Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Trade) Share this | Link to this | Hansard source

I speak in support of the Export Market Development Grants Amendment Bill 2008 as it is amongst the first very scant evidence for exporters as to what exactly they can expect from this government. Like exporters and investors, I listened avidly to the member for Hotham’s proclamations about trade—and he does make many of them. It is not that I am thrilled by the rhetoric of the Minister for Trade; rather, it pays to scrutinise closely every comment that is made on this topic by the Rudd government, as a daily assessment seems to be the only way to detect the prevailing mood of trade policy.

Over the past six months we have seen U-turns, roundabouts and backflips with the government’s approach to trade. It seemingly changes on a whim—or according to the weather or perhaps which country they are in at the time. The latest postulations of the trade ministers relate to the Export Market Development Grants Scheme. The member for Hotham is indeed correct when he recognises the central role this program plays for Australian exporters. Of course, given the ever-growing appetite of the black hole that is Labor’s trade policy, exporters will be forgiven for wondering how committed the current government are to the changes they are proposing.

The trade minister described his government’s convoluted strategy as a ‘down payment’ on ensuring sustainability for Australia’s trade policy. But no doubt exporters will shudder at the thought that what is to come will be just more of the same, because all this government has offered them so far when it comes to trade is an inconsistent message and an uncertain footing, all contingent on an ever expanding raft of—you guessed it—more reviews. Nonetheless, the changes to the EMDG Scheme are worth supporting. In fact, they are in keeping with the example laid down by the previous coalition government. The Howard government had a strong record on trade. It provided a stable environment for traders and investors and a consistent message for global markets and was responsive to the changing needs of exporters and the EMDG Scheme.

The member for Hotham would have us believe that under the previous government trade policy came to a standstill, but that is simply an attempt by him and his government to rewrite history. A simple review of the facts shows that it is simply not the case. Let us put some truths on the record. Over the full term of the previous coalition government, the value of Australian exports more than doubled to $216 billion. Exports grew in all major categories in 2006-07. While our resources exports continued to grow in 2006, manufacturers, services and rural exports reached all-time highs. The value of Australian resources exports more than doubled in real terms since 1996 and we achieved these record exports despite the worst drought in 100 years hurting our rural exporters, along with the high value of the Australian dollar, which appreciated 45 per cent against the US dollar in the five years to 2007.

Assistance for exporters also grew steadily through Austrade. In 2006-07 alone Austrade helped achieve export deals worth more than $22 billion, and the number of businesses obtaining export success through Austrade assistance consistently grew. In 2006, around 40 per cent of Australian made passenger motor vehicles were exported compared to five per cent in the late eighties, while international education has supported more than 50,000 jobs. Services exports already account for 21 per cent of Australia’s total exports and have been growing at an annual rate of 4.5 per cent over the past five years.

During the coalition’s time in office, trade policy helped open up new opportunities for Australians and created new jobs. Over the past decade, Australia’s export industries have created more than 400,000 jobs, and real wages grew by 20 per cent, which is in stark contrast to the previous Labor government, under which real wages actually fell. Along with a rise in real wages, we saw unemployment fall to just over four per cent. Exports from regional Australia grew three times faster than exports from cities and equated to around a quarter of Australia’s regional income.

Of course, this is a fact that may have escaped the trade minister—not surprisingly, given the Labor government’s tendency so far to treat the needs of regional Australia with absolute contempt. Let me assure the trade minister that regional Australia does exist. It contributes substantially to Australia’s exports, and at least one in four jobs in regional Australia is linked to exports. Not only did the previous government appreciate this fact; it also implemented an entire suite of policies to assist Australian exporters and investors, no matter where in Australia they were based, and the EMDG Scheme is indeed one of the most important.

The previous government worked to be in tune with the needs of exporters and, instead of throwing the entire industry into confusion as this government has, it actually governed and made decisions—not reviews. In 2006-07 the EMDG Scheme provided 3,548 grants, totalling $145 million, to Australian businesses. This scheme has been particularly relevant to small and emerging exporters, with around 80 per cent of recipients reporting annual income of $5 million or less. Nearly one-quarter of all grants were awarded to recipients from rural and regional Australia. Under the coalition government, this program was adapted to ensure it remained relevant to the prevailing conditions for exporters. It encouraged them to seek new opportunities and to build on Australia’s successes abroad.

So, while I applaud the trade minister for following the lead of his coalition predecessors, the fact of the matter is that Labor’s tinkering with the EMDG Scheme simply does not go far enough. The trade minister is attempting to wash his hands of what is happening in the real world and, in putting off any real decision making to some fanciful day in the future, he is refusing to address the issues that are facing exporters right now. I have been contacted by a range of Australian exporters who stand to pay a high price because this government has refused to address the current shortfall in the EMDG Scheme, which has become oversubscribed. These are hardworking Australian businesses that built up their operations in good faith in the belief that they would be reimbursed for their efforts. They are now facing the prospect of not receiving substantial amounts of money, as the Rudd Labor government watches on in freeze-frame review mode. It is simply not good enough to pass the buck and refuse to operate in real time.

Prior to the last election, the coalition made a clear commitment to continue the EMDG Scheme. While the scheme was undersubscribed in previous years, it was always our intention to seek extra funds from cabinet should the scheme, which is demand driven, become oversubscribed. This is the cut and thrust of actually governing, as opposed to setting up committees and reviews. But the trade minister seems to forget he is now one of those responsible for government. The Labor Party have acknowledged the popularity of the program under the coalition government but have refused to allocate any additional funding for the EMDG program not only for this year, 2007-08, but—surprise, surprise!—for 2008-09. I stand to be corrected, but the minister has not shown why he has failed to deliver anything but a one-off. There will be no extra funding in 2010-11 and 2011-12. So much for his waxing lyrical and his rhetoric, as he travelled around the country, about what he was going to do. His promise to exporters that he would increase the EMDG Scheme by $50 million to $200 million is in fact a furphy. He has delivered that only in one year. On the basis of that, he misled the export industries he now represents into thinking that if Labor were elected there would be an extra $50 million in the four years of the forward estimates. That is simply not the case. It is another example of the Labor Party, in terms of what they offer, what they say they are going to do and what they actually do, failing to deliver and attempting to deceive.

It is not enough for the trade minister to throw a one-off cash injection at exporters in two years time and claim he has provided them with sound policy. Along with ignoring the day-to-day reality for exporters, the proposed changes in this bill come with a substantial caveat that everything to do with the EMDG program, as with everything else to do with trade and just about everything under this government, is—guess what?—under review. We will see uncertainty continue. Australian exporters need and deserve a government that will deliver a comprehensive and comprehensible trade policy now, not just another review. They need a government that gives proper attention to free trade agreements as a crucial component of Australia’s trade policy, not an item that is, as we have seen, supported or shunned on a whim.

The previous government was always committed to a comprehensive trade policy that offered assistance on our shores in the form of programs such as the EMDG, but it also built assuredly on Australia’s relationship with major trading partners. This comprehensive approach included both bilateral free trade agreements and multilateral negotiations such as Doha in the World Trade Organisation talks. Despite what the trade minister claims, the previous government laid extensive groundwork for the Doha Round of the WTO talks. The hard work went on behind the scenes—yet another concept perhaps foreign to this government, who seem to be obsessed with media releases and photo opportunities.

Alongside this is the coalition’s success in negotiating and completing free trade agreements and its continual search for new opportunities to serve the interests of exporters. Along with successful negotiations on the Australia-US Free Trade Agreement, which is delivering new markets, new opportunities and a real benefit to exporters, the coalition continued to move forward, laying the foundation for FTAs such as those with Korea, China and Japan. If this government does not get its act together on the Korean free trade agreement and devote some resources and commitment to that area then Australian exporters, particularly in the beef industry, will be severely disadvantaged with the coming into being of an FTA between Korea and the US. It will be our exporters and our jobs that again will be forced to pay the price for a government that seems to be unable to do anything without a review.

We will see the FTAs we concluded pursuing areas which cover more than 60 per cent of Australia’s total trade and up to seven of our top 10 markets. This was, under the previous government, a robust, pragmatic and reliable approach and it was exactly the approach that best serves Australia’s interests in terms of both exporters and investors. We need to see this trade minister and his government get out of being stalled and get on with a program which has some momentum. We have seen in recent weeks recognition of the enormous value of bilateral free trade agreements via the independent study that places a value on the Australian-South Korea FTA of almost $23 billion. It is figures like these that give us all a precise indication of what is at stake when Labor cannot decide where it stands. Under a government with no clear direction on trade, Australian exporters run the risk of being left behind, and there is no better example of that than the Korean FTA. What is more, not only is this government leaving investors and exporters out in the cold but it is also sending conflicting messages to international markets and trading partners. The Rudd government has failed miserably to construct a coherent message on trade policy.

In February the trade minister announced that bilateral agreements were a low priority. In March, he announced that they were back in the mix. In 2006 the current Prime Minister described Doha as ‘dead as a dodo’, but in Europe last month he told the world he had changed his mind and Doha was now doable and the way forward. But then he changed his tune again, just days later and on a different continent, and said his focus was back on an FTA with China and India. Labor must be honest and consistent with Australia’s exporters if it wants to be taken seriously in negotiating free trade agreements with China and India. It must approach negotiations with more than just the sharp edge of a razor to cut budgets and negotiating positions.

The biggest hurdle for the successful completion of free trade agreements is Labor’s ever changing attitude towards bilateral relationships and its increasingly mixed message on trade. In taking this erratic approach, the trade minister and his government risk undercutting the interests of Australian exporters and jeopardising access to key markets. The government has powerful tools at its disposal and need only embrace the ambitious trade agenda laid down by the Howard government to deliver maximum benefits to exporters. A valuable place to start would be to bring an end to the uncertainty that has plagued exporters and investors since this government buried their business under a cloud of reviews.

The trade minister pledges that further reforms will follow his review of trade policies and programs. This, of course, is slated to occur on some unspecified day well into the future. While the Rudd Labor government may like to ponder this hypothetical day when all problems will be magically resolved without any actual governance or the need for real decisions, looking to the future is a luxury denied to Australian traders, whose daily business and livelihoods depend on knowing what is ahead right now.

So far the signs have been less than inspiring. The trade minister talks about looking forward but in the next breath proclaims that his search has started with trade policy from the eighties and nineties. Does the trade minister really expect to find the answers for the future by mulling over trade policy that is decades old? The member for Hotham may be shocked to discover that the international market has changed since the 1980s, along with Australia’s role in it, and that exporters and investors can no longer wait for the member for Hotham to catch up.

Labor claims to be listening to what exporters want. I would like to know where the trade minister is turning his ears other than to the vacuum of Labor’s trade policy. If the trade minister were truly listening then perhaps he would hear exporters and investors saying that they want a clear and stable framework in which to operate. They do not want to put their businesses on hold while Labor waits for reports and recommends something that will remain, at the very least, three months away. By the time the Labor government receives its trade policy report, it will have been in government for almost a year. That is a year in which exporters will have had no certainty, no direction and no clear indication of what their futures will hold under this government.

The trade minister claims he is making changes to the EMDG Scheme with the objective of providing a sustainable footing for exporters, but he is also conceding that it may be swept away as the EMDG Scheme is thrown into the mix of reviews. What guarantee can the trade minister give that what he promises today will not become meaningless once he receives this report? The bottom line for exporters is that, despite what the trade minister may want them to believe, under this Rudd government nothing is certain. The government can no longer cower from its real responsibilities and flounder for policy ideas under the cover of bureaucracy and more reviews. It is time the trade minister and his government stopped offering token gestures and hollow promises. Until then, the words of this government should be taken for what they are: scant guidance for Australia’s exporters and traders, who are crying out for certainty in the wreckage of Labor’s confusing and convoluted approach to trade.

John Murphy (Lowe, Australian Labor Party, Parliamentary Secretary to the Minister for Trade) Share this | Link to this | Hansard source

With great respect to the member for Groom, my friend and political opponent, I condemn the obfuscation and sophistry that he has just delivered in this chamber in relation to the Howard government’s position on the EMDG Scheme. I also condemn his misrepresentation of the Minister for Trade, Simon Crean, in relation to his position on the EMDG Scheme and on the other trade issues that the member for Groom alluded to in the disgraceful contribution he just made in this chamber. I will go into the reasons for that with some sobering information on the appalling performance by the Howard government in relation to trade in Australia. For the last six years there has been a trade deficit every month, and the Howard government did absolutely nothing about it. As a government, they stand condemned.

Instead of capitalising on the once-in-a-lifetime opportunity of the resources boom, the then government went belly up in relation to trade. In the last six years, total export revenues grew at an average annual rate of only 5.8 per cent, compared with 10.7 per cent in the 18 years following the float of the dollar by the Hawke government in 1983. Services exports grew at around one-third of their long-term average, despite being a major component of the domestic economy. Goods exports grew at an average annual rate of 6.4 per cent, compared with an average annual growth of 10.3 per cent since 1983. The manufacturing sector collapsed under the Howard government.

One could charitably describe these trade performance indicators as disappointing. The truth is that Australia’s trade performance over the past decade has been appalling. The Howard government has bequeathed the Rudd government 72 consecutive monthly trade deficits. The trade deficit for the September quarter 2007—listen to this—was a record $6.9 billion. The member for Groom should be here to listen to that. For a government that would so often and so arrogantly spruik its economic credentials, these figures are indeed damning. A government seeking to ensure or secure Australia’s future economic position beyond the resources boom must offer more than the mere rhetoric that we have just listened to from the member for Groom. It must engage in areas of opportunity. The need to renew our focus on trade performance takes on a heightened sense of importance in the light of the fact that, over the past five years, world trade has grown at twice the rate of world output. Australia must do better on the trade front. Australia must take advantage of the global opportunities presented to it.

Clearly, the Howard government failed to see the opportunities, failed to take advantage of the opportunities and dropped the ball on trade. Far from being responsible managers of the economy, the Howard government presided over an environment where net exports made a positive contribution to economic growth in only two of the 12 years that they were in power, despite world trade growing at twice the rate of world output. The failure of the previous government to integrate trade and economic policy has contributed to one of Australia’s worst trade performances in history and they cannot run away from that.

So it goes without saying that fresh ideas and a new direction in trade policy are long overdue; hence the Mortimer review. Australia has to get back to a position where net exports are making a positive contribution to economic growth. It will not be easy, but the Rudd government will not be content with leaving its head in the sand like the previous government. Rather than belatedly reacting to challenges, the Rudd government is committed to proactive reform.

There are serious problems that deserve a serious commitment to find solutions. The introduction of the Export Market Development Grants Amendment Bill 2008 is a down payment on the government’s commitment to find solutions to the soaring trade deficit. The commitment does not end there. Simon Crean has hit the ground running on a range of policy responses, and it would be prudent to outline some of those for the benefit of the member for Groom in order to put this bill into context. The Minister for Trade has already recalibrated Australia’s approach to trade negotiations by boldly trying to breathe life into the Doha Round. He is right to say that trade opportunities would be endless if the Doha Round were actually concluded, particularly given that world trade has already doubled the rate of world output, even without a successful Doha outcome. So, rather than having an unflinching obsession with free trade agreements that undermine rather than strengthen multilateral outcomes, as we saw under the Howard government, the Rudd government recognises that the best opportunities are presented through the Doha Round. Bilateral agreements should no longer be seen in isolation but must be compatible with and enhance and support the multilateral decision making.

However, there is little point pursuing improved market access globally if Australian companies are not productive or competitive enough to take up new opportunities. Australia has lacked a whole-of-government approach to increasing export levels and has failed dismally to invest in the drivers of economic growth, such as skills, innovation, information technology and infrastructure. It has only been months since the election of the Labor government but, as we have seen in the budget, the Rudd government is proactively addressing some of the productivity reasons underpinning Australia’s poor export performance. That is why we have committed to Infrastructure Australia, to a national broadband network, to an education revolution, to skilling Australia and to a $200 million Enterprise Connect innovation and research system. In clear contrast to the previous government, the Rudd government will take a twin-pillar approach to trade policy for sustainable economic growth. Multilateral trade liberalisation will be pursued at the border, while economic trade and structural reform will take place behind the border. The minister has put great emphasis on getting Australia’s trade strategy right in the future, commissioning the Mortimer review to examine all current trade policies and programs. That is appropriate, in view of the legacy left by the Howard government.

One of the programs under review is the subject of this bill. Given the sick state of the scheme—unrelated to how it was portrayed by the member for Groom—following 12 years of Howard government neglect, the Rudd government is not waiting for the Mortimer review to be completed before acting in relation to the EMDG Scheme. Like other economic policies and programs designed to assist Australia’s exports, the EMDG Scheme is yet another abandoned under the Howard government’s watch.

Since its inception by a Labor government, the EMDG Scheme has been an important component in getting businesses export ready and helping them to access new markets. Notwithstanding the significant support of the scheme by businesses, particularly mum-and-dad exporters, the scheme has been cut in half in real terms since 1995 and 1996—and that is the truth. It was cut in half by the Howard government in real terms, despite studies demonstrating that the EMDG Scheme returned an additional $12 of exports for every $1 outlaid by the government. The scheme was cut in half by the Howard government in real terms despite the significant assistance provided to thousands of small businesses across Australia.

Of 4,200 applicants under the scheme, 75 per cent employ fewer than 20 people and 81 per cent have a turnover of $5 million or less. About a third of these businesses are new to exporting. It is not hard to see why small businesses are so dependent on the scheme. They are often businesses that do not have an export culture, need to be mentored to become export ready and need the contacts in overseas markets.

Whenever there is a case of the former Howard government’s neglect of small business, I am reminded of the document published in 2004 entitled Committed to small business. In that document, the former Prime Minister extolled the virtues of small businesses and their importance to the Australian economy. He said inter alia:

The Government’s commitment to small business is undiminished. That is why we remain attuned to their needs and why we continue to respond to their concerns with practical measures.

It would seem that one practical measure was former Trade Minister Mark Vaile’s ‘ambitious goal of doubling the number of exporters’. Remarkably, the former government felt it could ‘remain attuned to small business’ needs and ‘double the number of exporters’ in Australia by halving a scheme that helped small business export. It is little wonder that the vast majority of Australians viewed the Howard government as having lost touch and it is thus not surprising that the previous government failed to meet its target of doubling exporters by almost 50 per cent. Surely, a scheme that encourages firms to spend their own money to seek out and develop overseas markets, as well as facilitates access to these markets, is worth supporting. Surely, firms that have the desire and capacity to export are firms that are worth investing in. Research has shown that firms that export pay higher wages, provide stronger growth in employment and are more profitable.

The EMDG Scheme is clearly an investment in our future. It is an investment for the future that the Rudd government is willing to make, and this bill, as I said earlier, is a down payment on that investment. The bill increases the maximum grant under the EMDG Scheme by $50,000 to $200,000, increasing the amount of reimbursement that exporters may claim. What did the member for Groom say about that? It is an explicit acknowledgement that exporters face increased marketing costs in international markets.

The bill also lifts the maximum turnover limit from $30 million to $50 million. To date, medium sized businesses have been punished for continuing to take advantage of new export opportunities and developing those export markets. We should be rewarding businesses that are making a real contribution to our balance of payments, not punishing them. This amendment will help to ensure that government support is not being cut off just as businesses start to develop sustainable export markets.

As well as addressing the legitimate needs of medium sized exporters, it is important to be mindful of the importance of this scheme to small businesses and the concerns those businesses have. In the time I have been Parliamentary Secretary to the Minister for Trade, I have had the privilege of visiting many Austrade offices around Australia and of meeting many small businesses that have benefited from the EMDG Scheme and are doing all they can to lift our export performance. One common comment has been about the onerous expenditure threshold that must be met by some businesses before they can receive a grant from the government. The current act provides for a $15,000 threshold. I have conveyed those concerns to the minister and the minister has listened to those businesses. This bill reduces the minimum expenditure threshold by $5,000 to $10,000, allowing new exporters early access to critical Austrade support when taking their first steps towards exporting. Australia’s export revenues remain biased towards a few major companies, with the top 10 per cent of exporters earning 90 per cent of export revenues. Small businesses earn only 0.9 per cent of export revenues, so early access to critical Austrade support cannot come soon enough for many small businesses.

Greater Austrade support cannot come soon enough for the services sector either. As I have mentioned, the current growth rate for services exports is only one-third of the long-term average. With services making up 80 per cent of the economy, we have to do more to make the most of our competitive advantages globally. This bill is a step in the right direction. This bill will make the EMDG Scheme more accessible for service exporters. It will replace the current list of eligible internal and external services with a new non-tourism services category that makes all services supplied to foreign residents eligible for funding unless specified in the EMDG Act regulations. Simply, this bill will replace a narrow, positive list of eligible services with a negative list, making all services eligible for assistance unless otherwise specified. This sensible change will help ensure large parts of the services sector no longer have difficulty meeting eligibility criteria originally designed for exporters of goods.

It is time for Australia’s new economy to take to the world stage, with assistance from an improved EMDG Scheme. As with any good scheme, good governance measures are essential. So it is essential to ensure that this scheme does not become a pot of gold for those who are unwilling—or unable, for that matter—to put in the effort to become successful exporters. Taxpayers, quite rightly, expect a return on their investment. Exporters will remain accountable to taxpayers by having to meet a new ‘net benefit to Australia’ test. Applicants claiming their third and later EMDG Scheme grants will be required to pass this test. The test is fair, balanced and provides new exporters with ample time to answer the question of whether, after a number of grants, they have in fact begun to export. An enhanced EMDG Scheme, coupled with good accountability measures, will deliver good outcomes for Australia. I have no doubt that the amendments in this bill will deliver.

Before concluding, it is worth observing that the changes contained within the bill are fully funded. This is in stark contrast to the changes made to the EMDG Scheme by the previous government two years ago, changes which were not referred to by the member for Groom. The previous coalition government had the temerity to respond to concerns about the scheme by tinkering with some legislative changes and without adding one single cent to the budget to ensure EMDG recipients could actually benefit from those changes.

A press release dated 21 April 2008 from the shadow minister for trade makes for fascinating reading. In it, the shadow minister states:

The coalition government was committed to ensuring the EMDG scheme delivered on its maximum potential and was responsive to the changing needs of exporters, making alterations to the program as needed.

The previous government made alterations all right. What they will not tell you is that they did not drop an extra cent into the scheme to ensure those alterations were worth more than the paper they were written on. The member for Groom made nothing of the fact that there was a $50 million shortfall in the funding for the scheme. I quote again from the shadow minister’s press release—

Warren Truss (Wide Bay, National Party, Shadow Minister for Infrastructure and Transport and Local Government) Share this | Link to this | Hansard source

Your minister did 27.

John Murphy (Lowe, Australian Labor Party, Parliamentary Secretary to the Minister for Trade) Share this | Link to this | Hansard source

I say it is about 25. I quote:

... it was always the intention of the Coalition to seek extra funds from Cabinet should the scheme, which is demand-driven, become oversubscribed.

It is marvellous how revisionism takes place after an election. It is easy to be this disingenuous when you are no longer in government. Quite frankly, I am not going to allow this from the member for Groom, despite the fact he is a friend of mine. He is a political opponent and he is wrong. The previous government, in my view, was never a friend of the EMDG Scheme, nor was it ever a friend of Austrade. It would not have expanded the criteria for the scheme if it did not commit to the funding. It is a nonsense, after the election, to start engaging in this revisionism. The previous coalition always knew that its changes two years ago would leave exporters short-changed this year. They knew this. How did they know this? In a newspaper recently the shadow minister and the Leader of the Nationals said they were hammering the previous government to put more funds into the scheme.

The previous government always knew more funds were needed. Two of its senior ministers have admitted this, yet the Howard government never delivered. The calls for more funding to meet the shortfall fell on deaf ears. With respect, the shadow minister’s excuses are dishonest and disingenuous. Unlike the former government, we will fund the changes that we make to the scheme. The changes in this bill will be worth more than the paper they are written on. The EMDG Scheme will have a $50 million increase in funding in 2009-10 and, unlike the previous government’s amendments, we will actually back our amendments with money. Those on the other side would do well to take note of this salient fact.

I would love to stay and listen to the next speaker, who knows a lot about trade. Sadly, I have to rush to get a plane, because I have to be in Japan tomorrow. I wish you well. I will read your contribution in Hansard tomorrow in Yokohama, because I might want to reply. Cheers.

Warren Truss (Wide Bay, National Party, Shadow Minister for Infrastructure and Transport and Local Government) Share this | Link to this | Hansard source

I wish the Parliamentary Secretary to the Minister for Trade a safe trip to Japan. While he is there, he might like to explain why Australia has cut back its budget for the negotiations on the Australia-Japan free trade agreement. Bearing in mind that this is the most important export market for our country, this government, in its first round of budget cuts, has actually slashed the amount of money available to complete that agreement. I will say a little bit more about that later on.

I do not think that the member for Lowe had his heart in what he said. He is an honourable man, and it is quite clear he was worried more about getting his passport and tickets in order than about ensuring that the House had the benefit of an informed and intelligent contribution to the debate on the Export Market Development Grants Amendment Bill 2008. I felt some of his language had been written by his minister, because it sounded rather familiar to me—a lot of empty criticism and blind rhetoric. His criticism of the previous government’s record in trade is extraordinary and of course differs enormously from the facts. The reality is that under the previous government Australian exports reached record levels. Every year was better than the year before, and exports crossed $200 billion for the first time. We expanded substantially markets like China, Korea, India and Indonesia, markets that in some instances had never been considered to be important to Australia in years gone by. We also maintained our longstanding traditional associations with New Zealand and Europe and expanded the trading opportunities.

Since the parliamentary secretary is off to Japan, it is probably worth noting that at a ceremony in Cairns last year we marked the 50th anniversary of the economic cooperation agreement between Australia and Japan, one of the world’s truly remarkable trade agreements. On the Australian side it was negotiated by John McEwen, just a few years after the end of World War II. It must have been an extraordinarily brave thing to do in that era. But, within about 10 years of that agreement being signed, Japan had become our No. 1 export market and it is still in that position today. It has been a remarkably successful agreement but after 50 years it needs to be modernised, and so the previous government commenced discussions to bring it into the current mode of free trade agreements around the world and ensure that the trade between Australia and Japan extended to new dimensions. It is disappointing that that priority project has been treated so abysmally in the government’s budget.

Can I also add that it is particularly disappointing that the Prime Minister has obviously given such a low priority to our relationship with Japan, not even bothering to call the Japanese Prime Minister on the phone until goaded into doing so when he was subject to widespread international criticism. He has frequent trips to China, but our most important export market is completely ignored by this Prime Minister. He has got some mending to do. It would be a tragedy if the importance of this market were to slip as a result of the attitude of the incoming government towards an important customer like Japan.

The bill before us deals with the Export Market Development Grants Scheme and introduces a range of new measures that the government announced during the campaign to make the scheme more generous. The bill essentially broadens the eligibility criteria, increases the maximum grant size, cuts the minimum threshold of expenditure and reintroduces a performance measure for grant recipients. As the parliamentary secretary, the Minister for Trade and the member for Groom rightly said, the EMDG Scheme has played a key role in encouraging exports from Australia. It has been particularly important in providing the incentive and support for new and emerging exporters to take on the quite challenging and difficult task of selling Australian products in what are often corrupt and confused markets around the world. The oft quoted figure of $12 of exports for every $1 of expenditure suggests that this scheme has indeed made a worthwhile contribution.

However, the member for Lowe was wrong to say that the previous government had done nothing about the scheme in 12 years. The reality is that it was subject to at least three major reviews. The last one, which he referred to, just a couple of years ago led to some significant expansion in the eligibility criteria for the scheme. It was for that reason that  the quantity of grants applications was expanded in 2006-07 and that, therefore, the number of grants applied for was greater than the amount of money that had been allocated. For years under the previous government the full amount of every claim had been paid—100 per cent. Indeed, there was always money left over. The amount of money provided in the budget was in excess of what was required for the applicants. So, in 2006-07, with an expanded scheme but with a programmed reduction in funding, for the first time the applications were greater than the amount of money provided.

Prior to the election the coalition government was aware that this was likely. We had made a bigger scheme and there was less money provided in the budget. It was always intended that we would honour the full commitments to the funding, as we had done in the past—the record was there. The coalition government had always paid the full amount of the claims and we would have done so again. It is true that Finance and Treasury were reluctant to provide that money in advance, and their reason was that the scheme had never used the allocated funds in the past. So they were not convinced that, even with the more generous scheme, there would have been enough applications to use up all of the available money. Treasury and Finance were wrong. The new scheme was more generous, there were more applicants and for that reason the funds available were oversubscribed. That money would have been provided, and 100 per cent of grants would have been paid to those who applied.

It is in this context, then, that the new government has introduced this legislation, which increases the maximum grants, cuts the minimum threshold, allows grants to be paid more often to companies, introduces a new range of eligible internal and external services and a new non-tourism services category, provides access to the scheme for non-profit export development bodies and increases the size of the companies which can apply for the scheme. In other words, a lot more companies are going to be eligible. On the surface of it, that sounds like good news, and there are many people out there who will be pleased that they can gain access to the scheme for the first time. But what the minister has seemingly not yet even acknowledged is the fact that there will actually be more losers than winners as a result of this legislation. There will be more people missing out on getting a fair share of the grants than actually winning grants. That is because this is a capped scheme. There is only a certain amount of money available. The government has said there will be $200 million available for this new scheme. That is only $23 million more than will be required for the 2006-07 scheme. So there is no way in the world that the available money and the extra money provided by this government will meet all of these new eligibility criteria. What will actually happen is that the claims, whether they be $300 million or $400 million under the new scheme, will all be paid on a pro rata basis, so all the applicants will only get a part of their entitlement. That is the way the legislation is drafted. That is the way the scheme has always worked—it is just that in the past the previous government ensured that there was always sufficient money there to meet all the claims.

So this government is pulling a bit of a confidence trick. It is telling companies that it has a more generous scheme; the only problem is that it does not intend to pay all the bills. It is only going to pay a part of the bills. It should be up-front and honest with exporters who go out there and spend money trying to sell Australian products around the world. It should tell them up-front and honestly that not all of their claims, even their legitimate claims, their approved claims, will actually be paid. All they are going to get is a pro rata share. In fact, the small companies are going to lose some of their claims because bigger companies are now going to be eligible. The ones who can perhaps afford it more are going to be eligible and they will get the money that might otherwise have been directed to some of the smaller companies. The key challenge for Labor with its new program is not just to introduce a more generous scheme but to make sure it is funded. The reality is that it is not funded; it will be well short of the requirements of those who are now entitled to apply.

While I am dealing with this issue of funding, I note that it is also important for the government to state urgently whether it intends to provide the $27 million which the minister has indicated is above the current budgeted funding for the 2006-07 EMDG Scheme. These people expected that their claims would be paid; they have always been paid in the past. It is up to this government to meet the obligation under the old scheme and to make sure those funds are paid. This bill is hypocritical in the extreme if it is going to leave past applicants for the EMDG Scheme with their bills unpaid. If the government wants to adopt some high moral ground on the EMDG program, it must urgently address the shortfall in the previous program.

I would like to comment briefly on a couple of the other new measures. There is the proposal now to reintroduce a performance measure where applicants claiming their third and subsequent grants must show they meet performance requirements. There were provisions like this in the scheme in the past, but there were always concerns that that kind of provision might well be illegal in terms of the WTO, that it might be challenged in the World Trade Organisation. I have no doubt that this government would have received the advice from its advisers that including this clause in the bill makes the whole scheme subject to WTO challenge. I am not especially concerned about that because there are not too many countries around the world that can legitimately cast the first stone, but what they have done is expose the whole scheme to the risk of challenge.

Finally, there is a new and quite complicated initiative which will allow expenses associated with granting, registering or extending rights under foreign laws in relation to intellectual property, as well as the expenses of obtaining insurance against costs likely to be incurred to protect the rights, to be eligible for funding under the scheme. Unless those measures are carefully crafted, they may well not lead to any new exports and in fact may well lead to the payment of legal expenses and other such matters, administration issues, which I am not sure ought to be a part of this scheme. Nonetheless, I acknowledge that the scheme does provide a wider range of benefits to a large number of new people. The sad thing is that there are many existing users of the scheme who will be paid less.

The other point that I want to take up, one that was raised by the member for Groom, is that the $50 million that the government is providing for this scheme is only for one year. It is only for one year, so there will be no confidence available to exporters that this scheme will be ongoing. Do you go and undertake some expenditure overseas, knowing full well that market programs involve many trips of continuing activity year after year, if you have only got an assurance that you are going to be funded for one year? I think that is going to be a major deterrent to companies that might be considering an involvement in the export market.

The other obvious point that needs to be made is this: why is the government undertaking the review of the EMDG Scheme after it has made the changes in the legislation? Surely you would wait for the Mortimer report, which, we are told, is only two or three months away, before making these sorts of legislative changes. There has been criticism that the scheme has been changed too often in the past. It was changed last year, it is being changed this year and, after the Mortimer review, presumably it will be changed again next year. This does indeed provide an unnecessary level of uncertainty for the industry. Whilst I know this government is inquiry mad and every single scheme has to be inquired into or reviewed, it does seem to be a particularly stupid piece of timing to make the changes before the review is even brought into the parliament.

Trade is very important to Australia, and our agreements underpinning our trade relationships are vital to the future confidence of our exporters. I have been quite alarmed by some of the comments made by the Minister for Trade and by his approach to trade negotiations. We have had all this confusion about whether we should have multilateral agreements or bilateral agreements. I say we should have both. Multilateral agreements are important in underpinning and delivering a freer and fairer trading regime around the world, but our specific agreements with our trading partners drive trade between those partners and go beyond what is in a multilateral agreement. You would not have bilateral agreements at all if they were not going beyond what countries have already committed to under the WTO or a wider multilateral agreement. The new Minister for Trade has made it clear that he despises bilateral discussions and that all of the effort should be put into multilateral discussions. The government demonstrated their commitment to that view, as I mentioned earlier, by cutting the budgets for not only the Australia-Japan free trade agreement but also the Australia-China free trade agreement.

The minister also said that he would revitalise the Cairns Group and that he would make sure that the Cairns Group played a leading role in the WTO discussions, in particular the Doha Round. The committee may be interested to know that since the Labor government was elected the Cairns Group has not met once. In six months, they have not had a single meeting. This is the way in which the new minister is going to revitalise the Cairns Group! It is quite clear that the discussions in relation to the Doha Round have increasingly excluded the views of the Cairns Group membership. I am particularly concerned that this minister is so desperate to do a deal in the Doha Round on his watch that he is joining the race to a very poor quality outcome from the Doha Round. A poor deal is a bad deal and it should not be done. If there are not real gains for Australian exporters in the Doha Round then we should not be a party to it. We should not do a deal just to get the minister’s picture on the wall or the minister’s signature on a deal.

There are some very tough issues that have to be resolved in Doha. I was particularly alarmed to see reports that the Prime Minister, when in Europe, was welcoming a commitment by the Europeans to cut their farm tariffs by 65 per cent. The Prime Minister apparently thought that was a good offer. The reality is that a cut of 65 per cent will deliver nothing to Australian exporters to Europe. It will not get us a single extra kilo of lamb or sugar or beef into the European market. It would be worthless. The cuts have to be 75 to 80 per cent on those particular lines to have any effect. Perhaps the Prime Minister did not know that there is a difference between the bound rate, which is a theoretical maximum tariff rate, and the applied rate, which is what is actually paid. If the Prime Minister is prepared to sign off on something with such a low ambition as a 65 per cent reduction in the tariffs in Europe then we will end up with a very poor Doha Round deal altogether.

We must also resist suggestions that the US farm subsidies would be quarantined in any way. The last US farm legislation to pass through Congress is a disgrace. It is perhaps the worst yet. It increases subsidies in an environment where their trade negotiators are talking about reducing them. In addition to that, it does it at a time when world prices are high and the subsidies simply unnecessary. If our trade minister is prepared to do a deal that countenances that kind of protectionism then Doha will be wasted. The opportunities will be wasted. I am also disappointed that he seems prepared to go back on some of the agreements that were made in the Hong Kong round and to renegotiate them to a lower level that would further disadvantage Australia.

If the trade minister is not prepared to do things in relation to the sensitive product area which will mean real cuts and real access to Australian products, then the deal will be useless. An earlier Labor government gave us the Uruguay Round. The Uruguay Round sold out Australian farmers. It delivered nothing for the Australian farm sector, but it provided some benefits for the manufacturing industry. The farmers of Australia were promised that their concerns would be addressed in the next round—the Doha Round. That is the round we are having now. We have another Labor minister and I am concerned that he is going to sell out the Australian farm sector in the same way his predecessor did at Uruguay. The opportunities for the Doha Round are enormous, but I am not satisfied that this government has the necessary level of commitment to bring about a deal that is good for Australia. If it is not good for Australia, we should not be in it. (Time expired)

Janelle Saffin (Page, Australian Labor Party) Share this | Link to this | Hansard source

The Leader of the National Party talks about a sell-out. The only sell-out that we had in terms of trade was under the National Party. Trade has always been within the bailiwick of the National Party. I was pleased to hear the member say that trade was important, because it did not seem to be so important when they were in government. It was always in their bailiwick. It is amazing; he used the phrase that it was somehow amazing or remarkable and it was, because for the last five or six years there was a trade deficit. Under the coalition government, and under the National Party directly, there were 69 consecutive months of goods and services trade deficits—and a lot more, which I will turn to later in my contribution.

In speaking to support the Export Market Development Grants Amendment Bill, I want to say that it does a number of things. Structurally, it amends the Australian Trade Commission Act and the Export Market Development Grants Act and substantively it does two things: it enhances the Export Market Development Grants Scheme, which I will address in some detail, and it goes some way towards addressing the Rudd government’s election commitment—a major one, I add—to improve Australia’s trade performance, which was abysmal under the previous government.

I will first turn to the proposed changes to the grants scheme, then cover the commitment to improve the performance and conclude with more general comments. The maximum grant will increase from $150,000 to $200,000, and $250,000 in some cases. Two claimable expense categories will be added to the range of eligible expenses—an important change. Also, importantly, it expands the range of bodies able to access the scheme and significantly some of the tourism bodies and some of the regional bodies that were not able to access it before. It lifts the maximum turnover limit to $50 million. It reduces the minimum threshold of expenditure to $10,000 from $15,000. That is more realistic in terms of the costs that a business has to outlay. It extends the limit on the number of annual grants from seven to eight—again, more realistic, and an extra one really helps the businesses a lot. It removes the distinction between internal and external services to provide that all non-tourism services are eligible products. The tourism industry has widely endorsed this. It introduces a good governance requirement by way of a performance measure for applicants claiming their third and subsequent grants.

I note that the Leader of the National Party talked about the performance measure and he mentioned that it had not been done because people were concerned about the WTO. The fact is that there can always be advice about what the WTO might or might not raise, what might be challenged, but the fact is that it makes sense. When we are giving our public money to bodies, particularly the third or subsequent grant, it makes sense that we have a performance measure. We do that in all areas of public life, but perhaps the National Party want it to be along the lines of Regional Partnerships, where money was given out helter-skelter, willy-nilly, without any performance measures.

Alby Schultz (Hume, Liberal Party) Share this | Link to this | Hansard source

Order! The debate is interrupted in accordance with standing order 192. The debate is adjourned and resumption of the debate will be an order of the day for the next sitting. The member for Page will have leave to continue speaking when the debate is resumed.