Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

It is a pleasure to speak on the Export Market Development Grants Amendment Bill 2010. I have spoken on EMDG bills in the past, because I am a supporter of this type of legislation and this program. It is always a pleasure to speak on one again, although the context of this amendment bill is unfinished business from the previous government in relation to the Export Market Development Grants Scheme.

Firstly, I would like to congratulate the Hon. Simon Crean, the Minister for Trade, for his good work in this area. I know his commitment to export business, to export companies, to Brand Australia, to a range of key issues around Australia as an export nation. I strongly support this amendment bill because it will enhance Australia’s ability to export and will encourage business, particularly small and medium enterprise, to participate in an important part of Australia’s economy, and that is exporting.

This bill will reduce the demand on the scheme. It needs to do that because the previous government, in an unfunded manner, overran the scheme, causing a range of problems in funding years for people who had applied for funding and grants—the budget for this program had actually run out. This is not good enough. It is not satisfactory for business to be placed in those circumstances. The reason we are here debating this bill, the reason we have this amendment, is to fix up a problem left over from the previous government, who saw fit, during a heated election campaign in 2007, to overrun this program without funding that overrun.

This amendment bill will increase the minimum requirement for export promotion expenditure from the current $10,000 to $20,000. That will mean that organisations will have to spend $20,000 before they are eligible, before they can apply. I think that is a fair and reasonable beginning point, given that the $10,000 figure has not changed for quite some time. We propose to reduce the maximum number of individual grants that are available to an applicant from eight to seven—a reduction of just one. We also propose to reduce the maximum that is payable per grant from the current $200,000 to $150,000. That will mean there are more grants available for more individual companies and businesses. We also propose to cap the maximum amount claimable for intellectual property expenses at $50,000.

Most important is the fact that we will be extending this program for a further five years, giving certainty and confidence to a whole range of mostly small businesses, but some larger ones as well, that rely on these programs to develop their export markets. We need to understand that in its context. It is a grant to help them develop those markets. Once a company can stand on its own feet, once it has established itself overseas in the particular market that it has chosen, then it no longer needs the assistance of the Commonwealth and should be able to make enough profit, have enough revenue from its export markets, that it no longer needs the assistance of the government.

The amendments we have placed on the table are fair, equitable and reasonable. They were done in consultation with the sector, and the sector supports them. The sector understands that, if we are to continue this program, the program needs to be checked and measured against expectations and funding. It is never satisfactory that a program is left unchecked or that a government overpromotes and overruns a program deliberately but then does not fund that overrun. I just do not think that is a satisfactory position. We have taken action to do something about this. We have increased the funding that is available, to make amends as best as possible and fund the unfunded liabilities that were left over from the previous government. As I say, these unfunded liabilities were run up close to the election last year.

These are good changes. They do provide some certainty. They do provide for an extension of the program by five years. What this program does is build on that contribution that small and medium enterprises make to the nation now. It does provide for a strong export culture to grow even stronger and it helps to reduce that information gap between government organisations and the export markets they are particularly targeting. It is done in coordination and cooperation with Austrade and a range of other government service bodies. Most importantly, if you are a small business owner, it reduces your costs. It means what you actually spend can be reduced because the government will foot part of that bill, which I think is very important. Australia is a competitive export nation. The program is about trying to assist those very important small businesses that we all acknowledge are the backbone of our national economy, the largest employer in the country. It is the small businesses, the mum-and-dad businesses and the unexpected businesses that are very important exporters. It would surprise a lot of people who they are.

I have spoken in the past on these grants, because I think they are very important. I recall very early on in my tenure as a member of parliament visiting Claypave, a paver and brick manufacturer, which was then in my electorate but, sadly, is no longer. They are a great local business, a large employer, and they do a fantastic job. It would probably surprise people to understand that a brick manufacturer, a paver manufacturer, would export its product. Bricks are pretty big and heavy. They are not something you would naturally think Australia would export if you think of the labour costs. It is a labour intensive production, which would suggest that it was not a viable export product or that exporting a product such as bricks to a nation such as China is counterintuitive, but that is exactly what Claypave do. What they did was differentiate themselves from every other brickmaker in the world with a high-quality, well-manufactured, highly labour intensive product and exported it to the rest of the world. They export to China, the United States and the Middle East and they are looking to other markets. I know, because I have spoken to the CEO and the company on many occasions, that a part of their success—it is only a small part—and a part of the confidence they had to go out and spend the R&D and marketing development money they needed to in those markets was due to the federal government standing there behind them with a really good program.

We have always been supportive of this program and it is good to have the Minister for Trade, Simon Crean, in the House today speaking on this particular bill. He knows just how important this bill is. That is why these amendments are on the table. We want to make sure that this program not only survives but grows in a properly funded manner and not in the manner that was left behind by the previous government. For our enterprising, innovative companies around the country, the biggest tick of all is that we have extended this program for a further five years. I could not think of a better way to promote a whole range of businesses.

Just in case people are listening or later read these speeches, think in just one seat how much impact a grant has. How much impact does it have in a seat like Oxley, which is my seat? I can tell you it is enormous. Over the years I have had dozens of companies not only apply for but also receive grants. I will run quickly through a list. In my electorate I have got companies like Majans and Leslie Consulting, which is another incredible story.  Bruce Leslie is the proprietor of Leslie Consulting, a mining engineering firm in my electorate. Counterintuitive to what you might think would exist in Goodna, on a small plot in Goodna we have a small firm of highly skilled, highly dedicated individuals that provide services and intellectual property to NASA, to the United States, to German engineering companies and to European mining engineering companies. In South-East Queensland, in a small suburb in Goodna, is this incredible company that is doing global things. Most people who drive past never know that, but it is a great story to tell and I congratulate Leslie Consulting, Bruce Leslie and his team for the great work they do. They have applied for funding and they obviously deal in export markets.

There are companies such as FARMkids, Acoustic Technologies Electronics, Aren Education, Eighteen Hunter Street, Australian Cotton Shippers, Very Small Particle Co.—it is not half obvious what they might be into—and companies like Welding Sales, Decina Export, Specialty Products Group, Excel Technology Group, PR Polymers, Global Chef, Tooltech and John Woodward’s Australian Finegrain Marble. These companies are in a range of sectors from food manufacturing and product manufacturing to professional services to scientific and technical services, to motion picture and video production, to election equipment manufacturing, to higher education, to toy and sporting goods wholesaling, to cotton growing, to basic chemical product manufacturing, to hardware goods wholesaling and to other basic polymer manufacturing. There is a bit of a pattern building here with lots of manufacturing companies. There are lots of highly skilled, highly trained expertise that small Australian companies are exporting to the rest of the world. We are exporting toy, sporting and recreational product manufacturing, non-metallic mineral mining and quarrying technologies. Companies such as Cooke Freeze, Mox Products, Metal Storm, PR Polymers, Decina Export and a whole range of other companies are all exporting.

I wanted to read the names of those companies out and talk briefly about the industries involved not only to demonstrate just how important the program is and the money that is spent on promoting export markets but also to highlight the variety and the manufacturing base of the sorts of companies that you do not see in the headlines and that you do not really see when you drive past commercial or industrial states or even in parts of suburbia where some of these businesses exist. They are the backbone of this country. They are, in totality, the largest employer by a lot, which would be the easiest way to describe it. Those small- and medium-sized enterprises are the biggest employer in the country. I congratulate the minister for his work in this area, for supporting this very important program and for ensuring its survivability and its sustainability over a long period of time and particularly for extending it for the next five years. I commend the amendment bill to the House.

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

I congratulate the member for Oxley on not only his contribution to this debate but the way in which he has brought home the significance of the EMDG Scheme, what it means, to businesses and small- and medium-sized enterprises in particular within his electorate. The great potential for this nation is our ability to grow our trade. Trade is not just exports, as I will go on to explain. The fact is that trade is the multiplier of economic growth in this nation, and the more we can do to assist more of our people to export and those who already know their potential to export to get into more markets the better off this country will be, in terms of not only economic growth but also job opportunities. I also thank all of the other members who have participated in this debate. In particular I thank the opposition for their support for the amendments that we are proposing in the Export Market Development Grants Amendment Bill 2010.

The Export Market Development Grants Scheme, the EMDG Scheme, does make a valuable contribution towards building a strong national export culture for this nation. It reduces the information gap about export markets by supporting marketing activities in new markets and it lends a much-needed helping hand to small- and medium-sized enterprises seeking to get into those markets to take advantage of the opportunities through the increasing trade liberalisation and the success of our trade negotiations. The scheme also reduces the financial barrier to exporting, by providing enhanced access to funds. It increases the competitiveness of Australian companies by exposing them to competitive overseas markets, and this in turn forces non-exporting local companies to become more competitive.

EFIC’s 2009 global readiness index shows that one in five jobs in this country are related to trade; one in seven jobs, to exporting; and one in 10 jobs, to imports. This year, the EMDG Scheme will help support the jobs of over 140,000 workers employed by grant recipients—small- and medium-sized Australian exporters. Analysts have long accepted that companies which export tend to pay higher real wages than non-exporting companies. So not only is trade good for economic growth; it is good for jobs and it is good in terms of its tendency to drive real wages higher. The Export Market Development Grants Scheme is itself a great multiplier: for every dollar spent under the scheme, we generate over $5 in taxpayer benefit, and studies show that EMDG recipients tend to enjoy much greater levels of labour productivity in their workforce.

I made the point earlier, but it is worth repeating, that trade is not just about exports; it is also about imports. To underscore this point, many export market development grant recipients highlight the fact that many exporters value-add imported inputs to finished products which are then themselves exported. I will give a few examples. Optalert Pty Ltd manufactures an advanced driver assistance system for use in the mining and transport sector. Up to 70 per cent of inputs are imported, but the company now has exports valued in excess of a million dollars. Data Signs Pty Ltd manufactures traffic signs which incorporate imported solar panels. The company is exporting finished products to markets including the UK and the United Arab Emirates. Heldon Products uses imported gas fittings to manufacture air-conditioning components which are then exported to markets including India, the UK and the US. These are all companies supported by the Export Market Development Grants Scheme and all good examples of companies that acquire their inputs through imports; but their competitive advantage, their value-add, is the way they convert that into a value-added commodity for export.

This is a government that has demonstrated a genuine and substantial commitment to the Export Market Development Grants Scheme. Since we came to office, we have injected an additional $100 million over the past two years, and this has played an important role in helping Australian exporters deal with very tough global conditions. The fact is we did inherit a mess from the coalition government, which was content to introduce guidelines that increased demand on the scheme but did not see fit to provide the extra funding needed to fund those changes. When we made changes to the Export Market Development Grants Scheme on coming to office, we injected the $50 million needed to fund them and we then had to find a further $50 million to fund the coalition’s changes. This stands in stark contrast to a coalition that was happy to take the lazy policy option: expand eligibility but do not fund it—once again, a policy low-road approach.

But the substantial growth in grant demand in recent years has created a growing imbalance between the scheme’s provisions and the funding available under the scheme. The scheme is now out of balance due to a combination of natural growth and increased demand arising from guideline changes introduced by successive governments. Now is the time to restore that balance, and these amendments will rein in future demand on the scheme and lay the foundations for a more sustainable funding model. The changes will move us further along the road towards the goal of building greater certainty into the scheme—this was a specific recommendation of the Mortimer review of trade policy—and industry itself is broadly supportive of the amendments and accepts the need to restore balance to the scheme.

I am confident that industry will welcome the moves to put in place a more sustainable funding model for the scheme. I personally remain fully committed to the EMDG, and these amendments will help secure the long-term future of the scheme and its role in promoting Australian jobs and Australian exports. Following government actions to address the impact of the global financial crisis, a tight and responsible central budget was called for and in this context the EMDG has had to play its part as well. I remain strongly committed to the future viability of the scheme. These amendments lay the foundation for it. I commend them to the House and I welcome the contributions that have been made to the debate.

Question agreed to.

Bill read a second time.