Warren Truss (Wide Bay, National Party, Shadow Minister for Infrastructure and Transport and Local Government) Share this | Hansard source

I wish the Parliamentary Secretary to the Minister for Trade a safe trip to Japan. While he is there, he might like to explain why Australia has cut back its budget for the negotiations on the Australia-Japan free trade agreement. Bearing in mind that this is the most important export market for our country, this government, in its first round of budget cuts, has actually slashed the amount of money available to complete that agreement. I will say a little bit more about that later on.

I do not think that the member for Lowe had his heart in what he said. He is an honourable man, and it is quite clear he was worried more about getting his passport and tickets in order than about ensuring that the House had the benefit of an informed and intelligent contribution to the debate on the Export Market Development Grants Amendment Bill 2008. I felt some of his language had been written by his minister, because it sounded rather familiar to me—a lot of empty criticism and blind rhetoric. His criticism of the previous government’s record in trade is extraordinary and of course differs enormously from the facts. The reality is that under the previous government Australian exports reached record levels. Every year was better than the year before, and exports crossed $200 billion for the first time. We expanded substantially markets like China, Korea, India and Indonesia, markets that in some instances had never been considered to be important to Australia in years gone by. We also maintained our longstanding traditional associations with New Zealand and Europe and expanded the trading opportunities.

Since the parliamentary secretary is off to Japan, it is probably worth noting that at a ceremony in Cairns last year we marked the 50th anniversary of the economic cooperation agreement between Australia and Japan, one of the world’s truly remarkable trade agreements. On the Australian side it was negotiated by John McEwen, just a few years after the end of World War II. It must have been an extraordinarily brave thing to do in that era. But, within about 10 years of that agreement being signed, Japan had become our No. 1 export market and it is still in that position today. It has been a remarkably successful agreement but after 50 years it needs to be modernised, and so the previous government commenced discussions to bring it into the current mode of free trade agreements around the world and ensure that the trade between Australia and Japan extended to new dimensions. It is disappointing that that priority project has been treated so abysmally in the government’s budget.

Can I also add that it is particularly disappointing that the Prime Minister has obviously given such a low priority to our relationship with Japan, not even bothering to call the Japanese Prime Minister on the phone until goaded into doing so when he was subject to widespread international criticism. He has frequent trips to China, but our most important export market is completely ignored by this Prime Minister. He has got some mending to do. It would be a tragedy if the importance of this market were to slip as a result of the attitude of the incoming government towards an important customer like Japan.

The bill before us deals with the Export Market Development Grants Scheme and introduces a range of new measures that the government announced during the campaign to make the scheme more generous. The bill essentially broadens the eligibility criteria, increases the maximum grant size, cuts the minimum threshold of expenditure and reintroduces a performance measure for grant recipients. As the parliamentary secretary, the Minister for Trade and the member for Groom rightly said, the EMDG Scheme has played a key role in encouraging exports from Australia. It has been particularly important in providing the incentive and support for new and emerging exporters to take on the quite challenging and difficult task of selling Australian products in what are often corrupt and confused markets around the world. The oft quoted figure of $12 of exports for every $1 of expenditure suggests that this scheme has indeed made a worthwhile contribution.

However, the member for Lowe was wrong to say that the previous government had done nothing about the scheme in 12 years. The reality is that it was subject to at least three major reviews. The last one, which he referred to, just a couple of years ago led to some significant expansion in the eligibility criteria for the scheme. It was for that reason that  the quantity of grants applications was expanded in 2006-07 and that, therefore, the number of grants applied for was greater than the amount of money that had been allocated. For years under the previous government the full amount of every claim had been paid—100 per cent. Indeed, there was always money left over. The amount of money provided in the budget was in excess of what was required for the applicants. So, in 2006-07, with an expanded scheme but with a programmed reduction in funding, for the first time the applications were greater than the amount of money provided.

Prior to the election the coalition government was aware that this was likely. We had made a bigger scheme and there was less money provided in the budget. It was always intended that we would honour the full commitments to the funding, as we had done in the past—the record was there. The coalition government had always paid the full amount of the claims and we would have done so again. It is true that Finance and Treasury were reluctant to provide that money in advance, and their reason was that the scheme had never used the allocated funds in the past. So they were not convinced that, even with the more generous scheme, there would have been enough applications to use up all of the available money. Treasury and Finance were wrong. The new scheme was more generous, there were more applicants and for that reason the funds available were oversubscribed. That money would have been provided, and 100 per cent of grants would have been paid to those who applied.

It is in this context, then, that the new government has introduced this legislation, which increases the maximum grants, cuts the minimum threshold, allows grants to be paid more often to companies, introduces a new range of eligible internal and external services and a new non-tourism services category, provides access to the scheme for non-profit export development bodies and increases the size of the companies which can apply for the scheme. In other words, a lot more companies are going to be eligible. On the surface of it, that sounds like good news, and there are many people out there who will be pleased that they can gain access to the scheme for the first time. But what the minister has seemingly not yet even acknowledged is the fact that there will actually be more losers than winners as a result of this legislation. There will be more people missing out on getting a fair share of the grants than actually winning grants. That is because this is a capped scheme. There is only a certain amount of money available. The government has said there will be $200 million available for this new scheme. That is only $23 million more than will be required for the 2006-07 scheme. So there is no way in the world that the available money and the extra money provided by this government will meet all of these new eligibility criteria. What will actually happen is that the claims, whether they be $300 million or $400 million under the new scheme, will all be paid on a pro rata basis, so all the applicants will only get a part of their entitlement. That is the way the legislation is drafted. That is the way the scheme has always worked—it is just that in the past the previous government ensured that there was always sufficient money there to meet all the claims.

So this government is pulling a bit of a confidence trick. It is telling companies that it has a more generous scheme; the only problem is that it does not intend to pay all the bills. It is only going to pay a part of the bills. It should be up-front and honest with exporters who go out there and spend money trying to sell Australian products around the world. It should tell them up-front and honestly that not all of their claims, even their legitimate claims, their approved claims, will actually be paid. All they are going to get is a pro rata share. In fact, the small companies are going to lose some of their claims because bigger companies are now going to be eligible. The ones who can perhaps afford it more are going to be eligible and they will get the money that might otherwise have been directed to some of the smaller companies. The key challenge for Labor with its new program is not just to introduce a more generous scheme but to make sure it is funded. The reality is that it is not funded; it will be well short of the requirements of those who are now entitled to apply.

While I am dealing with this issue of funding, I note that it is also important for the government to state urgently whether it intends to provide the $27 million which the minister has indicated is above the current budgeted funding for the 2006-07 EMDG Scheme. These people expected that their claims would be paid; they have always been paid in the past. It is up to this government to meet the obligation under the old scheme and to make sure those funds are paid. This bill is hypocritical in the extreme if it is going to leave past applicants for the EMDG Scheme with their bills unpaid. If the government wants to adopt some high moral ground on the EMDG program, it must urgently address the shortfall in the previous program.

I would like to comment briefly on a couple of the other new measures. There is the proposal now to reintroduce a performance measure where applicants claiming their third and subsequent grants must show they meet performance requirements. There were provisions like this in the scheme in the past, but there were always concerns that that kind of provision might well be illegal in terms of the WTO, that it might be challenged in the World Trade Organisation. I have no doubt that this government would have received the advice from its advisers that including this clause in the bill makes the whole scheme subject to WTO challenge. I am not especially concerned about that because there are not too many countries around the world that can legitimately cast the first stone, but what they have done is expose the whole scheme to the risk of challenge.

Finally, there is a new and quite complicated initiative which will allow expenses associated with granting, registering or extending rights under foreign laws in relation to intellectual property, as well as the expenses of obtaining insurance against costs likely to be incurred to protect the rights, to be eligible for funding under the scheme. Unless those measures are carefully crafted, they may well not lead to any new exports and in fact may well lead to the payment of legal expenses and other such matters, administration issues, which I am not sure ought to be a part of this scheme. Nonetheless, I acknowledge that the scheme does provide a wider range of benefits to a large number of new people. The sad thing is that there are many existing users of the scheme who will be paid less.

The other point that I want to take up, one that was raised by the member for Groom, is that the $50 million that the government is providing for this scheme is only for one year. It is only for one year, so there will be no confidence available to exporters that this scheme will be ongoing. Do you go and undertake some expenditure overseas, knowing full well that market programs involve many trips of continuing activity year after year, if you have only got an assurance that you are going to be funded for one year? I think that is going to be a major deterrent to companies that might be considering an involvement in the export market.

The other obvious point that needs to be made is this: why is the government undertaking the review of the EMDG Scheme after it has made the changes in the legislation? Surely you would wait for the Mortimer report, which, we are told, is only two or three months away, before making these sorts of legislative changes. There has been criticism that the scheme has been changed too often in the past. It was changed last year, it is being changed this year and, after the Mortimer review, presumably it will be changed again next year. This does indeed provide an unnecessary level of uncertainty for the industry. Whilst I know this government is inquiry mad and every single scheme has to be inquired into or reviewed, it does seem to be a particularly stupid piece of timing to make the changes before the review is even brought into the parliament.

Trade is very important to Australia, and our agreements underpinning our trade relationships are vital to the future confidence of our exporters. I have been quite alarmed by some of the comments made by the Minister for Trade and by his approach to trade negotiations. We have had all this confusion about whether we should have multilateral agreements or bilateral agreements. I say we should have both. Multilateral agreements are important in underpinning and delivering a freer and fairer trading regime around the world, but our specific agreements with our trading partners drive trade between those partners and go beyond what is in a multilateral agreement. You would not have bilateral agreements at all if they were not going beyond what countries have already committed to under the WTO or a wider multilateral agreement. The new Minister for Trade has made it clear that he despises bilateral discussions and that all of the effort should be put into multilateral discussions. The government demonstrated their commitment to that view, as I mentioned earlier, by cutting the budgets for not only the Australia-Japan free trade agreement but also the Australia-China free trade agreement.

The minister also said that he would revitalise the Cairns Group and that he would make sure that the Cairns Group played a leading role in the WTO discussions, in particular the Doha Round. The committee may be interested to know that since the Labor government was elected the Cairns Group has not met once. In six months, they have not had a single meeting. This is the way in which the new minister is going to revitalise the Cairns Group! It is quite clear that the discussions in relation to the Doha Round have increasingly excluded the views of the Cairns Group membership. I am particularly concerned that this minister is so desperate to do a deal in the Doha Round on his watch that he is joining the race to a very poor quality outcome from the Doha Round. A poor deal is a bad deal and it should not be done. If there are not real gains for Australian exporters in the Doha Round then we should not be a party to it. We should not do a deal just to get the minister’s picture on the wall or the minister’s signature on a deal.

There are some very tough issues that have to be resolved in Doha. I was particularly alarmed to see reports that the Prime Minister, when in Europe, was welcoming a commitment by the Europeans to cut their farm tariffs by 65 per cent. The Prime Minister apparently thought that was a good offer. The reality is that a cut of 65 per cent will deliver nothing to Australian exporters to Europe. It will not get us a single extra kilo of lamb or sugar or beef into the European market. It would be worthless. The cuts have to be 75 to 80 per cent on those particular lines to have any effect. Perhaps the Prime Minister did not know that there is a difference between the bound rate, which is a theoretical maximum tariff rate, and the applied rate, which is what is actually paid. If the Prime Minister is prepared to sign off on something with such a low ambition as a 65 per cent reduction in the tariffs in Europe then we will end up with a very poor Doha Round deal altogether.

We must also resist suggestions that the US farm subsidies would be quarantined in any way. The last US farm legislation to pass through Congress is a disgrace. It is perhaps the worst yet. It increases subsidies in an environment where their trade negotiators are talking about reducing them. In addition to that, it does it at a time when world prices are high and the subsidies simply unnecessary. If our trade minister is prepared to do a deal that countenances that kind of protectionism then Doha will be wasted. The opportunities will be wasted. I am also disappointed that he seems prepared to go back on some of the agreements that were made in the Hong Kong round and to renegotiate them to a lower level that would further disadvantage Australia.

If the trade minister is not prepared to do things in relation to the sensitive product area which will mean real cuts and real access to Australian products, then the deal will be useless. An earlier Labor government gave us the Uruguay Round. The Uruguay Round sold out Australian farmers. It delivered nothing for the Australian farm sector, but it provided some benefits for the manufacturing industry. The farmers of Australia were promised that their concerns would be addressed in the next round—the Doha Round. That is the round we are having now. We have another Labor minister and I am concerned that he is going to sell out the Australian farm sector in the same way his predecessor did at Uruguay. The opportunities for the Doha Round are enormous, but I am not satisfied that this government has the necessary level of commitment to bring about a deal that is good for Australia. If it is not good for Australia, we should not be in it. (Time expired)

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