James Stevens (Sturt, Liberal Party) Share this | Hansard source

I know the Export Market Development Grants scheme very well, because in my previous career I was quite involved with it across a number of businesses in the textile industry. Thinking back, 2008 might have been the first year that I was involved in a business in the yarn industry that used the scheme, and then equally, further up the supply chain, in fabrics and also garments in my time in the merino wool industry in this country. We used the scheme to great effect to help promote our offer overseas and build a business that was basically 100 per cent export.

The wool industry is obviously very famous for the economic contribution that it has made and continues to make to this country and our economy. But, perhaps unfortunately, most of the sector from greasy wool onwards is now very much offshore. In that time, I was involved with a business that had a scouring and carbonising mill in South Australia, in Adelaide. But the yarn combing and spinning happened in Malaysia. Then we would have our knitting done in China, in Suzhou, just out of Shanghai. Then, often, the cut and sew would happen in a variety of locations in South-East Asia, the Pacific and Eastern Europe.

That yarn business, which was the first in the supply chain and had an export focus, was the first company where I engaged with the EMDG process. Back then, as I recall, you were eligible for up to about $150,000 a year if you incurred the same amount. I think you had to incur your own amount first for about $15,000 and then after that you'd get dollar for dollar. As has been fleshed out in other contributions already, in those times you didn't have certainty over what you would get back. You hoped that the scheme would fully finance your maximum cap, which, as I said, from memory was about $150,000, but that wouldn't occur until you finished that financial year. You'd obviously deal with your acquittals with the department, put in your application and they would assess it, and then, if you were lucky, you'd get the full amount that you applied for. I was certainly lucky to be in a larger parent company that was able to make business decisions about pursuing export markets with the certainty that, if we weren't successful through the EMDG process, it wouldn't have an enormous impact on the investors.

Of course, there are a lot of smaller businesses that really count on the EMDG. It's very important for them that they're successful in this scheme, because their business planning involves that return on the marketing expenditure that they undertake. It can leave a big hole in the budgets of smaller businesses that are looking to access markets. Accessing overseas markets is really expensive. We do it very well in this country. We get great government support. There are great industry groups. In the wool industry, AWI, Australian Wool Innovation, is very involved with our businesses in a lot of the key markets. Sometimes you can be lucky, and you'll have other Australian businesses that are exporters that don't see you as a competitor; they see you as complementary to them. They might be successful in overseas markets already and they might give you a hand in market entry. But, if you're doing it cold and you don't have great support structures around you, or the market you're seeking to enter is not so mature and not so experienced by other Australian businesses and some of the significant Australian industry groups, you're taking a big risk.

The great thing about this scheme is that the government is saying, 'If you're going to take a risk to go and find an export market and to find a location for Australian exports—to hopefully grow, succeed and expand your business in this country and employ more people—we as a government want to share that risk, if you like, by sharing an element of the expenditure profile you've got in making the risky decision to go and seek to enter an overseas market.' Certainly in my time this covered branding expenditure, tradeshows, sampling, sending samples overseas and producing marketing collateral. I know some businesses that use it for developing websites. In the wine industry in South Australia it has been fundamental to so many wineries, particularly family wineries, that want to go from selling domestically and being successful—good on people who have the ambition to grow their business well beyond Australian shores and go and find new markets overseas. Those types of businesses have benefited for such a long, long time from this program.

As much as I praise the EMDG, I welcome the changes we are making to it in this legislation. The review commissioned by the government and handed to Minister Birmingham did raise some important opportunities for reform in this scheme, particularly to better target what we're doing to smaller businesses, with a slight contraction in the size of a business that's eligible for the scheme, but also to give businesses that certainty. They'll know before they incur expenditure whether they have been accepted into the program. They still have to meet the rules; the expenditure still has to meet the rules of the scheme, but, rather than hoping that you'll be eligible, you'll now find out beforehand. If you go ahead and incur expenditure to access a market or to try and expand into other markets, you will be able to count on the fact that, as long as you follow the rules of the scheme, you are going to be funded. That will make an enormous difference.

One of the key findings of the review was that there are undoubtedly businesses that in recent years have been expecting success in the scheme to the full amount and not receiving it, because it's been oversubscribed. What invariably happens is that there's a budgeted amount of money for the scheme, but, if a whole lot more people than were predicted are successful in meeting the rules of that scheme then the amount of money has to be shared amongst a larger pool of people. Although you might have done everything right, with all your expenditure exactly within the rules of the scheme, and although you might have been eligible for $150,000 return on expenditure, if twice the number of people applied successfully, like you did, you would only get half the money back that you were anticipating or hoping for.

This will have a significant impact on smaller businesses like the winery example I just used—a small operation in the Barossa Valley or McLaren Vale in South Australia or in one of the other great wine regions around this country. By accessing an overseas market, they were potentially putting themselves in a position to double, triple or quadruple their turnover. But, equally, being a small business, due to the cost of entering market—and it can cost hundreds and hundreds of thousands of dollars just to get that foothold—where they were counting on the EMDG to support them in that and share the cost, to find out after that event that they won't get that money back could well mean the difference between success and failure.

I know what it's like to do a budget on a new venture, particularly when you're looking to enter new markets. I mentioned earlier my background in the textile industry. In the garment industry, particularly when you've got a niche product and you know that you have to spread your risk amongst a number of markets around the world, the cost of entering a new market, versus the return you're going to get in the first few years, is very significant. The EMDG component of the money you get back when you're successful in the scheme in many cases makes the difference in a business deciding to go ahead and incur that expenditure, make that decision, commit to it and go into market. You still have risk. This scheme merely supports your expenditure and offsets up to half of it, depending on what you spend. It doesn't mean you'll be successful in the market. You're still bearing an enormous amount of risk that you might not succeed. For example, you think a particular distributor will be perfect for your product. You incur the cost of branding and translating all of your materials. You're going to go into market. You'll probably incur cost at a trade show. You meet the network you thought would be suitable for you, and you might find out they're not suitable at all. You might find out that the whole exercise, which has cost you hundreds of thousands of dollars, has all been for nothing. This happens in business all the time. Sure, it's part of the risk of doing business, but the EMDG helps cushion the impact of that and helps give you the confidence factor in taking that risk.

We have great support for our exporters, through Austrade, the Commonwealth government agency, through our network of embassies and high commissions and through the trade offices around the world. I mentioned earlier some of the significant industry bodies that do an excellent job of supporting our more mature industry sectors to engage and grow in existing markets and new markets. We've also got people with very niche businesses who have to do it alone. That's the category where EMDG really comes into its own in supporting those types of businesses to get the confidence and a feeling that they're in it with their government, that their government is supporting them and wants them to succeed in growing their business.

If we're growing businesses, we're employing more people. Bigger businesses pay more tax to the Commonwealth government. This is exactly the kind of investment that we should be making: supporting businesses to grow and pay that dividend back to the Australian economy, the Australian people, through employing more people and of course earning more money; and a higher turnover that results in more tax revenue for the Commonwealth government.

We are a nation of 25 million people. We're very prosperous. We're very lucky with some of our natural attributes. I've got a 100 per cent confidence that our future prosperity is always going to come from our ability to continue to grow our exports. When you're 25 million people, you're not going to be a thriving economy by selling lattes to each other. You've got to produce more than the 25 million of this country want or need, and sell that surplus around the world. That's how we're going to secure and safeguard our standard of living that we've come to expect and that we deserve in this country of great attribute. But, as a government, we've got to be doing things exactly like this legislation does, which is enhance a scheme that is supporting Australian businesses to grow into new overseas export markets and thrive.

Not everyone's going to be successful—that's obvious. A third of small businesses fail in their first year and the stats are similar with accessing export markets. Lots of businesses try and fail, but we need to encourage them. It's not a failure at all to have a go and seek to expand your business and access a new market. In success, there's an enormous return for your business; there's an enormous return for this country. We've seen unbelievable trade statistics in recent months—in fact, over the past two years—having a current account surplus and an enormous net trade surplus. We're doing very well as a nation in the successful pursuit of growing our exports and access to export markets.

This legislation is only going to improve and enhance the ability of particularly small businesses to continue to grow and help our broader economy expand. Every dollar we earn from overseas, rather than from within our economy, is a massive positive in so many ways, bringing that net trade surplus up, and ensuring our cost of living and our sustainability as a country and a continent. We are 25 million people. We can continue to be a very, very wealthy nation with a very high standard of living, strong productivity growth, wages growth and the dividend of that economic success. It's thanks to programs like the EMDG that we're going to be able to safeguard that into the future. I commend the bill to the House.

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