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

Australia’s trade performance has taken a battering, particularly over the last six years—it was the last six years of the coalition government. The Minister for Trade has said that the coalition government dropped the ball on trade, and they clearly did. They dropped the ball on a few other things too, not just trade, but all go to the heart of our economic policy in trade. They ignored the 20 warnings from the Reserve Bank on inflation. They seemed to ignore the 12 consecutive interest rate rises, and they ignored the fact that we needed an integrated trade policy with our economic policy. The impact of this lack of attention to fundamental trade and economic questions in a time of a prolific resources boom—a boom that made the coalition government fiscally lazy—has left Australia with an economic trade deficit and a deficit in trade policy.

I turn to the economic deficit first. The coalition government left us with a trade deficit for five consecutive years—nearly six years. The December 2007 trade deficit figure of $6.9 billion was the worst quarterly trade deficit on record. There were 69 consecutive months of goods and services trade deficit, there is a current account deficit at record levels of around six per cent GDP, there was soaring foreign debt in 2006-07 and net exports have made a contribution to Australia’s economic growth in only two of the past 11 years. When Labor were previously in government we made a positive contribution in exports, with growth in 10 of 13 years. The comparison is: coalition government, two out of 11; previous Labor government, 10 out of 13. They certainly did drop the ball. I think the figures speak for themselves.

But there is more. Manufacturing export growth collapsed, growing at three per cent in 2007 compared to 13 per cent since 1983. That is 13 per cent growth in 1983 and three per cent in 2007. Total export revenues grew at an annual average rate of only 5.8 per cent compared with 10.7 per cent in the 18 years following the float of the dollar in 1983, another Labor initiative. Goods exports grew at an average annual rate of 6.4 per cent compared with an average growth of 10.3 per cent since 1983. Services exports grew at about a third of their long-term average. I am surprised that no-one from the opposite side, particularly the National Party, raised these appalling and concerning trade performance figures either publicly or within their cabinet or caucus.

It is only now that they are in opposition that they have started to bleat about trade. I have listened with interest to the Leader of the National Party talking on the radio about trade. He said it was time the government—we have been in government for six months—put more resources into the Export Market Development Grants Scheme. They actually starved that scheme. When they were in government they changed the criteria yet they did not provide funds for the criteria to be fulfilled, so a lot of exporters were found wanting. It is a bit rich that they did it.

Minister Crean, the Minister for Trade, has said that they dudded us, and they did. It shows that the National Party are unable to have an impact either in government or out of government. Even the previous Leader of the Nationals, John Anderson, has publicly said that they were never listened to in Canberra. That is clearly the situation.

I will turn now to the approach that Labor is taking to trade. Labor has taken a fresh approach that is premised on the following: making Doha a key plank of advancing the trade agenda. Advancing the agenda and getting the outcomes is not easy. It is a difficult process, but it has to be at the heart of any trade initiative and any trade policy—along with the integration of the economic policy—to make sure that we get somewhere. The Rudd Labor approach is based on the twin pillars framework. The twin pillars framework approach is trade liberalisation at the border complemented by economic and trade reform behind the border. This is to advance sustainable economic growth, the driving force of trade policy.

On bilateral and regional agreements, we will continue to work to improve and enhance those that are consistent with our multinational and multilateral objectives. Whilst bilateral and regional agreements are important—and they are very important; I cannot but underscore that—they must be pursued consistent with multilateral or multinational outcomes. The ball was dropped in this area as well under the previous government. I pause here to say that trade policy has always been under the auspices, within the bailiwick, of the National Party. It is one area where they have been found very wanting.

Our major initiative in trade is a comprehensive review of trade policies and programs, called the Mortimer review, which will assess how we can improve our productivity and competitiveness to ensure we are ready—and, indeed, ahead of the game—to take up emerging trade opportunities. I recently had the opportunity, along with the parliamentary trade subcommittee, to meet with John Edwards and David Mortimer, who are heading up that review. I and everybody else felt quite confident about having them at the helm of that review and helping us with it.

I now want to turn to Page, the seat that I represent, where trade is clearly an important issue. Often we do not think about the Export Market Development Grants Scheme in regional and rural seats, but it is immensely important. I will give you some indicative figures that show why it is important and why this scheme will help in Page. There are caveats on these figures. I got some of these figures through research and through the Parliamentary Library, but they have the usual caveats on them. The main exporting industries—manufacturing, agriculture, forestry, fisheries, wholesale trade and mining—account for 19.7 per cent of employment in Page. That is nearly 20 per cent, which is significant for employment in the area. Other industries export—and, of these dominant export industries, not all employees would work on exports—but this gives you the order of magnitude. In terms of the total employment, two of the main exporting categories are in the top 10 employing industries in Page.

The research states that an extrapolation would be that the total employment in Page in 2006 was around 50,279. With total employment in Australia at 10.2 million, that is about 0.5 per cent of the total. Looking at exports from Australia over the last 12 months, that amounts to about $1.09 billion in the Page electorate, which is significant. The Export Market Development Grants Scheme allows a lot more small- to medium-enterprise businesses, which are the backbone across Page, to take advantage of it. There are many businesses I know that want to get into the export market. In fact, quite a few are already in the export market, as those figures indicate.

A couple of weeks ago I opened an innovation conference in Ballina, in the electorate of Page, and three of the speakers were local businesspeople who were all exporting. Members may have heard of Byron Bay Cookie Company and Byron Bay muesli. The company is run by a local woman who is based in the Richmond electorate, which is close to my electorate. She was at the conference in Ballina and she exports to the United States. It took them a while to get used to the macadamias. They had to do some work to get people used to the macadamias in the muesli and the cookies and things like that, but that is a really big exporter in our region—a success story. There are many more like that.

The Export Market Development Grants Amendment Bill 2008 has about eight key purposes. I will recap them here. They are to increase the maximum grant by $50,000, up from $150,000 to $200,000—

A division having been called in the House of Representatives—

Mark Dreyfus (Isaacs, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the Export Market Development Grants Amendment Bill 2008. This bill forms an important part of the Rudd government’s commitment to a whole-of-government approach to supporting Australian companies in the global economy. This commitment stems from deeper values held by the Australian Labor Party and from its view of Australia and what our nation can be. The Labor Party believes in a prosperous, fair Australia supported by an open, outward-looking economy—an economy where Australian companies that want to invest overseas and export their goods and services are not held back but are instead encouraged and supported.

It must never be forgotten that it was the Hawke and Keating governments that transformed the Australian economy. It was the Hawke and Keating governments which laid the foundation for the outward-looking, export oriented economy which this nation has developed. The Labor Party has a proud record on economic reform—the floating of the dollar, trade liberalisation, financial sector deregulation, superannuation reform and national competition policy. It is this record on which we continue to build today. This government understands that Australia’s current and future prosperity depend in part on our ability to compete successfully in global markets. That is why we are committed to a world-class education system, to addressing infrastructure bottlenecks, to fostering innovation and to reforming federal-state relations.

The new National Asian Languages and Studies in Australian Schools program, with funding of $62.4 million over the next three years, forms part of this approach. It is a whole-of-government approach designed to lock in our future prosperity—a prosperity that will depend on strong and sustained export growth that will continue past the current resources boom. This export growth will be driven by smart and innovative Australian companies delivering superior products to overseas markets.

The old-style interventionist policy that was pursued by both sides of politics under the Australian settlement no longer has a place in the modern economy. The industry policies of the 1950s and 1960s were inward looking. They were designed to shelter Australian companies and industries, including poorly managed ones, from the forces of international competition. The result was that Australian economic growth and our living standards fell behind other industrialised nations. The focus of federal government policy must be on enabling and encouraging Australian businesses rather than on sheltering and protecting particular industries. The evolution of the international trading system into a globalised economy provides enormous opportunities for Australian companies and the Australian economy as a whole. Australia requires an active export facilitation strategy that addresses the needs of Australian firms, and the Export Market Development Grants Scheme is an example of this type of policy at work.

The purpose of the act is to encourage small- and medium-sized enterprises to develop export markets through providing grants for export promotion. Under the act, companies can be reimbursed up to 50 per cent of a range of export promotion expenses up to a given cap. Some of the activities for which companies can claim include overseas representatives, marketing consultants, marketing visits, trade fairs, seminars, promotional literature and advertising. The Australian Chamber of Commerce and Industry—and I quote from one of their publications—has recognised these kinds of activities as:

... an integral part of the export promotion strategy of many Australian exporters, especially small to medium sized exporters.

For a small- or medium-sized business, the move into exporting is one of the most difficult decisions that they will take. Expansion into any new market brings with it new challenges. When a new market is located overseas, these challenges are compounded through a lack of capital, regulatory differences, cultural barriers and the need to develop new contacts amongst suppliers and purchasers.

The Export Market Development Grants Scheme has often been critical in determining whether a small- or medium-sized enterprise engages in exporting and the extent of that engagement. The 2005 Austrade review of the scheme found that it ‘plays a key policy role in funding additional export promotion, particularly for smaller sized firms’. It also found that the scheme ‘has considerable influence in assisting small firms achieve sustainability’ in exports and that it has ‘a positive impact on export culture’.

The scheme was estimated in 2000 to result in returns of $12 of exports for every $1 of outlay. Despite these benefits, the scheme was neglected by the Liberal and National parties when they were in government. This government is determined to revitalise the scheme. We announced this during the campaign last year and we are now acting on that commitment. The government, under existing legislation, is required to commence a review of the Export Market Development Grants Scheme before 2010. I commend the minister for bringing forward this review and including it in the review of export policies and programs which is to be chaired by John Mortimer.

Through this bill, which overhauls the Export Market Development Grants Scheme, and through the additional $50 million in funding in 2009-10 for the scheme, this government is taking immediate action to help reinvigorate an export culture amongst Australian companies. This bill amends the Export Markets Development Grants Act to expand eligibility for the scheme. It will bring it into line with the needs of Australian businesses. It will bring it into line with what Australian businesses have been calling for and what the previous Liberal and National Party government ignored.

The bill will increase the maximum grant by $50,000 to $200,000, lift the maximum turnover limit from $30 million to $50 million and extend the limit on the number of grants from seven to eight annual grants. These changes, which were advocated by the Australian Industry Group in its submission to the 2005 Austrade review, will ensure that companies can continue to access the scheme. The bill will also allow grant money to cover expenses related to patent protection in international markets. The ability to protect intellectual property rights is an increasingly crucial part of product and market development. This change will encourage innovative Australian companies that are seeking to expand markets overseas.

At present, the Export Market Development Grants Scheme allows only companies and national peak bodies to apply for grants. These amendments enable state and regional trade promotion bodies, including tourism promotion bodies, to access the Export Market Development Grants Scheme. The amendments cut the minimum threshold of expenditure by $5,000 to a $10,000 minimum, again ensuring that small businesses can access the Export Market Development Grants Scheme. It will reinstate a performance test to the act for applicants claiming in their third and later grant years, consistent with Australia’s obligations under World Trade Organisation rules.

Finally, these amendments replace the list of internal and external services with a new non-tourism services category. Critically, this change will help to ensure that companies in the services sector can properly access the Export Market Development Grants Scheme. On top of these changes, the government has delivered on its commitment to increase funding for the scheme by $50 million.

The Rudd government’s commitment to supporting exporters provides a contrast to the failure of the former government. The story of the last decade is indeed a story of a decline in Australia’s trade performance and a neglect of policy on the part of the Howard government. Australia has had ideal conditions for trade success—the most favourable terms of trade in a generation, a strong global economy and a resources boom. A 2005 research paper from the Reserve Bank found that Australia’s terms of trade were likely to have increased by around 50 per cent in the period 1987 to 2005. The Reserve Bank’s index of commodity prices has increased by 43 per cent over the last six years. The booming economies of India and China have become vital trade partners for Australia. But, despite all these favourable factors, export growth rates have fallen. Australia has seen its proportion of global trade in goods and services decline such that between 2001 and 2007 growth in total export revenues slowed to almost half the rate of the period from 1983 to 2001. Goods export growth has slowed. Services exports are now growing at only a third of their long-term average. Manufacturing export growth collapsed to an annual rate of 1.2 per cent between 2001 and 2007, compared to an annual rate of 12.3 per cent between 1983 and 2001.

The former government announced in 2001 that they would aim to double the number of exporting businesses—and they failed dramatically to achieve the target they set for themselves. The former government left Australia with a trade deficit of $6.9 billion in the December 2007 quarter, the worst quarterly trade deficit on record, and a current account deficit of around six per cent of GDP. The resources boom has been masking the failure of Australia’s trade policy over the last decade, and the previous government must take responsibility for their failure on trade policy.

The former government’s neglect of the Export Market Development Grants Scheme was emblematic of their failure on a broader level in the area of trade policy. In 2003, the Australian Chamber of Commerce and Industry declared:

The Federal Government’s decision to run-down the Export Market Development Grants Scheme will only serve to undermine the effectiveness of Australian exporters, especially smaller exporters, in vital overseas markets.

You would think that that warning in 2003 from the Australian Chamber of Commerce and Industry might have been sufficient to prompt some real action in this area and a revision of what the Australian Chamber of Commerce and Industry described as the running down of the Export Market Development Grants Scheme. But nothing of the kind occurred; the running down continued.

We might also recall that on coming to power in 1996 the former Howard government abolished the International Trade Enhancement Scheme and the Innovative Agricultural Marketing Program, programs that had been established by then and had contributed to the improvement in Australia’s trade position that occurred during the Hawke and Keating governments. These two programs, abolished by the Howard government on coming to power in 1996, were part of the attention that had been given to the trade area by the Hawke and Keating governments.

The Howard government seemingly focused on bilateral trade negotiations exclusively to the detriment of multilateral opportunities through the Doha Round and APEC. Like so many areas of the previous government’s record, the approach was incoherent. It was poorly thought out and lacked any sort of strategic vision. By contrast, the Rudd Labor government is committed to an open economy in which Australian companies can take full advantage of the opportunities provided by global demand. Our support for the Export Market Development Grants Scheme accompanies our commitment to further multilateral trade negotiations. The review of export programs and policies currently being undertaken will provide further opportunity to refine and improve trade policy so that the Commonwealth government is doing all that it can to support Australian business in the global marketplace. I commend the bill to the House.

Jim Turnour (Leichhardt, Australian Labor Party) Share this | Link to this | Hansard source

The amendments to the Export Market Development Grants legislation represent a significant turning point for Australia’s trade capacity. In particular, the Australian tourism sector is set to benefit from the changes being introduced by the Rudd government. These changes will have far-reaching impacts in the national tourism industry, and they come at a time when this industry requires renewed focus and investment. The Export Market Development Grants Amendment Bill 2008 demonstrates that the government is serious about strengthening Australia’s trade capacity as a nation and that it is committed to delivering upon the promises made in the lead-up to the election. We are delivering on all of our promises, and the EMDG amendment bill is just another example of that.

The Rudd government went to the election with a commitment to reform and revitalise export policies and programs, and this is exactly what we are now doing with the Export Market Development Grants Scheme. Already, federal Labor has committed additional funding for the scheme. A further $50 million will go to our aspiring and current exporters, bringing the total funding available for grants on eligible business expenditure in 2008-09 to more than $200 million.

Programs like the EMDG Scheme need continual attention and investment. The previous government failed to act appropriately with regard to the scheme; they dropped it as a priority and did not provide adequate funding. Australia’s exporters have every right to condemn the previous government for this. I know that many businesses in the tropical north, tourism operators in particular, are hurting as a result of the Howard government changing the policy settings for the EMDG Scheme without backing it up with money. Their budgets now, and for the next 12 months or so, have to be reworked, their marketing and other expenditure slashed and investment opportunities foregone. This is the Howard legacy. A number of these businesses have come to see me—hoteliers and reef operators who had put their faith in the EMDG Scheme, made significant investments and found that the Howard government had failed to appropriately fund this scheme.

We are reforming and revitalising the scheme. The Rudd government will work to restore the EMDG Scheme. There is renewed confidence over the future of the tourism industry as a result of the legislative changes being introduced into the parliament. My electorate of Leichhardt, in tropical North Queensland, is home to a number of tourism centres—from Cairns, Kuranda and Port Douglas, to the Daintree and Cooktown, to the burgeoning Cape York and Torres Strait regions, which are strengthening tourism hubs in their own right. We have some fantastic tourism experiences and destinations in Leichhardt. It goes without saying that tourism in Cairns and the tropical north region is critical to the strength of the Northern Australian economy. However, it is also a prime factor in the success of the national industry. Many foreigners associate Australia with many of the natural icons in the tropical north. With natural assets such as the Great Barrier Reef and World Heritage listed rainforest, the region has the ability to attract international visitors into Australia, and ultimately these visitors in many cases stay on and visit other parts of the country.

Recently, though, as we all know, the Australian tourism industry has been facing some tough times. I know firsthand the pressures being faced locally in Cairns and the tropical north and the flow-on impacts being felt in industries such as the hospitality industry. The tropical north has seen a decline in the past 12 months in one of the region’s most important international markets, Japan, with little growth in other key markets such as Europe. There has also been a decline in international airlines flying into Cairns in recent years, although there has been an ongoing effort and strategy development by local organisations to reverse this. I know that they also welcome the Rudd government’s aviation white paper. They will be working closely with me and the government to make sure that they have strong input into that white paper and to ensure that we have every opportunity in Cairns to attract international carriers back into our airport and strengthen and boost our local tourism industry. Additionally, the industry is trying to cope with the very high Australian dollar, which is the highest it has been for a number of years. These factors make it an uphill battle for exporting businesses and, particularly, for the tourism sector. However, the EMDG bill signals a tremendous boost to this region, and I am looking forward to the benefits of its amendments unfolding within the local tourism industry. The scheme is widely utilised in the region, and the changes that this bill will bring to the industry have been welcomed by local tourism operators. These changes come at a most apt point in time, given what the region and Australia have been experiencing of late.

Two measures proposed in the bill are of particular interest and benefit to the tropical north. One of the most significant and positive measures is the ability for regional tourism authorities to access the scheme. Tourism Tropical North Queensland, better known as TTNQ, is the region’s peak tourism industry organisation. It has welcomed the government’s decision to undertake a review of Australia’s export development policies and is particularly keen to take advantage of its eligibility to access the EMDG Scheme upon the passing of this bill. An enormous amount of the tourism promotion work in the tropical north is undertaken by TTNQ, and the government has recognised the critical role that tourism authorities like TTNQ play in regions throughout the country. TTNQ has established itself as a productive and effective organisation, and its proactive approach has placed it in an excellent position to capitalise on this legislative change. I work with TTNQ personally. The Minister for Trade, Mr Crean, visited the region, and we worked directly with TTNQ in the development of the amendments to the legislation. The TTNQ will benefit directly from these changes. TTNQ’s key objective is to build destination awareness in Australia through a targeted program of marketing activities to achieve maximum visitation, length of stay, expenditure and regional dispersal within tropical North Queensland. The ability of TTNQ and its corporate members to fulfil this objective will be greatly enhanced by the EMDG Scheme changes.

The second measure that will have a positive impact in the region is the reduction in the minimum threshold of expenditure on eligible export promotion activities by $5,000 to a $10,000 minimum. This too has generated a positive response from the region’s operators since these changes to the bill were publicised. The EMDG Scheme has always sought to encourage small and medium-sized Australian businesses to develop export markets. However, as the act currently provides for a $15,000 minimum expense threshold, this has often drawn criticism or hesitation from some small business operators. This limit excludes a substantial number of small operators for whom, although they are successful—they are financially stable and offer a quality tourism product—investing in the EMDG Scheme poses too much of a risk and/or commitment to their standard operations. However, changes to the legislation will ensure that these small businesses are not turned away in the future.

These two measures are both conducive to boosting the tropical north’s tourism capacity. Already research and planning have started in the local industry, with various operators ready to seize the opportunity this legislation will bring. TTNQ has instigated discussions as to how best to maximise the potential to access additional support for the region. A number of joint ventures have been tabled which would not have been considered had the government not revitalised the EMDG Scheme.

TTNQ is seeking to pull together export ventures that will allow very small operators to work with major operators to sell unique Australian experiences. For example, Indigenous tourism offers a host of opportunities for the tropical north. There is an extensive and rich cultural heritage in the region. Tropical North Queensland is home to a number of Indigenous communities, which have a tremendous amount of history, culture, art and traditions to share with visitors. This, coupled with the spectacular landscape that covers the peninsula area, represents significant tourism potential for a number of markets overseas. Whether it be fishing charters, nature tours or Aboriginal and Torres Strait Islands culture and historic experiences, a number of Indigenous operators, many of whom are only small enterprises, have expressed an interest in TTNQ’s strategy to combine forces, venture into international markets and market these unique experiences.

Some of these Indigenous operators may not have the business expertise or confidence and/or the financial backing to participate in the EMDG Scheme individually. However, with a reputable organisation like TTNQ providing direction and support, combined with the scheme’s financial threshold being lowered, there is a greater incentive for them to now explore international marketing options. As mentioned previously, this not only will benefit Far North Queensland but has the capacity to boost other regions as travellers continue on throughout the country. The Indigenous tourism market is somewhat untapped, and I believe there is real potential to develop this further. The EMDG Scheme has provided an ideal platform for this to be taken to the next level.

There are a number of indirect benefits that may result from increased tourism activity in these Indigenous communities, which should also be realised. Increased employment opportunities for local Indigenous community members are one such key benefit. Indigenous operators can contribute to cultural revitalisation within their own communities. Many will seek to employ local Indigenous people. These locals sharing their knowledge will not only inform tourists about Indigenous culture in a very authentic way but also help to preserve their own culture through awareness and education of many traditions within their own families, tribes and communities. There is a threat that some of the Indigenous languages, for example, may be lost, as younger Indigenous generations may not be engaging in their own culture like their elders did before them. These local employment options represent one way they can reconnect.

Aurukun Wetlands Charters and the Mapoon turtle rescue project are just two examples of successfully run Indigenous ventures. There is also tremendous potential in the Torres Strait for the development of further tourism enterprises—in particular, the arts industry in the Cape—and, as a result of these amendments, there will be the ability to market these experiences overseas.

Another example of a collaborative project that the EMDG Scheme changes have kick-started is the Great Tropical Drive. Already an established tourism product, this has significant potential to be marketed further, thanks to the expanded EMDG Scheme criteria. The Great Tropical Drive is a self-drive touring route that incorporates over 2,000 kilometres of road, taking those who participate to many sites along the way. A range of driving itineraries have been developed for different audiences, such as wildlife, food and wine, and Indigenous drives. The Great Tropical Drive is marketed effectively in its current state. However, the EMDG Scheme provides a real opportunity for this product to reach an international market. It will give many smaller operators—and there are many scattered throughout the entire region along the Great Tropical Drive route—the opportunity to participate in a collaborative marketing effort that will feature in the international arena, something they would not have thought possible on a sole basis. Similarly to the Indigenous tourism concept, the benefits of this are multifaceted. Individual tourism operators benefit from increased marketing exposure, as they are part of a much larger, widespread product and team. They are able to overcome financial restraints due to the joint effort and the lower expenditure limits. Such collaboration will enhance the strength and quality of the Great Tropical Drive product. The more operators who participate, the stronger the product, which then has an improved chance of receiving international attention and providing a return on their marketing investment.

If you drive from Cairns to the Daintree, you are doing one of the world’s great drives. As you come out of Port Douglas and go up through Mareeba, across the tablelands and back down through the Innisfail region, you are in magnificent country. It is spectacular country. I have travelled extensively throughout the world and I reckon I live in one of the most beautiful parts of the world. The Great Tropical Drive is a great experience that the EMDG Scheme amendments will enable us to market much more effectively overseas. They will allow small operators to come together and work with local tourism organisations such as Tourism Tropical North Queensland. Those individual businesses will be effectively marketed together overseas.

Michael Danby (Melbourne Ports, Australian Labor Party) Share this | Link to this | Hansard source

I’m from the south but I agree with you.

Jim Turnour (Leichhardt, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, and I appreciate that support. Another angle that Tourism Tropical North Queensland is pursuing as a result of the EMDG Scheme enhancement announcement concerns climate change. It is seeking to bring together climate-change-sensitive operators to work to show the world that holidays in Australia not only can be carbon neutral but also can reduce carbon footprints. In an era when ‘going green’ is fast becoming an important priority, tourism operators in the region are looking to operate in a more environmentally friendly way and to become not players but leaders in this field. The tropical north contains many coastal communities which are more susceptible to climate change risks. We are lucky enough to have World Heritage listed rainforests and the iconic Great Barrier Reef. Tourism in the region is built upon our amazing natural assets, so it is in our best interests to do everything we can to ensure they are preserved so that future generations are able to witness and experience what we are lucky enough to have surrounding us every day.

The world is taking action on climate change, and Australians are passionate about moving with this tide. Unlike the previous government, federal Labor has shown a clear commitment to tackling the threats that climate change poses. The Rudd government’s first budget clearly demonstrated this, as $2.3 billion, over the next four years, will be invested in measures that will help us all combat and adapt to this very real issue and risk. Whether it be at a local level in our households through installing solar panels, at a national level with the emissions trading scheme or in the global arena with the Kyoto protocol, the Rudd government is committed to tackling climate change. Out of this funding comes—and this is very pertinent to my electorate, as well as to my neighbours to the south—the $200 million reef rescue package. The Great Barrier Reef Rescue Plan will help to protect and preserve the reef for future generations, largely through improvements to water quality.

Tourism operators in the region have the ability to use this green concept to their competitive advantage. People across the world are becoming very conscious of their environmental impacts, their energy use at home, the cars they drive, the groceries they buy and—I am sure we are moving towards this, and we may already be there—the holidays they take. By grouping these like-minded operators together, which I understand they are already doing through the efforts of TTNQ, and collaborating on a green marketing program internationally, there is real potential to capitalise on this trend—a trend that is here to stay. There are many people throughout the world who would be attracted to a low-carbon impact holiday, offered by clean, green operators in one of the most environmentally precious regions on earth. Once again, the EMDG changes have offered a platform for Tourism Tropical North Queensland and some of our greener local tourism operators to explore this further.

Another important point that is pertinent to this EMDG bill concerns our long-term future. In delivering the EMDG amendments, the government has recognised that it needs to secure our future. There is no mistaking the resources boom that has occurred over the last decade or so in Australia. There is no denying that the tropical north has benefited significantly from this activity in recent years. However, there are clear signs that some sections of the economy are slowing, and certainly the tourism industry in the tropical north is experiencing this. Inflation is at a 16-year high. Official interest rates have increased eight times since 2004. Petrol and grocery prices are becoming more expensive. At least one in five households in my electorate is in mortgage stress or paying more than 30 per cent of its income in mortgage repayments. Over a quarter of renting households are in the same predicament. These factors are putting family budgets under pressure in tropical North Queensland.

It is for reasons such as these that we must support and remain focused on other core industries. In the tropical north we want to ensure that our region is sustainable past any boom. We must not squander the proceeds the mining boom has provided but look to the future and work towards ensuring we are able to recover from the period of economic slowing that we are entering. We want to ensure that tourism is one industry that comes out the other end of such a period in a strong and positive position.

I am pleased the Rudd government has acknowledged this need and has committed to ensuring our trading sector continues to be a positive contributor to economic growth. Tourism development needs continual attention in our country. The Export Market Development Grants Scheme is now a program with renewed focus and funding, and I am confident it will improve the export productivity and competitiveness long past the economic boom we have experienced and through the economic slowing we are now experiencing in tourism, particularly in the tropical north.

Federal Labor have demonstrated their commitment to improving the country’s trade performance. The EMDG amendment bill is a key element to this effort and the tourism industry is a significant benefactor of the work that is being done by the government in this field. The tropical north tourism industry has been receptive to and welcoming of the government’s actions to revitalise the Export Market Development Grants Scheme. TTNQ has been a leader locally in pulling together local businesses to take advantage of this. They are definitely going to benefit from this legislation and these amendments. I strongly support this bill in its progress through the House.

Greg Combet (Charlton, Australian Labor Party, Parliamentary Secretary for Defence Procurement) Share this | Link to this | Hansard source

The Export Market Development Grants Amendment Bill 2008 satisfies an election commitment to improve Australia’s trade performance. Of course, that is central to securing the long-term economic future of the country. In the first six months of government, Labor have put a lot of work into recalibrating our approach to trade negotiations to give renewed emphasis to the Doha Round and have commissioned a major review of trade policies and programs by Mr David Mortimer. The Export Market Development Grants Scheme assists small and medium-sized Australian businesses to develop export markets, reimbursing up to 50 per cent of expenses incurred on eligible export promotion activities. The changes contained in this bill will revitalise the EMDG Scheme and increase funding by $50 million. The most significant measures in the bill will increase the maximum grant available by $50,000 to $200,000, lift the maximum turnover limit from $30 million to $50 million and reimburse the expenses related to patent protection in international markets—all extremely important initiatives to strengthen the scheme.

Exports are vital to the long-term prosperity of the nation, and over the past five years world trade has grown at twice the rate of world output. If we want to secure Australia’s economic future beyond the resources boom, we must engage in the fastest-growing areas of international trade opportunity. Austrade research shows that firms that export pay higher wages, provide stronger growth in employment and are more profitable. By diversifying the sources of demand, we reduce our economic risk to downturns in the domestic economy or individual parts of the global economy.

It is relevant to note that we have recently been hearing condolence speeches concerning the passing of Australia’s greatest industry minister, John Button, and I think on the speakers list for this evening there are further speakers in that regard. By far the most common triumph attributed to Senator Button was transforming the manufacturing sector into an outward focused and export oriented sector. This secured the long-term future of manufacturing in Australia in many areas, and we are seeking to build on that reform process and that tradition with these amendments to the EMDG Scheme and our wider economic reform agenda—that is, the reform agenda of the Rudd Labor government.

The Export Market Development Grants Scheme has been cut in half in real terms since 1995-96 and that is the fact of the matter. This was at the same time the Howard government promised to double the number of exporters, but they failed woefully at delivering on this promise—and it is no surprise, given the attitude to the EMDG Scheme during the period of the Howard government. The coalition’s attitude to trade policy was not isolated to the Export Market Development Grants Scheme; they also abolished the successful International Trade Enhancement Scheme. One study of the effectiveness of the EMDG Scheme found that it returns an additional $12 of exports for every $1 of outlay. In 1997-98 and 2004-05 the Howard government changed both the eligibility criteria and the thresholds, which made it harder to access the scheme. As a result, in six of the 10 years following 1997-98 the scheme was in fact underspent, notwithstanding the return that is available in aggregate economic terms.

The attitude of the Howard government during that period pervaded all of the Howard government’s trade policies. Unfortunately, it is the economy and, of course, the Australian population who depend upon the economy who paid the price for that approach. In the last six years of the Howard government, despite the resources boom, total export revenues grew at an average annual rate of only 5.8 per cent, compared to the 10.7 per cent in the previous 18 years following the 1983 float of the dollar. As a result, the Howard government’s legacy is 70 consecutive months of goods and services trade deficits. No government in our history has presided over such a run. In fact, the trade deficit for the December quarter of 2007, the last quarter during which the Howard government presided, was almost $7 billion, the worst on record. That is the export trade performance that the Rudd Labor government inherited after 12 years of the Howard government.

Net exports made a positive contribution to economic growth in only two of the 12 years that the Howard government was in office. This compares to Labor’s record between 1983 and 1996, when net exports made a positive contribution to growth in 10 of the 13 years. The lesson from all of this is that a government determined to focus on export growth in international trade can have an effect on the country’s performance. As a consequence of the neglect in the Howard period, we now have a current account deficit at a record level of around six per cent of GDP and soaring foreign debt of $554 billion, measured in the 2006-07 financial year.

Even more concerning is the performance of elaborately transformed manufactured exports. In the decade to the mid-1990s, the Labor government focused on diversifying Australia’s export mix from an overreliance on the quarry and farm to a more modern and open economy, with a stronger presence of value-added services and ETMs. We lost this focus under the previous government, which lazily relied on the resources boom. This has exposed the country to serious risks, the greatest of which is our diminished capacity to reap the gains from participating in the high-growth global trade in knowledge and technology intensive goods and services. That is where the growth is and that is where we must focus as well. In the last six years of the last Labor government, elaborately transformed manufactures export growth averaged 17½ per cent per annum. This compares with the last six years of the Howard government, where the average ETM export growth rate was only 4.1 per cent. Unless we reverse this trend the Australian economy will not be on a sustainable footing when the resources boom eventually runs out.

The disastrous trade performance under the last government occurred because they failed to invest in the drivers of economic growth and international competitiveness—skills, education, innovation and effective infrastructure. Investment in R&D and other forms of innovation is a key success factor in our international competitiveness. Unfortunately, that investment also stalled under the previous government. In the nine years to 1995-96—Labor years—business investment in R&D grew in real terms by 11.4 per cent per year. In the nine years to 2004-05—the Howard years—business investment in R&D grew by only 5.1 per cent per annum. That is 11½ per cent versus 5.1 per cent. What is even more appalling is that, over the two periods, the annual real growth rate in manufacturing research and development—which is crucial to being able to participate in the growth of trade and elaborately transformed manufacturing—fell from 10.6 per cent to 1.9 per cent. As a result, again, Australia’s business investment in R&D as a share of GDP is only 62 per cent of the OECD average. That is a very important means of measuring the seriousness with which we in Australia are approaching the challenge of R&D.

A strong education skills formation and training system is vital to our international competitiveness. Over the last 150 years the measure of a nation’s economic development was the number of tonnes of iron and steel it produced. In this century, it will be the number of graduates, especially in science and engineering, that our nation generates. Investment in education is the linchpin of our future economic potential and trading performance. And what did we see in the last 11 years of the Howard government? We saw the proportion of Australian adults with at least upper-secondary education sitting below the OECD average. We saw Australia ranked near the bottom of the OECD in terms of the annual growth rate of graduates with science and engineering degrees. Our national investment in early childhood education was well below the OECD average. Since 1998 more than 300,000 people have been turned away from TAFE. Since 2001 almost 150,000 eligible applicants were turned away from our universities. That is an appalling record when we are confronting the economic challenges we have.

It is not surprising, therefore, that in the decade since 1995 Australia was the only OECD country to effectively cut public investment in tertiary education at precisely the time we needed to be significantly increasing it. The average increase in public investment by other OECD countries and aggregates since 1995 was 48 per cent, whereas our investment fell by seven per cent. The situation was so bad that in 2005, amidst a skills shortage, there was actually a drop in TAFE students overall. There was no growth—in fact, it was negative. In four of the five years between 2000 and 2005, the fact is that TAFE student enrolments actually declined.

How can we be expected to compete in global markets for knowledge intensive goods and services when we are training fewer TAFE students and underinvesting in tertiary education generally? This is one of the challenges that the Rudd Labor government faces, and it is great to see that the budget is tackling this problem. Look at some of the key elements—investing $11 billion in the Education Investment Fund, spending $1.2 billion on the digital education revolution, outlaying $2.5 billion on trades training in schools and committing $1.9 billion to deliver up to 630,000 training places. It is important to note that, in contrast to the former government’s Higher Education Endowment Fund, not only is Labor’s Education Investment Fund $6 billion larger but it can also be spent on vocational education and training facilities, not just on university infrastructure. Improving our international competitiveness will be equally dependent upon having a modern, well-resourced vocational education and training sector and a modern university system.

Developing additional economic, social and innovation infrastructure is essential to relieving the capacity constraints experienced in the economy. It is also critical to increasing productivity and driving export growth. We are seeing the impact of infrastructure bottlenecks such as clogged ports preventing resource exports. Living in Newcastle, I know this just as well as anyone, with the queue of ships off the coast. This is a direct result of the decade of neglect under the former government and it is great to see that this neglect is beginning to be addressed in the budget.

The establishment of Infrastructure Australia and the $20 billion Building Australia Fund will in time help to remove capacity constraints, improve our competitiveness and boost our exports. The government recognises its economic reform agenda must do all it can to restore Australia’s trade performance. This will help ensure that our trading sector once again becomes a positive contributor to economic growth in this country and places the economy on a sustainable basis beyond the resources boom. This will complement trade-specific policies such as the subject of this bill, the improvements to the Export Market Development Grants Scheme. These improvements will assist small and medium-sized Australian businesses to develop export markets and help reverse the awful trade performance under the previous government. This is going to be one of the key challenges for the Rudd Labor government—a challenge that has been grasped in the recent budget, in the policy position that has been adopted and in the activities of the Minister for Trade, Mr Simon Crean. It is a position that I am very proud to support through this bill.

Maria Vamvakinou (Calwell, Australian Labor Party) Share this | Link to this | Hansard source

Ensuring that Australia has a vibrant export industry, one with strong prospects for future expansion and growth, is fundamental to the long-term health of our nation’s economy. For many Australian firms, turning to export markets overseas offers enormous opportunities in revenue growth, job creation and product diversification. Like many in this country, I strongly believe that there is an enormous potential in Australia to see export growth across a range of different industries and sectors.

Spend just a day touring some of the businesses in my electorate of Calwell and you will see the level of commitment, drive and talent that underscores the potential that exists in Australia when it comes to creating high-quality, innovative products and cutting-edge technology ready to export to the rest of the world. If we are going to harness this potential, it is crucial that we get the policy setting right. Ongoing government support has an important role to play when it comes to growing Australia’s export industry. This includes providing tangible support to Australian firms looking to enter the export market for the first time, as well as helping Australian exporters continually grow their business by accessing new markets and taking advantage of new export opportunities overseas. Unlike our predecessors, the government understand that we have an important role to play when it comes to supporting Australia’s export industry, just as the government understand the importance of investing in the drivers of Australia’s economic growth—in education and training, in innovation as a key component of industry policy, in new technology and in infrastructure.

The Export Market Development Grants Amendment Bill 2008 seeks to make a number of important changes to the Export Market Development Grants Act, under which Australia’s Export Market Development Grants Scheme was first established, in 1974. Since then, the scheme has provided grants to help Australian firms get their business exports ready and it has provided much needed support to Australian exporters looking to expand their operations when it comes to taking advantage of new market opportunities overseas.

The main benefactors of the Export Market Development Grants Scheme have been small businesses. We know that 75 per cent of all applicants to the scheme employ fewer than 20 people and that 81 per cent have an annual turnover of $5 million or less. We also know that around one-third of all applicants are completely new to export. These statistics give us a clear picture of the sorts of benefits this scheme offers. In particular, the Export Market Development Grants Scheme has served to provide both support and additional incentives to Australian small businesses looking to export their products and technologies overseas, often for the first time, who rarely have the funds or expertise to do so. By providing them with additional funding, it has helped many small businesses become export ready, with the follow-on benefits of revenue growth and job creation never far behind. We also know from recent studies that the scheme has met with considerable success, with one study undertaken in 2000 showing that for every $1 spent under the scheme an additional $12 is generated in export revenue.

Despite the importance of the Export Market Development Grants Scheme in helping Australian businesses get export ready and access new market opportunities overseas, the former government showed little commitment to it. Its complacency over the last decade saw the scheme effectively cut in half in real terms. In both 1997-98 and 2004-05, the previous government introduced changes to the eligibility criteria and thresholds contained under the scheme that made it harder for Australian businesses to access it. Not surprisingly, these changes generated considerable opposition from within Australia’s business community.

The former Howard government then attempted to mitigate some of the problems these changes had created by, for example, promising to increase the amount companies can claim for overseas travel from $200 to $300. It also removed accountability requirements, which meant that successful applicants to the scheme were no longer under any obligation to justify their performance. But it then failed to adequately fund these changes, leaving behind a large catalogue of underpayments and a net shortfall of $27 million, which has affected some 900 claimants. These claimants have already spent money in the expectation that their costs will be reimbursed under the scheme. As was the case when it came to industry policy, the previous government failed to get Australia’s trade policy right. In particular, it squandered the golden opportunity that was presented to it by Australia’s commodities and resources boom to boost government investment in export and trade.

The changes contained in the Export Market Development Grants Amendment Bill 2008 start us down the path of reversing some of these failures. In particular, the bill seeks to increase the maximum funding available under the scheme by $50,000. Successful applicants will now be able to receive up to $200,000 to help them implement new export strategies and pursue new export opportunities overseas. The bill also widens the eligibility criteria by increasing the turnover threshold for eligible applicants from $30 million to $50 million, thus allowing more businesses to apply for the scheme. It also seeks to halve the minimum expenditure threshold of applicants, again widening the eligibility criteria to include smaller businesses that may not have an enormous amount of capital outlay at their disposal. Applicants will now be able to receive a maximum of eight grants under the scheme instead of the previous maximum of seven grants, allowing them to access the Export Market Development Grants Scheme for longer periods. In addition, the bill seeks to reinstate a performance measure for applicants who are claiming their third successive grant under the scheme, and this measure will hold for all subsequent grants obtained by these applicants under the scheme.

Collectively, these changes will see an increase in the funding that is available to successful applicants under the Export Market Development Grants Scheme, a widening in the criteria of eligibility in terms of both maximum turnover and minimum expenditure thresholds and the reinstatement of a performance measurement test to make sure that we get the maximum benefit out of the scheme. These are important changes and they underscore the Rudd government’s commitment to trade and to getting the policy setting right, especially when it comes to turning around the mediocre performances of our export growth over the last decade.

Whilst world trade has grown at twice the rate of world output over the last five years, Australia’s total export revenues managed an annual average growth rate of only 5.8 per cent over the same period. In Australia, export industry growth has slowed considerably despite the fact that world trade has risen dramatically. Exports in Australian goods grew by only 6.4 per cent. Australian manufacturing fared even worse, managing a growth rate of only three per cent. By way of comparison, the average growth rate in exports of Australian goods has been 10.3 per cent since 1983, whilst for manufacturing exports it was 13 per cent over the same period—a significant difference from the figures we have seen over the last five years of 6.4 and three per cent respectively.

Seventy consecutive months of trade deficits under the former Howard government were the net result of those poor figures, with Australia’s current account deficit reaching record levels and our foreign debt levels trebling. It is the same story when you look at productivity in Australia under the former government. In the five years leading up to 1998-99, productivity growth averaged 3.3 per cent a year. In the following five years, to 2003-04, Australia’s productivity growth rate fell to 2.1 per cent a year. In the last years of the Howard government, it took yet another dive, to average out at just 1.1 per cent a year. These falls in Australia’s productivity and export growth rates reveal the extent of the former Howard government’s failure to plan for Australia’s future and to invest in the drivers of economic growth.

We live in an age where the competition over resources, skills and technical expertise and access to emerging and established markets has become more and more pronounced. We simply cannot afford to become complacent and we cannot afford to drop the ball. That is why the Rudd government has adopted a coordinated approach to tackling the economic challenges Australia faces, both now and into the future—creating additional places in skills training, boosting government investment in education as part of our commitment to an education revolution, committing $4.7 billion to build Australia’s first national broadband network, introducing new government initiatives aimed at fostering a culture of innovation and encouraging greater emphasis on research and development in Australia’s manufacturing and industry sectors, and establishing Infrastructure Australia, whose principal aim is to provide a strategic blueprint for Australia’s current and future infrastructure needs. Nor can we afford to become complacent when it comes to providing real and tangible support to Australian exporters, as well as those businesses looking to break into the export industry for the first time.

I would like to briefly turn to one area of Australian manufacturing—namely, the automotive sector, which is particularly close to my heart as the federal member for Calwell. Recent trends in Australia’s car-manufacturing industry serve to highlight the importance of export and trade to Australian manufacturing. In 2007, sales of Australian made cars accounted for only 19 per cent of total car sales in Australia, down from 30 per cent in 2002. Over the same period of time, the total value of imported cars in Australia increased to $27 billion in 2007, up from $18 billion in 2002. To offset their declining share of Australia’s domestic car market, Australian car manufacturers have increasingly focused on maximizing export opportunities overseas. In 1997, only 16 per cent of the total production of Australian motor vehicles was sold overseas. In 2006, this figure increased to 40 per cent of total production, with the Middle East emerging as Australia’s largest export market for cars. In particular, Saudi Arabia is now Australia’s largest single trading partner in automotive sales.

Certainly when it comes to the future of manufacturing in Australia, the general consensus is that identifying new export opportunities and successfully opening up new overseas markets to quality Australian made products will play an increasingly important role in shaping the industry’s future and helping consolidate its future growth.

The importance of export trade has not been lost on Australia’s component manufacturers either, with a 2.6 per cent increase in component exports since 2002, and this trend looks set to continue. The growth in export sales has been one of the few good news stories to come out of Australia’s automotive manufacturing sector, though the rising dollar continues to blunt that growth. What needs to be made clear is that the Rudd government is committed to helping turn around the fortunes of Australia’s car-manufacturing industry, and I am confident that our green car partnership program will go some way towards achieving this end.

The lesson here is that export sales continue to grow in importance for many sectors of the Australian economy, and opportunities to export our products overseas continue to open up new possibilities for economic growth. That is why measures of the type contained in this bill, which seek to channel additional funding and support to Australian exporters and provide additional incentives to Australian firms looking to break into the export market for the first time, are so important, especially in today’s climate of increased competition and expanding world trade. I therefore commend the Export Market Development Grants Amendment Bill 2008 to the House.

Simon Crean (Hotham, Australian Labor Party, Minister for Trade) Share this | Link to this | Hansard source

in reply—First of all I want to thank the member for Calwell, who has just concluded the debate on this bill, for her contribution in this debate. Like so many on our side of the chamber, we do understand the importance of creating the environment to grow the export sector, and I am delighted that this bill gives us the opportunity to talk about one of the ways in which that can happen. I want to thank all those who have contributed to the debate. I also want to thank the opposition for supporting this measure.

The Export Market Development Grants Amendment Bill 2008 represents an important step. It is a down payment in delivering on the Rudd government’s commitment to improve Australia’s woeful trade performance under the previous government. In their contributions to this debate yesterday, the shadow minister for trade and his colleague the Leader of the National Party and former trade minister were in denial about Australia’s lacklustre trade performance. They defended the trade policies of the former government that have now delivered 72 consecutive monthly trade deficits despite a resources boom. No government has presided over such an appalling performance in terms of trade. A major shake-up of trade policy is clearly needed to correct the failings and negligence of the Howard government.

At the outset, I would also like to say that trade does matter and, if we are going to improve our performance, change is needed. In the past 50 years, world trade has grown on average three times faster than world output. But in the last five years, as we have seen this stalling process in the Doha Round, it has grown only twice as fast. It should have grown much more strongly, had we been able to conclude a Doha Round. Each successful round of trade liberalisation has fuelled world growth in trade. In times of economic uncertainty, like those that we face now, a successful round would be a tremendous boost to the confidence of the world economy. That is why trade matters and why it is important for us to drive issues that continue to liberalise trade and improve market access. We are vigorously using all available channels to work towards a Doha outcome, including through revitalising the Cairns Group, which Australia chairs, a group created when Labor was last in office.

Yesterday the Leader of the Nationals demonstrated just how out of touch he is on trade policy by telling this chamber that we have dropped the ball on the Cairns Group and that it has not met since we came to office. I can tell the Leader of the Nationals that we did have a meeting of those Cairns Group members present at Davos in January, within weeks of us gaining office. I met all Cairns Group ambassadors in Geneva after the Davos meeting to brief them on its outcomes. I have also written to all Cairns Group ministers, noting that we will meet as soon as the ministerial process in Geneva is underway. I have been in touch with every one of my ministerial colleagues from the group by phone, in some cases several times. This government did not drop the ball with the Cairns Group. Rather, the former government allowed its influence to decline. We are about revitalising the Cairns Group and Australia’s role at the WTO, unlike the former government, which squandered the opportunity of this unique grouping to be front and centre of the talks in Geneva.

We also understand the need for an integrated approach to trade policy. That is why we have developed a twin pillars approach to trade policy. The first pillar is reform at the border, pursuing improved market access for our exporters: the multilateral round, regional initiatives and bilaterals. But there is no point seeking and obtaining improved market access if your economy is not competitive enough or productive enough to take advantage. That is why the second pillar is also so important—reform behind the border, continuing to strengthen the economy and making it more productive and competitive. Improving access is important but on its own will not guarantee an improved trade performance unless Australian companies, as I say, are productive and competitive enough to take advantage of the new opportunities.

Within this framework, export facilitation programs can play an important role in securing the future of Australian industries and Australian business through assisting them to access the global marketplace. The Hawke and Keating governments did dismantle the protective barriers but at the same time they encouraged growth through successful export facilitation programs, including the Export Market Development Grants Scheme, the International Trade Enhancement Scheme and the Innovative Agricultural Marketing Program.

During the last Labor government’s 13 years in office, net exports made a positive contribution to growth in 10 of those 13 years. Compare that with the woeful record of the Howard government where net exports only made a positive contribution to growth in two of their 11 years, despite the longest lasting resources boom in at least 50 years. The coalition government never understood the important role that export facilitation programs can play in encouraging more companies to get into the export market. They, in fact, halved the value of the Export Market Development Grants Scheme in real terms. They abolished the Innovative Agricultural Marketing Program and they abolished the International Trade Enhancement Scheme despite the fact that the study of the scheme’s success concluded that it returned $18 in exports for every dollar outlaid by the government. The previous government’s neglect of export facilitation programs is one of the reasons that they failed dismally to deliver on the lofty promises they made in 2001 and 2004 to double the number of exporters. There they were, a government that proposed to double the number of exporters, but they halved the value of the scheme that is an instrumental part of promoting that export growth.

To add insult on top of the neglect and the running down of the scheme, two years ago they changed the guidelines for the Export Market Development Grants Scheme but did not provide any additional funds to support those changes. They have got the gall in this debate, despite the fact that they are not opposing what we are doing, to question whether the funds that we have provided for the improvements to the scheme contained in the bill are adequate. What hypocrisy. Exporters who are getting considerably less in their second tranche grant payments this year, only determined after the election, when they were led to expect by the previous government’s announcements that they could access it more readily, are the people who are now complaining about the underpayment. The blame for that underpayment lies squarely at the feet of the previous government.

I have received a number of letters from businesses and members of parliament, including some of those opposite, about the EMDG funding shortfall.

Joel Fitzgibbon (Hunter, Australian Labor Party, Minister for Defence) Share this | Link to this | Hansard source

Mr Fitzgibbon interjecting

Simon Crean (Hotham, Australian Labor Party, Minister for Trade) Share this | Link to this | Hansard source

The Minister for Defence tells me that he has got one on its way. I will give him something of the answer now for the reasons for the reduction. The simple fact is that the previous government’s eligibility conditions, which they changed a couple of years ago, had the effect of increasing grant claims by 27 per cent this year. Here we have a scheme that had already been cut in half, so not only was there no new money—in fact there was significantly less money than we have made provision for—but they went out and announced changed guidelines to make it easier to access, or at least more attractive for a wider group of people to make claims, and indeed there was a 27 per cent increase in claims. But, in their 2007 election promises, they did not provide any additional funding to cover the impact of those eligibility changes.

Despite the billions and billions of dollars that they were throwing around in their desperation to get re-elected, they could not find money for this scheme. We heard the Treasurer in the parliament earlier today talking about the fiscal profligacy of the previous government trying to get itself re-elected, but there was no money for this scheme despite the fact that the government was leading people to believe that there would be more opportunity to access the scheme. That is deception of the worst form, but it is what the previous government practised, having over the previous 11 years cut the scheme in half.

Nor can the former government plead ignorance in this matter. The shadow minister for trade gave the game away when he told the Financial Review on 19 December last year that he and the members for Lyne and Wide Bay had fought hard to get more money for the program. The Financial Review article quotes the shadow minister for trade:

I have to be frank and say that was as a result of just keeping the budget in balance.

It was an area where Mark Vaile and I, and Warren Truss and I were in absolute agreement that we needed more money into that area.

So here are a group of ministers sitting around the cabinet table who knew the problem but could not carry the day. They could not carry the day in circumstances in which the government of the day, to get itself re-elected, was spending money like drunken sailors.

Worse, they decreased the recipients. They increased the ability to apply; they decreased the funds. So it is a bit rich for members of the opposition to criticise us for their own failure to deliver the funds that were needed to provide for a larger second tranche payment this year. Their changes to the scheme increased claims by nearly 30 per cent, but they provided no additional money.

In this debate the shadow minister for trade also said it was always their intention to put more money in—but the fact is that they tried to get more money and failed. They fought but failed. Labor have not failed, and that is why we have put this bill before the House so early in the term. Not only have we introduced important new changes to eligibility but we have significantly funded those changes with an additional $50 million in the budget to bring the total funds available in 2009-10 to $190 million to provide greater assistance to Australia’s export communities.

The changes to the scheme contained in the bill are a down payment on the overall reforms to trade policies and programs that will follow the Mortimer review. We have not just commissioned a review, as important as that is; we have made decisions in this budget. This bill will increase the maximum grant by $50,000 to $200,000 and lift the maximum turnover limit from $30 million to $50 million. It will increase the limit on the number of grants from seven to eight. It will allow expenses related to acquiring patent protection in international activities. It will allow state, territory and regional trade promotion bodies, including tourism promotion bodies, to access the scheme—and I notice the member for Leichhardt had some important things to say in this regard.

It will cut the minimum expenditure threshold by $5,000 to $10,000. It will replace the current list of eligible internal and external services with a new non-tourism services category that will provide for all services supplied to foreign residents, whether delivered inside or outside Australia, to be eligible unless specified in the EMDG regulations. It will apply a new ‘net benefit to Australia’ test to applicants claiming their third and later year grants.

Business will welcome these changes. Labor has listened. We have responded through this bill, and in the budget the funds were provided. With these changes, more small and medium-sized businesses, particularly in the services sector, will be able to access the scheme. For the first time, regional economic and tourism bodies will be eligible for grants. The new ‘net benefit to Australia’ test will restore accountability to the scheme in a way which is WTO compliant.

The funding for these measures was confirmed in the budget, but they were not the only measures in the budget that will contribute to improving Australia’s trade performance. Those years of neglect of the Howard government in the provision of essential infrastructure will be addressed through the new $20 billion Building Australia Fund, which will be used to build critical economic infrastructure such as roads, rail, ports and broadband. The infrastructure development will benefit all exporting sectors, including manufacturers, miners, farmers and the services sector, particularly in increased productivity.

The skill base of the Australian workforce will be addressed through the $11 billion Education Investment Fund, and $62.4 million over three years will be provided to give Australian students the language skills they need to engage with our Asian neighbours. A generation of students missed out on the opportunity to study Asian languages when the Howard government abolished a similar program put in place by the previous Labor government—in fact, introduced when I was the Minister for Employment, Education and Training. This is a government that understands also that responding to climate change is about more than just the environmental challenge; it represents an economic opportunity for our business community, and there are key budget measures that will help Australian business to position themselves to take advantage of these opportunities.

This government has also recognised the importance of an integrated, fully coordinated trade policy that reflects the increasing importance of international capital flows and global supply chains. That is why we have announced in the context of the budget that the Global Opportunities and Invest Australia functions will be incorporated into Austrade. The previous coalition government neglected the needs of exporters and always failed to understand the changing nature of trade. It is no longer just about exports; it is just as much about our business and exporting community.

The previous government never understood the implications of the fact that the net outward investment is now approximately equal to the net inward investment. Because under them trade policy defaulted to the National Party, they never looked significantly beyond agriculture—and broadacre agriculture at that. For many Australian companies, investment in offshore facilities and businesses is a very important part of their export strategy. Inward investment, which was the responsibility of Invest Australia, is also crucial to our trading performance, particularly in building capacity. Global Opportunities was focused on building the capacity of small and medium-sized businesses to participate in global supply chains.

All these activities are integral to Australia’s trade performance, and yet the previous government took key programs associated with investment and support for global supply chains out of the trade portfolio. They located them in the industry portfolio. No doubt the decision had more to do with the rivalry between the Liberal and National parties than to do with sensible trade policy. Only those opposite would know why that decision was made, but from the perspective of a sensible coordinated trade policy it simply does not make sense. So they have been incorporated, and that was an important part of the budget.

Finally, the Mortimer review: having announced all of these initiatives of down payments, reinforced in the budget, we are undertaking a review, to be headed by David Mortimer and John Edwards. This is going to give us the road map forward because we, as a government, are committed to lifting the nation’s export performance. We have been badly let down by the previous government.

This bill is an important start to the rebuilding process. I commend it to the House and I thank the opposition at least for their support for this very important measure.

Question agreed to.

Bill read a second time.

Ordered that the bill be reported to the House without amendment.