Maria Vamvakinou (Calwell, Australian Labor Party) Share this | Hansard source

Ensuring that Australia has a vibrant export industry, one with strong prospects for future expansion and growth, is fundamental to the long-term health of our nation’s economy. For many Australian firms, turning to export markets overseas offers enormous opportunities in revenue growth, job creation and product diversification. Like many in this country, I strongly believe that there is an enormous potential in Australia to see export growth across a range of different industries and sectors.

Spend just a day touring some of the businesses in my electorate of Calwell and you will see the level of commitment, drive and talent that underscores the potential that exists in Australia when it comes to creating high-quality, innovative products and cutting-edge technology ready to export to the rest of the world. If we are going to harness this potential, it is crucial that we get the policy setting right. Ongoing government support has an important role to play when it comes to growing Australia’s export industry. This includes providing tangible support to Australian firms looking to enter the export market for the first time, as well as helping Australian exporters continually grow their business by accessing new markets and taking advantage of new export opportunities overseas. Unlike our predecessors, the government understand that we have an important role to play when it comes to supporting Australia’s export industry, just as the government understand the importance of investing in the drivers of Australia’s economic growth—in education and training, in innovation as a key component of industry policy, in new technology and in infrastructure.

The Export Market Development Grants Amendment Bill 2008 seeks to make a number of important changes to the Export Market Development Grants Act, under which Australia’s Export Market Development Grants Scheme was first established, in 1974. Since then, the scheme has provided grants to help Australian firms get their business exports ready and it has provided much needed support to Australian exporters looking to expand their operations when it comes to taking advantage of new market opportunities overseas.

The main benefactors of the Export Market Development Grants Scheme have been small businesses. We know that 75 per cent of all applicants to the scheme employ fewer than 20 people and that 81 per cent have an annual turnover of $5 million or less. We also know that around one-third of all applicants are completely new to export. These statistics give us a clear picture of the sorts of benefits this scheme offers. In particular, the Export Market Development Grants Scheme has served to provide both support and additional incentives to Australian small businesses looking to export their products and technologies overseas, often for the first time, who rarely have the funds or expertise to do so. By providing them with additional funding, it has helped many small businesses become export ready, with the follow-on benefits of revenue growth and job creation never far behind. We also know from recent studies that the scheme has met with considerable success, with one study undertaken in 2000 showing that for every $1 spent under the scheme an additional $12 is generated in export revenue.

Despite the importance of the Export Market Development Grants Scheme in helping Australian businesses get export ready and access new market opportunities overseas, the former government showed little commitment to it. Its complacency over the last decade saw the scheme effectively cut in half in real terms. In both 1997-98 and 2004-05, the previous government introduced changes to the eligibility criteria and thresholds contained under the scheme that made it harder for Australian businesses to access it. Not surprisingly, these changes generated considerable opposition from within Australia’s business community.

The former Howard government then attempted to mitigate some of the problems these changes had created by, for example, promising to increase the amount companies can claim for overseas travel from $200 to $300. It also removed accountability requirements, which meant that successful applicants to the scheme were no longer under any obligation to justify their performance. But it then failed to adequately fund these changes, leaving behind a large catalogue of underpayments and a net shortfall of $27 million, which has affected some 900 claimants. These claimants have already spent money in the expectation that their costs will be reimbursed under the scheme. As was the case when it came to industry policy, the previous government failed to get Australia’s trade policy right. In particular, it squandered the golden opportunity that was presented to it by Australia’s commodities and resources boom to boost government investment in export and trade.

The changes contained in the Export Market Development Grants Amendment Bill 2008 start us down the path of reversing some of these failures. In particular, the bill seeks to increase the maximum funding available under the scheme by $50,000. Successful applicants will now be able to receive up to $200,000 to help them implement new export strategies and pursue new export opportunities overseas. The bill also widens the eligibility criteria by increasing the turnover threshold for eligible applicants from $30 million to $50 million, thus allowing more businesses to apply for the scheme. It also seeks to halve the minimum expenditure threshold of applicants, again widening the eligibility criteria to include smaller businesses that may not have an enormous amount of capital outlay at their disposal. Applicants will now be able to receive a maximum of eight grants under the scheme instead of the previous maximum of seven grants, allowing them to access the Export Market Development Grants Scheme for longer periods. In addition, the bill seeks to reinstate a performance measure for applicants who are claiming their third successive grant under the scheme, and this measure will hold for all subsequent grants obtained by these applicants under the scheme.

Collectively, these changes will see an increase in the funding that is available to successful applicants under the Export Market Development Grants Scheme, a widening in the criteria of eligibility in terms of both maximum turnover and minimum expenditure thresholds and the reinstatement of a performance measurement test to make sure that we get the maximum benefit out of the scheme. These are important changes and they underscore the Rudd government’s commitment to trade and to getting the policy setting right, especially when it comes to turning around the mediocre performances of our export growth over the last decade.

Whilst world trade has grown at twice the rate of world output over the last five years, Australia’s total export revenues managed an annual average growth rate of only 5.8 per cent over the same period. In Australia, export industry growth has slowed considerably despite the fact that world trade has risen dramatically. Exports in Australian goods grew by only 6.4 per cent. Australian manufacturing fared even worse, managing a growth rate of only three per cent. By way of comparison, the average growth rate in exports of Australian goods has been 10.3 per cent since 1983, whilst for manufacturing exports it was 13 per cent over the same period—a significant difference from the figures we have seen over the last five years of 6.4 and three per cent respectively.

Seventy consecutive months of trade deficits under the former Howard government were the net result of those poor figures, with Australia’s current account deficit reaching record levels and our foreign debt levels trebling. It is the same story when you look at productivity in Australia under the former government. In the five years leading up to 1998-99, productivity growth averaged 3.3 per cent a year. In the following five years, to 2003-04, Australia’s productivity growth rate fell to 2.1 per cent a year. In the last years of the Howard government, it took yet another dive, to average out at just 1.1 per cent a year. These falls in Australia’s productivity and export growth rates reveal the extent of the former Howard government’s failure to plan for Australia’s future and to invest in the drivers of economic growth.

We live in an age where the competition over resources, skills and technical expertise and access to emerging and established markets has become more and more pronounced. We simply cannot afford to become complacent and we cannot afford to drop the ball. That is why the Rudd government has adopted a coordinated approach to tackling the economic challenges Australia faces, both now and into the future—creating additional places in skills training, boosting government investment in education as part of our commitment to an education revolution, committing $4.7 billion to build Australia’s first national broadband network, introducing new government initiatives aimed at fostering a culture of innovation and encouraging greater emphasis on research and development in Australia’s manufacturing and industry sectors, and establishing Infrastructure Australia, whose principal aim is to provide a strategic blueprint for Australia’s current and future infrastructure needs. Nor can we afford to become complacent when it comes to providing real and tangible support to Australian exporters, as well as those businesses looking to break into the export industry for the first time.

I would like to briefly turn to one area of Australian manufacturing—namely, the automotive sector, which is particularly close to my heart as the federal member for Calwell. Recent trends in Australia’s car-manufacturing industry serve to highlight the importance of export and trade to Australian manufacturing. In 2007, sales of Australian made cars accounted for only 19 per cent of total car sales in Australia, down from 30 per cent in 2002. Over the same period of time, the total value of imported cars in Australia increased to $27 billion in 2007, up from $18 billion in 2002. To offset their declining share of Australia’s domestic car market, Australian car manufacturers have increasingly focused on maximizing export opportunities overseas. In 1997, only 16 per cent of the total production of Australian motor vehicles was sold overseas. In 2006, this figure increased to 40 per cent of total production, with the Middle East emerging as Australia’s largest export market for cars. In particular, Saudi Arabia is now Australia’s largest single trading partner in automotive sales.

Certainly when it comes to the future of manufacturing in Australia, the general consensus is that identifying new export opportunities and successfully opening up new overseas markets to quality Australian made products will play an increasingly important role in shaping the industry’s future and helping consolidate its future growth.

The importance of export trade has not been lost on Australia’s component manufacturers either, with a 2.6 per cent increase in component exports since 2002, and this trend looks set to continue. The growth in export sales has been one of the few good news stories to come out of Australia’s automotive manufacturing sector, though the rising dollar continues to blunt that growth. What needs to be made clear is that the Rudd government is committed to helping turn around the fortunes of Australia’s car-manufacturing industry, and I am confident that our green car partnership program will go some way towards achieving this end.

The lesson here is that export sales continue to grow in importance for many sectors of the Australian economy, and opportunities to export our products overseas continue to open up new possibilities for economic growth. That is why measures of the type contained in this bill, which seek to channel additional funding and support to Australian exporters and provide additional incentives to Australian firms looking to break into the export market for the first time, are so important, especially in today’s climate of increased competition and expanding world trade. I therefore commend the Export Market Development Grants Amendment Bill 2008 to the House.

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