Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | Hansard source

I rise to address some remarks to the proposed changes in the Export Market Development Grants Legislation Amendment Bill 2006 and, as was the case with the previous speaker, the member for Forde, to reflect on Australia’s trade performance. Having listened to the member for Forde, I wonder whether or not she has actually examined the budget papers at all. A close examination of the budget papers proves beyond any doubt that Australia is putting all its export eggs in one basket through our absolute dependency on the resources sector. This week’s budget is riding on the back of the outcome of our success on the resources front. The truth is that we have effectively hung up the white flag with respect to manufacturers and service exports. In that context, the budget papers concede that our record current account deficit of $56.25 billion will blow out to a new record of $62.5 billion through the year ahead—that is, 6.25 per cent of our gross domestic product. We face some huge challenges with respect to our export performance. I can only hope that, as a result of the changes to the Export Market Development Grants Scheme that are currently being debated, we can assist in making some progress on that front.

On that note, as the shadow minister for trade and member for Griffith said, the opposition welcomes the extension of this program under the Export Market Development Grants Legislation Amendment Bill until 2010-11. However, from the opposition’s point of view and from the point of view of many Australians, the Howard government cannot take much, if any, credit for assisting exporters in this country. That is the truth of the matter. They are basically benefiting from the work of the private sector and principally the resources sector. The budget papers clearly point that out to the Australian community. The truth is that the government has no industry or export policy to improve this country’s terms of trade. That is the real challenge for the Australian community at the moment. This woeful record is underlined by the fact that for the past five years export growth has failed to come even near the government’s projections. That is why we as a parliament have to seriously start to debate the need for a new and a real export strategy.

That export strategy has to include some of the following elements. Firstly, we have to start rebuilding the skills of this nation. I am talking about the skills demanded by Australian industry to lift Australian exports, not just in the manufacturing and service sectors but also in the resources sector. We are at a point now where we are starting to lose investment because we do not have the skilled labour to facilitate that investment. I can think of a range of projects potentially coming on stream all around Australia—be they in infrastructure or resource development—over the next three to five years which are going to present a huge challenge to Australia’s capacity to bring forward this capital investment.

On the infrastructure front I acknowledge, for example, the announcements this week on the Hume Highway. That is a goat track. I drove it again recently from Melbourne to Canberra. The 120 kilometres from Albury to Gundagai is an absolute disgrace. It is a deathtrap. It is unsafe. But where are we going to get the labour to actually do that work? I was in South Australia yesterday talking with the South Australian government about the proposed expansion of Olympic Dam, a project worth $5.5 billion. They have not found the edge of that open-cut mine yet. Just think about the workers that are going to be required for that development. We do not have them at the moment. If you go to Western Australia and up to the North West Shelf, you can see the work under construction. There are a whole variety of other mining operations proposed. Go to Queensland and see the proposed duplication of the Gateway Bridge and the new tunnel through Brisbane. All around Australia there are projects ready to come on stream for a variety of reasons. The real challenge for us is this: where are we going to get the skilled labour?

It is abysmal that we now have a government saying that the solution is to bring in apprentices from overseas. The northern suburbs of Melbourne, where I am from, still have high youth unemployment. We are turning away kids because there are insufficient TAFE places in Australia. We have to invest in the training of Australians. I simply say to my local community that I want to give the kids a leg up by training Australians rather than bringing in apprentices from overseas. That is also central to our export strategy.

I will now talk about lifting research and development. We have to do more on the research and development front because that is the key to innovation and creating export opportunities. I do not think that the government is really thinking through such a strategy.

We want to talk about infrastructure—but also plan it. We have to make the right decisions. For example, in this budget there is additional money to upgrade the Brisbane to Melbourne rail freight corridor. Perhaps we should have done an assessment first. Was that corridor as big a priority as Darwin to Alice Springs for our immediate economic requirements? We need to actually sit down with a plan, make projects and prioritise them based on our economic needs rather than our political needs.

So, yes, spend infrastructure money but spend it on the right projects: the projects that really stack up in growing the size of Australia’s economic cake. That also requires cooperation at the state, territory and Commonwealth government levels. All levels of government and all political parties have to stop playing games with project selection and actually work together towards the development of a national plan that means we select the projects through cooperation and coordination to get the outcomes, in association with the private sector.

I also think we have lost our export culture in Australia. We had a decade in the eighties and nineties when export was the order of the day. Industry by industry—be it food manufacturing, the resource sector or advanced manufacturing—it was the requirement of government to pursue an export culture and change the culture of industry to be more efficient and productive. Where in the Treasurer’s speech on Tuesday evening was the word ‘productivity’? That is what drives our competitive position. That is what drives our capacity to create jobs and training opportunities in Australia to earn export dollars. To maintain our export capacity, we have to be efficient and productive. The word ‘productive’ does not even enter into the mind of the Treasurer. I say that that is a sad reflection on him because he is riding on the back of all the hard work in the eighties and nineties that I talked about: the foundations of the economic benefits that we are now receiving—because that is where the tax cuts on Tuesday evening came from. All the changes of the past are just about running out of steam. Unless we pull up our socks and think about the export strategy issues that I raised today, we are going to have problems.

China at the moment has a resources boom. When will the bubble burst? We as a nation have to think about how we ensure the bubble does not burst and how we ensure that we are not dependent on the resource sector and growth in China but have a broader view of life and a broader view of the global challenges that confront Australia, because the truth is that we are a small player in the world. That is why there is always greater pressure on us to do better on training and infrastructure issues and improve our productivity.

I raise these serious issues because I am worried about what this week’s budget papers revealed. They revealed the continuing blow-out of our current account deficit of $56.25 billion, potentially increasing to $62.5 billion. That is on the back of promises by the Howard government that we are actually going to do better. That is what they have told us for years about exports. I go back to the fact that, since 2001-02, the government—and the budget papers show it—have over-forecast growth in exports by an average of 5.5 per cent each year. That is their forecast of potential growth. Whether the Minister for Trade and the Treasurer like it or not, each of these predictions has become a complete joke. We have not achieved those predictions.

Let us take the example of 2001: the government forecast five per cent export growth when, in fact, exports fell by 0.8 per cent. In 2002—we can just pick the dates out of the air—the government forecast six per cent export growth, when exports in fact fell again by 0.8 per cent. I can tell you about 2003 and 2004, but let us go to 2005. The government forecast seven per cent export growth; actual growth was two per cent.

During all of this period we were told that something was going to occur, and it has not occurred. This is a real challenge to us, because, unless we try to work out where we are going on the export front, we are just going to run up debt and ride on the back of the resources boom. In the end, you have to start to scratch your head and worry about where we are going as a nation economically, because we have seen resource booms in the past. As a Queenslander, Mr Deputy Speaker Somlyay, you have seen resource booms in the past and you have seen them blow out. So a lot of hard work has to be done to make sure that we come out of this resource boom well positioned for the future, because no-one knows how long it will go or how this rollercoaster will play out.

I think this is particularly important, not only from Australia’s point of view—and I am shadow minister for resources—but also with regard to another part of my responsibilities. That is my policy area of tourism, which is exceptionally important to Australia in export opportunities and in training opportunities. We have to seriously work out how we can increase apprenticeship and training opportunities in the tourism industry so that we can deliver a quality service for the potential growth of a market such as China. And what about Japan? Obviously we are doing well out of New Zealand at the moment. But it is not just about numbers; it is about high yield and a quality product—real challenges to the tourism industry in a very tough global market.

I say that because tourism export revenues have stagnated since 2001. We now hope that the strategy put together by Tourism Australia to promote increased recognition of Australia internationally through the advertising campaign works out and that in 12 months we will be able to start making a hard-headed assessment of whether or not we have succeeded. I wish the advertising campaign well; we have to make progress on this front, because we have stagnated in our performance since 2001. So it comes back to the need for an export vision to go hand in hand with the Export Market Development Grants Scheme proposals.

As we all know, this scheme was originally established in the 1970s. It was established for one reason: to foster an export culture in Australia at a time when Australian firms were largely protected by tariffs. We decided to confront the barriers. But, if we are going to confront the barriers, we also have to give people a hand in developing an export culture and chasing international opportunities, and there is clearly a role for government in working in partnership with the private sector. If we go back to that time, the record will show that there were very few incentives to assist Australian industry to seek export markets; hence the scheme. The key role, therefore, is for a program such as this to assist in growing our economy with benefits across society generally. I hope that we see benefits not only in metropolitan areas but also in regional Australia. A lot of regional Australia is struggling when it comes to economic prosperity at the moment, other than the major resource towns and communities around Australia.

The scheme is also about assisting labour markets through higher wages, efficiency and productivity. The benefits, as we all appreciate, are felt through microeconomic reform, economies of scale, competition, innovation and learning. In combination with the liberalisation of the Australian economy through reduced tariffs, the scheme helps to assist companies to look beyond the domestic market to sell their products.

By the late 1980s the grants scheme had become the main funding support for export promotion. In the 1990s the program was increased and changed to cater for small to medium firms—which is exceptionally important, because they are the engine room of potential jobs growth in Australia. This recognised the fact that these firms had the most to gain from government support to enter new markets abroad. They needed a push and a prod but also some assistance.

Subsequent research has confirmed the benefits of the program, in particular to small firms. I refer to the fact that the Centre for International Economics found that the scheme’s best return came from firms—and this is interesting—of less than $15 million in annual income, so it really is important to these firms. The report found that the greater the financial constraints of the firms, the greater the proportional return, with the scheme inducing up to 60 per cent in additional exports. For each dollar in grants, these firms facing tighter financial conditions were likely to spend one dollar or more towards export promotion. So they are intimately involved in making the decisions to spend a few dollars to chase export opportunities. It is not one without the other—as it should be. The report concluded:

The scheme is effective in increasing the number of small to medium enterprises that develop into new exporters, increasing the number of small to medium enterprises that achieve sustainability in export markets, in generating additional exports and in further developing an export culture in Australia.

The opposition, therefore, supports the continuation of this program, which it believes has been successful for Australian business. However, I point out that one aim of the bill is to broaden the eligibility criteria under which the grants are provided, incorporating businesses that, until now, have been excluded from applying.

The opposition have moved a second reading amendment opposing two features. This includes the attempt to modify the scheme’s approach testing whether or not the products are made in Australia. In addition to the obvious issues that arise with this issue, there is the question of discretion over grants programs, which the opposition have concerns about in terms of accountability and proper scrutiny. We also do not support the bill’s attempt to remove the export performance test; we think people have to be judged on performance. We believe the attempt to remove the criteria on which grants are based represents a challenge to government. It has been argued that up until now the performance criteria have helped the government to ascertain the benefits of the program. How are we going to assess these benefits in the future? I would be interested in the government’s response to these questions and the minister’s response to the debate.

The opposition has also called on the government to adopt recommendation 1 of the Senate Foreign Affairs, Trade and Defence Legislation Committee, which is:

… the Australian government requests the Auditor-General to conduct a performance audit of the scheme two years after the proposed legislation …

That is about all of us making sure the scheme performs and, if there are any difficulties, actually doing something to improve it.

I also want to raise a particular issue concerning the tourism sector, because it is one of our top export sectors; it will obviously have benefits for the whole Australian community. For the first time ever, Tourism Research Australia has quantified indirect benefits of the tourism industry to the economy. In 2003-04, tourism directly contributed $31 billion to gross domestic product. At the same time, it indirectly contributed more than $26 billion to GDP. In the same year, 407 of the 3,205 grant recipients were from the tourism sector. Tourism is also an industry that can benefit substantially from this scheme, as more than 90 per cent of the operators are small businesses. This means we have to think about the needs of this particular industry.

While all industries rely on marketing promotion, with respect to the tourism industry we also have to accept that it is dependent on visitor awareness of their destination. Moreover, while other exporters generally market their own products, the marketing of specific regional destinations can be of benefit to more than one exporter, so you have to think outside the square. Under the scheme, grants can be provided to approved bodies, including peak industry associations. The opposition expresses some disappointment that the government did not consider allowing the extension of approved bodies to recognise regional associations, which are central to tourism in Australia.

I believe there is a strong argument that the tourism industry is distinct from other industries, and that it could gain from a change with respect to recognising regional bodies. If regional associations could receive grants for export promotion, then it is not one tourism operator that potentially benefits from marketing of the region but all operators within the region. We are trying to encourage these key tourism regions to work together, think regionally and cooperate in marketing their regions. Therefore, disbursing the funding to sole operators when marketing costs are so high may not have the broad impact on overseas markets needed to attract tourists. To put it another way, tourists are more likely to come for several attractions in a country or region, not just one attraction—and that is about promoting tourism regionally.

In conclusion, obviously the opposition supports the thrust of the changes. We have moved a second reading amendment raising some specific problems; also, from my shadow responsibilities point of view, I have raised an issue related to regional thinking concerning the tourism industry, which I have asked the government to take on board and think about in terms of where we might go with this act as potentially amended as a result of this debate. Obviously exports are too important to Australia to be treated lightly. We have a major challenge and I can only hope that the act as potentially amended actually assists us in improving our performance in a very challenging and competitive tough global environment. I commend the bill to the House including the second reading amendment moved by the member for Griffith.

See this speech in context