Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Hansard source

I support the passage of the Trade Legislation Amendment Bill (No. 1) 2016 with my Labor colleagues. The purpose of the bill is to amend the Export Market Development Grants Act, or the EMDG Act, and the Australian Trade Commission Act. The Export Market Development Grants scheme is a great Labor initiative that has been very successful in promoting Australian businesses in international markets. There are many businesses, particularly small to medium-sized businesses, in the electorate of Kingsford Smith that have benefited from this program. Labor supports this bill, which comprises mainly minor amendments and technical changes designed to improve the operation of the scheme.

The scheme was established in 1974 by the Whitlam government and administered by Austrade. Its primary focus is to bring benefit to Australians by connecting and nurturing foreign markets for Australian goods, services, intellectual property and general capability. This is done by providing financial support and advice on prospective markets and opportunities to small and medium Australian businesses actively seeking out and developing export business. Further support is provided in the form of on-the-ground assistance in targeted countries.

Small business of course is the backbone of the Australian economy, employing 4.7 million Australians as at June 2014. EMDG have assisted a number of businesses to excel both domestically and abroad. Some of the success stories are well known. Xelon Entertainment, a prominent digital music distribution company, has grown to represent over 150 labels, both domestically and worldwide. Thanks to the EMDG scheme this company has been able to regularly attend international conferences and international music summits. It is the face the new music industry in Australia. The scheme has helped it develop and expand its export sales significantly in recent years, to over $1.5 million in 2014-15.

Another success story is SAGE Automation. A leading independent system integration company, specialising in industrial automation and control systems, SAGE has managed to leverage the help it has received through the EMDG to break into markets, particularly in computerised global supply chains, and secure big customers, such as Glencore, BHP Billiton, Orica and Santos. It has allowed the business to have up to $40 million in revenue a year.

Under section 106A of the EMDG Act the scheme was scheduled for review in 2015. The review was aimed at increasing the number of businesses that develop into exporters, increasing the number of businesses that achieve sustainability in export markets and generate additional exports, and further developing an export culture in Australia. The review found that the EMDG scheme generates a net economic benefit and recommended that it be maintained with minor changes. That review conducted by Michael Lee made a number of recommendations including: the removal of sunset provisions from the act, which said that the act sunsetted, or was discontinued, every five years; the augmentation of Austrade's budget to free up EMDG funding for export promotion grants; and Austrade to continue monitoring changes to any program's accessibility and processes as well as the outcomes of progressive changes. Further amendments to the act contained in this bill include a limit of $15,000 on the free sample expenditure category, provisions for reimbursement of in-country travel, and expenses incurred on activities or products considered detrimental to Australia's trade reputation being excluded from the scheme.

Modelling by KPMG estimated that each dollar provided to SMEs through this scheme generated $7 in benefits when industry spillovers and productivity gains are taken into account. There is no doubt that the scheme provides a net economic benefit to Australia. By amending the act's definition of a 'grant year', which is currently defined as any year up to 30 June 2016, the bill 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 bill also provides the minister with greater flexibility over the timing of reviews of the scheme. Under the amendments the minister will be required to commission an independent review to report by 31 December 2021. Thereafter the minister will be required to commission subsequent reviews for completion on dates he or she determines rather than on dates prescribed by the act. Labor believes strongly the EMDG should be subject to regular reviews. This way business and stakeholders are given the opportunity to raise concerns and have input into the ongoing operation of the scheme, which should help the scheme continue to be responsive and meet the specific needs and expectations of small and medium enterprises while delivering value for money for taxpayers.

The bill makes other amendments which amount to sensible finetuning of the scheme. Most notably they are: communications will be removed from the eligible expenditure category to reflect the reduced cost of communications as a result of advances in technology—a lot of companies are now using social media as a means of promotion, which in many respects is free; the promotional literature or other advertising expenditure category will include material in electronic form; and Austrade will be permitted to direct funds from other sources towards EMDG administration costs.

In conclusion, I am pleased to support this bill and the changes embodied by it. It will help consolidate the scheme and bolster its effectiveness as a major supporter of small and medium Australian businesses and ensure it can continue to support Australian business well into the future.

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