Stuart Henry (Hasluck, Liberal Party) Share this | Hansard source

It certainly gives me a great deal of pleasure to be able to speak on the Export Market Development Grants Legislation Amendment Bill 2006, as there is no doubt that exports are critical to our economic wellbeing and the prospects of Australia and Australians. It is interesting to note the concluding comments of the previous speaker with respect to illusions, to cheap labour from places like China, India and those other places and to suggestions that the Howard government wishes to emulate that. That is the greatest illusion of all—the illusion of the opposition—with respect to these changes. Let us look at their record. Let us look at the history and the track record of the previous Labor administration: one million people unemployed, 345,000 of those long-term unemployed, and the highest level of unemployment in teenage ranks, at something like 34.5 per cent. Then there were mortgage rates of over 17 per cent. Talk about family friendly! With those sorts of statistics, everyone shudders. Then on top of that there was a debt of $96 billion left to the Australian government and the Australian community to recover. Very fortunately, we have had the Howard government for the last 10 years, which has ensured that Australia is debt free. So no more about illusions; let us get to the reality.

The realities are that the Howard government well understands the importance of this and works tirelessly to better support and enable Australian enterprise to flourish in the dynamic world of international trade. The Export Market Development Grants Scheme is a highly successful initiative, and this amending bill is designed to make it even more so. Exporting is of incredible importance to Australia—indeed to any modern economy. The most obvious area of importance, of course, is the issue we know as the balance of trade. This is something that the government will continue to work tirelessly to address. Exports, in effect, allow nations to pay for their imports. This benefit from exporting is well known and is discussed in public debate often by our leading economic thinkers and policy makers. But there are many other benefits which get comparatively little coverage and yet, as people like me who have seen them in action can attest, they are of far-reaching significance.

Businesses involved in export are typically economically stronger and make a greater economic contribution to Australia than businesses not involved in exporting. If we take a macroeconomic view we see some significant indicators, such as exports in 2005 accounting for over 20 per cent of the total value of Australian produced goods and services. Austrade has estimated that one in four jobs in regional Australia and one in five jobs across the whole country depend on exports. Over the past 20 years industries with strong export performance had much greater gains in productivity. We have enjoyed a very strong and sustained period of export performance with clear trends towards greater diversity in our exporters. There is now much higher diversity among Australian exporters, not only in terms of what they export but also in terms of where they are located. This pattern, combined with results like the 2005 record achievement of export value of $176.7 billion, which was an increase of 15 per cent on the previous year, is not bad. It is positive news indeed for the nation as a whole, as well as for our 30,000 exporters.

We also see clearly how exporting drives innovation and productivity, not just in the exporting business itself but also in their non-exporting competitors here in Australia, their suppliers and even their domestic customers. The analogy of a sporting competition illustrates this well. No sportsman or team would expect to improve their performance with home training or competition alone: high-level away competition provides a whole different sort of training and opportunity that you cannot get otherwise. Indeed, in many sports, the mark of a truly great team or competitor is one which consistently outperforms the competition no matter where the location. Domestic competition also benefits from the knock-on effect of being exposed to a high standard of competitor. This in turn creates a culture of generally higher productivity, which contributes to higher living standards across the community.

This competition is healthy, not destructive. It will create opportunities, not limit them, since no nation can excel at everything. The global marketplace allows each the scope to become very good at what they are best at. It also allows scope for this, like sporting achievement, to change over time. This is not just a particular point of view. The research clearly shows that Australian exporters are more efficient, more productive and more innovative than nonexporters. They spend more on research and training, they uptake and apply technology quicker and they develop and market new ideas sooner.

It is important for Australia to be competitive in the global marketplace. Globalisation has exposed Australia to more technology, more change and more opportunities. Australian business has taken up the opportunity presented by globalisation to increase our export markets, particularly in the areas of design and manufacture. We have expanded beyond trade in our traditional commodities such as wheat, wool and ore.

The Howard government encourages Australian businesses to take advantage of these export opportunities and to make smart use of the new technology brought to our shores by globalisation in order to compete at the same level with countries with bigger populations and bigger economies. In my own experience I have had the privilege of working closely with a great many exporters, including small businesses, in the water industry over a number of years. Their ingenuity, entrepreneurship and work ethic is something to be celebrated and encouraged wherever possible.

This includes businesses like Caroma Dorf, which produce outstanding quality water fittings for the Australian and international market, including being a world leader in the development of dual-flush toilet systems to save on water use. And now as the representative in this House I am glad to support exporting businesses in my own electorate of Hasluck, including Freedom Pools and Pioneer Water Tanks, which are currently working in markets world wide and have been the beneficiaries of the export market development grant.

Freedom Pools, located in Kenwick, received an export market development grant of $50,000 last year to develop the export aspect of their successful fibreglass swimming pool manufacture and retail business. Freedom Pools is now the largest exporter of fibreglass pools in Australia, exporting over 600 pools per year to Europe, the United States, Asia, southern Africa, the Asia-Pacific and the Middle East. Pioneer Water Tanks, another very dynamic and effective business in Midland in Hasluck, has received two export market development grants since 2004, totalling almost $116,000. Pioneer Water Tanks has provided tanks to a brewery in Papua New Guinea, a desalination plant in the Persian Gulf and to countries throughout the Asia-Pacific and the Middle East. I congratulate of these two companies in particular on the endeavours and on the significant contribution they make to employment opportunities in the electorate of Hasluck.

But they are just two of those dynamic businesses that exist in Hasluck. This includes lots of small businesses operating in horticultural areas—stone fruit growers, orchardists, vineyards, wineries—which are also involved in export markets and the development of those markets overseas and are doing a fantastic job. The innovation I have consistently seen among these exporters for many years is undoubtedly inspired and driven by their exposure to international trade and the competition provided in those markets. This first-hand lesson is something I would wish for anyone interested in what export really means for Australian small business. In fact by 2003 this government had already moved to enhance the Export Market Development Grants Scheme by targeting its support more towards small businesses. Now Austrade estimates that 77 per cent of all grant recipients are small businesses.

So what does this mean for Australia’s workforce? The research on this is both impressive and unambiguous: exporting businesses outperform non-exporting businesses in many key employment indicators, including both measure of employment quantity and employment quality. The most recent ABS business longitudinal survey, published in 2000, tells a compelling story. Although exporters account for only four per cent of Australian businesses, they account for 16 per cent of Australian employment. That is a fourfold difference.

And what of the quality of these jobs? It is worth bearing in mind some other employment statistics about exporters. Exporters outperform non-exporters on standards of pay, training, health and safety practices and job security. For example, 34 per cent of exporters pay above average weekly earnings while only 12 per cent of non-exporters do. On average, exporters have 91 per cent of their staff as full-time employees and 90 per cent of their employees enjoy permanent employment status. The figures for non-exporters are only 69 per cent and 72 per cent respectively. This pattern holds remarkably consistent across other indicators such as health and safety practices and investment in training. Notably, the pattern also holds regardless of business size—in other words, even the smallest exporting businesses tend to offer Australians better quality jobs than their non-exporting counterparts.

The Export Market Development Grants Scheme is one of the government initiatives through Austrade to play a strong facilitative role in the development of Australia’s export capacity and performance both now and in the long term. The scheme was introduced by the original act in 1997 and has already been enhanced in 2003. In 2004-05 alone the scheme made 3,277 grants totalling $123.9 million to small to medium sized business that were actively working to improve their export performance. These businesses generated around $3.1 billion worth of exports and 23 per cent of these exporters are based in regional or rural areas.

A comprehensive review, including independent economic research, was undertaken in 2004 to evaluate the scheme and make recommendations about its future. The review concluded that this is a particularly effective and popular scheme which delivers excellent value for money to the Australian community. I think it is notable that the review observed a clear pattern in which the greatest benefits from grants were seen in the smallest businesses, especially businesses which otherwise had financial constraints. This indicates clearly that the scheme is being applied as intended by both administrators and recipients. Specifically, it concluded that the scheme: induces export promotion; increases exports; helps small to medium enterprises become sustainable in their exporting; positively impacts on export culture; and delivers net positive social benefits. It concluded that the scheme clearly outperforms any feasible alternative approach and deserves to continue. This bill ensures that by extending the program to 2011.

The review also gained important insights learnt by the scheme’s stakeholders during its operation to date and found that there were a number of ways in which the operation and effectiveness of the scheme could be improved. Overall these focus on four strategies: increasing incentives to visit overseas markets and gain an international perspective; focusing on new and emerging forms of exporting; reducing risk and administration; and improving certainty of payment for businesses. In particular I wish to draw the attention of the House to several aspects of this amendment bill which address important findings of the review.

This bill allows for the scheme to continue until 2010-11 with a review to be conducted in 2010. This continuity provides security and a reliable context within which businesses wishing to improve their export performance can plan. And greater business certainty allows for better allocation of resources and more employment certainty. Increasing the daily overseas visit allowance will be very encouraging for those businesses, typically small or start-up enterprises, which are only just beginning to develop their export program and need first-hand on-the-ground knowledge and contacts that can often only be achieved by getting there yourself.

The bill includes a number of measures designed to eliminate anomalies around the question of which businesses are and are not eligible for the grant. With this legislation Austrade will be able to allow eligibility where the case is clearly genuine but a business may not fit an expected category. It also prevents the unfortunate situation where eligibility is prevented because of financial timing: a business being denied a grant in one financial year because their export earnings occurred in another financial year.

As knowledge becomes ever more important in the global economy I am also happy to draw the attention of the House to measures in this bill that allow for greater eligibility for businesses involved in the export of knowledge and intellectual capital. This is an area of Australia’s performance that we must encourage wherever possible, such as with this legislation. This greater flexibility and responsiveness to the needs of modern business is also achieved by amendments to the rules governing principal status and country of origin for the eligible products.

Complementing these measures to open up and simplify deserving eligibility are important measures to prevent unwarranted or manipulative use of this scheme. The new limit on eligible cash payments and conditions on transfer of business ownership are important to ensure that the funds available go only to deserving exporters and that the Australian community gains maximum benefit from its investment. Clarification of the rules precluding commission payments to prevent loopholing and clarification of Austrade’s authority to disallow claims it views as not in keeping with the legislation’s intention are also important amendments. Overall, these amendments ensure: more clarity, simpler processes, greater responsiveness, improved flexibility, more fairness, less risk of manipulation, enhanced incentives for new exporters and overall increased effectiveness from a program of which we should be very proud already. This amendment bill ensures even better support for Australian exporters and even better outcomes for the Australian community, including those businesses in Hasluck currently exporting or considering moving into the export market areas. I commend the bill to the House.

See this speech in context