Chris Hayes (Werriwa, Australian Labor Party) Share this | Hansard source

I support Labor’s second reading amendment to the Export Market Development Grants Legislation Amendment Bill 2006. While I welcome the continuation of the scheme and acknowledge the importance of a number of the changes that the government is implementing in this bill, at the same time I am concerned about the impacts of those provisions which seek to increase the level of discretion available to the minister. I cannot help thinking that the government might be getting a little desperate to deliver on its promise of doubling the number of exporters and seeing this as a means by which it might be able to redefine its measures of success in relation to that promise.

There is no doubt that the export market development grants have benefited a great number of companies throughout this country. For an island nation like our own, a strong culture of exporting and a strong export sector are critical to the long-term success of our economy. The export market development grants have helped companies that might not have considered themselves necessarily as exporters, but they have certainly been able to develop their businesses to the point of entering and competing in an export market to our benefit. The grants have played an important role in allowing small business owners throughout the country to seek out and expand their businesses through export. In my own electorate of Werriwa since 1993-94 there have been more than a hundred grant recipients with a total of $5.2 million paid out in grants to companies like Broens Industries which received grants of more than $180,000 over a number of years.

I have mentioned Broens in this place on a number on occasions as it is a great example of the type of innovative and growing business that is based in my electorate. Broens has operated for more than 25 years. It started with a single toolmaker. The business is now designing and manufacturing high-tech solutions for precision engineering, tooling, special purpose machinery and automotive applications. Last year Broens was one of the winners in the Western Sydney Industry Awards. As a matter of fact it took out the most coveted, most outstanding large business award. Broens exports to 17 countries and among its customers are Mercedes Benz, Ford, GM, Boeing and Airbus. The company currently employs about 140 people and in Werriwa is one of our largest employers of apprentices. Only recently the company took on another 17 apprentices in the metal trades area. I have not spoken with Carlos Broens in detail about the impact of these grants on his business but I have no doubt that they have played a significant role in his business expansion into overseas markets.

Another company that has benefited from a grant under the EMDG is Lipa Pharmaceuticals of Minto. Recently I had the opportunity to tour the Lipa plant with its owners Gorge and Stanika Jovanova. Lipa is a contract pharmaceutical manufacturer. They started the company in 1995. It started from very humble beginnings as both Gorge and Stanika migrated to this country with nothing in 1988. So theirs is a very good story. They have opened this new plant in Minto. They currently employ in my area over 300 employees and they are a major contributor to the local economy of Campbelltown. Lipa has used their EMDG to target international markets. It has certainly opened up new areas for business which can be supplied by our local manufacture and it has created new jobs. They have identified specifically a market for quality pharmaceuticals for export into the international market. They constantly remind me that the threat to the local pharmaceutical industry is from overseas manufactured products that are not currently required to display or advertise their country of origin, so when those products appear on our shelves we do not see that. I will say more about that later.

These are just a couple of examples of companies that have expanded through the growth in exports, assisted by export market development grants, and are reaping the benefits of exporting. That said, Australia’s export performance remains poor. It was only two weeks ago that we heard those fabled words from the Treasurer once again as he delivered his 11th budget. Towards the end of the budget speech he said:

GDP is expected to grow by 3¼ per cent in 2006-07, following more modest growth in 2005-06. Economic growth will continue to be supported by strong global demand for Australia’s commodities. This is generating robust growth in business investment and should lead to—

and I stress—

an increase in export growth.

Once again this is a case of another budget speech and another prediction from the Treasurer that an increase in our exports is just around the corner. This is another prediction of strong export growth from a government that has consistently got it wrong when it comes to forecasting export performance. It is another prediction of improvement in Australia’s export performance from a government that has overforecast growth in exports by an average of 5.5 per cent each year since 2001.

I would like to quote some figures. In 2001 the government forecast export growth of five per cent. In reality, it fell by 0.8 per cent. In 2002 the government forecast a six per cent growth. The reality was a fall of 0.8 per cent. In 2003 the government forecast export growth of six per cent. Exports came in that year at around one per cent. In 2004 the government forecast export growth of eight per cent, and the result was a mere 2.5 per cent growth. This is the government’s actual record when it comes to export growth, and I have to say that, if as with other things the government’s record is its guarantee, when it comes to predicting more export growth being just around the corner I for one have to be just a little sceptical.

A closer inspection of the budget papers reveals that, during a period of record terms of trade and with an export expansion just around the corner, the current account deficit is expected to hit a new record high. In 2006-07 it is expected to hit a new record high of $6.2 billion or some 6¼ per cent of GDP. A couple of weeks ago I was shocked to see that our monthly trade deficit had increased to $1.5 billion. That is $1.5 billion for the month, with an expected $6 billion increase in the current account deficit expected over the next 12 months. That is hardly a record that sits well with this government.

Digging a little further into the budget papers reveals that Australia’s poor export performance is impacting on growth. The budget papers reveal that net exports are expected to knock off about half a per cent of GDP growth in 2006-07, which follows on the back of a one per cent reduction in GDP as a result of export growth in 2005-06. This is simply not good enough. Today we are tinkering with the Export Market Development Grants Scheme, waiting—ever waiting—for the predicted but never realised export boom to come along, while what Australia really needs is a new export strategy.

In the budget the government had the opportunity to take business by the horns and lead it to overseas markets but instead the budget did not contain one single new export initiative. It contained yet another promise—the promise of the export growth that always seems to be just over the horizon, no matter how close we are—but it did not contain any new initiatives to lift the number of exporting firms that we have in this country. The Treasurer is starting to sound a little like Paul Revere, running around telling us, ‘The exports are coming,’ but for the Treasurer the export improvement never seems to occur. The government talks big on exports but very little seems to be happening.

In 2001 the government set a target of doubling the number of exporters by 2006. In response to a question I put on the Notice Paper not long after I got to this place, the Minister for Trade said that the Australian Bureau of Statistics recorded that in 2000-01—the base year on which they are going to calculate success or failure of the strategy of doubling the number of exporters—the number of exporters stood at 25,000. In 2001-02 it had grown to 31,450, in 2002-03 it dropped back a little to 31,174 and by the end of 2003-04 the number of Australian exporters stood at 30,788. In all, since 2000-01 the number of exporters has increased by fewer than 6,000. Growth of fewer than 6,000 in three years, while the government’s goal was to double the number of exporters! This leaves the government nearly 20,000 exporters short of reaching that target. That is a long way short. It is so far short that it is almost at the point where the government could start all over again.

This government is asleep at the wheel when it comes to promoting exports. It is keen to sign up to bilateral trade agreements—the benefits of which are largely yet to be seen—but, in terms of a real commitment to an export strategy, we have seen nothing from this government. I mentioned at the outset that I had concerns about some of the provisions of this bill. I am particularly concerned about the removal of the Australian content rules and their replacement by a provision that allows ministerial guidelines to determine eligibility criteria in the future.

Yet again it is a case of the devil being in the detail, although, unlike other pieces of legislation that come before this place, I strongly suspect that on this occasion the detail will allow a less stringent approach to assessing the performance of the minister. If the decision of the government was that the rules of origin requirements should be replaced by ministerial guidelines, then why are those guidelines not available? In effect, this piece of legislation is the government asking the parliament to write it a blank cheque.

It is asking us to agree to a set of guidelines that, for all we know, have not been written or, at the very least, have not been made available. The government’s track record on such matters hardly instils me with confidence. While the majority of changes in this bill are improvements to the Export Market Development Grants Scheme, this should not be seen as the most comprehensive approach to export promotion that the government could come up with. The scheme does help small and medium sized firms test and explore possibilities in overseas markets but it is certainly not the complete strategy that is needed by a country facing an increasing current account deficit and an export performance that is starting to shave percentage points off economic growth.

I support Labor’s amendment to this bill to improve some aspects of the grant’s operation and ultimately I will support the bill because Australian businesses need all the help they can get to get their products to international markets. Australian businesses need to know that the next expansion for their business can and should be to export. But more importantly Australian businesses need to know that they have a government that is backing them and that will support their bid to expand their businesses and markets. From all the evidence that I have seen, the current government is not willing to provide that support and is not ready to get behind potential exporters by putting in place the infrastructure and policies that potential exporters need to help them on their way.

The fact that the review of the Export Market Development Grants Scheme found a need for the scheme to continue and the fact that this bill is before us today is a good start—I do not doubt that—but I have to say that it is not enough. At a time when a new export strategy is needed, at a time when the Treasurer concedes that our export performance is constraining economic growth and at a time when independent assessments of Australia’s export performance report it to be severely lacking, having a government that is willing to sit idly by while the current account deficit gets out of hand is simply not good enough.

It is not good enough for this government to continue to resist the need to improve infrastructure. We need the building blocks so that domestic businesses can cheaply and efficiently get their products into overseas markets. While I strongly support the continuation of the Export Market Development Grants Scheme, I do believe this government needs to do more. In my electorate there are many fine businesses—world class businesses—that should be able to get their product into overseas markets and use exporting as a means to grow their businesses and create jobs.

Instead of trying to stave off international competition by cutting wages and threatening workers’ job security through the Work Choices legislation, we should be putting Australian businesses on a more competitive footing with overseas businesses so that they can compete with those markets. That is what we should be doing. Our policy should be driving that because, at the end of the day, that is what is going to create jobs and economic wealth for this country.

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