Peter Hendy (Eden-Monaro, Liberal Party) Share this | Hansard source

I rise in support of the Export Market Development Grants Amendment Bill. As we said in our election policy, the coalition believe exports are the basis for a successful economy in services, agriculture and manufacturing. We said that we would progressively restore funding for the Export Market Development Grants Scheme with an initial $50 million boost and look to further increases as the budget improves. We noted that over one in five Australians are linked to trade, and an increased export capacity will allow Australian businesses to grow by accessing new and emerging markets. The EMDG Scheme assists in encouraging small- and medium-sized Australian businesses to develop export markets, particularly those who specialise in unique and high-value manufacturing operations.

The government has a well thought through trade agenda and I am pleased that I was able to help draft the coalition's trade policy before we came to government. Today's bill is an integral part of that policy. Rather than assisting Australia's vital export sector, the Rudd-Gillard-Rudd government severely weakened Australia's trade position. The catastrophic decision to ban live cattle exports to Indonesia without warning significantly damaged not only Australia's valuable cattle export trade to Indonesia but also our reputation as a trusted and reliable trade partner. It was a huge blow and it will take years to repair that part of our relationship with Indonesia. It was the iconic issue displaying the previous government's attitude to the export sector—they were ever ready to bow before the Greens despite the damage to Australia's national interest.

The last government's frequent changes to the EMDG Scheme created unnecessary business uncertainty at a time of global economic instability. In the 2012 Mid-Year Economic and Fiscal Outlook, the Labor government took the decision to make annual cuts of $25 million to this scheme. That was the second significant budget cut to the scheme following their 2007 election promise to actually expand the scheme. Soon after taking office in 2007, Labor expanded the scheme by lowering the eligible expenditure threshold from $15,000 to $10,000, increasing the number of grants that an applicant could receive from seven to eight and increasing the maximum grant from $150,000 to $200,000. The cost of these changes was estimated at $50 million a year, but—and this is the key—Labor increased funding only for a bit over a year. In June 2010, Labor amended the scheme to reverse the 2008 implementation of their election commitments.

The EMDG Scheme, administered by Austrade, partly supports the export promotion expenses of eligible enterprises in order to boost exports and to grow our economy through Australian produced goods and services. The scheme began operation in financial year 1974-75, which would mean that it was started under the Whitlam government. Given the hit to small business caused by that government, it is quite ironic that this scheme has that pedigree, but credit should go where it is due. It has proven to be a successful policy that has helped many businesses over the years. When I was the chief executive of the Australian Chamber of Commerce and Industry we regarded the EMDG Scheme as one of the most successful small business programs around. The added bonus is that it is an export assistance scheme that fully accords with the rules of the World Trade Organisation. According to the Austrade website, claims are reimbursed retrospectively for expenditure incurred in the previous financial year, pro rata up to the cap. I understand that about 5,000 enterprises per year apply for grants.

As the minister noted in his second reading speech for the Export Market Development Grants Amendment Bill 2014, the changes proposed in this bill deliver on the coalition's pre-election commitment. As promised, after the election the 2013 Mid-Year Economic and Fiscal Outlook allocated an additional $50 million over four years. The associated policy changes required to give effect to this provision, as well as some additional administrative enhancements to the scheme, are contained in this bill.

In summary, the bill increases the maximum number of grants per applicant from seven to eight and reduces the required expenditure threshold to qualify for a grant from $20,000 to $15,000. According to the minister, based on the profile of last year's applicants, this will enable hundreds of extra small businesses to benefit from the scheme. Currently the export market development grant does not reimburse the first $5,000 of an eligible claim. With this bill, this figure will drop to $2,500, and around 85 per cent of export market development grant recipients will receive an extra $2,500 per grant as a result.

The improvements the coalition is making will benefit many small business exporters in rural and regional areas, such as in my electorate of Eden-Monaro. Last financial year, 2012-13, I note that there were two recipients in Eden-Monaro. One recipient was Campbell Foods Australia Pty Ltd, which deals in meat, poultry and smallgoods wholesaling and is based in Narrabarba, south of the town of Eden. They export to five-star hotels and restaurants around the world. The other recipient was Found Enterprises Australasia Pty Ltd, based in Jerrabomberra in my electorate, which undertakes a grocery wholesaling business. They export organic pomegranate juice, watermelon juice and other products.

Our EMDG policy is only part of a larger trade policy. The Rudd-Gillard-Rudd government was a disappointment to Australia's exporters, especially in its failure to conclude bilateral trade agreements with key regional partners. The failure to conclude free trade agreements with Australia's major trading partners has resulted in a loss of real export income. Since the launch of Australia's free trade agreement negotiations with China in 2005, over 20 rounds of discussions have been held without result. This lack of action stands in stark contrast to New Zealand, which concluded a free trade agreement with China in 2008 after three years of negotiations. Indeed, they started the negotiations the same year we did—in 2005. Since then, New Zealand's goods exports to China have trebled, with more than 90 per cent of its goods now entering China duty-free. New Zealand has also finalised a free trade agreement with Taiwan.

The Rudd-Gillard-Rudd government's disregard for bilateral free trade agreements and the benefits they provide to Australian exporters and investors is exemplified by former trade minister Craig Emerson's statement that a free trade agreement with China was 'overrated'. This is despite a joint feasibility study finding that a free trade agreement with China could boost Australia's real gross domestic product by approximately $24 billion over the period 2006 to 2015. We have a vastly different attitude. The Prime Minister has put a deadline on the China free trade agreement negotiations and has asked that they be concluded by the end of the year. Similarly the Chinese Prime Minister has backed an accelerated timetable. I am sure our Minister for Trade and Investment is up to the task, given his great performance in relation to trade with Korea.

Labor's refusal to consider a proposal for an investor-state dispute settlement clause in a free trade agreement with South Korea placed Australian exporters at a direct disadvantage compared to their competitors in other countries. The Korean-United States free trade agreement, which entered into force on 15 March 2012, has enabled the USA to capture a significant part of Korea's lucrative beef market at the expense of Australian beef producers, who are still subject to higher tariffs. When the competitiveness of our exports is lost, so too are Australian jobs.

I am glad to say that the Minister for Trade and Investment and his team have been able to pull off a great win with the Korea-Australia Free Trade Agreement, KAFTA. It is a world-class, comprehensive agreement that substantially liberalises our trade with a major market. KAFTA gives Australian exporters significantly improved market access in goods and services and substantially improves investment protections. I understand that when KAFTA comes into force 84 per cent of Australia's exports, by value, to Korea will enter duty free, rising to 99.8 per cent on full implementation of the agreement.

As part of our commitments, Australia will be removing its remaining tariffs on Korean goods over several years. For rural and regional Australia, where my electorate sits, I note that in the agriculture sector, the KAFTA will see Korea eliminate tariffs immediately on entry into force for raw sugar, wheat, wine, and some horticulture. Tariffs of up to 550 per cent on most other agricultural products will be eliminated within short time frames. Importantly, Korea will eliminate its 40 per cent tariff on beef progressively over 15 years, which will help to level the playing field for Australian beef exporters. And with a large dairy industry in my electorate, I should note that duty-free quotas for cheese, butter and infant formula and high tariffs will be eliminated on many dairy products between three and 20 years. KAFTA will also provide Australian services exporters with the best treatment Korea has agreed to with any trading partner. Key outcomes include: expanded markets for Australian law firms, Australian accountants, telecommunications providers, Australian financial services providers, education, engineering and other professional services.

Of course it would be preferable that more progress was made in the multilateral negotiations area. Despite the current the World Trade Organisation impasse on negotiations, the coalition remains committed to the Doha Round of negotiations as the best way to improve global economic growth and remove the barriers that restrict trade and investment. With its global framework of agreed trade rules, the WTO remains crucial in preserving the openness of markets around the world.

As an export-oriented economy, Australia has much to gain in pushing for further international trade reform. Over the last 20 years, multilateral trade liberalisation has boosted real family incomes by between $2,700 and $3,900 per year. However, the current impasse in the Doha Round increases the need for Australia to pursue bilateral agreements that expand trade and investment opportunities for Australian businesses. The government is devoting increased resources to fast-tracking the conclusion of free trade agreements not only with China—which I was talking about before—but also with Japan, India, the Gulf Cooperation Council and Indonesia. We will also explore the feasibility of free trade agreements with other trading partners including the European Union, Brazil, Hong Kong, Papua New Guinea, South Africa and Taiwan.

We are also committed to the negotiation of a Trans-Pacific Partnership Agreement as a stepping stone to a longer term goal of an Asia-Pacific free trade area. The TPP negotiations have been progressing well and I have heard encouraging reports out of recent negotiations in Singapore. We also support negotiations for a Regional Comprehensive Economic Partnership centred on the Association of Southeast Asian Nations, ASEAN, and the Pacific Agreement on Closer Economic Relations or, as it is called, PACER Plus.

This bill is part of our small business policy as much as being part of our trade policy. It is therefore part of our jobs policy. Over the last 14 years the EMDG scheme has helped support small and medium business exports worth more than $60 billion. On average, those exporters employed 97,000 employees each year, thus, strengthening the EMDG scheme is also about boosting jobs. I conclude by again noting that I support the bill before the House as it further strengthens the EMDG scheme.

See this speech in context