Anne Webster (Mallee, National Party) Share this | Link to this | Hansard source

Australia produces three times the food it needs. This fact alone demonstrates how important it is that we export our produce to international markets, and that's without mentioning other key exports like iron ore and coal. The Export Market Development Grants Legislation Amendment Bill 2020 demonstrates the Morrison-McCormack government's commitment to supporting our vital export industry. There are now a record number of Australian businesses exporting goods. There were over 56,700 goods exporting businesses in 2018-19. This is up seven per cent on the previous financial year and 27 per cent since 2013-14. One in five jobs in this country depend on trade. Australian exporters, on average, hire 23 per cent more staff, pay 11 per cent higher wages and have labour productivity 13 per cent higher than non-exporters.

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Export businesses are highly productive because they compete in a global market and need to be efficient to be competitive. Therefore, cutting red tape, increasing access to international markets and providing financial support to these businesses is hugely important. Our comeback after COVID depends on jobs and increased productivity. Doing so will mean more jobs and more productivity as our economy recovers from the impact of the COVID-19 pandemic. Through the measures outlined in this bill and several other initiatives, we are opening an ambitious export growth agenda and supporting our vital export industry. This in turn supports highly productive Australian jobs and enterprises.

Local exporters in Robinvale Fred Tassone and Donny Gareffa have talked with me many times over the last 12 months about export difficulties, whether its market access or trade arrangements and agreements. This year they have a bumper table grape harvest, and the big issue for them is the export market. This legislation is one key to assisting our farmers to do what they do best: grow and sell. Packages developed by the government to assist producers, including the Busting Congestion for Agricultural Exporters package and the International Freight Assistance Mechanism, are part of the solution. The Morrison-McCormack government continues to pursue and adopt several important trade deals and open up new markets when diversification is needed.

Other businesses in my electorate of Mallee are benefiting from our export agenda. I recently met with Robert and Vanessa Woodward of Woodward Foods in Swan Hill, who have an ambitious export agenda of their own. Their exceptional business stems in part from its longevity. It was established in 1888, and the business now has over 600 employees. Robert and Vanessa, along with their CEO, Brett Buktenica, pride themselves on their vertically integrated paddock-to-plate business model. While they maintain a focus on their valued domestic customers, the business has expanded its reach globally, accessing several of the world's biggest markets, including China, Japan, India and Indonesia. Australia has fostered free trade agreements that have delivered higher incomes, more job opportunities and higher growth for businesses such as Woodward Foods and many more around the nation.

The bill currently before the House drives on the Morrison-McCormack government's export agenda through further supports for our nation's exporters. The bill currently before the House implements several changes to the Export Market Development Grants scheme, or the EMDG scheme. This is a key government financial assistance program, supporting exporters to increase their marketing and promotional activity in international markets. Since it started in 1975, the EMDG scheme has supported over 50,000 small and medium exporters to enter and grow their export markets, whether they are products, services or intellectual property.

The bill enacts the recommendations of the review of financial assistance to SME exporters. Extensive consultation was undertaken by the reviewer, with a direct email sent to over 5,000 interested parties, including past and current EMDG recipients, EMDG consultants and peak bodies, informing them of the review and alerting them to the opportunities to have their say and provide input. The review then found that the government should continue to provide financial assistance to SMEs to encourage them to enter and grow export markets but noted that the way this financial assistance is provided should be simplified by removing complexity, by streamlining and by providing more certainty.

As it stands currently, the EMDG scheme reimburses costs to exporters. This process sees exporters waiting up to two years for payments, with no guarantee of full reimbursement. With the proposed changes, the scheme will be transformed to an eligibility based grants program to encourage export-ready businesses to increase their exports and diversify their markets. Grants will target eligible export-ready SMEs with an annual turnover of less than $20 million. This will provide eligible businesses with certainty through up-front funding agreements across multiple years for marketing and promotional activities, enabling them to plan their activities with confidence. The operation of the program will be simplified and streamlined, cutting red tape and making the scheme easier for exporters to access. The eligibility threshold will also be lowered from $50 million to under $20 million in order to ensure this funding is targeted to where it will have the greatest impact and achieve the best outcomes.

The coalition has progressively restored funding to the Export Market Development Grants scheme, delivering over $200 million in additional funding to the scheme since 2013. This government's investment in the scheme fully restores and provides additional funding on top of Labor's $100 million worth of cuts to the scheme from when they were last in government. As part of the COVID-19 Relief and Recovery Fund, the Morrison-McCormack government provided nearly $50 million in additional funding for the 2019-20 financial year, bringing the annual appropriation for the EMDG scheme to $207.7 million—it's highest level in more than 20 years. This government has demonstrated its commitment to supporting exporters through this scheme and will continue to do so with these changes by making it easier to access and more effective in its delivery.

Since I stepped into my office in May 2019 I have walked alongside my exporters through an incredibly difficult 18 months, particularly for those in the agriculture and horticulture sectors, who have faced drought, high water and energy costs, workforce challenges and COVID-19. I'm absolutely focused on supporting our exporters now more than ever, so I welcome this bill. I know that this government's measures to support exporters and increase access to trade markets will be welcomed by growers in my electorate, particularly those in the table grape and citrus industries. Recently I was contacted by several table grape growers, who've expressed concern about ongoing issues with one of their major markets in China. Growers, including Maria Iudica, Mark Zappia, John and Tereena Marlais, Adrian Cordoma, Michael Snadden, Zoe Dichiera, and Guiseppe Romeo, came to me with their concerns. I've heard their concerns and I've taken them on board and communicated them.

I want to reassure growers that the government is monitoring the situation closely and is working through diplomatic channels to ensure our produce keeps moving. I've been working closely with both Minister Littleproud and Minister Birmingham to ensure they understand the unique challenges facing our region from a farmgate perspective. The ministers are well aware of the issues facing producers in Mallee and are working tirelessly through each commodity, one by one, to make sure these issues are resolved, noting that these challenges are best resolved through open and respectful dialogue.

The Australian government faces a dilemma of balancing Australia's trade interests against issues of foreign interference and protecting our nation's sovereignty and strategic interests. The government will continue to work collaboratively with industry and our trade partners to ensure we strike the right balance. Notwithstanding the government's desire to resolve these issues, diversification and expanding into new markets will continue to be important to industry. I understand this is easier said than done. Relationships with importers are often built up over years of doing business and accessing new markets doesn't happen overnight.

Diversification may lead to short-term pain for producers, but we need to have a long-term view. We need to consider what the next five, 10 and 15 years looks like. This is why the government is working to support industry by opening up new market access and negotiating new free trade agreements, having brought into force trade deals with Indonesia, Hong Kong and Peru; pursuing trade agreements with the European Union and the United Kingdom; and building on our relationships with Japan and Korea.

I'm particularly excited by the Regional Comprehensive Economic Partnership, which brings together 15 Indo-Pacific countries into a single framework. The agreement includes nine of Australia's top 15 trading partners and delivers a range of improvements over our existing agreements with these nations. We've also signed a bilateral agreement with Indonesia known as the Indonesia-Australia Comprehensive Economic Partnership Agreement. Under this agreement, over 99 per cent of Australia's goods exports will enter Indonesia duty-free or under preferential agreements. I hope this will lead to more favourable trading conditions for exporters of red globe table grapes who encountered issues with the Indonesian market at the start of the year before the agreement was ratified.

Continued growth in exports to premium markets is vital to Australian agricultural industries and regional economies, and maintaining strong relationships with our trading partners is critical to ensuring success especially now in a post-COVID world. That's why the government is introducing a package of reforms to slash unnecessary red tape to get products to export markets faster and support jobs in regional Australia. The Busting Congestion for Agricultural Exporters package will work to maintain and strengthen existing access to premium overseas markets and provide an immediate freeze on fees and charges to assist exporters with the impacts of COVID-19.

The centrepiece of the reform package is the Digital Services to Take Farmers to Markets measure, which will modernise Australia's agricultural export systems by slashing red tape and improving regulation and service delivery for our producers and exporters. This measure will transition our systems online and provide a single portal for transactions between exporters and government, streamlining processes for exporters and helping them experience faster and more cost-effective services.

The most recent ABARES Agricultural Commodities Report has shown that the gross value of Australian agricultural production is forecast to increase to $65.1 billion in 2021. This is in spite of the fact that Australian agricultural exports are expected to take a seven per cent hit on what has been an exceptionally difficult and unprecedented year. The government's ambitious export agenda and the suite of measures designed to support our nation's exporters, including the improvements to the Export Market Developments Grant scheme, will pave the way for future growth, job creation and prosperity, including in my electorate of Mallee.

Rob Mitchell (McEwen, Australian Labor Party) Share this | Link to this | Hansard source

I rise to support the honourable member for Brand's very-well-worded and intelligent amendment to the Export Market Development Grants Legislation Amendment Bill 2020. We are not opposing the bill, because we understand the enormous benefits the Export Market Development Grants scheme has brought to Australian small and medium enterprises over many years. The EMDG Act establishes a grant program for Australian small and medium enterprises for reimbursements of up to 50 per cent of their export related marketing expenses. This, on the surface, is a great policy and, like most policy initiatives over the last few decades, it was introduced by the Whitlam government, in 1974. Its purpose was to encourage small businesses to expand their export markets and for Australia to diversify its economic reliance. Over time, however, the EDMG Act has not functioned in the best way it could for our exporters.

The Howard government slapped a spending cap of $150 million on the EMDG in 1997, and since then the funding has not really increased in real terms. Because of the confusing administration, the level of reimbursement each SME receives is uncertain and varies from year to year, dependent on the demand on the scheme and the size of the appropriation. Currently, some exporters are being forced to wait up to two years to receive reimbursements, with the level of funding unknown until after the completion of their promotional activities. We want our exporter-operators operating with as much certainty as possible, not hedging their bets based on what they think they might or might not get from this government.

The bill implements the recommendations of the Fisher review to streamline the act and to cut down bureaucracy. It will change the reimbursement scheme to an upfront grants scheme, which will provide certainty for exporters. The grants will also be capped for export-ready SMEs with an annual turnover of less than $20 million, down from the previous $50 million. That's because the review found that to many big exporters these grants were seen as nice to have rather than actually acting as an incentive to diversify their exports.

So Labor will be supporting the bill, but we urge the government to actively enter discussions with the Export Consultants Association and take on their advice about any amendments to the act. While we will be supporting the bill, we are horrified by this government's indifference to any export market that doesn't involve digging things out of the ground. That accounts for the vast majority of SMEs, who are trying to make a go of it in complex exports—exports like manufacturing, which has all but died under this government's watch and has contributed to our decline in our world rankings.

Diversifying our exports means higher wages and more jobs for Australians, and in the midst of the Morrison recession, the worst this country has seen since the Great Depression, you would think it would be a top priority for a government, yet small and medium enterprises account for just 14 per cent of Australia's exports. If we look at that in comparison with G7 countries, we see they account for 25 per cent of exports and the European Union average is around 35 per cent. By lifting our SME exports to 25 per cent of our overall exports, Australia would increase its GDP by an estimated $36 billion. At a time when this government is slashing JobKeeper and saying there isn't enough money in the budget to help young families with child care, you'd think that $36 billion would be an enticing number. Then again, this is the government which has squandered billions of dollars on waste, rorts and favours for Liberal mates, so it isn't surprising that the PM is more interested in bringing a lump of coal into parliament than he is in supporting industries that can save the Australian economy.

Because of the government's inaction over the last eight years, our exports have been become unusually dependent on China, so this government should be doing all it can to promote diverse export markets, but it's not. Take, for example, Australia's languishing trade and investment relationship with India. Two years ago a landmark report on India found that no single market over the next 20 years would offer Australia more growth opportunity, but so far this government has done next to nothing in its response to the report's 90 recommendations. Instead the PM held a virtual summit with Prime Minister Modi with practically no attention given to the trade and economic relationship. It's hardly shocking, then, that India's share of Australia's export has dropped below two per cent, the lowest since 2003. In a growing market Australia is getting less and less of a share because this government is asleep at the wheel when it comes to supporting small and medium enterprises and exports.

Our SME exporters have learnt the hard way that the government really cares more about short-term bucks they can get from mining rather than the long-term stability we can achieve by diversifying exports. That's why Labor has publicly called on the government to address Australia's lack of export complexity. A recent Harvard study of economic complexity ranked Australia 93rd in the world for complexity of its exports, lagging behind great and powerful nations such as Kazakhstan, Uganda and Senegal. Such a narrow export base means Australia is uniquely dependent on a small number of trade investment markets, which obviously increases Australia's risk in a deteriorating global economic environment. The government claims to care about national security above all else, but if this were really the case Australian businesses would not currently be feeling the pain of geopolitical tensions. That they are is due to the mismanagement of the current Prime Minister.

Despite these warnings, Australia, under Prime Minister Scott Morrison, is more dependent than ever on China for its exports and jobs. In fact, we depend on the Chinese market more than any other country in the world. A British research institute recently determined that among the Five Eyes countries, comprising Australia, the US, the UK, Canada and New Zealand, Australia is the most dependent on the import of Chinese goods, particularly strategic goods, ranging from medical equipment and pharmaceutical goods to processed aluminium and steel. These are things that can and should be made here. We're a country that should be able to invent things, make things, sell things and export things. We have the know-how. We have the intelligence. We just don't have a government that's actually committed to driving and building this.

The government has had over seven years to figure it out, yet it still hasn't delivered a plan to support our exporters, to save Australian jobs or to diversify our economy. Australian exporters are suffering and Australian jobs are on the line because our exports are forced to be too reliant on a single market. I find this particularly worrying, because Chinese demand for our commodities is forecast to plateau in coming decades, and we've seen recently the issues in relation to exports. Whether it be live fresh rock lobster—our wild catch lobster, which is the best in the world—or other commodities such as barley, they are all at pains, while this government walks around, puffs its chest up and says how good it is. In the meantime, our exporters, our farmers and Australian workers are suffering.

With all these exposed sectors, such as our meat exporters and winemakers, it becomes painfully clear that China, for reasons which are vague and unclear, is willing to limit imports from us. But what is definitely clear is that the government has been asleep at the wheel and is failing Australian workers and businesses badly. We cannot change our reliance on China overnight, but the government seems to believe it is up to the Australian companies to go and open new markets. It's obvious from our history that nothing will happen unless the government takes the lead, but it will take a little more follow-through than a couple of press conferences called by the Prime Minister. We have a vast network of trade embassies right around the world that can deliver work and help bring in extra markets, more job opportunities for Australian workers and more opportunity for Australian exporters, but we've got to have the government driving these things. There's no point sitting on your hands and saying, 'It's not our fault. It's all their fault.' No, it's not. It's actually the government's fault, and the government should be held to account for doing this and causing the issues that we're seeing today for our small and medium enterprises.

It's not just China that we're dependent on. Australia currently holds 28 days worth of fuel imports. Now, this is well below the 90-day minimum requirement under international agreements. Even though the hapless Minister for Energy and Emissions Reduction signed an agreement with the US to hold fuel reserves, let's be clear: we're going to get fuel reserves, but we're going to leave them in the US rather than onshore. So, if anything happens and we have any incidents that stop fuel from being transported, we'll be left with nothing. This is the joy that we have when we listen to Minister Taylor. Seriously, he turns anything he touches into absolute problems, each and every time. Whether it's false emails with the City of Sydney or his energy policy, you can be sure that whatever happens with Minister Taylor is going to end up being a mess.

We need to ensure that this fuel is delivered onshore. It should be sitting here. We should have our refineries working. We should have jobs in this country. We should have the fuel supply that our people rely on here onshore, because we don't actually have the capacity to refine it. We saw the member for Brand talking very strong about the refinery in her electorate that's being shut down. Where's the government on that? It's nowhere to be seen. That is an absolute failure. Really, the core business of the Australian government is firstly to protect our citizens.

The government has abandoned self-sufficiency in favour of foreign reliance. As I said, we used to be a country that invented things, built things and sold things. But, under this government's watch, the manufacturing sector has collapsed. Through past jobs, I know the importance of access to Australia's high-quality exports. The rock lobster fishery in Victoria and South Australia is the cleanest and greatest in the world, yet it's being held up and those products are not getting overseas. Sure, it's good for Australian consumers because it means a price drop, but it's not good for those who have invested millions of dollars in an industry and the many jobs that it brings.

Industries like that have been abandoned by this government, because this Prime Minister is all about a photo op but never a follow-up. If it was up to Labor we would be working hard with exporters to be build relationships and secure the markets that Australian jobs depend on. Diversifying export markets is more than a photo op and a free trade signing ceremony. We've seen with the free trade agreement with China just how well that's working at the moment! Labor would work with other allied and aligned countries who also face the challenge of a more assertive China, not alienating ourselves from our Pacific neighbours like this government is doing.

While we will support the passage of this bill, we say to the government that more must be done to improve SME exports. We are lagging on the world stage when we should be out in front. I say to the Prime Minister if he ever took the time to listen to anyone but himself that if he expects the support of exporting businesses then he has to do more to protect them from the geopolitical tensions, which they are now exposed to courtesy of the failure of this government.

Katie Allen (Higgins, Liberal Party) Share this | Link to this | Hansard source

I rise to support the current Export Market Development Grants Legislation Amendment Bill 2020. This longstanding reimbursement scheme provides financial assistance to Australia's small and medium enterprises, SMEs, and encourages them to create, develop and expand export markets for Australian goods, services and intellectual property. I sit on the Joint Standing Committee on Trade and Investment Growth and we've heard from a variety of exporters how important this grant is to their survival and also to their sense of innovation and how it provides them with assistance in the early stages of trying to get off the ground. We know how important being an exporting country is to our future. We understand that we need to increase diversification of our trading assets and diversification of our trading partners. That is what the two inquiries the Committee on Trade and Investment Growth has been looking at during the course of this year and the last part of last year.

This bill establishes an entitlement for eligible exporters which reimburses recipients up to 50 per cent of eligible export promotion expenses above $5,000, provided the total expenses are at least $15,000. It also provides a wide range of expenditure that is eligible under the new scheme, reflecting the different ways that different businesses approach different markets. The Committee on Trade and Investment Growth heard from a diverse group of exporters. I am a medical researcher and I know how difficult it can be to predict the future when you are trying to develop something for a commercial market. It's important that we have a flexible approach to ensure that companies can deal with developing their business in a way that suits their needs. Importantly, this bill also provides SMEs access to multi-year entitlements, reflecting the time to build a presence in the market, and it provides funding certainty and confidence. Again, I reflect on my time in medical research and how important having those multi-year agreements can be with regard to long-term certainty and planning. This funding certainty has never been more important for our SMEs who rely so heavily on this grant for the innovation, particularly in this post-COVID environment we are finding ourselves in.

I recently met with local constituents, Tom and Belinda, who together own an export business which has been growing for 13 years. Tom and Belinda took over from Tom's father three years ago and they have watched their company, Sandilands Export, go from strength to strength. They have also been pivotal in helping other Australian businesses take their products and services to the world stage. They achieve this by helping businesses obtain and maximise the export market development grants. Tom and Belinda, like many exporters, want less red tape, as additional paperwork is an added expense to their business and is far more onerous to the applicant.

Our government has conducted a review of the financial assistance to SME exporters. It was conducted by Anna Fisher of Zonte's Footstep, a wine exporter and former recipient of this funding scheme. Anna knows exactly what is required when it comes to using these sorts of reimbursements to help grow business. This review examined the effectiveness of the scheme and the efficiency model for delivering financial assistance for Australia's SME exporters, to encourage additional export development and promotional activities.

I always love a review, because it is about engaging with those people who are in the scheme rather than just applying what we think is going to work. The review involved extensive stakeholder consultation with over 5,000 participants, including peak body engagement. This provided invaluable feedback about the EMDG. The review received 158 submissions and found that, while the EMDG is valued by SME exporters, its administration was too complex and needed simplification—exactly what my constituents have been calling for. Again, I have been involved in the grants process, and you can spend a lot of time filling out paperwork when actually what you want to do is get on with the business of doing business.

The government has responded by changing the EMDG from a reimbursement scheme to an eligibility based grants program, to encourage export ready businesses, like the one in my electorate who will now be able to access new markets, increase their exports and expand. This is what we need to grow as an economy going forward in the post-COVID world.

The review also found, not surprisingly, that each SME's export journey is entirely unique, meaning that financial assistance needs to be tailored along the way to accommodate their changing needs. We know that, as businesses change, their needs change. The review recommended that the EMDG be re-targeted towards exporters with a turnover of less than $20 million at three stage of their export journey, and that the EMDG targets those exporters who are ready to take their business overseas for the first time, those that are growing and those that are undertaking a strategic shift. We know that this is so important. We don't want flatlining businesses; we want businesses that are looking for opportunity and growth. We want to take businesses from good to great, rather than just investing in businesses that are not necessarily going places.

The review presented a persuasive case for the need to better target EMDG funding towards those SMEs who can make the best use of public money. Additionally, the review also found that businesses don't always require government funding to help them through the export journey and that in fact large exporting businesses saw EMDG funding as nice to have but not essential and that it was not an incentive to invest in more export promotion activity. It was found that, for exporters with a turnover of $20 million and over, the EMDG payment was equivalent to less than 0.15 per cent of their total revenue. Hence, our recommendation is that SMEs with a turnover of under $20 million receive the assistance in order to ensure that this taxpayer funding is best targeted where it will have the greatest impact. Importantly, this will also provide industry associations the assistance they need to help support their members who haven't been export ready to become so.

The Morrison government has accepted in principle each of the review's recommendations, and this bill implements those recommendations. Under this bill, the current EMDG design features and principles have been preserved, including assistance being focused on export market development and promotion; the establishment of an entitlement for eligible exporters; providing for a wide range of expenditure to be eligible, reflecting the different ways that businesses are approaching their markets; and importantly, the multi-year entitlements. But the principle that SMEs must have skin in the game is intact and fundamental—again, we know that if you want to teach someone to fish you give them a fishing line but it's important that they also place the bait on the hook. This will help them receive their proportion of their eligible expenditure. We will also continue to subject the EMDG to continual evaluation—something I think is very, very important—so that we make sure that people are complying with the required processes.

In conclusion, the Export Market Development Grants Legislation Amendment Bill 2020 makes sure that support and assistance to SMEs is targeted and stream lined; that we cut down on red tape; and that we help these businesses which are open, flexible and, most importantly, growing in the export market. As we go forward in a post-COVID world, we want to make sure that these businesses help us to grow our economy for a better future for all Australians.

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Assistant Minister for Financial Services) Share this | Link to this | Hansard source

The Export Market Development Grants program is a great initiative of a Labor government. It was introduced in 1974 by the Whitlam government as a means of supporting Australian exporters to sell their goods and services in international markets. Labor support this legislation because we understand the enormous benefits of exporting into foreign markets for Australia's GDP and the benefits that this scheme has played in opening up new opportunities, particularly for SMEs, to expand their horizons and their markets and ultimately their incomes to support jobs. Funding for the program has steadily increased under successive governments to a peak of $270 million in the 1996-97 years and was forecast to increase to $300 million in 1997-98 under the Keating government. However, the Howard government were elected and they imposed a spending cap of $150 million in 1997, putting downward pressure on the scheme. The current funding, which includes a COVID-19 top-up of $47 million, is $277.7 million. This means that funding in real terms hasn't increased under this scheme since the Keating government.

The scheme helps aspiring and current exporters to increase their marketing activities overseas by reimbursing them up to 50 per cent of their eligible promotion expenses. In 2019, more than 4,000 small to medium enterprises in Australia accessed the scheme, generating exports worth $3.7 billion. In October last year, the government commissioned an independent review of the administration of the EMDG scheme and the review recommended that the program be retargeted to businesses with a turnover of less than $20 million, because many large exporters saw the grants as nice to have but not an incentive to invest in promotional activity. It was also recommended that the scheme's administration be simplified. One of the recommendations related to when the payments were made. In the past, payments were made by government to exporters after the expenditure had been undertaken, and in some cases it was years after the expenditure for promotional activities associated with selling their goods and services in international markets had been undertaken. That was inefficient and it was a deterrent to many businesses participating in the scheme.

There were 10 recommendations in total that were accepted by the government, and this bill makes a number of key changes to the scheme in light of those recommendations in that report. The changes include that the scheme will be changed from a reimbursement scheme to an up-front grants scheme to provide funding certainty for exporters dealing with the issue that I just raised. Grants will be capped for export-ready SMEs with an annual turnover of less than $20 million, down from the previous $50 million. Grants will be administered in two tiers, with tier 1 focused on SMEs new to export and tier 2 targeted at expanding exporters. It would be good to see the focus on businesses that are new to export—those that are dipping their toe in the water, if you like, or are looking to expand into international markets when they previously might not have thought of looking overseas. Labor supports building capacity amongst SMEs to boost exports and create more jobs for Australians. We all hope that this particular change to the program will achieve that.

SMEs account for only 14 per cent of Australia's exporters, whereas in G7 countries they account for 25 per cent and in the European Union, on average, they account for 35 per cent. However, exporters contribute more than nonexporters to jobs and productivity. On average, they employ more staff, pay higher wages and achieve higher labour productivity compared to nonexporters. It's a fact that exporters tend to have enterprise bargaining agreements with their staff to a higher degree than nonexporters, which tends to imply that they're interested in collectively bargaining with their employees around better wages and conditions on a regular basis and on the basis of a productivity trade-off which ensures that the efficiency of their business is improving and they are in a position to look to international markets to expand. Lifting SME exports to 25 per cent of Australia's exports would increase our GDP by an estimated $36 billion

The COVID pandemic has presented many fresh obstacles for Australian exporters, including the disruption to supply chains and loss of markets. Now more than ever it's important that Australian exporters have the most efficient support mechanisms in place to help them to access markets around the world. The Morrison government must develop a clear strategy to genuinely diversify our export markets. Our exporters need a government that does more than simply point to free trade agreements and hope that this will lead to increased trade. They need a government that actually delivers on access to markets, particularly around non-tariff barriers and particularly in Asian markets. We are signatories to close to 16—I think it is now—free trade agreements, and many of them do break down barriers around market access associated with tariffs. But it's the key area of non-tariff barriers, particularly investment controls in many of these nations, that have been a barrier to many Australian businesses opening up, locating premises, manufacturing and selling into Asian markets in particular but international markets more broadly. That's an area where I think the government could be doing more to assist businesses to break down some of those barriers.

The most glaring example is their decision to implement just one of the 20 priority recommendations contained in the 500-page report released in 2018 that contained a blueprint for closer economic management and closer economic cooperation with India. We believe that that's been a great failure of and a missed opportunity by this government. It was of course a report that was prepared by Peter Varghese. Since the publication and launch of the report, it has basically sat on the shelf in the minister's office, gathering dust. India's share of Australian merchandise exports was falling by more than 30 per cent as that report was being released. The Morrison government seem to believe that it's the responsibility of Australian SMEs themselves to open up these new markets, without any assistance from government. But we all know that governments that are interested in supporting SMEs to expand into international markets do have programs such as this—and others as well—to break down some of those barriers and support trade diversification.

It's evident from our history, including from the actions of both Liberal and Labor governments, that little will happen unless the Commonwealth government takes the lead in this area. For the sake of Australian jobs and SME exports, the Morrison government must act in the national interest to devise an urgent strategy to support Australian SMEs. That includes looking at some of those issues I mentioned around investment and the newer markets in the Asia-Pacific region.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Julian Hill (Bruce, Australian Labor Party) Share this | Link to this | Hansard source

I will say at the outset that I support the Export Market Development Grants Legislation Amendment Bill 2020. It makes a series of sensible administrative changes to an important longstanding scheme, the Export Market Development Grant scheme, which is actually a Whitlam government scheme from 1974. I'm only one year older than this scheme, and it's certainly stood the test of time.

The independent review, I might stress, is not the government's ideas; they haven't come up with these ideas. They quite sensibly had an independent review, spoke to hundreds of businesses and took that expert advice. The review found that the policy intent of the scheme has stood the test of time. For over 40 years this scheme that the Whitlam Labor government introduced is still a sound piece of policy. But, as you'd expect, there's a range of changes as the economy changes—as the nature of our markets and exporters change, so must the scheme change in an administrative sense. The idea of having upfront payments to provide greater certainty to businesses is a sensible one. In a past life I used to work in the Victorian government in trade and investment. I've run trade missions around the world. I've spoken to businesses and tried to help them in the Victorian context, and there was a lot of frustration with this scheme that people couldn't actually run a cash flow or bank on it. They had no idea what they were going to get. It was like a little lottery that they might win or they might lose. They've lowered the threshold, which is a controversial recommendation in some senses, but it does, so the government says and so the review says, better target the available dollars to SMEs by lowering the cap from $50 million to $20 million and creating two streams: businesses new to export and those wanting to expand export.

That's all sensible as far as it goes, but I do want to return my remarks to the second reading amendment. I listened to the previous speaker. He said we're doing well as a nation in trade. It is self-congratulatory prattle from the government. He's obviously content rich, but I can see why Christopher Pyne sent him here: it's so we'd miss Christopher! It was certainly an antidote to my insomnia. I was thinking of getting a podcast! But there's a serious and growing crisis with this government. The self-congratulatory prattle—oh, everything's fine in trade; there's nothing to worry about. It's almost like there's not a trade crisis. It's almost like there are not 80 ships sitting off the cost of China with over $1 billion of our export just sitting there, going nowhere. We could apply the Prime Minister's comeback slogan, couldn't we? 'Come back, ships. They don't want you. We've stuffed up the relationship so badly. Come back. We'll do something else.'

It's ridiculous. Mogadon speaker after government muppet gets up and says: 'Oh, we're doing really well on trade. It's all going swimmingly. It's all tickety-boo.' Well, it's not. Have a look at the facts under this government in its eighth year. Here are three key metrics. SMEs are 14 per cent of our nation's trade exports. Compare that to the G7 nations: 25 per cent. The European Union average is 35 per cent. The government's fiddling with a Whitlam government scheme. The amount of funding, though, matters in the scheme. You haven't put enough funding into it. This is your eighth year in government. You put, I think, another $37 million in as a COVID boost—panic, panic. 'Let's put some money in the scheme. All of a sudden we can spend money.' The funding was $240 million. When Paul Keating left office it was $270 million. Twenty-three years ago there was vastly more money in real terms in this scheme, and the government's fiddling with the rules, saying, 'Oh, haven't we done a good job?'

This is the spin versus the reality from this government. It's a marketing department masquerading as a government. There's nothing serious happening over there, just another announcement. 'Oh, look: we've announced. We changed the rules in the scheme the Whitlam government introduced,' but have a look at the outcomes. Fourteen per cent of our trade exports are from SMEs. It's not good enough. Have a look at our export complexity. Under this government we have a serious problem with our export complexity. Our exports, our trade, are far too narrowly focused and concentrated on a very few things that we export. So of course the headline figure for trade has gone up: people are buying this year a whole lot more of our iron ore. But, if you take that out of it, we're not doing well. That comes and goes. The headline figures that the government is trumpeting disguise a serious underlying problem with our trade and export profile. They haven't done anything about it; they just love making announcements. We are too dependent on a small number of exports.

This is not a new problem. It's not an easy problem to fix. But we don't value-add enough. We're now 93rd in the world for trade export complexity, behind Kazakhstan, Uganda and Senegal. That's not good enough. We're an advanced OECD economy, the 13th largest economy in the world, and we are far too dependent on a very narrow slice. There's no single solution, but there is a role for government—a much more creative, thoughtful role for government in industry and trade policy than we've seen over there. All they want to do is cut things.

Have a look at market diversification. That's the big one at the moment, isn't it? In their eighth year in government all of a sudden they're running around, going: 'Oh, we need to diversify away from China. This is a new thing. Look what we discovered.' It's not a new thing. People have been talking about this age of disruption between our biggest security partner and our biggest economic partner for years. If you talk to the experts, if you talk to business, if you talk to the academics or if you listen to your own bureaucrats for the government, they'd be saying, 'Amber light flashing; we have a market concentration problem here.' But you need to do more than just say 'diversify'. You actually need to do something.

So how is all the talk about diversification working out? Not very well. Like I said, we've got 80 Australian ships—well, they're not Australian; we got rid of the shipping industry. But there are 80 ships with Australian coal sitting off the coast of China with over $1 billion of our product not welcome, not let in. As I said, there is the comeback slogan. 'Come back, ships. Come back to shore. Come back to Australia. We've stuffed the relationship. They won't let you in.' The Prime Minister has got that little thing. Remember what we saw after he stopped the boats when he was the immigration. He stopped the boats. He has that little ship sitting on his desk, 'I stopped the boats.' Xi Jinping will need a whole new palace to put all the boats of Australian exports in that he's stopped! This is a serious matter. This is a serious relationship. The threats to our trade relationships are deadly serious. Of course, our sovereignty and our values must come first. But it has been crystal clear for years under this do-nothing government that we may face this situation and now the government just looks confused. It's as if we didn't have the former Prime Minister running around gratuitously insulting our biggest trading partner with, 'Shanghai Sam.' It's domestic politics at every turn for the Liberal Party, particularly this Prime Minister who is very, very good at politics. You have to hand him that. His very, very good at politics. But it's as if every time it matters in the national interest domestic politics doesn't trump the national interest.

We found out, shockingly, the announcement by the foreign minister about the World Health Organization, which was widely panned by the national security establishment. We didn't have to go and poke our biggest trading partner in the eye. We could have been more diplomatic and said, as Kevin Rudd observed, 'How about we do a study.' How you frame stuff matters. How you talk to people matters.

Opposition Member:

An opposition member interjecting—

Julian Hill (Bruce, Australian Labor Party) Share this | Link to this | Hansard source

Absolutely. We could have got the same outcome. Look at the smug, little whippet over there. What did you do to the previous member? We know about your loyalty and what happened. Unbelievable.

Rick Wilson (O'Connor, Liberal Party) Share this | Link to this | Hansard source

Order. I ask the member to withdraw that comment.

Julian Hill (Bruce, Australian Labor Party) Share this | Link to this | Hansard source

I withdraw that comment. It's a serious business and it's been clear for four years that there is no strategy. There is no trade minister. The previous finance minister announced in July that he was going. The Prime Minister has known for five months that he is going to have to get a cabinet reshuffle underway. He has downgraded the trade portfolio in the middle of a trade crisis. He has downgraded it and put it under the finance minister and under the Senate leader. I wonder when Australian exporters are going to get a trade minister who might actually focus on this growing crisis. We have backbenchers running foreign policy. The foreign minister is so weak. As I was saying before, she went on Insiders and announced the World Health Organization investigation because she needed an announcement. They couldn't actually just go on television for the morning and talk about their agenda or manage the foreign policy debate or talk about what the government is doing or achieving. They needed to make up an announcement. How well has that gone for us!

Not one single minister in this government in the last two years has been able to pick up the phone and call any of their counterparts in our biggest trading partner. What a stunning success that has been! Well done, government. There is no relationship at all. The foreign minister is so weak she has outsourced foreign policy to a bunch of the extreme backbenchers. They are the ones popping up on TV and trotting out the messages, mucking up the relationship. We've had private briefings—I won't say from whom but former heads at the very top of the government—from people who have served Labor and Liberal governments from the national security establishment who were scathing about the way the government has managed this. They observed that the World Health Organization announcement—a chest-beating call from the front, no diplomacy—was not in our national interest and undermined our national security. One thing they said to us very clearly which I've tried to take to heart when I talk on TV is that this relationship should be managed by adults—by the Prime Minister, by the foreign minister, by the opposition leader and by the shadow foreign minister—and just about everyone else should shut up. If only the foreign minister and the government had the strength to call these nutters in the government into line and stop trotting out their lines ,this country would be in a much better place.

As I said, diversification isn't easy but the government had the best opportunity, a serious opportunity, to look at diversification, which was the Varghese report from 2018 on India. The former head of the Department of Foreign Affairs and Trade did a serious piece of work, a $1.5 million study, into how we could diversify our trade relations with India. What did that say? It said, 'There is no single market over the next 20 years that offers more growth opportunities for Australia than India'—not one. In 2018, the Prime Minister said, 'The government endorses the report and provides in principle support to its 20 priority recommendations.' What a great announcement. 'We are going to diversify trade with India. It's a great opportunity. That's what we're going to do.' What has happened two years on? Nothing. The government has implemented one recommendation out of 20 and they have wandered away from the rest. They have opened a new consul-general in Calcutta. That's it. That's all they have done. There is all this opportunity out there and all this need to diversify our trade relations. The government had the report and they loved the announcement, but they never delivered. It's yet another example of this government being addicted to the announcement—addicted to the marketing. The Prime Minister loves taking photos of himself. You know, he could've taken a trade adviser into his two weeks of quarantine in the Lodge, or his chief economics adviser or the Chief Scientist, and maybe learnt something, but no—he took his personal photographer, and subjected us all to photos of himself wandering around in shorts. It's a joke! This is not a serious government. It's a marketing department: spin; delivery; no outcome.

As I said, the government has no plan to diversify trade, no plan for jobs and no serious structural reform in the budget. They managed to spend $98 billion of new spending and run up over a trillion dollars of Liberal Party debt. There's nothing to show for it—not one serious piece of structural economic reform. What we get, in the middle of a trade crisis, is a bill from the government to change the rules in a scheme the Whitlam government introduced 46 years ago. Unbelievable!

In question time today we heard the education minister; he wandered up, and he was doing his audition, wasn't he? He wants to be the next trade minister—we read that in the Fin Review; we'll see what happens on Friday. He was doing his audition; he regaled us with figures and statistics, and he said: 'We're working on more free trade agreements.' Well, whoop-de-do! Anyone who knows anything about trade policy knows that we want global agreements, then we want regional agreements, and bilateral agreements can sometimes achieve something, and often they make things more confusing. There's been no honest auditing of all these free trade agreements they love to announce. No-one knows whether the outcomes are achieved. They just jump on to the next one and make another announcement. What about the hard work of the behind-the-border barriers, of the non-tariff barriers? If the government were to actually go and talk to exporters, instead of reading out their little talking points, they would understand that the biggest barriers for most exporters are not the tariffs anymore, in most of our markets. Those are not the barriers. It's the non-tariff barriers: the customs regulations; the extra checks; the standards; the cultural barriers. They're the things the government needs to focus on, instead of trying to think up their next announcement to get another free trade agreement.

Finally, I'll just share a word, in the last minute, for international education—our fourth biggest export sector, and, indeed, my state of Victoria's single largest export sector. Can you imagine the Prime Minister talking about any other export sector the way he has about international education?

An honourable member: 'Go home.'

'Go home.' He said to students: 'If you don't like it, go home.' He said that to a sector worth $40 billion to our country—$40 billion! It's a sector which relies on word-of-mouth marketing; we know that from the research. This is a sector with a 12-month/six-month pipeline. If students who are here feel welcome and have a good experience, they put it on social media and tell their family and friends, and more come. How do you think the students felt, being told by the national leader to go home? I spoke to the CEO of one of the accommodation providers who said that, the morning after, he had students at his front desk saying: 'I need to leave—where are the forms to leave?—because the Prime Minister told us to go home.' They heard that literally. How do you think they felt?

The government has taken no responsibility for helping our fourth-biggest export sector. Indeed, I know the Minister for Education. He tried. He hasn't called his counterpart in China for two years. He has taken some things to cabinet, but he gets rolled every time by the Prime Minister and the Treasurer.

I genuinely don't understand why the Prime Minister is hostile to international education. I remember a couple of years ago he said: 'If you can't get a seat on the bus or a lane to drive your car in, it's because of all the international students.' Unbelievable!

The government has no credibility on trade. They cannot say they're serious on trade, and if this is the extent of reform, in the middle of a trade crisis, then God help us!

David Gillespie (Lyne, National Party) Share this | Link to this | Hansard source

I thank the member for that contribution. The original question was that this bill be now read a second time. To this the honourable member for Brand has moved as an amendment that all the words after 'That' be omitted, with a view to substituting other words. The question now is that the words proposed to be omitted stand part of the question.

Graham Perrett (Moreton, Australian Labor Party, Shadow Assistant Minister for Education and Training) Share this | Link to this | Hansard source

I rise to speak on the Export Market Development Grants Legislation Amendment Bill 2020 and, in doing so, I say upfront that Labor supports this bill. Labor supports the Export Market Development Grants because of the enormous benefit they've brought to Australian small and medium enterprises over many years. In fact, it was the Whitlam Labor government that introduced the Export Market Development Grants Act in 1974, only 46 years ago. The objective was for Australian businesses to seek out new export markets for Australian goods and services. This isn't a case of governments picking winners but a case of an astute government recognising the institutional disadvantage that can come with geography and other world factors. The scheme has received bipartisan support since 1974, albeit with different funding commitments from successive governments, and we heard from the member for Bruce about the lack of commitment from those opposite.

Over 50,000 small and medium enterprises have been supported under this scheme. The EMDG Act established a grant program administered by Austrade. The grants provide Australian small and medium enterprises with reimbursements of up to 50 per cent of their export related marketing expenses. Currently, the level of reimbursement to an SME is uncertain and can vary from year to year, depending on the demand for the scheme and the size of the appropriation. Sadly, there can be delays of up to two years for SMEs to receive reimbursement, and the level of reimbursement is unknown until after promotional activities have been completed. As anyone who has spoken to SMEs knows, this can be when money is most crucial.

The government commissioned an independent review into the administration of the Export Market Development Grants scheme in October last year, the Fisher review. It recommended that government continue to provide financial assistance to SMEs to encourage them enter and grow export markets. The Fisher review was made public in September this year and made 10 recommendations to simplify and streamline the scheme to deliver financial assistance to SME exporters in the most effective and efficient way. This bill implements those recommendations.

In essence, the EMDGs will change from a reimbursement scheme to an upfront grants program, to provide certainty to exporters. The Export Council of Australia told the Senate committee that conducted the inquiry:

This will be particularly helpful under current global trading conditions. SME exporters will not have to wait for as long as two years under present arrangements, especially for activities that go for multiple years. This will provide some element of certainty in SME exporters' planning in the future.

The Fisher review recommended that grant recipients be export ready. The bill removes the export performance test and the requirement that recipients have a prospect of success, replacing them with the requirement that recipients either are ready to export or have already exported their products.

The Fisher review also recognised that SME exporters have changing needs that reflect their export journey. The report said:

There are stages in an SME’s export journey where financial assistance is most likely to encourage additional export promotion activity. At other times, SMEs benefit more from information and education or tailored support, equity funding or export loans.

Encouraging diversity in trade relations has never been more important than it is right now, with our No. 1 trading partner effectively putting the Australian government in the freezer.

The year 2020 has thrown us many curve balls—COVID-19 being the most obvious—but adapting to our new reality has required some creativity. Austrade told the Senate inquiry:

COVID-19 has fundamentally changed the global business operating environment and made life very challenging for Australian exporters of goods and services. The COVID-19 pandemic has continued to cause major economic disruption and uncertainty worldwide, which is likely to remain for some time.

Austrade will continue to support exporters through these disruptions. A modern, streamlined EMDG program providing upfront funding certainty, allowing businesses to plan with confidence, is key to assisting SME exporters to recover from the effects of COVID-19 – and grow the number of SME exporters.

International travel restrictions have impacted on many SMEs and it may be some time before the world is free from these restrictions. For the tourism sector, ensuring that the scheme is flexible and that the detail of the scheme is developed through the rules and administrative guidance will be crucial. We know that this is an industry that has been hammered particularly hard.

Planning for anything in 2020 has been challenging for exporters; planning a marketing program a couple of years in advance is almost impossible in the current circumstances. It is a weird world where, as we've heard from other speakers, the trusted has become the estranged and where FTAs trumpeted only a decade ago, such as the China free trade agreement, are now, some might say, not worth the paper they're written on. It is proposed that exporters will identify their broad plans. Details will only be relevant for milestone payments rather than the initial grant application.

Technology startups are obviously already operating in a very fast-moving world. One of the submitters to the Senate inquiry pointed out that some SMEs who work in the online world are born global right from the word go and that for them new markets is a very old concept. Austrade clarified in the Senate inquiry that, for born globals, the parameters of an export-ready business will be applied flexibly. They said:

Establishing export-readiness will not preclude 'born global' businesses from being eligible for the EMDG program. Export-readiness does not mean that applicants will need to have established customers in Australia.

That's good news for a lot of those tech startups, particularly in the valley and around Brisbane. We need to encourage SMEs to create, develop and expand export markets for Australian goods, particularly coming from agriculture and mining. But could I stress that even in agriculture and mining we should value-add to the goods. I'm the son of a butcher. I'd much rather export processed meat than live cattle. My fundamental position is that we should always be value-adding and creating jobs in Australia. We should value-add to the services of the future, the intellectual property, the know-how and all of those things much more carefully.

Obviously exports are important for Australia. In 2018-19, exports represented 22 per cent of Australia's GDP, contributing $419 billion of Australia's nearly $2 trillion economy. Exports have grown over the past five years at 5.4 per cent per annum. That's double the rate of the Australian economy. Companies that export, by their very nature, are competing with companies around the world. They need to use the most modern technology and the best business practices. Exporters are 40 per cent more productive than non-internationalised businesses, according to international studies. The Department of Industry, Innovation and Science said that on average Australian exporters employ more staff, pay higher wages and achieve higher labour productivity compared to non-exporters—three things to take note of. Whether an SME makes a conscious decision to export or is an accidental exporter, there are benefits for the SME, benefits for the workers and benefits for Australia.

I particularly want to make this point in praise of the member for Fairfax. I worked with Ted O'Brien on the report From little things big things grow: supporting Australian SMEs go global, a report handed down in February 2019. We toured all around the country talking to SMEs about the opportunities to export more. It certainly came up for me that one of the greatest assets Australia has is the fact that we are the most multicultural country on earth. We came to my electorate of Moreton and had part of the hearing in my electorate office at Sunnybank. Recommendation 10 in this report says:

The Committee recommends that the Australian Government commissions an audit into the untapped human capacity of Australian nationals living and working overseas and Australia's multi-ethnic diasporas living and working in Australia and their related chambers and associations with a view to formulating a strategy to unlock that capacity to advance Australia's interests, including opportunities for Australian small and medium enterprises.

I segue from that to the fact that Chinese people have been arriving in Australia for 202 years. We have almost a million people in the Chinese diaspora, some with connections going back a couple of fortnights; some with connections going back 202 years. There are all sorts of people with connections to Australia, who love Australia, who have roots that extend back to the Middle Kingdom. For the government to make this trading situation worse is something that is hard to forgive. Before coming up to speak, I saw that the ABC is reporting that honey producers, fruit producers, vitamin producers and dairy producers are on high alert in terms of being put in the freezer with China. We know that we need to get this relationship right. The reality is that the Liberal-National coalition are in their eighth year in government. They've been dealing with one Chinese leader, President Xi, for that entire time. They've seen our trade connections become much stronger but also much more dependent on China.

This government needs to make sure we have the best possible settings. We know that they should be calm and strategic and focus on our national interests. Part of that is surely jobs. We know that our wine makers, our barley farmers, our crayfishers, our coalminers—the Australian coal sitting in the 80-odd ships off the ports of China—our meatworkers and all the people who work hard for the good of this country, who create jobs and create wealth for this nation by sending products overseas, deserve the government to be calm and strategic.

We've seen too much focus on announcements rather than on what's best for this nation. I know that the government think that they have our national interests at heart at all times—and we obviously are proud Australians—but we need to be strategic. I hope that the Prime Minister is getting the best possible advice, rather than just going for a quick photo opportunity, a quick presser, a quick grab, a quick headline, and that he's taking a longer-term view of dealing with the Chinese. There's a saying that politics is 'the slow boring of hard boards', and good diplomacy makes that possible. It means that we listen to our diplomats around the world. They make sure that they understand the longer game and the more complicated aspects of our relations.

China understands this. China knows how to play a long game. It's been playing a political game for 5,000 years or so. We need to make sure that we put our trade relationships and our relationship with China on the best possible footing. I know that that can be difficult. It was 49½ years ago that the then Leader of the Opposition, Gough Whitlam, went off to China on a Labor Party delegation with Tom Burns, the president of the party, and Mick Young. It wasn't a trade delegation because they weren't a part of government. They went off to make a connection with Beijing. That was risky, and they were pilloried and attacked by the government of the day for doing that. But from those connections we set up a great trading relationship that has flowed for 49½ years—all because of the adventurous task that was undertaken by the Labor leader at the time, Gough Whitlam.

I was at events on the weekend with the Chinese diaspora. I assured them that calmer heads would prevail. There is much trepidation. A lot of people from that diaspora have had their businesses hammered—people dealing with international students, trading businesses. They are worried, and I assured them that calmer heads would prevail. I hope that this is a time when the government will step up and, rather than go for that quick presser, will press on with what is in the nation's interests.

Zali Steggall (Warringah, Independent) Share this | Link to this | Hansard source

I rise to speak on the Export Market Development Grants Legislation Amendment Bill 2020. The value of Australian goods and services exports reached a record $470 billion, up from $403 billion in 2018. With over 53,000 goods exporter, we are now the second-largest exporter of beef, the third-largest of lentils, the fourth-largest of sugar and wine and the largest global exporter of iron ore. We continue to punch above our weight on the world stage. The Export Market Development Grants scheme is a significant federal government financial assistance and incentive program for small to medium exporters and aspiring exporters. However, it's important to periodically revisit policy settings and parameters so as to ensure that they remain relevant and effective given changes in the trading context.

This bill will make important amendments to the Export Market Development Grants Act passed in 1997, which made changes to the Export Market Development Grants scheme administered by the Australian Trade and Investment Commission. The scheme provides a 50 per cent reimbursement to the costs of small and medium enterprises with turnovers less than $50 million for their export related marketing expenses above $5,000. Under the proposed changes there will be a retargeting of the threshold to export businesses with a turnover of less than $20 million a year, although the majority of SME exporters will still fall under this threshold.

The grant aims to encourage SMEs to create, develop and expand export markets for Australian goods, services and IP, and it's very much welcomed. SMEs are the lifeblood of our economy and it's important that we support them in their international endeavours and to become export-ready. I very much support this scheme.

According to the Australian Bureau of Statistics, only two per cent of businesses in Australia are good exporters. This is partly because many Australian SMEs face considerable challenges when they wish to export. The challenges include a lack of overseas contacts, high start-up costs in exporting and still higher costs of compliance with regulations. The scheme provides financial assistance to Australian SMEs to tackle some of those challenges. The scheme is also facilitating growth in our two-way trade driven by our SMEs. It has generated over $3.8 billion in export earnings, it's helped support the employment of over 69,000 people and it has facilitated exports to 138 countries. So this scheme is functioning well, but in 2020 the independent review of financial assistance to SME exporters found several ways the government could, in fact, improve it. We must improve the functioning of this scheme as we continue to open up to new markets and emerge from COVID-19 in post-trade restrictions.

The review found that it's time to simplify, streamline, give certainly and make more timely payments to recipients of the grants. This bill will enact several recommendations that do this, including making funding more certain and less varied by providing an up-front grant, which will be especially helpful given current global trading conditions and the difficult conditions coming out of COVID for many of our SMEs. Further, education and training will be included as an eligible expense for the grant. The bill will also create a new legislative structure that allows the government to respond quickly to changes in market conditions and business practices. Business groups, such as the Export Council of Australia, have expressed support for the bill. The bill will help more SME exporters access the scheme and get much needed funds sooner.

Warringah is an internationally-facing electorate. We have many global travellers and many businesses who embrace global opportunities. Businesses in my electorate are grasping the opportunities of those export markets. There are some of the perhaps cheeky businesses as well—maybe unusual ones for ironmen, swimmers and beachgoers, and probably the previous member for Warringah! Every Australian should know about the iconic Budgy Smuggler Swimwear. Budgy Smuggler began in Manly. It has a factory just up the road. It's 100 per cent Australian owned and manufactured. When presented with a pair of Budgy Smugglers, Prince Harry, at the Sydney Invictus Games, said:

It doesn’t get better than that ... Only in Australia would you ever find something like this. It’s so wrong, but it’s wonderful.

The UK is now their biggest export market, followed by a rapidly growing French market. It's only right that the rest of the world should experience that touch of magnificent Australian beachwear. They were a beneficiary of the scheme as they attempted to tap into the export markets, but, prior to these amendments, they had issues with how the scheme reimbursed the up-front costs. Assistance was only given after the marketing expenses had been incurred and paid. As a growing SME, that was a hit to their cashflow and at times it was difficult. When learning about the changes to the arrangements under the bill, they said it would be a massive help to a business like them to be awarded 50 per cent of the grant prior to expenses being incurred.

Other exporters in my electorate who will benefit from the scheme include manuka honey exporters who are focused on growing the global market to $1.27 billion by 2027. Microbreweries are popping up all over Brookvale and Manly and export development is high on their list of priorities. The new arrangements in the bill are prudent and appropriate. It's my hope that businesses in Warringah will continue to heed the call of international export opportunities and use the scheme to broaden their horizons. I commend the bill to the House.

Dan Tehan (Wannon, Liberal Party, Minister for Education) Share this | Link to this | Hansard source

Exports make an important contribution to the Australian economy, but we know that the challenges and risks associated with exporting are significant particularly for SMEs at the start of their journey. There is no doubt that EMDG, which helps exporters overcome those challenges, is well loved. Over the last 45 years it has provided valuable assistance to over 50,000 SME exporters to grow export markets for their goods, services, intellectual property and know-how. Last year alone over 4,000 SMEs benefited, employing almost 69,000 Australians and generating exports worth $3.7 billion.

However, time doesn't stand still and, while the EMDG principles still hold true, the way we provide EMDG assistance needs to be modernised and simplified to meet the needs of a rapidly changing economy and global environment. These are unprecedented times, and the world economy that emerges from COVID-19 won't be the same as before. In this time of uncertainty, by changing EMDG from a reimbursement scheme to a more traditional grant program, we can provide Australian SME exporters with more certainty.

Unlike the current reimbursement scheme, these amendments mean SME exporters will know straightaway that they are eligible for EMDG funding and they'll know upfront how much money they will receive if they hold up their end of the bargain. That means they can plan with confidence whether they are exporting for the first time or growing and expanding to reach more customers or move into new markets.

This bill recognises each exporter faces their own challenges and takes their own export path. Together with the EMDG rules, which have been released for public consultation, and the administration guidelines, which are being developed with industry, the new program will take a flexible approach to determining eligibility and what will be required to receive milestone payments while maintaining accountability for spending the Australian taxpayer money.

We will continue to work with industry to shape the processes for the EMDG program before it becomes operational. We want to make the processes as smooth and user-friendly as possible. I table an addendum to the explanatory memorandum in response to comments raised by the Senate Standing Committee for the Scrutiny of Bills. I thank all members who have contributed to this debate. I commend the bill to the House.

Question agreed to.

Original question agreed to.

Bill read a second time.

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

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David Gillespie (Lyne, National Party) Share this | Link to this | Hansard source

It being 6.30, the debate is interrupted in accordance with standing order 192B. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.