Jim Chalmers (Rankin, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Hansard source

I rise today to voice Labor's support for the Trade Legislation Amendment Bill (No.1) 2016, which implements two categoriesof changes to Australia's trade legislation. Firstly, it gives effect to a name change of the Australian Trade Commission, commonly known as Austrade, to the Australian Trade and Investment Commission. Secondly, it makes a number of minor and technical changes to the Export Market Development Grants Act 1997.These modest amendments will improve the operation of the Export Market Development Grant scheme.

The EMDG scheme is a key part of Austr alia's export promotion effort. It has been ever since it was instituted by the Whitlam government in the 1970s. It is good to see something that both sides of the House are supporting because it does provide good opportunities for our local companies, in particular by providing government grants to help Australian small and medium sized the enterprises—something I know my colleague at the table is very passionate about—and it helps them promote their products in export markets. Under the scheme, SMEs can obtain grants for activities such as attending trade fairs, advertising their products in overseas markets, and conducting market research to identify export opportunities.

As we know, one of the unfortunate realities about the way that the business community does not take sufficient advantage of all of the various trade deals that are available to them is that only 19 per cent of Australian exporters make use of free trade agreements, which leaves a lot of room for improvement in this country when it comes to ensuring that our businesses get a slice of the action in our region and that our businesses get a slice of the action when it comes to taking advantage of these FTAs. I was involved in a committee process which tried to dig into some of the issues that are preventing a lot of our businesses from taking full advantage of the agreements in the region and beyond. I think it is important that Austrade and the EMDG program and all of that are geared towards helping businesses make the most of those opportunities. The EMDG scheme helps small businesses to grow and to take advantage of export opportunities. It also helps the wider Australian economy to improve its export performance , which is good for growth and jobs. That is why Labor has been for some time such a strong supporter of the EMDG scheme .

The scheme has been reviewed a number of times since it was instituted by the Whitlam government in the 70s, most recently by Mr Michael Lee , who handed his report to the g overnment last year. Mr Lee found that the EMDG scheme continues to operate effectively in encouraging the development and expansion of overseas markets for Australian goods, services and intellectual property. We also know modelling done by KPMG concluded that the scheme generates a net benefit for the Australian economy. That modelling estimated that each dollar provided to SMEs generated $7 in benefits when industry spill-overs and productivity gains are taken into account. So $7of benefit from every dollar of that of money going into the scheme is good bang for the buck. That is a good outcome for the Australian people as well as for the specific businesses involved. Mr Lee recommended that the EMDG scheme be maintained with a number of changes to improve its operation and performance. Some of his recommendations are reflected in th e amendments contained in this bill that we are debating today.

For example, the b ill removes the EMDG A ct's current sunset provisions. Under the a ct's existing sunset arrangements, the EMDG scheme would effectively lapse unless it is extended by legislation every five years —that is a pretty bizarre state of affairs . It is good to see that discarded in the amendments today. By amending the a ct's d efinition of a grant year, the b ill will ensure the EMDG scheme continues on an ongoing basis rather than requiring periodic reauthorisation. Labor supports this change because it will deliver greater certainty for business about the future of the scheme.

The opposition notes that the b ill also provides the minister with greater flexibility over the timing of reviews of the EMDG scheme. Under the amendments we are talking about today, the m inister will be required to commission an independent review to report by 31 December 2021. After that, the m inister will be required to commission subsequent reviews for completion on dates that he or she determines, rather t han on dates prescribed by the a ct. I think that is a much better way to go about it, so long as it is not abused and so those reviews are not conducted too frequently. I think that is a good way to go about it. The o pposition believes the EMDG scheme, which costs taxpayers more than $130 million a year, should continue to be subject to regular reviews , even with the additional flexibility that has been provided to ministers in this bill we are talking about .

The b ill makes other amendments which amount , in my view, to sens ible fine-tuning of the scheme. These include: c ommunications will be removed as an eligible expenditure category to reflect the reduced cost of communications as a result of advances in technology; a limit of $15,000 will be imposed on the free sample expenditure category; t he promotional literature or other advertising expenditure category will include material in electronic form —commonsense changes to keep up with the available communications technology ; p rovisions for reim bursement of in-country travel—other than air fares— will be repealed and the daily allowance for overseas visits will be increased from $300 to $350; e xpenses incurred on activities or products which the CEO of Austrade considers may have a detrimental impact on Australia's trade reputation will be excluded from the scheme; A ustrade will be permitted to direct funds from other sources towards EMDG administration costs. These are the sorts of changes that the bill before us today makes to the current arrangements.

As flagged at the outset of my contribution today, the bill also changes the official name of Austrade from the Australian Trade Commission to the Australian Trade and Investment Commission. By this point of the speech, I think honourable members get the impression that, while many of these changes are worthy changes, it is not exactly a substantial bill, it is not a particularly visionary piece of legislation and it is a bit of a reflection that we are spending time on some of these more minor issues. You do really get the sense of an absence of a broader plan for investment and a broader plan for the economy.

Since coming to government, those opposite—under the member for Warringah and now the member for Wentworth—have talked about Australia being open for business. Unfortunately, when it comes to investment, and foreign investment in particular, this sort of sloganeering is little more than a fancy website, a new logo or some of those cheap pull-up banners that you see at trade fairs around the place.

The fact is that when it comes to the investment community there have been some pretty inconsistent actions from the government which are having the opposite effect of building confidence in the investment community itself. For example, the changes to the Foreign Investment Review Board screening thresholds and new application fees have meant more hurdles for foreign investors in an already overburdened Foreign Investment Review Board system. Labor recognises Australia is hungry for an increased share of highly competitive foreign direct investment flows to underpin our future economic development. That is why we have opposed the government's anti-investment FIRB legislation changes in this place.

Labor's position on the government's FIRB changes has been supported by the Business Council of Australia. For example, in its December 2015 report entitled Building Australia's comparative advantages: a 21st century agrifood sector, the BCA criticises the Turnbull government's new barriers to investment in the agriculture and food sectors. The BCA criticises the government for swathes of new red tape, onerous Foreign Investment Review Board screening thresholds and new application fees for would be investors. In their report, the BCA says very clearly:

The government has declared that it is 'open for business', however its recent decisions have sent the opposite message to potential international investors considering investing in the Australian agrifood sector.

Alarmingly, the report finds that the new rules may result in diminished investment returns in those agriculture and food sectors. The BCA also criticises the Turnbull government for amending FIRB thresholds without undertaking a proper regulatory review process.

The BCA is not alone in its criticism of the Liberal government's foreign investment policies. The investment screening thresholds have also been criticised by the Australian Food and Grocery Council, the Cattle Council of Australia, the Queensland Farmers Federation, the WA Chamber of Commerce and Industry, the Australian Lot Feeders' Association, the Financial Markets Association, Wellard, GrainCorp and Ridley Corporation—

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