Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Link to this | Hansard source

Once again, I rise to speak to the Export Market Development Grants Amendment Bill 2013. I say 'once again' because this is the third major amendment that this government has made to the EMDG scheme since it came to office in 2007. This is just another example of Labor's shambolic policy processes. It creates uncertainty through these regular changes. Once again, this emphasises the fact that no-one in business can take the government's word that it will deliver a program and do so with the level of confidence and stability that is necessary to achieve the program's objective. That is why people are talking about sovereign risk now when they talk about Australia, because so often the government changes its mind, alters programs and leaves businesses stranded. Labor does not seem to care about or understand business, and people in business—exporters in this case—simply cannot rely on government programs anymore.

At the 2007 election, Labor promised a huge boost to the EMDG scheme. Then shadow minister Crean trumpeted his proposed changes to the scheme at that time and boasted about the new benefits Labor was going to provide under the EMDG. When elected to government, Labor changed the grants scheme to make it more generous and extended eligibility to a number of criteria. Labor also increased the funding available for the grants from $150 million to $200 million.

The EMDG is a capped scheme, but under the coalition the money provided was adequate to meet all of the claims made, in full. In 2006-07 there was a requirement for a top-up to enable the scheme to pay all of its bills, but Labor never provided that top-up. Instead, it provided $50 million extra for the following year to implement what was to become a more generous scheme. However, the scheme was capped and paid pro rata to applicants and, as there were more people applying for grants than money was available, they would not always receive a full payment. Under the coalition, the money was topped up so that payments, except those for 2006-07, were made in full.

In 2010 the Labor government came back with another amendment to the scheme that changed the grant funding cap back from $200 million to $150 million. So the higher funding was made available only in one year. This trashed the government's election promise and reversed most of the promises the government made at the previous election—promises which were not funded and therefore led to a significant blowout in the cost of the Export Market Development Grants scheme.

The government set up the Mortimer review which looked at the changes the government had made to the scheme, but, in effect, it looked at the whole EMDG scheme. It was about the 10th or 12th review of the EMDG scheme. It has been subject to regular review, both under the coalition government and the Labor government after that. It has been reviewed to death. The government set up another review under Mortimer. To the government's great embarrassment, the Mortimer review recommended that the changes Labor had made in 2008 be reversed—that the previous, coalition government's scheme was better than the scheme Labor had introduced. The government then introduced legislation to essentially reverse the changes it had made in 2008 and reverted the scheme to the arrangements that applied under the previous government. They actually reversed it right back to what had originally been put in place as far back as 1997.

That brings us to the Export Market Development Grants scheme amendments that are proposed today. This time the government tells us that the changes will fundamentally save $25 million from the grants, effectively capping the scheme at $125 million, the lowest cap ever. So, at a time when our exports are falling, when our competitiveness in the international market is coming under serious stress, when we have a high dollar, when we have changed industrial relations and higher wages in this country, when we face increased competition from low-cost labour countries around the world and when our country has significant trade deficits, the government's response is to reduce the amount of assistance available to Australian exporters. To me, that does not make any sense.

Yesterday, in the Federation Chamber, there was another bill under debate to take $200 million away from the Export Finance and Insurance Corporation. That is the body that helps provide funding for Australian exporters to compete on international markets and to consummate trade deals with other countries, and the government is taking $200 million away from it to prop up its budget deficit. The reality is that that is the wrong signal to send to Australia's battling exporters at a time when they are facing increased competition from other countries that have massive export insurance and financing arrangements to subsidise and support trade deals. Our government is taking money away from the only body that is really able to provide that kind of support in Australia. In parallel to that, $25 million is being taken away from the Export Market Development Grants scheme. The government described these changes as sensible, but what it really demonstrates is that government policy is in disarray.

There may be people in the chamber who are confused, because it is a rather complicated scheme, but many of the exporters who have received these grants in the past and have benefited from these grants will again be confused. They are getting increasingly frustrated with the constant changes to the scheme. How can they plan an export strategy when the government keeps changing the rules? How can they know they will actually get a helping hand to break into a new market when the government keeps changing the rules?

These amendments will affect Australian businesses that are trying hard to break into export markets. Small and medium business owners, farmers and manufacturers—they are all doing it tough at the present time. Whilst on the world stage a high dollar might look good, it does hurt our exporters and industries that are heavily dependent on exports to overseas markets to survive. Throw in the carbon tax, the industrial relations reform, the change in shipping arrangements, all of which are adding cost to Australian industry and making it much more difficult for us to be competitive. This government simply does not seem to be serious about promoting our export industries.

These amendments not only reduce the amount of funding available but introduce more favourable treatment for exports to East Asia, frontier and emerging markets at the expense of grants to other markets. The amendments will increase the period for grants to East Asia, frontier and emerging markets from seven years to eight years and reduce the number of grants available to the United States, Canada, the United Kingdom and the European Union from seven years to five years. This is because the government argues that these markets already know and accept the Australian brand and so therefore Australian businesses will be able to do business more freely. In a sense, they are saying some export markets are more valuable than others: 'Some export markets we are going to foster and others we are not interested in.' Frankly, that is illogical. If we can find an export market anywhere, we should value that. Surely we are not going to say in the future that exports to the US or Europe are somehow or other inferior because they are not going to Asia? Certain products fit the European and United States markets and other products fit the Asian market.

One of our big advantages in our trading situation as a country is our reputation for quality and clean, green products. That reputation is probably less valuable in the US and Europe, where they have high standards of their own, than when putting our products into Asian markets, where they can command a premium price. So the government's argument that it is somehow or other easier to put products into European countries or the United States is not valid. It may be true for some industries, but in other cases it is harder to get products into those countries. The need for support under the Export Market Development Grants scheme in Europe and America has not lessened.

We know that the government is obsessed with Asia. I share the view that it is important for us to expand our markets there wherever we can. There has already been significant growth in those countries, and we will need to have that in the future. But it defies logic that we should be proposing to walk away from significant markets in other parts of the globe because Labor wants to flash around its recently discovered interest in Asia.

I want to reiterate what the Deputy Leader of the Opposition stated in her comments on this bill—that we should not have just an Asian century; we ought to have a global century. We as a nation need to recognise that we have to engage with the world wherever we possibly can. In order to see our economy grow, we need to encourage trade on a global scale. It is important therefore that we do not send a signal to traditional markets that they are now less important. In the same context, as we work to develop new markets in Asia, that needs to be undertaken in a consistent and diligent way. It is perhaps regrettable that under this government our relationship with many of our most important Asian markets, many of our nearby friends, has deteriorated. Our relationship with Indonesia is at a particularly low ebb because of the ineptitude of this government over the live animal trade and so many other issues. Our relationship with Korea is at a low ebb because of this government's ineptitude in handling arrangements, especially concerning defence contracts but in a whole range of other areas as well. Even in places like China and Japan this government has not managed the relationships in a constructive way. A lot of work will now have to be done to help rebuild the trust that has been lost because of the way in which this government has mismanaged our relationships with people in other parts of the world. A slight extension of the Exports Market Development Grants scheme to give people more time in those markets is not likely to undo the damage that has already been done by this country.

Japan, China, Korea and Indonesia are big importers of Australian products, and the promotion and protection of these markets will remain and continue to be of great importance to Australia in ensuring that our economy grows and returns to strength. But we should be encouraging business not only to grow these markets but to be innovative in looking in other parts of the world and in markets where our products are well known. The EMDG scheme does help; however, Australian exports are not just limited to Asian countries. That is the issue that concerns me.

These amendments will impact viability of our exports to the European Union, the United States, Canada and the United Kingdom. I will just give you one example that perhaps many people may not be aware of. Take, for example, the producers of the world's most consumed meat—that is actually goat meat. Not only is goat the most consumed meat in the world but Australia happens to be the largest exporter of frozen goat meat. In 2011-12 Australia exported 24,478 tonnes of goat meat, and the largest market for Australian goat meat happens to be the United States. In fact, the US takes over half of Australia's total goat meat exports. By reducing the number of grants available for the US market, the government could be potentially reducing the viability of Australian producers who are looking to export into that critical market.

Sometimes Australians will be surprised at where Australia is exporting, where we do well, the times we send coal to Newcastle and the times when we are able to penetrate markets where perhaps it would not be expected. Indeed, it is interesting to note that the second largest exporter of frozen goat meat in the world is Ethiopia. So if we lose these markets they are potentially gone forever and are very difficult to get back.

We saw similar things with the disastrous bungled live export of cattle to Indonesia. If Australia cannot meet the demand of importing countries then those countries do not change their eating habits; they look for somebody else to supply it. That has certainly happened in Indonesia and in the live animal trade. It has also happened in the Middle East and other places at times when we have imposed bans. I get lots of letters from people saying to me, 'Why don't we process all this meat in Australia?' Of course, we would all like to do that wherever we possibly can. But some markets are not able to take frozen or chilled beef because they do not have adequate refrigeration. Where Australia says to countries, 'We will not supply you live animals,' they do not then say, 'We love you so much that we will therefore take some other product that we do not want.' What they actually do is move around and look for another country that can supply them with live animals, and there are well over 100 countries in the world that are involved in the live animal trade. In every case where we have imposed bans on countries, we have not been rewarded by having greater exports of chilled and frozen meat. Those countries have looked to other countries—anyone but Australia—to supply their product, because they feel grievously offended when we have intervened in ways that they consider to be inappropriate.

The amendments introduced in this bill highlight the government’s mismanagement of its budget, because they are essentially being put in place to save just $25 million. This also demonstrates this government’s complete lack of understanding of small business in this nation. It is a false economy. There is an oft quoted statistic that every dollar spent on the Export Market Development Grants scheme delivers $12 of exports. One dollar in expenditure delivers $12 in exports. So, by cutting the expenditure on the EMDG scheme, this government is effectively cutting our exports. That is simply illogical. At a time when we have bad trade balances and where we have struggles with our manufacturing sector and other parts of industry in trying to find new markets and new opportunities, this government is taking away the helping hand and making it more difficult for them to do their job.

For many years, the previous coalition government managed this scheme. More money was allocated in the budget when it was required and claims were paid in full. The coalition remains committed to the EMDG scheme and will also make other reforms to help it easier for Australian exporters to compete. We will be reducing red tape for Australian business and in turn helping the export sector by abolishing the carbon tax and the mining tax to encourage the development of industry in Australia. Of course, we need to do all this to reduce Labor’s debt and get rid of their fiscal mismanagement.

There are job losses and mounting job insecurity in this country. We need to have a stable support scheme for our exporters. We need to be doing what we can to make sure that the small business sector can have confidence in government programs, can proceed with innovative new plans and can look at quality export markets around the world. We need to ensure that those who battle on the world trade market get all the help they possibly can to achieve their objectives, because, when they export, our whole country benefits.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

I rise to speak on the Export Market Development Grants Amendment Bill 2013 as the coalition shadow minister for tourism and regional development. I note that, according to the Association of Australian Convention Bureaux, in 2011-12 Australia’s leading convention bureau won and assisted the placement of 456 international business events in Australia. These events are expected to attract 149,475 delegates for 609,385 visitor nights, with an economic benefit of $385.2 million. I refer the House to a media release issued by the association regarding this bill:

The proposed amendment will have significant impact resulting in fewer international delegates for Australia and therefore reduced export revenue, and a reduction in all of the indirect benefits brought to the economy by business events. At a time when current global economic conditions and a high AUD make Australia a less attractive long haul destination, now is not the time to be reducing support for delegate boosting activities.

Given these concerns of the association, I call on the Labor government to immediately explain what impact this bill will have on Australia's business events sector.

Australia’s tourism industry has been hit with so many new or increased taxes under Labor and now they are taking a further hit because of this government’s economic mismanagement. The direction of this bill was explored in the Senate estimates last month, and I note the two critical issues discussed. The first is to reduce the amount that we are funding by $25 million, which will take it down from some $150 million to $125 million. This cut is a result of Labor’s economic mismanagement. Labor have been unable to balance the books. The second is to do some rebalancing of grants so that we increase the number of grants to eight for applicants to emerging and growth markets and reduce to five the number of grants that might be given to applicants for the so-called mature markets: Europe, the United States and so forth. Evidence by a departmental officer at the Senate estimates states:

There was not a considered view by all applicants, and I would say that we did not consult applicants directly; we consulted with industry associations.

It is critically important that the government not only deal with peak bodies but also take the time to listen to the individual operators.

This bill has been rushed through the parliament, and the government has not engaged fully with the stakeholders and properly considered the range of options open to reform. I refer to the pre-budget submissions from the National Tourism Alliance. With respect to the Export Market Development Grants, this bill represents an unfortunate mixed bag of outcomes, resulting from implementing change without going through a proper review as recommended in the last Mortimer review. The National Tourism Alliance recommended that, with such significant changes currently taking place in one of Australia's most important export markets, an immediate review of the EMDG scheme should be undertaken to bring it into line with current shifts in both the Australian export market focus and export marketing practices.

The government has instead rushed this legislation into the parliament in its dying days, rather than observing the principles established under the Office of Best Practice Regulation. Leader of the Opposition Tony Abbott told the tourism industry in July last year:

What you will find from the next Coalition government is a ready set of ears and an enthusiasm to act in partnership with you. You will never find, from the next Coalition government, changes being sprung on you that we haven't talked through because that's not how adult governments operate. Adult governments understand that actions have consequences and they talk about the consequences with the people who will be affected by those actions.

The coalition agrees with the tourism industry that, due to the significant nature and scope of the changes in both Australia's tourism export market focus and the way tourism exporters now market their services, it required an immediate review of the EMDG scheme.

We will adopt the recommendations put by the NTA in its pre-budget submission—conducting a review, consulting with industry and acting on that basis. This was recommended by the Mortimer review—the last time the effectiveness of the EMDG scheme was assessed. Had the government followed this course, it would have dealt with other recommendations of industry at the same time. For instance, the NTA argues that, firstly, a focus of any review into the EMDG scheme must ensure a scheme that has a simpler application process for businesses and provides very clear criteria that provide some certainty around the nature and level of such a grant and, secondly, there should be clarity around how the EMDG is applied to 'cluster' organisations and organisations that receive funding from state government bodies. To quote an Austrade officer, Tim Harcourt, one of the staff at the agency promoting its services online to prospective clients in the business community:

Small is still beautiful … when it comes to exporting, that is. That's the word from the Australian Bureau of Statistics (ABS), whose survey of the Australian exporter community shows that around 90 per cent of Australian exporters are either small or medium sized enterprises (SMEs).

This confirms previous research by the Bureau which showed SMEs to be the 'engine room' of the Australian exporter community in terms of growth potential.

Tourism and hospitality matches this profile exactly, with 90 per cent of businesses either sole traders or small businesses. Tourism and hospitality employs 10 per cent of Australia's workforce and receives around this same proportion of Export Market Development Grants. This part of the services sector—its largest constituent part—is one of Australia's best economic multipliers.

As Minister for Tourism Martin Ferguson stated in Tourism Australia's Corporate Plan for 2012-15:

As well as employing around 500,000 Australians, the industry generates A$94 billion a year in spending which, as a sector, translates into A$71.7 billion direct and indirect contribution to GDP and makes tourism Australia's largest services export.

For every dollar spent on Australian tourism a further 91 cents is generated in other parts of the economy, a multiplier effect which surpasses mining, agriculture and financial services.

I agree with the minister on that. Tourism related services are also one of Australia's most important export industries. While only iron ore and coal earn more for the country, tourism's multiplier effect surpasses mining and agriculture. For the year to 30 June 2011, iron ore exports were $58.4 billion, coal exports were $43.9 billion, and tourism related services $33.9 billion.

People sometimes do not see, as they should, that servicing inbound tourists on shore in Australia is in fact engaging in export activity, but it surely is—through the attraction of foreign spending on Australian goods and services. In my view, there is a very good case to be made for the economy's best multipliers to be the focus of investment of taxpayer funds—whether it is tourism or other activity that derives additional economic benefit for this nation. Tourism not only creates jobs in the tertiary sector, it also encourages growth in the primary and secondary sectors of industry. This is known as the multiplier effect, which, in its simplest form, is how many times money spent by a tourist circulates through a country's economy. Money spent in a hotel helps to create jobs directly in the hotel, but it also creates jobs indirectly elsewhere in the economy. The hotel, for example, has to buy food from local farmers, who may spend some of this money on fertilisers, machinery or clothes. The demand for local products increases as tourists often buy souvenirs, which increases the secondary employment.

Industry multipliers can be derived from the input-output tables published by the Australian Bureau of Statistics. We know this Labor government has driven Australia into record debt. We need to recommit ourselves to prudent economic management to deliver us back into the black and invest in wealth generation. But there are many things we could be doing which do not have a budget impact. For instance, Austrade could be set key performance indicators to include actively seeking meetings with capital funds for inward hotel investment. Furthermore, a responsible government would need to first address the potential for multipliers to overstate the contribution of industries because of the potential for double counting. The multipliers are sensitive to the state of economy. For example, a multiplier is likely to be different when the economy is experiencing a downturn then when the economy is running close to capacity. Finally, a responsible government would need to ensure consistency of methodology and assumptions underpinning figures claimed by competing interests.

The government's explanatory memorandum states:

This Bill aligns the Export Market Development Grants (EMDG) scheme rules to the revised level of scheme funding. It concentrates the scheme more heavily on East Asian, emerging and frontier markets, in line with Austrade's greater emphasis on these markets, and helps achieve savings of $25 million per year.

This sounds awfully familiar. Last year the government increased the passenger movement charge by $8 per passenger to $55 per passenger. Australia now has the highest rate of passenger movement charge of any short-haul market in the developed world, according to the Tourism and Transport Forum. The tourism industry, working with the crossbenches and the opposition, combined to defeat the government's indexation of the passenger movement charge with the consumer price index. The EMDG scheme is meant to dispense government grants, not sustainability grants. Taxpayer funds must be spent wisely on ventures that ultimately lead to self-sustaining business activity. The National Tourism Alliance's 2013-14 pre-budget submission stated:

… the EMDG scheme aims to encourage businesses to promote their products and services overseas, and to become established exporters whose exporting persists as a sustained activity after assistance under the scheme ceases.

We know this government has been unable to construct a consistent message. The right hand never knows what the left hand is doing. This bill does not fit with what the government is doing elsewhere. For example, firstly, there is ongoing special status for US working holiday maker program participants whilst China is excluded from the program, and, secondly, there is no G'Day Beijing or G'Day China annual event to match the G'Day LA and G'Day USA events.

Since taking office this Labor government has made a complete mess of the Export Market Development Grants scheme. The coalition, in government, will review this scheme, particularly to address the increase in red tape that is expected to arise as a result of Labor's changes. The coalition government will restore reward, hope and opportunity for those prepared to invest and develop export markets to the benefit of all Australians. I urge the government to reconsider its approach, engage with industry participants and those that want to invest in Australia and let us all work together to deliver real benefits for the Australian economy and therefore the Australian people.

John Cobb (Calare, National Party, Shadow Minister for Agriculture and Food Security) Share this | Link to this | Hansard source

I rise to speak on the issue of trade, which is incredibly important to agriculture, as it is to the Australian economy generally, and on the Export Market Development Grants Amendment Bill. The coalition do not oppose the bill in its current form, but we do have some very strong reservations on the approach taken by this government.

I wish to support the shadow minister's comments about Labor jeopardising market opportunities overseas. You do not actually improve our access to Asia by cutting market grants to the rest of the world. It is not as though that money is going to be added to our efforts in Asia. This bill is supposed to enhance what is happening in Asia, but it is not adding to it; it is simply taking it away from our traditional markets. They are still good markets and still exist, and we will, I hope, continue to trade with them for a very long time to come.

I know that this will deliver a decent savings pot for the government of $25 million annually, so this is far more about addressing a deteriorating budget position than looking at market access. It is another blow to business caused by the budget mismanagement of this government, which is a matter of public record and government shame. They need money to make up for their woeful management, so they simply strip it from existing programs. Just because markets are traditional it does not mean we can do better at them. Is this a reasonable decision for the government to be making? Labor are already pushing our exporters out of the market with massive cost increases, through the removal of the export certificate rebate, the introduction of the world's biggest carbon tax and catering to the Greens' environmental whims like making chemical registrations outrageously expensive. It should be up to Australian business to exploit market opportunities according to commercial realities rather than bureaucratic impulse.

Given the government's recent track record of undermining export opportunities, can we be blamed for holding our breath in this instance? In looking at the agricultural sector, the Labor government has heralded the Asian century as the solution for agriculture, yet everything the Gillard government does undermines our opportunities in that region. The Gillard government jeopardised our trade deal with Korea by reneging on a major defence contract. At the same time, the US completed a trade deal with Korea which gives the US tariff advantages in the Korean market for beef exports, which are going up at the rate of about 2½ per cent a year. Labor has dawdled on negotiations for a trade deal with China. New Zealand has secured a deal which gives them, for example, a tariff advantage of up to 20 per cent over Australia on some dairy products.

What about Indonesia? This government has done absolutely everything to completely destroy relations with our nearest, our biggest and definitely our most important neighbour. Indonesia's 237 million people—and that number is rising—are literally on our doorstep. They are 2½ days sailing, on a good day, from Broome and about 3½ from Darwin. Indonesia has a growing middle class well in excess of the total population of Australia and a high propensity for consumer spending. In short, it is an ideal destination for our farm produce. From 1999 until a couple of years ago, its annual growth surged from zero to 6½ per cent and there are no signs of that abating. It is bizarre that we have a $15 billion two-way trade with New Zealand, with 4½ million people, while our trade with Indonesia is only worth $11 billion. But that is shrinking when it comes to beef exports, primarily as a result of the nonefforts or the bad conduct of our government. Citibank has recently predicted that Indonesia will be the fourth-largest economy in the world within 30 years—and it is 2½ days sailing from Broome. Yet this government had a huge negative impact on our relations with Indonesia when it unilaterally banned live animal exports, which led to reduced quotas in both live exports and boxed beef. Having visited Indonesia more than once and having met with government ministers about this issue, with feedlot operators and representatives of the livestock industry generally and having visited their abattoirs, the damage that was caused by the Australian government to both—

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

Order! The honourable member will come back to the bill.

John Cobb (Calare, National Party, Shadow Minister for Agriculture and Food Security) Share this | Link to this | Hansard source

Absolutely, and this is about Asia and it is about the—

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

The honourable member will take note of the chair. I am asking the honourable member to come back to the bill and the amendment before the chair.

John Cobb (Calare, National Party, Shadow Minister for Agriculture and Food Security) Share this | Link to this | Hansard source

I will do that, Mr Deputy Speaker. Expanding these overseas markets will not only allow Australian industries to broaden production beyond the limited domestic market but also provide much-needed competition to Australia's supermarket giants.

So stepping up to be Asia's food bowl does need government to not interfere but actually get off its butt and help in doing deals with different countries. Make no mistake: our produce is highly valued and sought after. From travelling overseas and meeting visiting delegations here, it is evident to me that our farmers are renowned as producers of very reliable, sought-after, quality food. Despite that, this government has not done a good job of not wrecking these opportunities.

The bill does not create much confidence. On the one hand, the bill continues to talk up the Asian century but, on the other hand, does not do anything to enhance it. The amendment focuses on Asia by cutting out export grants and opportunities for the rest of the world—areas where we have longstanding markets—so that it can save money. This is not about exports; it is about saving money. It is not enhancing Asia. It is simply taking money away from our traditional and longstanding trade areas.

There is a better way. The coalition, if elected, will prioritise trade deals that deliver benefits for industry by rebuilding our international reputation and strengthening our relationship with our trading partners, whether they are growing, old—or totally cheesed off. For agriculture, this will be complemented by a government that has agriculture as one of its five pillars and a minister for agriculture that stands up for the industry and works proactively to make the most of opportunities.

This government have listed legislation for tomorrow that will increase the cost of chemical registration. When you add that to the carbon tax and all the things they are doing to make it harder for us to do business with Asia, it is clear we have to rectify that. We are supporting the bill, but it is because of the diabolical budget situation, not because it will increase the potential of our industries to capitalise on the Asian century.

Jane Prentice (Ryan, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Export Market Development Grants Amendment Bill 2013. The EMDG scheme was set up to support export promotion expenses of eligible enterprises in order to boost exports of Australian produced goods and services. The scheme reimburses up to 50 per cent of eligible export promotion expenses incurred by small to medium sized enterprises. Claims are reimbursed retrospectively for expenditure incurred in the previous financial year, pro rata, up to the cap, which I understand currently sits at a maximum grant level of $200,000.

The agency which administers the EMDG scheme, Austrade, similarly provides a range of vital services to would-be exporters, such as advice on prospective markets and opportunities, on-the-ground support in target countries, trade exhibitions and assistance in finding potential investors. The EMDG scheme very ably assists their work for would-be exporters and is a crucial investment program for new and existing exporters.

Last year, as a result of Labor's mismanagement of the economy, the Treasurer decided in the Mid-Year Economic and Fiscal Outlook, MYEFO, that the EMDG scheme should have its budget cut to deliver what the Treasurer calls a 'saving' of $25 million. That is not what you would hear the Labor government admit, of course. They have tried to claim that their changes are all about shifting the aim of the program and increasing the number of grants available in East Asian and so-called frontier and emerging markets. At the same time, the government will exclude expenses relating to the promotion of sales in the stronger markets of the United States of America, Canada and the European Union in grant years 6, 7 and 8 for all applicants except approved bodies. The government have argued that in those stronger markets the Australian brand is already well known and accepted, claiming that small businesses face fewer barriers to doing business there and, therefore, they have reduced the duration of available grants from a maximum of seven years to a less commercially realistic five years.

I have serious misgivings about this approach. Firstly, as the Australian Chamber of Commerce and Industry rightly argues, there is no credible commercial analysis that shows that money spent through the EMDG scheme on established markets is any less valuable to the Australian market than that spent in emerging markets. I know that, while this government considers it to be easier for smaller operators to gain access to our traditional markets, we must not ignore the fact that this means the potential for growth can be so much higher. We need only look at the experience of the cruise ship industry, which has seen not just enormous growth in Asian markets but also unprecedented growth from areas such as the United Kingdom and Germany.

At this time, when the Australian dollar is so strong and Australian companies, unlike their international competitors, are reeling from the whole-of-economy carbon tax, the government should not be picking the winners or the regions in which we spend money but, rather, through this scheme, facilitating private companies to direct money to areas where it will be cost-effective.

It should be up to Australian businesses to apply for EMDG funds according to commercial realities, as opposed to the decision of some politician or bureaucrat in Canberra so far removed from what is actually happening on the ground. But that is exactly what the Labor government have done since 2007—they have meddled with the scheme, and frankly they have made a complete mess of it. Soon after taking office Labor expanded the scheme by lowering the eligible expenditure threshold from $15,000 to $10,000, increasing the number of grants from seven to eight and increasing the maximum grant from $150,000 to $200,000. This does not, on the face of it, sound like a bad idea. But, while the cost of these changes was estimated at $50 million a year, the Labor government only provided increased funding for the 2009-10 year. Then, in June 2010, Labor amended the scheme to essentially reverse the 2008 implementation of its election commitments. This is yet another example of the government saying one thing publicly and then deciding to break promises and election commitments. All the while, small and medium sized enterprises in this case have absolutely no idea what is going on. I have heard from the industry that, from year to year, they essentially do not know what the government are going to do with the EMDG scheme—but at least this bill finally codifies the cuts that they are making now. Exporters have the unfortunate certainty that, with this bill, yes, the Labor government are cutting funding to EMDG.

One of my primary concerns with this bill is that it removes event promoters from the EMDG scheme. This Labor proposal will have a negative impact on event promoters, including businesses such as Brisbane Marketing, which is an enormously successful company that markets Brisbane to the world. Brisbane Marketing, and many other companies like it, form part of the Australian Association of Convention Bureaux, which has approved-body status through the EMDG scheme and assists its members by applying through that scheme. As a former board member of Brisbane Marketing and event manager, I know how effective EMDG support can be to the inbound event market.

We know that tourism is one of the key export industries in this country. It is a growing one, and certainly event promotion falls under this category. Some of the very important work they do is to promote events within Australia as well as destination marketing for international tourists. I am concerned that by removing event promoters from the EMDG scheme we are removing a whole tranche of ways that the government can assist businesses to promote specific events in overseas markets. The success of the sector speaks for itself: in 2011-12 the AACB won and assisted the placement of 456 international business events in Australia, which were expected to attract some 149,470-plus delegates, for 609,385 visitor nights, with an estimated economic benefit of $385.2 million. The enormous success of event promotion in Australia and its broader importance to expanding the tourism sector cannot be underestimated. As Andrew Hiebl, the Executive Director of AACB, said, today's changes will;

… have [a] significant impact resulting in fewer international delegates for Australia and therefore reduced export revenue, and a reduction in all of the indirect benefits brought to the economy by business events. At a time when current global economic conditions and a high Australian dollar make Australia a less attractive long-haul destination, now is not the time to be reducing support for delegate boosting activities.

Clearly, it is simply not the right time to be doing this. By cutting funds available through the EMDG scheme, Labor is simply making a bad situation worse for an industry already struggling from the high Australian dollar and a whole-of-economy carbon tax.

Of course, it is clear that the government is not responsible itself for the success and growth of tourism—that has been done by hardworking tourism operators. But the EMDG scheme does form an integral part of any government's approach to supporting small and medium sized operators to get a foothold in foreign markets, whether that be Asia or our more traditional markets in the USA, Europe and Canada. What the Labor government are doing is taking a very piecemeal approach to the tourism industry. They do not have a coherent strategy, nor do they intend to devise one. This cut of $25 million is again an example of damaging tourism.

David Goodwin, the immediate past President the Chamber of Commerce and Industry Queensland and a former board member of the Australian Chamber of Commerce and Industry, believes these amendments will have dire effects on the Queensland export market. Queensland is an extremely strong exporting state, and Mr Goodwin says these changes will affect every pillar of the Queensland export market—from education and tourism through to agriculture and natural resources.

The coalition will not oppose the passage of this bill in parliament—due to fiscal constraints as a result of this Labor government's economic mismanagement we must accept reduced funding. However, I take this opportunity to reaffirm my commitment to exporters and organisations such as AACB that, if the coalition wins government, we will review this issue—and, for that matter, review any potential increases in red tape due to the changes. The coalition maintains our long-term commitment to increase general funding levels for the EMDG scheme. Tourism is a part of the coalition's strong plan for economic growth. The coalition will ensure that Australia has a vigorous five-pillar economy, including a resilient tourism services sector. Only the coalition will support the EMDG scheme, and only the coalition will take real action to support and expand Australian tourism.

Kelvin Thomson (Wills, Australian Labor Party, Parliamentary Secretary for Trade) Share this | Link to this | Hansard source

The Export Market Development Grants Amendment Bill 2013 reflects the careful consideration of both government and Austrade as to how to contribute to Australia's successful engagement with the world through exporting the remarkable skills, innovation and goods of its hardworking men and women. It is an important issue. It is important to get the EMDG scheme right and, in the balance represented in the bill, we feel we have achieved that.

I thank all the members who have contributed to this debate, but I do need to respond to some of the more remarkable claims that were made during the debate. Few things better illustrate the opposition's failure to sincerely engage in the discussion about Australia's economic future than the amendment proposed by the Deputy Leader of the Opposition. To read it returns one to the playgrounds of our primary school days, where nonsense and abuse are paraded as debate. On the one hand, the opposition condemn this government for spending too much, and in the next sentence they condemn the prudent savings in the bill. If that is not sufficiently dishonest and sneaky, in paragraph 4 the opposition imply that if they formed government they would increase spending, but they do not commit to it. They commit to a review.

We all know about coalition reviews. People lose jobs. Funds are cut. That is in the opposition's DNA. That is what has happened in Queensland, what has happened in New South Wales and what has happened in my home state of Victoria. Let me quote the shadow Treasurer on this matter. To a London audience on 17 April last year, Mr Hockey said:

The age of unlimited and unfunded entitlement to government services and income support is over.

The next day he boasted on Lateline:

… we need to keep our pencil sharpened when it comes to entitlements.

So just where do the opposition stand on helping Australian business succeed overseas? The truth is that they are addicted to cutting, and their complaints about prudent measures taken by this government are hypocritical and not to be believed. They had every opportunity during this debate to commit to increasing funding for the EMDG scheme. They did not. And, make no mistake, if they were to get elected in September, they would not.

They had the nerve to criticise our economic and fiscal strategy. Australia is the second fastest growing developed economy in the world. We have a triple-A credit rating from the three main rating agencies. We have low unemployment. We have modest inflation in the middle of the RBA's target band and low interest rates. Our public finances are in good order, enabling the RBA to reduce interest rates.

This government has been able to cut taxes, reform business taxation and assist small business with increased tax deductions. At the same time, we are making strategic investments that will secure Australia's prosperity for generations to come, with the National Broadband Network, the Gonski reforms, the National Disability Insurance Scheme, the New Car Plan and renewable energy. In a telling vote of confidence in Australia, business has invested over $1 trillion in Australia since Labor came to power in 2007. If that is mismanagement, the rest of the world would surely wish to be equally mismanaged. Australia's outstanding economic performance is built on the strategic direction provided by this government and the sometimes difficult decisions it has taken. But, on the Australian economy, we have come to expect the opposition trying to have their cake and eat it too.

Less understandable, however, is the opposition's attack, during this debate, on Australia's relations with Indonesia. It has long been a bipartisan view that our important relationship with Indonesia should not suffer from cheap partisan politics. Our relations with Indonesia are in very good shape. In 2012, two-way trade between Australia and Indonesia was valued at $13 billion, making Indonesia our 12th largest trading partner. Currently there are approximately 17,000 Indonesian students enrolled with Australian education institutions. The ASEAN-Australia-New Zealand Free Trade Agreement, now ratified by Indonesia, dramatically reduces tariffs on two-way trade and creates greater certainty across the board for Australian exporters and investors in Indonesia.

The recent ratification of the ASEAN-Australia-New Zealand Free Trade Agreement paves the way for the commencement of negotiations on an Indonesia-Australia Comprehensive Economic Partnership Agreement, as jointly announced by both leaders in 2010. This agreement will focus on the following priority sectors: agribusiness, so food security; infrastructure and resources; value-added and high-level services; and alternative energy and environment. Far from the dire picture painted by the opposition, our relations with Indonesia are excellent and are set to grow and deepen further. That is important for Australia's future prosperity at home and for a peaceful and prosperous region.

All of this raises the question of how Australia would fare with a coalition government filled with Asia sceptics. They are the regional equivalent of climate change sceptics. I note with deep concern the Deputy Leader of the Opposition's criticism of this government's focus on Asia. Her call for a focus on a global century is quite worrying. We all know that, when you make everything a priority, nothing is a priority. This unthinking focus on everything would see valuable resources poorly directed, would give no direction at all to business and community leaders about where efforts can be most productively made and would confuse our neighbours and our major trading partners about where Australia thinks it is actually located and who we think the majority of our trade is with.

The facts of Asia's rise are undeniable. By the end of this decade, Asia will overtake the economic output of Europe and the US combined. By early next decade, the combined output of China and India will exceed that of the whole Group of Seven major economies, and average GDP per person in Asia is set to almost double by 2025. In recent years, we have seen a sharp shift in our pattern of trade. A decade ago, Australia's most important trading partners were largely in the developed world. Today, China, Japan, the Republic of Korea, India and our ASEAN neighbours absorb around three-quarters of our exports and supply half of our imports. China alone absorbs one-quarter of our exports and supplies one-fifth of our merchandise imports. Is the opposition the one remaining group in Australia that does not understand that the world is changing and that Asia is growing dramatically in economic importance?

The Asian century will present both opportunities and challenges. It will be accompanied by a need for responsible stewardship of resources and the way government works with industry. As my colleague the member for Makin eloquently stated in this debate on 12 March, it is the responsibility of government to use resources prudently and to regularly review programs to ensure they accurately respond to the needs of the industry and to those of the country as a whole. This is the serious business of government, as distinct from the shrill and opportunistic chatter of the opposition.

This bill is an expression of this government's commitment to support the efforts of small- and medium-sized exporters, develop new international markets and generate jobs and prosperity for Australians. The changes proposed in this bill will help ensure that support to Australian small- and medium-sized enterprises is well targeted and that grants go to those businesses which can benefit most from that support. The proposed changes focus the scheme on where Australia's largest opportunities lie by encouraging small- and medium-sized businesses to take advantage of the emerging opportunities in our region.

The changes in this bill will better help Australian exporters maximise the potential of the Asian century by increasing the number of grants available to businesses exporting to East Asian and emerging and frontier markets from seven to eight. This offers Australian small- and medium-sized exporters a slightly longer and more commercially realistic period to become established in those markets. To offset the additional grant expenditure associated with an increased number of grants to East Asian and emerging and frontier markets, the number of grants to the United States, Canada, the United Kingdom and the European Union—where the Australian brand is already well known and well accepted and where small businesses typically face fewer barriers—will be reduced from seven to five.

The increased focus of the EMDG scheme on emerging and frontier markets brings EMDG into closer alignment with Austrade's broader trade priorities following its review in 2011 and the government's Asian century policy agenda. These changes also deliver on the Mid-Year Economic and Fiscal Outlook decision on the EMDG scheme and will generate annual savings of $25 million, commencing this year. As I announced on 12 March, businesses that put in an EMDG claim in 2012-13 will likely receive their full EMDG entitlement. This is great news for EMDG claimants and means that any small business that applied for a grant will receive a reimbursement of up to $150,000 this financial year.

In summary, the bill contains the following changes: an increase in the maximum of number grants to eight; the exclusion of approved bodies and joint ventures; the exclusion of expenses relating to the promotion of sales to the markets of the USA, Canada and the European Union in grants years 6, 7 and 8 for all applicants except approved bodies; the removal of the limit on administrative expenditure from the legislation and the introduction of a power for the minister to set the limit on administrative expenditure by determination; the prevention of further approval of joint ventures after 30 June 2013; the removal of event promoters from the EMDG scheme; the prevention of payment of grants to applications engaging an EMDG consultant assessed to be not a fit and proper person; the enabling of a grant to be paid more quickly where a grant is determined before the 1 July following the balance distribution date; and a requirement for applicants to acquit claims by individually paying for claimed expenses.

The government is seeking to pass this bill now to avoid creating considerable uncertainty for small businesses as they adjust to the new arrangements, which become operational on 1 July this year. I commend the bill to the House.

Ms Anna Burke (Speaker) Share this | Link to this | Hansard source

The question is that the amendment be agreed to.