Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Assistant Minister for Financial Services) Share this | Hansard source

The Export Market Development Grants program is a great initiative of a Labor government. It was introduced in 1974 by the Whitlam government as a means of supporting Australian exporters to sell their goods and services in international markets. Labor support this legislation because we understand the enormous benefits of exporting into foreign markets for Australia's GDP and the benefits that this scheme has played in opening up new opportunities, particularly for SMEs, to expand their horizons and their markets and ultimately their incomes to support jobs. Funding for the program has steadily increased under successive governments to a peak of $270 million in the 1996-97 years and was forecast to increase to $300 million in 1997-98 under the Keating government. However, the Howard government were elected and they imposed a spending cap of $150 million in 1997, putting downward pressure on the scheme. The current funding, which includes a COVID-19 top-up of $47 million, is $277.7 million. This means that funding in real terms hasn't increased under this scheme since the Keating government.

The scheme helps aspiring and current exporters to increase their marketing activities overseas by reimbursing them up to 50 per cent of their eligible promotion expenses. In 2019, more than 4,000 small to medium enterprises in Australia accessed the scheme, generating exports worth $3.7 billion. In October last year, the government commissioned an independent review of the administration of the EMDG scheme and the review recommended that the program be retargeted to businesses with a turnover of less than $20 million, because many large exporters saw the grants as nice to have but not an incentive to invest in promotional activity. It was also recommended that the scheme's administration be simplified. One of the recommendations related to when the payments were made. In the past, payments were made by government to exporters after the expenditure had been undertaken, and in some cases it was years after the expenditure for promotional activities associated with selling their goods and services in international markets had been undertaken. That was inefficient and it was a deterrent to many businesses participating in the scheme.

There were 10 recommendations in total that were accepted by the government, and this bill makes a number of key changes to the scheme in light of those recommendations in that report. The changes include that the scheme will be changed from a reimbursement scheme to an up-front grants scheme to provide funding certainty for exporters dealing with the issue that I just raised. Grants will be capped for export-ready SMEs with an annual turnover of less than $20 million, down from the previous $50 million. Grants will be administered in two tiers, with tier 1 focused on SMEs new to export and tier 2 targeted at expanding exporters. It would be good to see the focus on businesses that are new to export—those that are dipping their toe in the water, if you like, or are looking to expand into international markets when they previously might not have thought of looking overseas. Labor supports building capacity amongst SMEs to boost exports and create more jobs for Australians. We all hope that this particular change to the program will achieve that.

SMEs account for only 14 per cent of Australia's exporters, whereas in G7 countries they account for 25 per cent and in the European Union, on average, they account for 35 per cent. However, exporters contribute more than nonexporters to jobs and productivity. On average, they employ more staff, pay higher wages and achieve higher labour productivity compared to nonexporters. It's a fact that exporters tend to have enterprise bargaining agreements with their staff to a higher degree than nonexporters, which tends to imply that they're interested in collectively bargaining with their employees around better wages and conditions on a regular basis and on the basis of a productivity trade-off which ensures that the efficiency of their business is improving and they are in a position to look to international markets to expand. Lifting SME exports to 25 per cent of Australia's exports would increase our GDP by an estimated $36 billion

The COVID pandemic has presented many fresh obstacles for Australian exporters, including the disruption to supply chains and loss of markets. Now more than ever it's important that Australian exporters have the most efficient support mechanisms in place to help them to access markets around the world. The Morrison government must develop a clear strategy to genuinely diversify our export markets. Our exporters need a government that does more than simply point to free trade agreements and hope that this will lead to increased trade. They need a government that actually delivers on access to markets, particularly around non-tariff barriers and particularly in Asian markets. We are signatories to close to 16—I think it is now—free trade agreements, and many of them do break down barriers around market access associated with tariffs. But it's the key area of non-tariff barriers, particularly investment controls in many of these nations, that have been a barrier to many Australian businesses opening up, locating premises, manufacturing and selling into Asian markets in particular but international markets more broadly. That's an area where I think the government could be doing more to assist businesses to break down some of those barriers.

The most glaring example is their decision to implement just one of the 20 priority recommendations contained in the 500-page report released in 2018 that contained a blueprint for closer economic management and closer economic cooperation with India. We believe that that's been a great failure of and a missed opportunity by this government. It was of course a report that was prepared by Peter Varghese. Since the publication and launch of the report, it has basically sat on the shelf in the minister's office, gathering dust. India's share of Australian merchandise exports was falling by more than 30 per cent as that report was being released. The Morrison government seem to believe that it's the responsibility of Australian SMEs themselves to open up these new markets, without any assistance from government. But we all know that governments that are interested in supporting SMEs to expand into international markets do have programs such as this—and others as well—to break down some of those barriers and support trade diversification.

It's evident from our history, including from the actions of both Liberal and Labor governments, that little will happen unless the Commonwealth government takes the lead in this area. For the sake of Australian jobs and SME exports, the Morrison government must act in the national interest to devise an urgent strategy to support Australian SMEs. That includes looking at some of those issues I mentioned around investment and the newer markets in the Asia-Pacific region.

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