynamic nature of Queensland’s business sector and given that Trade & Investment Queensland staff have maintained their fundamental commitment to their core roles, there is significant benefit to retaining the function and growing its success.

With the fundamentals still strong, the organization must be established in a governance structure that supports its global mission and allows it capacity to respond rapidly to priority opportunities.

The Review therefore recommends that a Statutory Authority be created, to function as the:

Queensland Export & Investment Authority

This Authority will have a small Board drawn from appropriately qualified people, develop strong ties with the Minister for Trade and other senior Ministers, and will vigorously pursue opportunities:

• Promoting Brand Queensland to the world • Identifying new business opportunities and partners for Queensland exporters • For global companies to invest in Queensland to strengthen to local economy • To co-‐ordinate the Queensland government’s global presence.

Consideration was given to a Limited Liability Company, but the Review believes that the full imprimatur of a Government body is key to opening doors in our export markets.

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In terms of its markets, Trade & Investment Queensland:

• Spends 67% of its Budget in Queensland and only 33% on overseas offices • Of its coverage of 19 centres across the world, has:

-‐ 9 centres in the BRICS nations, seen as the powerhouse of global growth; yet -‐ Only one staff contractor and no offices in the ten ASEAN nations, which combined

make up 9% of the world’s population and the world’s ninth largest economy and -‐ No centres supporting sub-‐Saharan Africa particularly in the emerging sector of

Mining Equipment and Technology Services.

The Review also made note of the organisational difficulties that are faced when Trade Commissioner roles are appointed directly by Government. In the past these types of Government appointees have carried a ‘Diplomatic A-‐Base’ tag to their posting, which is costly to Trade & Investment Queensland not only in the salary component, but also the management of ancillary benefits such as housing, family allowances and relocation expenses.

Finally, the Review identifies the need to more broadly promote the activities and objectives of the organisation to all segments of Queensland business, so that the private sector as a whole grasps the importance of Brand Queensland.

Global competition is fierce, and Brand Queensland (all Queensland Government Departments and businesses) needs to have a managed and unified presence overseas, without wasteful duplication and non-‐coordination of activities. One business person interviewed estimated that over 200 government trade and investment entities were permanently established in Shanghai so choice is wide and competition strong, and Queensland needs to be on its game fully to grow its presence. QEIA should play this role.

An effective structure is essential, and the Review identified several issues with the current structure that need resolution.

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The current structure is:

The recommended structure, which shifts resources into overseas offices from the Queensland operations and shifts the domestic focus onto priority export sectors, is:

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This structure can be implemented immediately, with existing staff being reallocated temporarily to new units, with a process to follow of ensuring that newly established roles are filled by appropriately skilled staff. In the establishment of the QEIA, it would be expected that the legislation will make provision for an orderly staff transition, with options over time to remain as public servants or to transition fully to the new Authority.

The Review noted that there was universal concern with the focus on the dollar value KPIs used by Trade & Investment Queensland to rate its performance. The Review team sought discussion on and then developed a more broad ranging set of measures that take into account the wide range of functions undertaken by Trade & Investment Queensland and the fact that there are different outcomes sought in each.

For instance, the effort that goes into preparation for outgoing trade missions and for receiving inbound missions is not captured, but represents a major portion of the capacity of the Trade & Investment Queensland operation domestically and overseas.

(Section redacted for commercial-‐in-‐confidence reasons)

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A high performing organization should have a published set of Key Performance Indicators that present in a meaningful way the outcomes that the organisation has achieved, compared to what it expected and budgeted to achieve. The current Trade & Investment Queensland performance measures that are most used and commented on are based on the dollar value of transactions done. These are seen by the Review as not capturing the complete range of services and objectives that Trade & Investment Queensland is involved in, and as being open to criticism for not showing the full picture of TIQ involvement and for distorting behaviour in market. Current KPIs based on export dollar values in no way reflect the full range of TIQ services as large deals dominate the KPI totals. The Review believes that the range of KPIs needs to support the various stages of activity of the organization, and that a more appropriate set of KPIs is:

The recent range of budget savings targets applied to Government agencies as part of returning the Queensland Budget to surplus have had a high impact on the Trade & Investment Queensland organization, at a time when a renewed focus on core export activities can assist the development of a strong and diverse State economy. The Review has analysed the Trade & Investment Queensland Budget and identified a set of savings to be generated from the Recommendations through restructure of the Queensland operations and planned changes, including closures, to the overseas office network.

There is also a set of new measures that will require funding as it is evident that opportunities for excellence exist in the way in which Trade & Investment Queensland services and Queensland attributes are promoted. There is a need for a return to Indonesia, one of the most populous nations in the world and one of the most rapidly growing economies. The Americas market is significant with minimal similarities between North

IN-‐MARKET

AWARENESS

Numbers of structured activities or

programs to assist business build

export capacity

Number of Businesses participating in

structured activities or programs

Number of businesses assisted to generate

new trade/investment deals through significant QEIA

assistance Number of clients reporting progress with export capacity development or market access readiness.

Number of pre-‐qualified export or investment leads communicated to

clients Number of high level

international relationship building meetings and events

Value of new investment deals

QEIA Client Journey

PARTICIPATION CAPABILITY

IN-‐MARKET

Independent Surveys – Client Satisfaction; Improved Export capability; Employment Impact

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America and Latin America and the Review recommends it be separate markets with a new Trade Commissioner role established for the USA and Canada based in Houston, Texas. In addition, new approaches to the way in which regions are covered by Trade & Investment Queensland mean that whilst costs can be reduced in fixed terms, variable costs such as travel need to be increased. The establishment of the QEIA will also have a range of ‘one-‐off’ and ongoing costs.

The other international agency in Queensland Government, Tourism and Events Queensland, received $61.3M in 2010-‐11 from the State Government including a $20M boost for Tourism attraction strategies in partnership with regional bodies. This initiative alone is greater than the budget for Trade & Investment Queensland in year three of its current forward estimates, and the total TEQ budget is 2.5 times the size of the Trade & Investment Queensland Budget allocation (pre-‐savings targets) of $25M.

The Victorian Government this year also approved funding of $50M over four years to promote export initiatives, and on a recent super Trade Mission to China took over 600 delegates to market.

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In bringing this all together, the graphic following has been developed by the Review to show at a high level how the desirable elements of Trade & Investment Queensland fit. It starts at its highest level by establishing the Queensland Government’s Four Pillar approach as a strategic anchor. Sitting below this is the simple Mission of Trade & Investment Queensland – To grow Queensland’s economy by supporting exporters and investors, while building Brand Queensland globally. In order to bring focus to Trade & Investment Queensland’s activities, the five key priority export sectors plus Foreign Direct Investment

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have been identified and these sectors are seen as the focus for the business in the next triennium.

In a current organisational structure where every part of the organisation wants to be involved in-‐market, the graphic goes on to clearly show the support areas of the organisation that support the two client facing groups-‐ Client Services and the Overseas Offices. In turn these groups are directly involved in taking clients through the “pipeline” – through Awareness, to Participation, then development of export Capability and on to In-‐Market activity.

From this point, these phases in the client journey generate simple KPIs. As recommended by the Review, these activities take place in a corporate structure of a Statutory Authority:

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SECTION 2 – REVIEW ANALYSIS

Impact of Machinery of Government Changes

Current Situation

Much of the current environment at Trade & Investment Queensland has been shaped by the environment surrounding the function for the last year. Trade & Investment Queensland was advised in mid-‐2011 of an impending review by Ignition Partner. This review was delivered in late 2011 and its contents were never released to staff. The State election announcement in 2012, the subsequent change of Government and the internal announcement of a pending review further added to uncertainty in the agency.

Significant effort was absorbed by the shift of TIQ from DEEDI to Queensland Treasury & Trade and the negotiation of transfer of staff and resources. In this shift Invest Queensland was moved to the new Department of State Development, Infrastructure and Planning. This shift was after TIQ participated in the sector-‐wide Voluntary Separation process, in which 30 staff exited the organisation with a management expectation that 15 replacement staff would be recruited. This recruitment never occurred as it was caught up in the change of Government; leaving gaps in the workforce– funds for these positions were subsequently given up as savings.

The State Budget delivered in September 2012 imposed significant reductions in funding on Trade & Investment Queensland. This current Review was announced in November 2012 but the cumulative impact of these issues has been that staff positions remain unfilled, new functions have not been fully integrated with mainstream Trade & Investment Queensland activities, coherent forward planning has not occurred and an overall air of, as one respondent put it, “looking inwards rather than outwards” has pervaded. The table below outline changes to Ministers and departments over the last 10 years.

Year Portfolio Minister Department 1. 2001-‐2005 Premier & Minister for Trade Mr Beattie Department of State

Development (part) Department of Premier & Cabinet (part)

2. 2005-‐2006 Deputy Premier, Treasurer and Minister for State Development, Trade & Innovation

Ms Bligh Department of State Development

3. 2006-‐2007 Premier & Minister for Trade Mr Beattie Department of Premier & Cabinet

4. 2007-‐2009 Minister for Transport, Trade, Employment and Industrial Relations

Mr Mickel Department of Transport

5. 2009-‐2011 Minister for Natural Resources, Mines & Energy and Minister for Trade

Mr Robertson DEEDI

6. 2011-‐2012 Deputy Premier, Treasurer & Minister for State Development & Trade

Mr Fraser DEEDI

7. 2012-‐ Treasurer and Minister for Trade Mr Nicholls Queensland Treasury & Trade

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The Review team was concerned at the cost and impact of Machinery of Government changes. It considered at length the change last year from a DEEDI structure to the structure in Queensland Treasury & Trade.

On a very positive note, Trade & Investment Queensland moved from a Departmental structure where it was buried several layers down in the structure in a Department with four responsible Ministers, to one where there is a direct report of Trade & Investment Queensland to the Under Treasurer, and in practical terms direct to the Minister for Trade.

Problematic issues included:

• DEEDI had absorbed specialist support staff into central Corporate Services functions, which resulted in a loss of corporate memory and international expertise and some senior level staff did not transfer with Trade & Investment Queensland

• The Machinery of Government change resulted in a range of Budget shortfalls for accommodation, the Ventyx IT contract and shared services fees of approximately $1 M.

• Immediately prior to the Machinery of Government (MoG) change a budget reduction of $2 million was applied to Trade & Investment Queensland

• Difficulties were encountered in accessing asset records, purchase orders for work in progress assets, taxation advice and information around Queensland Trade and Investment Office Pty Ltd.

There have been two recent reviews of Trade & Investment Queensland. The first was in 2007 by Loftus Harris, former CEO of the Department of the Premier & Cabinet in Queensland and a Special Trade Representative. The outcomes of that review structured Trade & Investment Queensland in the way it currently is now – however many of the “stand-‐alone” features of this model were lost when Trade & Investment Queensland was incorporated into DEEDI.

This Review has considered at length the recommendations of each of the previous reviews and where appropriate has included issues and recommendations that remain relevant.

Recent Reviews of Trade & Investment Queensland

Year Review 2007 Trade Queensland Review 2007 – Loftus Harris 2011 Review of Trade & Investment Queensland – Ignition Partner

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Issues Arising

The key issues arising from recent MoGs and Reviews are that the organisation has effectively been in limbo for over a year and that it has severely impacted on capacity to do its job. In fact the latest performance information to the end of December 2012 indicates that these issues may be impacting on outcomes in a tangible way, with results for the half year period less than half those of the same period last year, although the strong performance of the $A and its impact on exports may also be influencing the outcome.

Export & Investment Outcomes TIQ $M %age $M %age

2011-‐12 2012-‐13

Export Outcomes Target for Year

453.00

600.00

Export Outcomes : 1 July -‐ 11 January

448.79 99%

203.45 34%

Investment Outcomes Target for Year

212.00

122.00

Investment Outcomes: 1 July -‐ 11 January 2,351.00 1109%

285.49 234%

The impact of MoGs outlined continues long after the MoG is completed and in the case of Trade & Investment Queensland has involved constant reinvention of itself and a process of costly adjustment or, in cases around ICT, no adjustment and therefore inferior systems environments.

Proposed Solution

The Review believes that corporate governance change is the only way to remove the impact of MoGs, and to give the organisation the flexibility to operate on a global basis in a cost effective manner. Previous attempts to insulate Trade & Investment Queensland from constant change have ultimately failed in a mainstream government environment. Because the Trade agency is relatively small and not seen as an essential service, it tends to be one of those functions that is constantly reallocated and eroded. Given that the international nature of Trade & Investment Queensland’s business is sufficiently different to the rest of Government, the Review Team believes a structure that provides certainty and flexibility is essential.

Recommendations

IMPACT OF Machinery of Government Changes 1 That Government seek to maintain Trade & Investment Queensland in a

senior portfolio (Premier, Deputy Premier, or Treasurer) on an ongoing basis.

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Corporate Governance

Current Situation

At present, Trade & Investment Queensland is a division of Queensland Treasury & Trade and the Managing Director of Trade & Investment Queensland reports directly to the Under Treasurer.

Issues Arising

The issues associated with this have been fully explored above in the discussion of the impact of MoGs – that is, the need to establish a corporate structure that fully allows the organisation to undertake its business in an effective and flexible way.

Proposed Solution

On this basis the Review seeks approval for the establishment of the Queensland Export and Investment Authority, with a Board of Directors experienced in corporate governance but also familiar with issues faced by exporters and investors. It is anticipated that following development and passage of legislation, the ideal date for commencement of the Authority is 1 July 2013. This timetable is extremely tight but also essential to ensure that no further time is lost. A transition team with a Transition Director should be established in Queensland Treasury and Trade/Trade & Investment Queensland to drive and guide the implementation of accepted recommendations out of this Report and to do the work needed to have the Authority in place by 1 July 2013. Given the impact of the Review on current structures and processes, it is also critical that transition to the new measures in this Review be implemented as soon as possible prior to 1 July 2013 so that the transition period prepares the organisation to hit the ground running at commencement of the QEIA.

Recommendations

CORPORATE GOVERNANCE 2 That a statutory body styled the Queensland Export & Investment Authority

be established on 1 July 2013. 3 That legislation to give effect to this is prepared as a matter of urgency for

introduction to Parliament. 4 That the Authority be established with a Chair and Board drawn

predominantly from SMEs exporters in Queensland, with a minority drawn from the broader business community.

5 That the Minister for Trade preserve rights of direction for key strategic decisions and other matters.

6 That the new Authority be funded via an annual appropriation from the Consolidated Fund and self-‐generated revenues.

7 That a program of Industry Roundtables be established, with membership to rotate based on industry/ regional focus and that these Roundtables act in a true advisory capacity on topics relevant to the Minister.

8 That Industry Roundtables be chaired by the Minister or Assistant Minister. 9 That a Transition Director and team be appointed to manage the

implementation of the Recommendations of the Review.

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Brand Queensland

Current Situation

The concept of branding the State or nation is active at an international level. Austrade, other States and client and stakeholder groups that the Review interviewed pointed out clearly that the level of competitiveness in markets for export contracts and investments is strong and well organised, often at a national level.

This means that Queensland needs to be seen as acting with one voice when it comes to our national and international representation. However, this is not necessarily the case in practice. There are a number of agencies that work internationally – Education; State Development, Infrastructure and Planning; Tourism, Major Events, Small Business and the Commonwealth Games; and Protocol Queensland in the Department of the Premier and Cabinet.

The challenge in this landscape is to ensure that visits and efforts are co-‐ordinated and have maximum effect in market. As noted elsewhere, there are now three departments involved in investment attraction and keeping the activities of these groups in step becomes a priority.

The two major physical presences overseas are Trade & Investment Queensland and Tourism and Events Queensland. In some cases, accommodation is shared; in others there is a common city presence but not shared accommodation, and for each organisation there are cities where there is only one or the other. These locations are set out below in the table:

Tourism and Events Queensland (TEQ) and Trade & Investment Queensland (Trade & Investment

Queensland) – Office locations

City with TEQ only Common city location and shared office location TEQ and Trade & Investment Queensland

Common city location, no shared office location TEQ and Trade & Investment Queensland

City with Trade & Investment Queensland only

Munich (TEQ outsourced) Taipei Los Angeles Bangalore Auckland Shanghai Seoul Beijing Singapore Tokyo London (TEQ

outsourced) Guangzhou

Kuala Lumpur Hong Kong Santiago Dubai (TEQ outsourced) Houston (contractor only) Mumbai (TEQ outsourced) Belo Horizonte (contractor only) Abu Dhabi Riyadh (closing) Ho Chi Minh City (Austrade contractor)

Issues Arising

There are several issues arising from the Brand Queensland approach:

• The need for Queensland Government generally to promote Brand Queensland and understand its value internationally in a competitive and aggressive market

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• The need to ensure that each agency understands its role and how it fits into the Brand Queensland approach, particularly in the Investment space

• The need to ensure that agencies are co-‐ordinated in Ministerial travel overseas, Departmental travel overseas, investment activity across Government, close cooperation with Protocol Queensland and development of international travel planning

• At a practical level, identification of efficiencies of operation both domestically and internationally.

Proposed Solution

The Review proposes a framework that would see a small group set up in Trade & Investment Queensland to note, co-‐ordinate and plan international activity. The Review notes that a departmental committee exists with a role as a cross departmental planning group, and will recommend that this group meets monthly to plan visits with maximum impact in pre-‐qualified markets and sectors of importance, by doing key note addresses, making presentations and other high levels of involvement. This committee should also prepare an annual plan to allow good planning in Ministerial offices. At a practical level, the Review sees opportunities to do more co-‐location with TEQ and recommends that this be undertaken.

Recommendations

BRAND QUEENSLAND 10 That the role of Trade Commissioners and overseas offices in attracting

Foreign Direct Investment (FDI) be confirmed 11 That QEIA be solely responsible for FDI is confirmed 12 That QEIA/Trade & Investment Queensland re-‐establish an International Co-‐

ordination Unit that will co-‐ordinate details of all international travel by the Queensland Government and act as a co-‐ordinator between key Government agencies involved in protocol, tourism and events, education and trade.

13 The Queensland Trade and Export Committee should meet monthly and provide strong planning and opportunity identification, including an annual plan.

14 That Hong Kong and Seoul offices of TEQ and TIQ be co-‐located.

Corporate Mission

Current Situation

The situation is that there is no mission for Trade & Investment Queensland currently published. The organisation has a business plan which is targeted at an office/functional level, but there is nowhere that these plans roll up to nor is there a single statement or description that gives direction and guidance to the organisation.

Issues Arising

There are several important issues that arise from this lack of a mission. Firstly, such a statement is needed to inform clients. Secondly, employees need a high level expression of

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why the organisation exists to not only motivate them but give them an anchor on which to hang a whole variety of key decisions: budget allocation, development of performance indicators, and setting of planning and functional priorities. In the course of the Review, particularly from an overseas perspective, there was strong comment on the absence of a high level mission.

Proposed Solution

The Review believes that the reason Trade & Investment Queensland exists is to facilitate export opportunities and attract investment so that Queensland’s economy grows and develops. On this basis, a mission statement has been developed and strategies identified to support the mission so that at the highest level, Trade & Investment Queensland can explain its reason for being. This Strategic Plan is set out below:

Recommendations

CORPORATE MISSION

QEIA Strategic Plan

• Gather market intelligence in-‐market

• Capitalize on high growth markets

• Review location of overseas resources

• Communicate findings to business

• Use on-‐line assessment tools • Use TradeStart more to assist

business • Facilitate events for clients • Use Export Week to promote

awareness • Use events to match clients

and global businesses

• Attract global companies that leverage growth in Queensland exports

• Encourage investment in value-‐add and innovative industries

• Identify regional needs and diversify investment to assist

• Work with local partners to encourage growth in new industries

• Form collaborations with Govt. and industry to grow sector knowledge and cooperation

• Capitalize on R&D and innovation strengths to diversify trade capacity

• Further develop Queensland as an education destination

• Promote quality and value of Queensland Products

• Facilitate Trade Missions • Target supply chain opportunities • Promote Premier’s Export Awards • Develop market strategies for clients to

use • Develop Queensland information packs • Develop sector specific packs

• Promote quality and value of Queensland Products

• Facilitate Trade Missions • Target supply chain opportunities • Promote Premier’s Export Awards • Develop market strategies for

clients to use • Develop Queensland information

packs • Develop sector specific packs

• Form collaborations with Govt. and industry to grow sector knowledge and cooperation

• Capitalize on R&D and innovation strengths to diversify trade capacity

• Further develop Queensland as an education destination

• Attract global companies that leverage growth in Queensland exports

• Encourage investment in value-‐add and innovative industries • Identify regional needs and diversify investment to assist • Work with local partners to encourage growth in new

industries

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15 That the Mission statement and supporting strategies developed by the Review be adopted for the organisation.

16 That Trade & Investment Queensland immediately undertake business planning based on the outcomes of the Review.

Key Client Groups

Current Situation

Analysis of the current KPIs for Trade & Investment Queensland gives a broad indication of the size and capability of the businesses that make up Trade & Investment Queensland’s client group. The Table below shows a breakup of the individual elements of the KPI for Export Earnings for the year 2011-‐12, indicating that 72% of clients confirm transactions less than $1M, giving a clear indication of the relative size of the client group that Trade & Investment Queensland mainly services:

2011-12 2012-13 (Year to December)

Individual Value

# of t/actions % of total

$M Value

% of total

$M Average t/action

# of t/actions

% of total

$M Value

% of total

$M Average t/action

> $10M 16 4.72% 687 67.22% 42.94 5 4.59% 80 43.96% 16.00 $5M to $10M 15 4.42% 105 10.27% 7.00 7 6.42% 50 27.47% 7.14

$1M to $5M 63 18.58% 144 14.09% 2.29 16 14.68% 30 16.48% 1.88

<$1M 245 72.27% 86 8.41% 0.35 81 74.31% 22 12.09% 0.27

Total 339 100.00% 1,022 100.00% 3.01 109 100.00% 182 100.00% 1.67

It is these 72% of clients that occupy the vast majority of effort and time, and it is this group that should be identified and promoted as the priority client group for Trade & Investment Queensland. However, it is also evident that larger businesses generate good outcomes for Queensland, although the outcomes may not always be attributable solely to the efforts of Trade & Investment Queensland. These medium to large businesses are important to the State.

In 2010-‐11, TIQ assisted 3,058 clients with one or more of their services – these clients covered a wide range of industries with heaviest concentration in agribusiness, professional and other services, METS and energy resources. The target for 2012-‐13 in the Business Plan is 2,800 clients assisted.

Issues Arising

The main issue arising from the “who is my client” discussion relates to KPIs and the way in which the development can influence organisational behaviour. As noted above, an internal focus on high value deals generated by larger businesses does tend to skew in the field behaviour towards following these contracts.

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The KPIs proposed by the Review should address this behaviour and mean that the focus can be on the main client group of small to medium enterprises and still be recognised in performance terms.

Proposed Solution

The Review recommends that the SME sector be re-‐confirmed as the key client group for Trade & Investment Queensland.

Recommendations

Key Client Groups 17 That the key client group for Trade activities be Queensland based Small-‐

Medium Enterprises (SMEs) and that strategies developed by Trade & Investment Queensland be focussed on this group

Corporate Performance

Current Situation

Trade & Investment Queensland currently collects information across eight measures – six of these are publicly reported, two are internal measures only:

Publicly Reported Measures:

1. Number of targeted and qualified leads for Queensland businesses generated through Trade & Investment Queensland’s overseas trade missions and other trade and export development activities.

2. The numbers of structured programs/activities helping businesses build their capacity, improve their performance and/or access opportunities.

3. The number of business participants in structured development activities 4. Significant one-‐on-‐one business consultations undertaken 5. Number of businesses involved in Trade & Investment Queensland facilitated

alliances, partnerships, industry networks, supply chains, clusters etc. 6. Number of businesses assisted to export or expand market share

Internal Measures:

1. Value of additional capital attracted to Queensland as a result of Trade & Investment Queensland ‘s investment and business development assistance, in $million

2. Value of exports generated by businesses assisted by Trade & Investment Queensland in $million

Issues Arising

The Review found that in spite of the range of KPIs used by Trade & Investment Queensland, the two internal measures that recorded $ outcomes completely dominated consideration of KPIs.

These measures are agreed annually for each market by the Trade Commissioner and Managing Director, and distributed to overseas and domestic offices. The targets set are

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then monitored on a weekly basis centrally. Contributions to the measures are recorded on Confirmation of Business Success Forms (previously Export Impact Forms), which are prepared by the relevant office and signed off by the Queensland business involved in the transaction.

Discussions with overseas Trade Commissioners, former Trade Commissioners and office staff indicate that the information recorded by the CBSF may not give the full picture of the service provided by Trade & Investment Queensland. It may also have the effect of influencing behaviour and skewing measurement by:

• Being disproportionately impacted by large, one-‐off deals • Reflecting only “easy target” deals with larger corporations that may occur with or

without Trade & Investment Queensland assistance • Encouraging behaviour in market to overlook the key client group for Trade &

Investment Queensland, Queensland Small to Medium Enterprises, in favour of chasing high value deals

• Discouraging co-‐operation between offices in dealing with clients who may be market-‐ready in several markets

• Not taking into account the lead times involved in bringing businesses to market, with assistance and support not necessarily resulting in export outcomes in the same year – in fact such assistance may have a several year incubation period.

Proposed Solution

The “headline” export value number is regularly used as the sole indicator of Trade & Investment Queensland performance, both at a political level and in the media. The Review concluded that this number is not relevant to the vast number of services that Trade & Investment Queensland provides nor does it reflect accurately on the key client target groups that Queensland is seeking to support i.e. Small-‐Medium Enterprises (SMEs). The Review would prefer to see KPIs that match the client journey from initial contact through to presence and activity in-‐market. On this basis, the Review recommends that a set of KPIs be used to measure performance at each key stage of this journey, and that an independent body such as a University be engaged to do an annual customer satisfaction survey and an economic impact analysis to add further depth and reliability to the performance suite.

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Recommendations

CORPORATE PERFORMANCE 18 That a monthly performance report be prepared and distributed to all offices

comparing and ranking performance against KPIs. 19 That the current dollar based export KPIs not be retained. 20 That a broader suite of KPIs be introduced to directly address the key client

group, Queensland SMEs (see attached table). 21 In addition, it is recommended that an independent body such as a university

be engaged to do a client satisfaction survey across all clients on an annual basis, and also an annual assessment of the economic impact of Trade & Investment Queensland’s activities on the Queensland economy.

22 That a narrative accompanies this KPI reporting which provides on a quarterly basis a summary of in-‐market activity across all offices, including regional offices and Brisbane based activities, and that this narrative be provided quarterly to the Under Treasurer, Treasurer, Deputy Premier and Premier.

23 That at a minimum annually Queensland Treasury & Trade undertakes an update of short, medium and long term views of domestic and international trade and investment opportunities, including status of new, emerging and mature markets and development of industry sectors, and that this update is distributed to all overseas and regional offices.

24 That in between these annual updates, QTT distributes the Quarterly Economic Review produced and briefs key staff on its contents.

Proposed Performance Measures

Measure Type

Performance Measure Client programs and events

Sectoral export development

International market services

Input Number of businesses participating in structured activities or programs

x x x

Number of pre-‐qualified export or investment opportunity leads communicated to clients

x

Number of high-‐level international relationship building meetings and events

x

Output Number of businesses assisted to generate new trade/investment deals through significant agency assistance.

x

x

Value of new investment deals generated through significant agency assistance

x

Qualitative Client satisfaction with the performed services Via Independent survey

Proportion of assisted businesses reporting improved international trade capability or performance

Via Independent survey

Number of jobs created or maintained through the assisted export/ investment activity

Via Independent survey

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Overseas Network

Current Situation

Trade & Investment Queensland currently has a touch point in 19 locations across 13 countries, with ten Trade Commissioners in the field. One of these Commissioners (Saudi Arabia) finishes in January 2013 and will not be replaced.

Queensland’s multiple representation is in:

• China (4 offices including Hong Kong) • The Americas (four points of representation including contractors) • India (one office but covering 4 locations) • and The Middle East (one office since closure of Saudi Arabia, but covering three

locations).

All other countries represented have single points of reference, varying from

• a full office with Trade Commissioner (Japan, Korea, and Taiwan) • an Austrade facilitated contractor (Vietnam) • London has the dual role of Agent-‐General and Trade Commissioner.

The oldest Office is that of the Agent General in London, dating back to 1861, and the newest office Beijing, China.

Queensland Current

Queensland Proposed

China -‐ Beijing BDM -‐ Guangzhou BDM -‐ Shanghai Commissioner Commissioner -‐ Hong Kong Commissioner Deputy Commissioner India -‐ Mumbai Contractor Contractor -‐ Bangalore Commissioner Commissioner -‐ Hyderabad BDM ex Bangalore Indonesia -‐ Jakarta Commissioner Japan -‐ Tokyo Commissioner Commissioner Korea -‐ Seoul Commissioner Commissioner Vietnam -‐ Ho Chi Minh City Austrade Contractor Austrade Contractor Taiwan -‐ Taipei Commissioner Commissioner Europe -‐ London Agent-‐General Agent-‐General The Americas -‐ Los Angeles BDM

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-‐ Houston Services Contractor Commissioner – North America

-‐ Santiago Commissioner Commissioner – South America

-‐ Belo Horizonte Services Contractor Services Contractor Saudi Arabia -‐ Riyadh Commissioner UAE -‐ Abu Dhabi Commissioner Commissioner Qatar -‐ Doha BDM (ex Abu Dhabi) 19 14

Issues Arising

The key issues arising for the Review were consideration of the question of whether the offices are in the right countries, the right locations in these countries and whether the overall delivery model was sound.

Proposed Solution

The economic information earlier in the report suggested that there will be significant growth in the BRICs, and USA and Japan will remain significant economies. The Review examined each current office’s operation in detail. The issues that arose from a first scan of locations of offices are that TIQ is not represented in Indonesia. The TIQ office there was closed several years ago. In the meantime, it has continued to grow and as part of the ten ASEAN nations is not only a major and growing force but also in close physical proximity. The Review believes it is essential that Queensland be represented there, and that the ASEAN activities being run from Jakarta with support from Brisbane.

The second issue is in The Americas. The Americas market is significant with minimal similarities between North America and Latin America and the Review recommends it be separate markets with a new Trade Commissioner role established for the USA and Canada based in Houston, Texas. Houston provides a central location to access East and West coasts, has a central USA time zone, and is now accessible directly from Brisbane.

Thirdly, the Trade Commissioner in Saudi Arabia has completed his contract and the decision has been taken to close that presence with UAE in Abu Dhabi taking over responsibility for the role.

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Over time, TIQ has sought to take short term leases and generally tried to make the office structure more mobile. The four major offices in cost terms are Japan, China, London and The Americas. Japan remains a major trading partner for Queensland and China is going to be a focus for the foreseeable future. The Americas is noted above as needing to be split into North America and South America and to meet the market, the TIQ presence increased.

This leaves London as an office where the cost does not appear to be justified in the mature markets of UK and Europe. The Review team considered the pros and cons of closing or significantly modifying the operations of London. The dual role in London is that of Agent General and of Trade Commissioner, and on current indications, the Agent General role is a minor one of 5%-‐10% of effort compared to the Trade Commissioner activities that occupy the majority of time and effort. TIQ receive a good deal on rent from Department of Housing and Public Works and the site, as mentioned in the recommendations, is suitable for a sale and lease-‐back deal. Currently three floors are leased, of which the TIQ office uses one. Options for cost reduction in London include moving the operation to Australia House but the cost of this is similar to reducing floor usage in Queensland House. The big benefit to Queensland would come from redeveloping the Queensland House site, either as a sale deal or in a development approach which guarantees office space going forward. It is recommended below that the Government consider such an approach. In practical terms however in relation to the operations of the office, the Review felt that on balance it is not practical to close London, but that the office needs to take on additional responsibility for new and emerging markets in the Commonwealth of Independent States, Turkey and Africa. These economies are rapidly growing, offering increased business opportunities for Queensland companies.

The other major issue that the Review has a strong view on is the delivery model for services in large countries such as China, North and South America and India. Rather than incurring the expense of fixed costs associated with new offices, a One City approach needs to be adopted where one main office is established, and staff in this office travel out to regions to develop business. On this basis in China, regional offices should be progressively closed and operations run from Shanghai. The larger office contingent adds to the critical mass of maintaining good service delivery, information flows and good office morale, and the additional costs of travel are covered by the savings in fixed costs. This approach is recommended.

In terms of the staffing of overseas offices, four things stand out:

1. The cost of ‘A Based’ Commissioners is prohibitive. Current moves are to replace these contracts with Locally Employed Staff (the engagement method for general office staff) but these contracts can be problematic in terms of engaging the right people for the right market. The Review therefore believes that the employment market could support a new category of contract engagement – Australian Sourced, Locally Paid (ASLP) whereby sound staffing choices could be made but without the A Based costs and administration.

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2. The funding for overseas offices needs to be adequate to support the normal activities of the office or else staff are unable to do the job. For instance, the recent reductions in travel applied to offices meant that Trade Commissioners and business development managers were unable to function as they should. It would be a perverse outcome to have staffing capacity but no travel capacity.

3. Staff at the Business Development Manager level and above in overseas offices should travel to Brisbane periodically to receive a briefing on Queensland capability in certain sectors and participate in market orientated briefing seminars. Trade Commissioners should continue current practice of an annual planning meeting in Brisbane and participation in Export Week. Business Development Managers and Office Managers should do this every two years. Business Development Managers, having served six months in the job, should travel to Brisbane so that they know and understand the State that they represent in market. This has an impact on travel costs that has been identified in the proposed Budget.

4. Trade Commissioners in some markets are the sole repository of vital in-‐market intelligence and this is a high risk if no succession planning is put in place. This is an ideal initiative to foster future leadership for Queensland’s overseas office network. Therefore there is an urgent need to appoint a Deputy Commissioner role in the key markets of China, Japan, India, South America, UAE and UK. This recommendation is also in line with the need to boost the resources in overseas offices which will attract a corresponding increase in KPI targets.

Finally, with the Review recommending that the Brisbane office take a sector based approach to structure and using this basis to support overseas offices, a scan was undertaken of what markets each Priority Export Sector team in Brisbane could focus on. The table bellows shows that FDI should be a focus for all offices and markets, and that it is expected that Food and Agribusiness; Education and Training; and Infrastructure Construction & Environmental will be the broadest targeted sectors.

UK & EUROPE

LATAM NORTH AMERICA

JAPAN CHINA HONG KONG

TAIWAN SOUTH KOREA

INDIA UAE

FOOD & AGRIBUSINESS

INFRASTRUCTURE CONSTRUCTION & ENVIRONMENTAL

EDUCATION & TRAINING

MINING ENERGY & METS

ICT

KNOWLEDGE BASED INDUSTRIES

FOREIGN DIRECT INVESTMENT

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Recommendations OVERSEAS NETWORK 25 That the Managing Director of Trade & Investment Queensland visit each

overseas office annually to brief on issues and undertake the annual performance assessment for each Trade Commissioner.

26 That Trade Commissioners return to Brisbane annually, Business Development Managers every two years and Office Managers every two years to be briefed and meet together.

27 That overseas offices be given appropriate delegations to develop and manage their budgets in an accountable but efficient manner.

28 That a monthly communication to Trade Commissioners outlining KPI results be developed and distributed.

29 That a model be implemented for large markets (China, India, North America, South America) which identifies a head office and locates all staff in that office, with representatives responsible for other regions travelling into market regularly. Fixed costs are thus maintained in one place and the support of a larger office is maximised.

30 That each Trade Commissioner does an annual business plan in conjunction with the Managing Director to include proposed KPI targets, proposed travel, sector focus and budget requirements.

31 That the Minister for Trade consider the sale of Queensland House and lease back on a no-‐cost basis of ongoing office accommodation for the Agent General.

32 That the Guangzhou office be closed. 33 That the remaining offices in China be incorporated under one Trade

Commissioner to facilitate the servicing of clients across the country and that the Trade Commissioner in Hong Kong becomes the Deputy Trade Commissioner for China.

34 That the Taiwan and Hong Kong office incorporate accommodation for Tourism and Events Queensland as soon as practicable, and that the number of locally employed staff be reduced to release funding for other priority offices.

35 That the Los Angeles Office be closed and staff relocated to Houston under the control of a Trade Commissioner, with all efforts made to minimise the cost of ongoing leases in Los Angeles.

36 That the expanded Houston office includes responsibility for North America and Canada.

37 That the current contractor position in Houston focussing on gas and oil be discontinued

38 That the Trade Commissioner in Santiago becomes only responsible for Latin America

39 That a new office be opened in Jakarta, Indonesia with an ASEAN Trade Commissioner and essential staffing.

40 That a new Business Development manager in Brisbane be responsible for development of opportunities in Papua New Guinea.

41 That the Review notes the retirement of the Trade Commissioner in Saudi Arabia and recommends that the responsibility for this country be transferred to the UAE.

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42 The Review notes that gifts presented by the Minister to visiting Trade Missions are extremely basic, and recommends that a small range of high quality gifts which represent Australia be developed to leave a lasting impression on key foreign investors and stakeholders.

42 That Deputy Commissioners be appointed UK, UAE, China, Japan, India and South America.

Queensland Operations

Current Situation

The existing organisational structure of Trade & Investment Queensland broadly reflects the recommendations of the 2007 Review of Trade by Loftus Harris. It centres on a Brisbane structure of two market desks, (Overseas Market Development -‐ Asia & Overseas Market Development – Europe, Americas, Middle East & Emerging Markets) supporting a network of overseas offices; a Regional Trade & Investment Group of TradeStart officers; Food & Agribusiness officers (both in Brisbane and in the regions); a Brisbane Export Advisory Service that manages the Export Hotline and rolls out exporter training programs across the State; an International Business Solutions Branch that entails a corporate support unit (finance, HR, IT); a marketing & media unit; corporate planning/performance and strategy unit; and trade mission planning and coordination unit for managing Premier’s and Minister for Trade’s trade missions. In addition a CBRC funded International Education and Training Unit sits in the Asia Branch.

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Current Trade & Investment Queensland Structure

Issues Arising

There appear to be some inconsistencies and difficulties in the structure as it is currently implemented. The Review identified several issues for further consideration in proposing a structure:

• Overall staffing numbers across the organisation suggest an imbalance in the number of staff currently occupying positions overseas (53) and in Queensland (98.6) and believes there should be a larger contingent in overseas offices that supports clients in market and a corresponding reduction in Queensland feeding export businesses through to these overseas locations.

• The Review noted from discussions with Trade Commissioners that their preference in market is to have Brisbane office providing high level sectoral advice in priority industries rather than the duplication arising from having a market desk operation in

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Brisbane as well as in market. The priority industries take in three of the governments’ four pillars: mining & resources; construction/infrastructure; and food & agribusiness; and noting that tourism is specifically dealt with in other areas of government. Additionally, international education and training is another key export industry for Queensland and the international aid and development business area covers off a number of services and knowledge intensive industries. Given that Foreign Direct Investment (FDI) from overseas interests targets a number of these industries, the Review believes the FDI unit should sit with this group.

• The other client servicing area, the regional team of TradeStart and export and investment advisors (FATIQ), would also benefit from being located with the other client facing units. This would facilitate the development of a cohesive and consistent service delivery process for assisting export clients into the overseas markets.

• The Review also looked at the marketing, media and events unit, which currently is designated as a corporate service activity situated in the International Business Solutions Branch. It was noted by staff that this unit had a much higher profile previously and was seen as integral to developing the (then) Trade Queensland Brand. Once again the MOG of this group into the old DEEDI corporate area saw TIQs marketing effort homogenised and reduced. The Review strongly believes that BRAND QUEENSLAND requires a significant upgrade in order to compete with the marketing efforts of other States in key overseas markets. (Text redacted for commercial-‐in-‐confidence reasons)

• The Review noted the current reporting arrangements for Trade Commissioners through to the Directors of the Overseas Market Desks. The Review felt strongly that given the critical role that Trade Commissioners play in the organisation, that there should regular and direct contact with the Managing Director. This would facilitate a close working relationship between the market and Head Office to identify potential difficulties and seek swift resolution. This coupled with a direct line to the General Manager International Operations will mitigate any communication issues that may occur.

• The Review also noted the requirement to have a senior management position and a small market support team in Brisbane to assist the overseas offices with operational issues and assist with inbound/outbound trade missions.

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• Mission Planning and Coordination, which manages ministerial trade missions is a

critical role and experiences peak times with the finalisation and departure of a mission. The Review felt that this function needs to be more closely aligned with the overseas offices rather than being located in a corporate services unit (International Business Solutions).

• The Corporate Services unit of TIQ is one that has suffered most under the previous MoG outcomes. Discussions with staff also indicated that there are corporate service type activities still occurring in the business part of the organisation. It is essential that all corporate activities are undertaken in the Corporate area, and that in turn this group clearly understands their role. The Review believes the corporate services area needs to be a standalone unit that reports directly to the Managing Director. (Section redacted for commercial-‐in-‐confidence reasons)

• (Section redacted for commercial-‐in-‐confidence reasons) The Review believes there would much better synergies and consistency if all client facing teams be in one division and recommends the creation of a Client Services and Sectoral Development Division headed by a General Manager at the SES2 level reporting to the Managing Director. This would leave a standalone Corporate Services Unit which would then be managed at the Senior Officer level and report to the Managing Director. The combining of the two OMD Teams into one International Operations Division which would be managed by a General Manager. (Section redacted for commercial-‐in-‐confidence reasons)

• (Section redacted for commercial-‐in-‐confidence reasons) The Review believes the Mission Planning and Coordination unit would function much better located in the International Operations Branch. The target client group is now export ready SMEs in the target sectors. The exporter education activities will be handled by on-‐line self-‐assessment and development tools and referred to external providers.

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Proposed Solution

The Review recommends a significant change to the TIQ organisational structure as depicted in the model below. This includes the creation of five sectoral teams plus the FDI Co-‐ordination Unit and dissolving the International Business Solutions Branch with existing client facing units going to the Client Services and Sectoral Development Division. This division would also include a Client Services Branch with the regional network of export advisors, the Business Cadet Program the Export Hotline and the Marketing and Media team. The remaining Corporate Services area would become a standalone unit reporting to the Managing Director. The two OMD Teams would be dissolved with creation of a single International Operations Division consisting of a boosted overseas office network, a smaller support group in Brisbane and includes the Mission Planning and Coordination team.

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Recommendations

QUEENSLAND OPERATIONS 43 That the structure of the Brisbane based operations of Trade & Investment

Queensland reflect a sector approach to best support Overseas offices, with a smaller Brisbane based market desk reporting directly to respective Trade Commissioners.

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44 That these Priority Export Sector groups and the FDI Co-‐ordination Unit prepare a strategy for each priority sector and present it to the overseas offices to assist in development of the each office’s business plan.

45 That Trade & Investment Queensland as a matter of urgency: -‐commence a focus of effort on export ready businesses in Queensland -‐continue to provide initial contact, information and participation activities but that these be sourced by the development of on-‐line education, on-‐line self-‐assessment and outsourced to training providers.

46 That the current imbalance of staff numbers between Brisbane and overseas offices be addressed as a matter of urgency by definition of roles needed across the organisation and a process of allocation of staff with relevant skills to the new structure.

47 That, having completed their probation period, all Business Development staff in overseas offices visit Queensland for orientation and Head Office briefing.

48 That the International Business Cadets program be reinstated on the basis of a 50% contribution by businesses and involve five graduates positions.

49 That work underway on establishing a clear basis for engagement of local staff in each market be completed so that a clear legal basis is evident for each country.

50 That a new category of employment contract be developed which allows recruitment of key senior staff either in-‐market or in Australia, but applies local employment conditions with the objective of removing the burden and cost of A-‐Based conditions.

51 That Deputy Commissioners be appointed in the following offices – China, Japan, India, UK, UAE and South America.

52 That Trade Commissioners appointment terms be no more than 3 years with the option of 2 year extensions.

53 That QTT Legal Services Unit develops a consistent legal framework for the establishment of overseas offices and the engagement of local staff to ensure that the State’s interests are preserved.

54 That similarly QTT Director of HR work with Trade & Investment Queensland to establish an ongoing framework for local employment, including approach to recruitment, remuneration and remuneration review.

Queensland Operations – Food & Agriculture

Current Situation

The Food & Agribusiness Team in Trade & Investment Queensland (FATIQ) consists of 11 positions (2 currently vacant with substantive holders acting elsewhere in Trade & Investment Queensland) in Head Office in Brisbane and 9 positions in Regional Queensland (Cairns (1); Townsville (2), Barcaldine (1), Rockhampton (1), Bundaberg (1), Toowoomba (2), and Gatton (1).

Currently the FATIQ team works on a variety of agribusiness industry development activities and the Global Markets Initiative (GMI) Program (limited life funding from CBRC of $250,000

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p/a for years ending 2013-‐14). The FATIQ team was transferred from the Department of Agriculture, Fisheries and Forestry (DAFF) in 2010 as their function was deemed to be primarily a trade activity, which sat better in Trade & Investment Queensland.

Issues Arising

Given tight Trade & Investment Queensland budget position, it should be a priority for the FATIQ Brisbane and Regional staff to focus on the GMI Program for their business plan activities. This should reduce the need for Trade & Investment Queensland to fund project activities from the Trade & Investment Queensland base budget.


Proposed Solution FATIQ Brisbane and Regional staff to focus on the GMI Program (Section redacted for commercial-‐in-‐confidence reasons)

Recommendations

Queensland Operations – Food & Agriculture 55 That FATIQ Team focus their efforts to utilising the GMI Program and

identifying potential regional investment opportunities to attract FDI with the development of appropriate KPIs. That the composition and location of the FATIQ Team be streamlined to provide multi-‐sector trade and investment advice to reduce budget costs.

Queensland Operations - International Education and Training Unit

Current Situation

Queensland’s international education and training sector is the State’s fourth-‐largest export industry after coal, beef and tourism. In 2011, it contributed A$2.347 billion in export revenue and employed 16,800 Queenslanders.

Issues Arising

The CBRC Submission on international education 2011 recommended that the International Education and Training Unit (IETU) unit within Trade and Investment Queensland be the government’s lead agency involved in the promotion of international education and training exports.

The international education and training industry have proposed that the Treasurer and Minister for Trade to become the international ‘champion’ for the export of education and training services. This will provide the industry with a senior government decision maker who industry can engage with to discuss major challenges and potential solutions.

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The industry also proposes that an International Education Reference Group (with the IETU as secretariat), comprising of education providers from different sectors and regions of the state be established as the formal mechanism for Trade & Investment Queensland’s consultation with stakeholders.


Proposed Solution

• Treasurer and Minister for Trade to accept role as ‘Champion’ for the international education and training industry as part of the trade portfolio. Treasurer’s parliamentary secretary or assistant minister to assist where required.

• Establish an industry reference group comprising education providers in different sectors and from different regions of the state. IETU to act as secretariat for this reference group.

• IETU to be designated as the State’s lead agency for promotion of the international education and training sector.


• IETU move to fill vacant positions for specialist education promotion staff overseas including in the Middle East, Indonesia and the Americas

Recommendations

Queensland Operations – International Education and Training Unit 56 That the IETU be designated as the State’s lead agency for promotion of the

international education and training sector and the vacant funded positions be filled urgently.

57 That the Treasurer and Minister for Trade become the export Champion for the International Education and Training industry and establish an industry reference group

Sister State Agreements

Current Situation

Queensland has six Sister-‐State relationships, four in Asia: Saitama, Japan; Shanghai China; Central Java, Indonesia and Gyeonggi, Korea, as well as South Carolina, United States (US) and North Rhine Westphalia, Germany. Saitama was the first one signed in 1984 and South Carolina the last in 1999. Sister-‐State agreements are signed at the Head of Government level and carry significant status in terms of diplomacy and trade.

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Issues Arising

The benefits of a Sister State relationship are only worthwhile if the relationship is broadly based across economic, educational and cultural dimensions, and if there is a good match between the jurisdictions in complementary economic and social objectives, and most importantly, if there is a demonstrated commitment by both sides to maintain and grow the relationship.

The Queensland-‐Shanghai Sister State Relationship, for example, is Queensland’s most significant Sister State relationship in terms of its active status with regular exchanges in both government and business, collaborative projects that are conducted under its auspices, and for the importance both sides give to its maintenance and continuation. China is Queensland's second largest trading partner and the Queensland-‐China relationship overall is supported by the strength of the Queensland-‐Shanghai Sister-‐Sate relationship. Queensland is the only Australian State with a Sister State relationship with the Shanghai Municipal Government, which gives Queensland an advantage over other Australian states when engaging with this important and influential government. The main areas of cooperation between Queensland and Shanghai centre on sustainable economic development, including trade and investment; education; tourism; science and technology; police; health; culture and sports.

Other Sister State relationships such the agreements with Central Java, Gyeonggi and Saitama have lacked focus and activity in recent times, but there is now a renewed interest by both sides to revitalise the relationships. The Central Java MoU (first signed 1991), is currently being renewed with a strong focus on trade, education and health, and the Gyeonggi, Sister State relationship MoU (first signed in 1997) is undergoing a renewed action plan including a public servant exchange program planned for 2013. The Saitama and South Carolina relationships are currently not being actively pursued due to a lack of resources by both parties.

Proposed Solution Sister State agreements that are actively managed and resourced by both parties are an important diplomacy and trade relationship tool, and such, should continue to be supported and resourced by government. It should be also acknowledged that these types of agreements carry a whole-‐of-‐government status and should be supported across government, not just in TIQ.

Recommendations

Sister State Agreements 58 That the system of Sister State Agreements be reviewed annually to

determine that they are still delivering a net benefit to Queensland and that the other party is actively participating in the arrangement.

59 That TIQ maintain an up to date central register of all Sister State Agreements and other Agreements i.e. (MoUs) and keep a record of each annual review’s results.

60 Agreements that fail to meet a positive review assessment should show cause as to why they should be continued to be resourced by TIQ.

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Trade Missions and Representation

Current Situation

Trade missions remain one of the most significant aspects of Trade and Investment Queensland’s services to Queensland exporters. There are two types of trade missions – (1) ones which are led by either the Premier or a Minister (often associated with other activities such as the Commonwealth Games bid in 2011 or QTC road shows); and (2) those which are led by TIQ officers.

Trade missions offer companies a range of support services including pre-‐mission market briefings and export skills development, key industry and trade show exhibitions or attendance, one-‐on-‐one meetings with local buyers, networking events with key decision makers and site visits. Trade missions provide a cost effective tool for Queensland companies to enter a market and develop or expand their export business and are tailored to company needs and interests. In 2011-‐12, 156 companies participated in 19 TIQ trade missions. Export and investment deals that have been attributed to date on these trade missions total $45.78M.

Issues Arising

Premier and Ministerial led trade missions are a whole-‐of-‐government activity that TIQ undertakes. Activity includes working with the overseas office and market development staff to develop a suitable itinerary that entails high-‐level government and business meetings for the Premier/Minister, while providing business participants access to top decision-‐makers and one-‐on-‐one business matching meetings. Recruitment of businesses to participate in a Premier Ministerial trade mission involves a direct mail campaign followed up by telephone calls and personal selling.


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Export and investment deals from trade missions often take months, even years, to be finalised and reported to Trade and Investment Queensland. Companies are still reporting outcomes from the 24 trade missions which were undertaken in 2010-‐11. It is recommended that collection of $ KPIs and the number of transactions concluded by a reporting item for the Premier/Treasurer to present to Parliament.

TIQ Trade Missions currently TIQ submits a six month forward trade mission schedule (including the TIQ Officer travelling) for the Minister to approve “in-‐principle”. Then a formal individual travel approval request is submitted by the Trade Officer to the Minister to officially authorise travel. This double approval process would seem an unnecessary burden for the Minister and the initial agreement to undertake the Trade Mission should suffice, with the organisational CEO signing off the final travel approval. This preplanning and timely approval process and booking arrangements will result in cost savings.

Trade Mission Representation is another important issue for TIQ. Previously, TIQ engaged “Special Trade Representatives” who were former senior Parliamentarians and government bureaucrats. Due to significant budget restraints in TIQ, these positions were discontinued in June 2012. Their departure has left a hole in some markets where a senior current (or former) government representative is crucial in being able to get high levels meetings (Middle East, India, China, ASEAN). A low cost option suggested was to invite a panel of eminent persons (Special Mission Representatives) to be engaged on a case-‐by-‐case basis as required. In addition, the Governor or other Ministers in government could be invited to lead a trade mission, should the Trade Minister not be available. (Section redacted for commercial-‐in-‐confidence reasons)

An international network of State-‐to-‐State Honorary Trade Representatives in key markets could be appointed to facilitate high level in-‐market access to government representatives and the local business community. These honorary representatives would have some affinity with Queensland (Expats etc.) and be in a position to promote Brand Queensland at networking events and encourage participation of high level dignitaries and key influencers in-‐market.

For In-‐Bound Trade Missions it has been suggested that a number of market-‐related Friendship Committees be established for Queensland’s key trading partners, who assist TIQ in hosting visiting trade missions. These committees would host networking events aimed at promoting Brand Queensland, developing goodwill and facilitating networking opportunities for local Queensland business.

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The Review also noted the TIQ policy introduced in 2012 of charging on a cost recovery basis for participation in Trade Missions has been accepted by the business community and recommends it be continued and broadened over time to offset other operational costs.

Proposed Solution

A yearly forward plan of Premier/Minister trade missions be developed and promoted to the business community. The travel approvals process for TIQ officers be streamlined to decrease the administration burden on the Minister and Minister’s Office and enable more cost effective travel arrangements to be secured by TIQ. That a number high level Trade Mission representative options be developed for outbound and in-‐bound trade missions.

Recommendations

TRADE MISSIONS AND REPRESENTATION 61 That the Minister for Trade travel to market four times a year – in conjunction

with the Premier and the Deputy Premier this provides a major opportunity for targeted Trade Missions to key markets.

62 That this level of planning, and indeed all Trade Mission planning, be done annually in advance to allow exporters an opportunity to plan for the event and for Trade & Investment Queensland to explore options for key note speaking roles on trade missions, conferences and business networking events.

63 Whole of Government process for Ministers and Government departments that overseas travel is to be undertaken in cooperation with Trade & Investment Queensland so that overseas offices can be aware and value added with engagements where appropriate.

64 That a KPI based on expected business be developed and applied after each Ministerial Trade Mission to measure the success of that Mission – this KPI outcome is to be recorded as part of the narrative in the Annual Report but not reported in the overall performance information.

65 That the use of joint Trade Missions with other States, where there are complementary opportunities particularly in mining and mining services, to further develop the Brand Queensland and Brand Australia approach.

66 That the policy introduced in 2012 of charging on a cost recovery basis for participation in Trade Missions be endorsed.

67 That the importance of overseas Missions be recognised and that Trade & Investment Queensland plan to engage senior Ministers (Premier, Deputy Premier, Treasurer) in a program of visiting each Trade market annually.

68 That a panel of eminent persons (Special Mission Representatives) with strong credibility in-‐market to be engaged.

69 That a network of State-‐to-‐State honorary Trade Representatives be appointed in-‐market where appropriate.

70 That the Government seek to formally engage the Governor of Queensland in promoting Queensland Trade and Investment when travelling overseas.

71 That a revamped structure of Friendship Committees be established for large markets of Korea, Japan, USA, India, China and South America; that these incorporate existing Councils; and that the purpose of these reflect the need for a like-‐minded group of local business and community people to act as hosts for visiting dignitaries and delegations, with minimal administrative input from Trade & Investment Queensland.

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72 That Trade & Investment Queensland ensures that briefing processes for Missions are maintained at a minimum appropriate to the Ministers and markets being visited.

Investment

Current Situation

In 2011-‐12, Foreign Direct Investment into Queensland attracted foreign investment of $23.2 billion (up from $9.4 billion in 2006-‐07). This represents an annual average growth rate of foreign investment into Queensland of 20%.

The Governments of Victoria, NSW, WA and SA and the Australian Trade Commission all advise that FDI is a high priority. For example:

• The Victorian Government is in the process of establishing Major Investment Victoria a statutory body with a focus on FDI.

• The Western Australian Government has had significant success in attracting FDI, particularly into the resources sector (oil, gas, METS) but also into infrastructure, food and agriculture, tourism infrastructure and property development.

Trade & Investment Queensland currently has two positions (redacted for commercial-‐in-‐

confidence reasons) dedicated to FDI.

Issues Arising

• There is a need for improved whole-‐of-‐Government coordination of foreign direct investment in Queensland. There are currently three areas of Government focusing on investment activities: Invest Queensland (DSDIP), Tourism Investment Attraction (Tourism, Major Events, Small Business and the Commonwealth Games) and Trade and Investment Queensland & Projects Queensland (QTT).

• There remains considerable confusion among external and internal stakeholders regarding which areas of the Queensland Government are responsible for promoting, attracting and facilitating investment into Queensland.

• Invest Queensland’s activities are heavily concentrated on attracting companies from other States to move to Queensland. Tourism Investment Attraction identity investment opportunities in the tourism sector, Trade and Investment Queensland has a strong focus on promoting, attracting and facilitating FDI into Queensland. There is considerable opportunity for all parties to work much more closely with Trade & Investment Queensland in support of FDI.

Proposed Solution

An International Coordination Unit be established in Trade & Investment Queensland to present a Team Queensland approach to FDI enquiries. That appropriate training be implemented across the overseas office network and in Head Office to develop a high quality consistent approach to dealing with international investor enquiries.

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Recommendations

INVESTMENT 73 The Review recommends that Trade & Investment Queensland’s role in FDI be

endorsed by the Minister, and that the International Co-‐ordinating unit to be established in Trade & Investment Queensland to be used to ensure a common approach international investment attraction activity.

74 That key investment markets be nominated (presently UK, North America, Japan, India) and that specific investment targets be nominated as part of the Trade Commissioner’s performance agreement.

Corporate Processes, Red Tape and Systems

Current Situation

The Review team were aware from discussions that there were a range of issues affecting corporate performance. These were mentioned by senior managers in Brisbane and by Trade Commissioners overseas, all of whom identified spending up to 60% of their time on administrative task. While all accepted that some level of administration is necessary and unavoidable, the key theme for the Review team was that the level of duplication of processes was frustrating, and of even more concern was the overall effect of slowing down the way in which the offices did business. Many examples were quoted – the worst involve the need to get pre-‐approval for trivial or minor expenditure items with additional administration both at the point of the expenditure through to the current requirement to acquit and provide hard copies of all supporting documentation. Travel generally is seen as difficult and time consuming, which is at odds for an organisation which depends on travel to do its job. As the Review recommends using a One City approach where staff locate centrally in a country and travel to markets regionally, the need for travel will increase not decrease.

The lack of a well-‐defined organisational governance framework with specific policies and procedures that supports the business activities of TIQ has an impact across all corporate activities.

Of equal concern was the state of the systems that the organisation uses to do its job, both Customer Relationship Management (CRM) systems which are central to activities and more general support subsystems.

Issues Arising

With these identified concerns around processes, systems and delegations, QTT as part of receiving the TIQ function as part of the ongoing due diligence process, QTT engaged Crowe-‐Horwath, an international accounting firm to do a review and make recommendations on the state of processes and systems in TIQ. This Report is attached, and it details at length the range of issues found and the recommended approach to dealing with these issues and mitigating current risks to the organisation. (Section redacted for commercial-‐in-‐confidence reasons)

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Proposed Solution

Crowe-‐Horwath has recommended a range of improvements to the processes and systems environment. The Review has analysed this report and discussed it actively with the Crowe-‐Horwath team, and will recommend that their set of recommendations be accepted in full for rapid implementation. Key areas of concern have been highlighted in the report and recommended below to add emphasis to the need for urgent change to the CRM system, to communications between offices, and to the process by which travel is approved.

Recommendations

CORPORATE PROCESSES, RED TAPE and SYSTEMS 75 That in noting that the Trade & Investment Queensland’s most important

business system, the Phoenix CRM is no longer operational, the Review recommends immediate action to purchase on a per user basis capacity with a web based CRM such as Capsule, and that where possible using web based services commercially available be the preferred method of acquiring ICT, given the global nature of the Trade & Investment Queensland operation.

76 That the Government note the major cost of delayed Travel approvals on both budget and sound office planning, and that: travel approvals for overseas officers be approved up front in a planned schedule for a financial year; that further travel approvals prior to travel not be required; and approval for this annual travel plan be at the Departmental CEO level, in this case the Under Treasurer, rather than at a Ministerial level.

77 That the development of a complete organisational governance framework be undertaken to ensure strategic risk; business continuity; and operational planning is undertaken in the context of the business requirements of TIQ. The framework would include financial and non-‐financial requirements ensuring accountability and responsibility rest where appropriate to ensure correct business outcomes.

78 That the Recommendations of the Crowe-‐ Horwath report be accepted in full.


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Recommendations

BUDGET 79 That the principle of fee-‐for-‐service for professional advice be explored, and

that a trial be undertaken out of the Santiago Office to determine applicability and success with learning’s to be used in 2014-‐15 to guide further decisions.

80 That Export Week be revived given its capacity to engage potential exporters, but that the organisation of the event be outsourced, and that it proceed on a commercial basis.

81 That a range of on-‐line and hard copy material be developed to promote the services that Trade & Investment Queensland provides.

82 That accommodation in 111 George Street be rationalised to one floor. 83 That to aid communications and reduce cost, overseas offices and Brisbane be

provided with Skype or other low cost communication tools. 84 That to improve local efficiency, wireless networks be established on a low-‐

cost basis in overseas offices. 85 That a regular program of external audit be developed to ensure that the

increased autonomy in overseas offices is matched by adequate and well managed controls and risk management regimes.

86 That the Budget outlined above be funded as part of the 2013-‐14 Budget deliberations for QEIA.

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SECTION 3 – SUMMARY OF RECOMMENDATIONS IMPACT OF Machinery of Government Changes

1 That Government seek to maintain Trade & Investment Queensland in a senior portfolio (Premier, Deputy Premier, or Treasurer) on an ongoing basis.

CORPORATE GOVERNANCE

2 That a statutory body styled the Queensland Export & Investment Authority be established on 1 July 2013.

3 That legislation to give effect to this is prepared as a matter of urgency for introduction to Parliament.

4 That the Authority be established with a Chair and Board drawn predominantly from SMEs exporters in Queensland, with a minority drawn from the broader business community.

5 That the Minister for Trade preserve rights of direction for key strategic decisions and other matters.

6 That the new Authority be funded via an annual appropriation from the Consolidated Fund and self-‐generated revenues.

7 That a program of Industry Roundtables be established, with membership to rotate based on industry or regional focus and that these Roundtables act in a true advisory capacity on topics relevant to the Minister at the time and that QTT use these Roundtables to also brief participants on economic and sector issues.

8 That the Industry Roundtables be chaired by the Minister or the Assistant Minister.

9 That a Transition Director and team be appointed to manage the implementation of the Recommendations of the Review.

BRAND QUEENSLAND

10 That the role of Trade Commissioners and overseas offices in attracting Foreign Direct Investment (FDI) be confirmed

11 That QEIA be solely responsible for FDI is confirmed

12 That QEIA/Trade & Investment Queensland re-‐establish an International Co-‐ordination Unit that will co-‐ordinate details of all international travel by the

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Queensland Government and act as a co-‐ordinator between key Government agencies involved in protocol, tourism and events, education and trade.

13 The Queensland Trade and Export Committee should meet monthly and provide strong planning and opportunity identification, including an annual plan.

14 That Hong Kong and Seoul offices of TEQ and TIQ be co-‐located.

CORPORATE MISSION

15 That the Mission statement and supporting strategies developed by the Review be adopted for the organisation.

16 That Trade & Investment Queensland immediately undertake a business planning based on the outcomes of this review.

Key Client Groups

17 That the key client group for Trade activities be Queensland based Small-‐Medium Enterprises (SMEs) and that strategies developed by Trade & Investment Queensland be focussed on this group

CORPORATE PERFORMANCE

18 That a monthly performance report be prepared and distributed to all offices comparing and ranking performance against KPIs.

19 That the current dollar based export KPIs not be retained.

20 That a broader suite of KPIs be introduced to directly address the key client group, Queensland SMEs (see attached table).

21 In addition, it is recommended that an independent body such as a university be engaged to do a client satisfaction survey across all clients on an annual basis, and also an annual assessment of the economic impact of Trade & Investment Queensland’s activities on the Queensland economy.

22 That a narrative accompanies this KPI reporting which provides on a quarterly basis a summary of in-‐market activity across all offices, including regional offices and Brisbane based activities, and that this narrative be provided to the Under Treasurer, Treasurer, Deputy Premier and Premier on a quarterly basis.

23 That at a minimum annually Queensland Treasury & Trade undertakes an update of short, medium and long term views of domestic and international

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trade and investment opportunities, including status of new, emerging and mature markets and development of industry sectors, and that this update is distributed to all overseas and regional offices.

24 That in between these annual updates, QTT distributes the Quarterly Economic Review produced and briefs key staff on its contents.

OVERSEAS NETWORK

25 That the Managing Director of Trade & Investment Queensland visit each overseas office annually to brief on issues and undertake the annual performance assessment for each Trade Commissioner.

26 That Trade Commissioners return to Brisbane annually, Business Development Managers every two years and Office Managers every two years to be briefed and meet together.

27 That overseas offices be given appropriate delegations to develop and manage their budgets in an accountable but efficient manner.

28 That a monthly communication to Trade Commissioners outlining KPI results be developed and distributed.

29 That a model be implemented for large markets (China, India, North America, South America) which identifies a head office and locates all staff in that office, with representatives responsible for other regions travelling into market regularly. Fixed costs are thus maintained in one place and the support of a larger office is maximised.

30 That each Trade Commissioner does an annual business plan in conjunction with the Managing Director to include proposed KPI targets, proposed travel, sector focus and budget requirements.

31 That the Minister for Trade consider the sale of Queensland House and lease back on a no-‐cost basis of ongoing office accommodation for the Agent General.

32 That the Guangzhou office be closed.

33 That the remaining offices in China be incorporated under one Trade Commissioner to facilitate the servicing of clients across the country and that the Trade Commissioner in Hong Kong becomes the Deputy Trade Commissioner for China.

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34 That the Taiwan and Hong Kong office incorporate accommodation for Tourism and Events Queensland as soon as practicable, and that the number of locally employed staff be reduced to release funding for other priority offices.

35 That the Los Angeles Office be closed and staff relocated to Houston under the control of a Trade Commissioner, with all efforts made to minimise the cost of ongoing leases in Los Angeles.

36 That the expanded Houston office includes responsibility for North America and Canada.

37 That the current contractor position in Houston focussing on gas and oil be discontinued

38 That the Trade Commissioner in Santiago becomes only responsible for Latin America

39 That a new office be opened in Jakarta, Indonesia with an ASEAN Trade Commissioner and essential staffing.

40 That a new Business Development manager in Brisbane be responsible for development of opportunities in Papua New Guinea.

41 That the Review notes the retirement of the Trade Commissioner in Saudi Arabia and recommends that the responsibility for this country be transferred to the UAE.

42 The Review notes that gifts presented by the Minister to visiting Trade Missions are extremely basic, and recommends that a small range of high quality gifts which represent Australia be developed to leave a lasting impression on key foreign investors and stakeholders.

42 That Deputy Commissioners be appointed UK, UAE, China, Japan, India and South America.

QUEENSLAND OPERATIONS

43 That the structure of the Brisbane based operations of Trade & Investment Queensland reflect a sector approach to best support Overseas offices, with a smaller Brisbane based market desk reporting directly to respective Trade Commissioners.

44 That these Priority Export Sector groups and the FDI Co-‐ordination Unit prepare a strategy for each priority sector and present it to the overseas

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offices to assist in development of the each office’s business plan.

45 That Trade & Investment Queensland as a matter of urgency:

-‐commence a focus of effort on export ready businesses in Queensland

-‐continue to provide initial contact, information and participation activities but that these be sourced by the development of on-‐line education, on-‐line self-‐assessment and outsourced to training providers.

46 That the current imbalance of staff numbers between Brisbane and overseas offices be addressed as a matter of urgency by definition of roles needed across the organisation and a process of allocation of staff with relevant skills to the new structure.

47 That, having completed their probation period, all Business Development staff in overseas offices visit Queensland for orientation and Head Office briefing.

48 That the International Business Cadets program be reinstated on the basis of a 50% contribution by businesses and involve five graduates positions.

49 That work underway on establishing a clear basis for engagement of local staff in each market be completed so that a clear legal basis is evident for each country.

50 That a new category of employment contract be developed which allows recruitment of key senior staff either in-‐market or in Australia, but applies local employment conditions with the objective of removing the burden and cost of A-‐Based conditions.

51 That Deputy Commissioners be appointed in the following offices – China, Japan, India, UK, UAE and South America.

52 That Trade Commissioners appointment terms be no more than 3 years with the option of 2 year extensions.

53 That QTT Legal Services Unit develops a consistent legal framework for the establishment of overseas offices and the engagement of local staff to ensure that the State’s interests are preserved.

54 That similarly QTT Director of HR work with Trade & Investment Queensland to establish an ongoing framework for local employment, including approach to recruitment, remuneration and remuneration review.

Queensland Operations – Food & Agriculture

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55 That FATIQ Team focus their efforts to utilising the GMI Program and identifying potential regional investment opportunities to attract FDI with the development of appropriate KPIs. That the composition and location of the FATIQ Team be streamlined to provide multi-‐sector trade and investment advice to reduce budget costs.

Queensland Operations – International Education and Training Unit

56 That the IETU be designated as the State’s lead agency for promotion of the international education and training sector and the vacant funded positions be filled urgently.

57 That the Treasurer and Minister for Trade become the export Champion for the International Education and Training industry and establish an industry reference group

Sister State Agreements

58 That the system of Sister State Agreements be reviewed annually to determine that they are still delivering a net benefit to Queensland and that the other party is actively participating in the arrangement.

59 That TIQ maintain an up to date central register of all Sister State Agreements and other Agreements i.e. (MoUs) and keep a record of each annual reviews’ results.

60 Agreements that fail to meet a positive review assessment should show cause as to why they should be continued to be resourced by TIQ.

TRADE MISSIONS AND REPRESENTATION

61 That the Minister for Trade travel to market four times a year – in conjunction with the Premier and the Deputy Premier this provides a major opportunity for targeted Trade Missions to key markets.

62 That this level of planning, and indeed all Trade Mission planning, be done annually in advance to allow exporters an opportunity to plan for the event and for Trade & Investment Queensland to explore options for key note speaking roles on trade missions, conferences and business networking events.

63 Whole of Government process for Ministers and Government departments that overseas travel is to be undertaken in cooperation with Trade & Investment Queensland so that overseas offices can be aware and value

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added with engagements where appropriate.

64 That a KPI based on expected business be developed and applied after each Ministerial Trade Mission to measure the success of that Mission – this KPI outcome is to be recorded as part of the narrative in the Annual Report but not reported in the overall performance information.

65 That the use of joint Trade Missions with other States, where there are complementary opportunities particularly in mining and mining services, to further develop the Brand Queensland and Brand Australia approach.

66 That the policy introduced in 2012 of charging on a cost recovery basis for participation in Trade Missions be endorsed.

67 That the importance of overseas Missions be recognised and that Trade & Investment Queensland plan to engage senior Ministers (Premier, Deputy Premier, Treasurer) in a program of visiting each Trade market annually.

68 That a panel of eminent persons (Special Mission Representatives) with strong credibility in-‐market to be engaged.

69 That a network of State-‐to-‐State honorary Trade Representatives be appointed in-‐market where appropriate.

70 That the Government seek to formally engage the Governor of Queensland in promoting Queensland Trade and Investment when travelling overseas.

71 That a revamped structure of Friendship Committees be established for large markets of Korea, Japan, USA, India, China and South America; that these incorporate existing Councils; and that the purpose of these reflect the need for a like-‐minded group of local business and community people to act as hosts for visiting dignitaries and delegations, with minimal administrative input from Trade & Investment Queensland.

72 That Trade & Investment Queensland ensures that briefing processes for Missions are maintained at a minimum appropriate to the Ministers and markets being visited.

INVESTMENT

73 The Review recommends that Trade & Investment Queensland’s role in FDI be endorsed by the Minister, and that the International Co-‐ordinating unit to be established in Trade & Investment Queensland to be used to ensure a

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common approach international investment attraction activity.

74 That key investment markets be nominated (presently UK, North America, Japan, India) and that specific investment targets be nominated as part of the Trade Commissioner’s performance agreement.

CORPORATE PROCESSES, RED TAPE and SYSTEMS

75 That in noting that the Trade & Investment Queensland’s most important business system, the Phoenix CRM is no longer operational, the Review recommends immediate action to purchase on a per user basis capacity with a web based CRM such as Capsule, and that where possible using web based services commercially available be the preferred method of acquiring ICT, given the global nature of the Trade & Investment Queensland operation.

76 That the Government note the major cost of delayed Travel approvals on both budget and sound office planning, and that: travel approvals for overseas officers be approved up front in a planned schedule for a financial year; that further travel approvals prior to travel not be required; and approval for this annual travel plan be at the Departmental CEO level, in this case the Under Treasurer, rather than at a Ministerial level.

77 That the development of a complete organisational governance framework be undertaken to ensure strategic risk; business continuity; and operational planning is undertaken in the context of the business requirements of TIQ. The framework would include financial and non-‐financial requirements ensuring accountability and responsibility rest where appropriate to ensure correct business outcomes.

78 That the Recommendations of the Crowe-‐ Horwath report be accepted in full.

BUDGET

79 That the principle of fee-‐for-‐service for professional advice be explored, and that a trial be undertaken out of the Santiago Office to determine applicability and success with learning’s to be used in 2014-‐15 to guide further decisions.

80 That Export Week be revived given its capacity to engage potential exporters, but that the organisation of the event be outsourced, and that it proceed on a commercial basis.

81 That a range of on-‐line and hard copy material be developed to promote the services that Trade & Investment Queensland provides.

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82 That accommodation in 111 George Street be rationalised to one floor.

83 That to aid communications and reduce cost, overseas offices and Brisbane be provided with Skype or other low cost communication tools.

84 That to improve local efficiency, wireless networks be established on a low-‐cost basis in overseas offices.

85 That a regular program of external audit be developed to ensure that the increased autonomy in overseas offices is matched by adequate and well managed controls and risk management regimes.

86 That the Budget outlined above be funded as part of the 2013-‐14 Budget deliberations for QEIA.

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Documents

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