beyond pt 0 23/1

(s11) Saving of particular inputs
It is expected that some sectors will be able to save inputs through
reengineering using e-commerce techniques and other factors.
• The Banking sector (industries 99 and 100) is expected to be able
to save 5 per cent of its inputs of paper products (commodities
49 and 50).
• Business services (industry 103) will save 5 per cent of its inputs of
paper (commodities 49 and 50), machinery and equipment
(commodities 74 to 80) and financial and business services
(commodities 101 to 105).
• Because e-commerce will reduce the need for constructing branch
offices, it is assumed that the Banking industry (99) will save
three per cent of the costs of construction inputs to capital creation.
(s12) Twist in favour of imports
E-commerce will increase awareness by Australian households and
industries of foreign products. This is represented by a twist in
preferences which at given prices increases the ratio of imports to
purchases of domestic products by five per cent.
(s13) Increase in foreign awareness of Australian products
E-commerce will increase foreign awareness of many of Australia’s
manufactured commodities and of tourism opportunities in Australia.
This is represented as follows:
• for MONASH commodities 25 to 48, 53 to 57, 59 to 85 and 101 to
105, a vertical upward movement in foreign demand curves of
five per cent is assumed;
• for commodities 49 and 50 (publishing and printing), an upward
movement of ten per cent is assumed;
• for tourism, an upward movement of five per cent is assumed. It is
also assumed that e-commerce will not increase foreign awareness of
Australia’s agricultural, mineral and standard processed food products.
These shifts in export demand curves have an impact on the terms of
trade of 2.4 per cent. With exports representing about 20 per cent of
GDP, this terms of trade improvement is equivalent to a gift to consumers
worth about 0.60 per cent of consumption.
(s14) Reductions in foreign-currency c.i.f. prices of imports
Wider use of e-commerce in Australia will help Australian consumers shop
around and get a better deal on imported products. This is recognised in
the simulation by assuming for most commodities that Australian
consumers will be able to save foreign margins worth 50 per cent of the
margins that they save in Australia. For example, if it is assumed that
saving of Australian margins reduces the price of clothing in Australia by
one per cent, then it follows that shopping around using e-commerce
reduces c.i.f prices of imported clothes by 0.5 per cent.
It is viewed that some goods are particularly susceptible to such shopping
around including books and commercial printing (commodities 49 and
50). For these it is assumed that the percentage reductions in foreign
prices equal the percentage reductions in Australian prices caused by
saving of Australian margins.
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