DEPARTMENT OF STATE DEVELOPMENT BUSINESS AND INNOVATION ANNUAL REPORT 2013-14 DEPARTMENT OF STATE DEVELOPMENT, BUSINESS ANNUAL REPORT 2013-14 AND DEVELOPMENT, INNOVATION DEPARTMENT OF STATE DSDBI ANNUAL REPORT 2013-14 This 2013-14 Annual Report covers the Department of State Development, Business and Innovation, an individual entity. Published by the Department of State Development, Business and Innovation. October 2014. Also published on dsdbi.vic.gov.au Content coordination, design and production Strategic Communication and Marketing Branch Department of State Development, Business and Innovation Print managed by Finsbury Green. This document is printed on Envi Recycled which will help reduce global greenhouse gas emissions by more than 363 kgs CO2-e. 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Authorised by the Victorian Government, Department of State Development, Business and Innovation 121 Exhibition Street, Melbourne VIC 3000 Postal Address: PO Box 4509, Melbourne VIC 3001 Tel: 1300 366 355 ISSN 2202-6924 (Print) DSDBI 6823 CONTENTS 01 OVERVIEW 2 Secretary’s foreword 3 Department overview 5 Major department changes during 2013-14 5 Organisational chart 6 Governance arrangements 8 Highlights for 2013-14 10 02 SIGNIFICANT ACHIEVEMENTS AND OTHER HIGHLIGHTS AGAINST STRATEGIC OBJECTIVES 12 Assist businesses in accessing skilled workers to align with Victoria’s industry needs 13 Promote Victoria to attract tourists, investors and students 15 Support organisations to boost their productivity through innovation 18 Provide market intelligence and assistance to organisations to make it easy to invest in Victoria 22 Create more opportunities for Victorian businesses to grow and become more productive and competitive in the global marketplace 25 Promote the delivery of safe, reliable and competitive energy services, and grow a sustainable resources sector 31 03 FINANCIAL REPORT 34 04 APPENDICES 116 DEPARTMENT OF STATE DEVELOPMENT, BUSINESS AND INNOVATION ANNUAL REPORT 2013-14 1 01 OVERVIEW 2 DEPARTMENT OF STATE DEVELOPMENT, BUSINESS AND INNOVATION ANNUAL REPORT 2013-14 01 OVERVIEW SECRETARY’S FOREWORD ECONOMIC CONTEXT forecast to grow to 2.5 per cent in 2014-15 from a Trade forecast 2.0 per cent in 2013-14. These improved Economic conditions in the state were subdued but In recent years the department’s Trade Engagement conditions will complement the state’s existing stable in 2013-14. Victoria’s economic growth over Program has been highly successful in promoting strengths, including our links to emerging and the year continued to reflect an economy hampered Victorian industry capability and providing direct established economies in Asia, the United States by fluctuating consumer and business sentiment support for companies to develop new skills and of America (USA) and Europe; our world-class and weak private investment and jobs growth. State export markets. Building on the positive momentum health and education sectors; our significant natural final demand rose 1.8 per cent over the year to generated in previous years, in 2013-14 the resources base; and the attraction of Melbourne to March 2014 with consumption contributing almost department conducted a series of outbound trade international tourists and associated activities such all the growth over that period, although housing missions for 900 organisations, including four as major events and conventions. investment was also important. Super Trade Missions (STM) to China, the Middle East and Turkey, India and South-East While interest rates remained low, limited overall THE DEPARTMENT Asia. Alongside the STM Program the Victorian demand meant that businesses were cautious 2013-14 was a year of change and consolidation Government also continued its series of smaller- and focused on maintaining markets rather than at the Department of State Development, Business scale targeted trade missions, including a investing for growth. This is reflected in a slight and Innovation (DSDBI) as the department mission to the USA to promote Victoria’s strong decline in private business investment in the year incorporated three new functions - energy and earth defence and aerospace capabilities and develop to March 2014. The declining share of resources, whole-of-Victorian Government (WoVG) relationships formed on previous defence missions. manufacturing in the economy – a transition information and communication technology (ICT) Complementing the outbound trade mission which has been occurring for at least twenty and Regional Development Victoria (RDV) - and program, the department conducted 12 inbound years – will mean a smaller ongoing contribution established the Office of State Development (OSD) trade missions including International Food and from manufacturing to business investment but to streamline investment facilitation activities. Beverage Week, Australian Automotive Week and ultimately a more diverse economy with greater the Melbourne-Latin America Education Symposium. resilience to industry-specific shocks. The department’s chief aim – to encourage economic growth through a supportive business To encourage growth in Victoria’s tourism market, Employment conditions in Victoria have remained environment – is underpinned by a focus on in 2013 Tourism Victoria launched two pivotal soft with the rate of job growth trailing population expanding markets for Victorian businesses, strategies, Victoria’s 2020 Tourism Strategy and growth. Unemployment has risen while attracting foreign investment to the state and Victoria’s Regional Tourism Strategy 2013-16, participation has trailed off, partly due to the ageing enhancing business productivity through innovation providing industry leadership for the future. of the workforce but also due to weak employment and red tape reduction. Victoria’s 2020 Tourism Strategy outlines the demand and scarce opportunities. However, despite Government’s plan to increase overnight tourism this, labour market conditions are stronger than The department’s Business Engagement Model expenditure to $24.7 billion by 2020. This represents experienced in previous periods of adjustment such supports our efforts towards these objectives annual growth of 6.6 per cent, in line with the long- as the early 1990s. Population growth has remained by enabling us to work directly with businesses term national tourism strategy. Victoria’s Regional a key support for the labour market, fuelled by both to understand their needs. Over the year the Tourism Strategy was developed to stimulate net overseas and interstate migration, reflecting department’s Business Development Managers, tourism in regional areas and ensure that regional the attractive liveability and sound economic based in five metropolitan and 18 regional Victoria will share the economic benefits of the prospects of the state. offices, as well as 17 international Victorian Government Business Offices (VGBO) engaged tourism market. Tourism Victoria will implement Positive outcomes were seen in relation to exports, with 13,000 companies. both strategies in partnership with regional tourism with exports from Victoria growing during 2013. boards, local government, industry and other Goods exports grew strongly, led by food items, Details of the department’s achievements in stakeholders to increase visitation to the state, while tourism was a major area of growth in 2013-14 are contained throughout this report. particularly regional Victoria. services exports. Exchange rates moderated They confirm that DSDBI has had a successful year. during 2013, compared with highs in recent years. However, they have strengthened slightly again in 2014, leading to growing import competition. After a period of restrained growth, Victoria’s economic performance looks set to improve in 2014- 15. Buoyed by stronger household consumption and private investment, real gross state product is DEPARTMENT OF STATE DEVELOPMENT, BUSINESS AND INNOVATION ANNUAL REPORT 2013-14 3 01 OVERVIEW Investment Whole of Victorian Government ICT Regional development The department continued to actively pursue The Government’s ICT performance is a key focus In response to the recommendations of the Victorian investment in the state by local and international for the department. In March 2014, a refreshed Bushfires Royal Commission in 2013-14 the companies. In 2013-14, the department investment Victorian Government ICT Strategy was released department began rolling out the Powerline Bushfire attraction and facilitation activities helped create to further improve digital channels for citizens and Safety Program (PBSP). In the first half of 2014, 6,300 full-time equivalent (FTE) jobs across 200 businesses, and standardise systems and processes approximately 45 kilometres of powerlines were major investment projects worth more than to improve the productivity of government. replaced with underground or aerial bundled cable $2.6 billion. A headline project was