Claire Moore (Queensland, Australian Labor Party, Shadow Minister for Women) Share this | Link to this | Hansard source

Labor supports the passage of the Trade Legislation Amendment Bill (No.1) 2016. The dual purpose of this bill is to make a number of minor and technical changes to the Export Market Development Grants Act 1997—the EMDG Act—and to amend a number of acts to effect a change in the title of the Australian Trade Commission to the Australian Trade and Investment Commission.

I would like to address this name change first. It appears that this change from the Australian Trade Commission to the Australian Trade and InvestmentCommission is another example of the government's preference for slogans over substance. Since coming into government, the Abbott-Turnbull government has invested a lot of money in its 'open for business' sloganeering. We are yet to see the policy substance.

Recognising that Australia is hungry for an increased share of highly-competitive foreign direct investment flows to underpin our future economic development, Labor has stood against the government's anti-investment Foreign Investment Review Board legislation changes. Labor opposed the additional red tape that the government introduced last year as part of its suite of amendments to the Foreign Acquisitions and Takeovers Act regime. Labor stood against the government's imposition of layers of red tape on proposed investments in Australia's agricultural, agribusiness and food-manufacturing industries.

It is inconceivable that those industries could scale up to the levels required to supply rapidly increasing demand from our regional neighbours without the assistance of foreign investment capital. The National Farmers' Federation has estimated that for Australian agriculture to reach the capacity which will be needed to meet rising demand will require investment of between $1.2 trillion and $1.5 trillion over the next 35 years. That is a very significant requirement, and it will require a substantial contribution from foreign capital. Making it difficult to attract such capital is inconsistent with an 'open for business' mantra.

Labor's position on the government's FIRB changes has been supported by the Business Council of Australia. The government's investment screening thresholds have also been criticised by the Australian Food and Grocery Council, the Cattle Council of Australia, the Queensland Farmers' Federation, the Chamber of Commerce and Industry of WA, the Australian Lot Feeders Association, the Financial Markets Association, Wellard, GrainCorp and Ridley Corporation.

In its December 2015 report entitled Building Australia's comparative advantages: a 21st century agrifood sector, the BCA criticises the Turnbull government's new barriers to investment. The BCA report says:

The government has declared that it is 'open for business', however its recent decisions have sent the opposite message to potential international investors considering investing in the Australian agrifood sector.

This was the kind of economic incoherence we came to expect under Mr Abbott. It is disappointing to see Mr Turnbull persisting with this approach. It is another example of how the Prime Minister says one thing and does another.

This current bill just reconfirms this lack of economic and substantive policymaking by the Liberal government. Before us we have a bill that actually changes a name. Like the banners, labels and rhetoric of 'open for business', the change to 'Australian Trade and Investment Commission' will be an empty attempt to increase needed foreign investment into Australia. Making a name change to the Australian Trade Commission will do little to reverse the impact of the government's actions to deter foreign investment. A name change will also by itself do little to attract and retain much needed foreign investment into our economy.

In relation to the changes to the EMDG Scheme, the amendments comprise minor changes which will improve the operation of the Export Market Development Grants Scheme. The EMDG Scheme is part of Australia's export promotion effort. It provides government grants to help Australian small and medium sized enterprises to promote their products in export markets. The scheme encourages small and medium Australian businesses to develop export markets, supports small and medium export businesses by reimbursing up to 50 per cent of expenses related to export promotion and provides up to seven grants to each eligible applicant. Under the scheme, SMEs can obtain grants for activities such as attending trade fairs, advertising their products in overseas markets and conducting market research to identify export opportunities.

In this current period of economic transition, it is critical we continue to develop and support measures that open up export opportunities for new and existing export businesses. Labor has a proud history of supporting trade as a means of boosting economic growth and supporting our local industries. The Export Market Development Grants Scheme is itself a Labor initiative, established by the Whitlam government in 1974. The Whitlam government wanted to provide more support to small exporting firms and decided: 'The emphasis in a new export incentive scheme should be on market development.' Like many initiatives of the Whitlam government, the Export Market Development Grants Scheme, with its emphasis on small business and new markets, has endured. By helping SMEs with these costs, the scheme helps these businesses to grow and to take advantage of export opportunities. It also helps the wider industry and economy to improve its export performance, which is good for growth and good for jobs.

The scheme has been reviewed several times over the years since then, most recently by Mr Michael Lee, who handed his report to the government last year. Mr Lee found that the EMDG Scheme continues to operate effectively in encouraging the development and expansion of overseas markets for Australian goods, services and intellectual property. Modelling by KPMG estimates that each dollar provided to SMEs generates $7 in benefits, when industry spillovers and productivity gains are taken into account.

Mr Lee further recommended that the EMDG scheme be maintained with a number of changes to improve its operation and performance. Some of his recommendations are effected in the amendments contained in this bill. For instance, the bill removes the EMDG Act's existing sunset provisions but maintains the need for periodic reviews. Mr Lee also recommended that the EMDG Act be amended to include a requirement for independent external reviews of the effectiveness and efficiency of the scheme and that the review be presented to the minister and tabled within 15 sitting days of being received and that the government response be tabled within three months of the report being tabled. Under the act's existing provision, the EMDG scheme would effectively lapse until it is legislatively extended every five years. By amending the act's definition of a 'grant year', which is currently defined as 'any year up to 30 June 2016', the bill will ensure that the EMDG scheme continues on an ongoing basis and provides greater confidence to small- and medium-sized businesses, especially those planning future export growth.

The opposition believes the EMDG scheme, which costs taxpayers more than $130 million a year, must continue to be subject to regular reviews. These reviews are important for ensuring business can raise any concerns with the administration and design of the scheme and they are important for ensuring that the scheme continues to deliver value for money for taxpayers and net benefits for the community. So our view is that the additional flexibility provided to the minister by these amendments must not be used as a way of avoiding regular, independent reviews of this scheme. Under this amending legislation, the minister will be required to commission an independent review to report by 31 December 2021. Thereafter, the minister will be required to commission subsequent reviews for completion on dates he or she determines, rather than dates prescribed by the act.

The bill makes other amendments which amount to sensible finetuning of the scheme. Communications will be removed as an eligible expenditure category to reflect the reduced cost of communications as a result of advances in technology. A limit of $15,000 will be imposed on the free sample expenditure category. The promotional literature or other advertising expenditure category will include material in electronic form. Provisions for reimbursement of in-country travel other than airfares will be repealed and the daily allowance for overseas visits will be increased from $300 to $350. Expenses incurred on activities or products which a CEO of Austrade considers may have a detrimental impact on Australia's trade reputation will be excluded from the scheme. Austrade will be permitted to direct funds from other sources towards EMDG administration costs. Labor supports the minor and technical changes to the EMDG scheme effected by this bill, and we support the passage of the Trade Legislation Amendment Bill (No.1) 2016.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

While I indicate that I will be supporting the second reading of Trade Legislation Amendment Bill (No.1) 2016, I have to express some serious concerns about one provision in particular, the $15,000 limit on the free sample expenditure category. While I acknowledge this bill must be passed in order to keep the Export Market Development Grants scheme going—and I emphasise I will not be standing in the way of the scheme continuing—capping the free sample expenditure category is a short-sighted, penny-pinching move that I think will have more serious consequences than the government appreciates. At the outset, it is important to note that a coalition MP, Craig Kelly, the member for Hughes, in his second reading contribution to this bill in the House of Representatives said:

There are a couple of changes in this legislation that I would prefer not to see there. One is the capping of the free samples provision. That is capped at $15,000. Each individual business determines whether promotion should be done through overseas representation, marketing consultants, marketing visits, trade forums, promotional literature or free samples. I understand that there have been times in the past when those free samples may have been overclaimed, but I think that should be left to each individual business rather than putting a cap on it. I would not like to see that there, but it is there.

I agree with Mr Kelly that if there are participants in the scheme who are rorting the system by inflating the actual cost of the free samples they are claiming, then those rogue operators should be identified through audits. Punishing all participants of the scheme for the actions of a few is not the way to go about controlling expenditure here.

I have been told by participants in the Export Market Development Grants scheme that free samples can be a more cost-effective way of driving more business than any other expenditure, particularly for small exporters, as they tell me there is nothing like a potential buyer holding a new product in their hand when it comes to their deciding whether or not to go ahead with the purchase. So why are we tying our exporters' hands and putting up barriers to them growing their business by removing what appears to be a sensible concession? It does not make sense to me. It is a matter that I have raised with the trade minister. I wanted to flag these concerns because there are a number of agents involved in this who say that this is going to be counterproductive. I raise that. I know that this bill will be passed, but it needs to be monitored. I will continue to make representations to the minister for trade in relation to these matters, with the anomalies and the unintended consequences that I think will arise out of this particular aspect of the bill.

Richard Colbeck (Tasmania, Liberal Party, Minister for Tourism and International Education) Share this | Link to this | Hansard source

I thank senators for their contributions. Senator Moore has very clearly articulated the measures within the bill and I thank her for her comments. I do stress the point that there will be regular reviews of the measure, as she expressed the concern. With respect to Senator Xenophon's comments, it needs to be understood that this is a capped scheme and the more that is taken out in the sample section means there is less for other players. A very small component of the scheme has been claiming over that mark—about four per cent. I understand his concern and I am quite happy to continue to receive his representations with respect to those concerns. Again, I thank senators for their contributions. I commend the bill to the Senate.

Question agreed to.

Bill read a second time.