Ms Julie Bishop (Curtin, Liberal Party, Deputy Leader of the Opposition) Share this | Hansard source

At the outset, I must say that the coalition has grave reservations about the Export Market Development Grants Amendment Bill 2013, but, due to the disastrous budget mismanagement of this government, we do not believe that we can oppose this bill, which is principally designed to cut the level of funding for the Export Market Development Grants Scheme, because this is a savings measure. However, we do condemn the government for this outcome, and I will be moving a second reading amendment which notes that the coalition, should we be elected to government, commits to reviewing the changes in this bill to establish their true budgetary and administrative impact on business, especially small and medium enterprises, who need the support of this scheme in order to grow their export oriented businesses.

The changes proposed in the bill are to implement the recent Mid-Year Economic and Fiscal Outlook decision to deliver annual savings of $25 million. That is how dire the budget situation has become. This government, which has run up over $260 billion in gross debt, now has to look for savings in the order of $25 million a year out of this scheme. The EMDG Scheme, administered by Austrade, partly supports the export promotion expenses of eligible enterprises in order to boost exports, to grow our economy in Australian produced goods and services. Claims are reimbursed retrospectively for expenditure incurred in the previous financial year pro rata up to the cap. My understanding is that about 5,100 enterprises per year apply for grants. Prior to now, the scheme has been capped for many years at $150 million per annum, except in 2008-09 and 2009-10, when a $200 million cap applied.

According to the government, the changes in this bill will better help Australian exporters maximise the potential of the Asian century by increasing the number of grants available in East Asian and frontier and emerging markets from seven years worth to eight years. The government believes that this offers Australian small- and medium-sized exporters a slightly longer and more commercially realistic period to become established in these markets. However, to offset the additional grant expenditure associated with an increased number of grants to East Asian and emerging and frontier markets, the number of grants to the United States, Canada, the United Kingdom and the European Union is to be reduced. I believe that the 21st century should be known as 'the global century' and that Australia, as a global nation with global interests, should not only be looking to East Asia but also be continuing to pursue opportunities for our exporters in established markets. The government argues that in those markets the Australian brand is already well known and accepted and small businesses would typically face fewer barriers to doing business.

The bill provides for the reduction in the number of grants for these markets from a maximum of seven years of annual grants to only five years. So, in effect, the Minister for Trade and Competitiveness is telling Australian exporters that he knows how to run their businesses better than they do. He knows through who knows what business experience that the US market is bad but the Asian market is good. The fact is that the minister for trade does not have a clue. If the minister for trade thought the Asian market was so vital, why did he do virtually nothing to stop the government's disgraceful ban on live cattle exports to Indonesia? The government claims that it is seeking to introduce this bill now to avoid creating considerable uncertainty for small businesses as they adjust to the new arrangements which become operational on 1 July 2013.

The coalition has consulted key stakeholder groups, including the Australian Chamber of Commerce and Industry and the Export Council of Australia—both oppose the expenditure cut and have asked that the coalition oppose the bill. We have agonised over this decision because we agree with them that the EMDG scheme under a competent government is a fine scheme and it has helped Australian exporters over many decades, and we believe it should not be cut in this way. However, recognising the dire state of this government's upcoming budget, recognising the dire state of the debt situation that this government has plunged Australia into and in the interests of our wider budget management policy, it is felt that we cannot oppose the expenditure cuts. But we note that this is yet another blow to business caused by the budget mismanagement and fiscal recklessness of the Gillard government.

When in doubt a Labor government will default to kicking the business community. The former trade union bosses and their lawyers who form the Labor Party just do not get business, especially small business. Labor cries crocodile tears about job security, but does not acknowledge or appreciate that it is the business community that is the engine room for job security—the businesses that take the risks to find new markets to grow their businesses. It is business that employs workers and creates and provides jobs. So, this blow to the EMDG scheme is just another example of Labor not understanding business and its needs. It is fair to say that since 2007 Labor has made a complete mess of the EMDG scheme. Soon after taking office Labor expanded the scheme by lowering the eligible expenditure threshold from $15,000 to $10,000, increasing the number of grants from seven to eight and increasing the maximum grant from $150,000 to $200,000—all well and good, if you can believe them. The cost of these changes was estimated at $50 million a year, but then—and this is the key—Labor increased funding only for the year 2009-10. So, in June 2010 Labor then amended the scheme to essentially reverse the 2008 implementation of its election commitments. Why should we have been surprised?

In the past the coalition has made commitments to increase the funding levels of the EMDG scheme. We believe it is a good scheme. While this remains a long-term goal, we believe the export sector would benefit more from a coalition government making its first priority the abolition of the carbon tax, then the mining tax, the reduction in Labor's debt and the reversal of Labor's fiscal mismanagement. In terms of the detail of the legislation, I am advised that industry representatives have various concerns about the potential exclusion of some types of activities—for example, the promotion of musical concerts. While these are a matter for debate, the bottom line is that many of these exclusions would appear to have been made because of cost cutting. The principal change that has attracted most attention is the cutting of grants available to established markets like the United States, the United Kingdom, European Union and Canada with some of the savings used to fund increased grants, principally in the East Asian region. The rest of the savings go to consolidated revenue, although we do not have a breakdown on the composition of that—so, again, another warning sign.

The Australian Chamber of Commerce and Industry argues that there is no credible commercial analysis provided that shows that the EMDG money spent on established markets is any less valuable than that spent in emerging markets. I agree and the coalition agrees that it should be up to Australian business to exploit markets according to commercial realities, rather than bureaucratic whim. The minister who introduced this bill, the Minister for Trade and Competitiveness, has one of the worst track records of any trade minister in modern history in terms of achieving for exporters. There has barely been any progress at all in trade negotiations by this minister. He has cut the vitally important EMDG scheme. He stood by idly when the Gillard government trashed our trade relations with Indonesia over the live cattle export fiasco and trashed our reputation as a trusted and reliable trading partner. The Australia-China Free Trade Agreement has barely moved from the starting point of negotiations that occurred under the Howard government in 2005. New Zealand also started negotiations with China in the same year and concluded their free trade agreement by 2008. In particular there has been stalled progress with respect to the free trade agreement with South Korea. Again, where is the practical concern with boosting our trade with Asia, when the government cannot finalise an agreement with one of our friendliest trading partners?

The National Farmers Federation has been particularly vocal about this export issue. Last week, along with representatives of the Cattle Council of Australia, the Australian Meat Industry Council and the Australian Lot Feeders Association, the President of the National Farmers, Mr Jock Laurie, said:

Australian beef producers stand to miss out on $1.4 billion in exports to Korea because of our stalled free trade agreement.

He went on to say:

… the threat to other agriculture exports like wheat (around $350 million) and dairy (over $100 million) was also pronounced.

Further he stated that:

Total losses to Australian agriculture could run into the multi billions of dollars. Australian farmers are losing out in a major way while ever we don’t have an FTA with Korea and our major competitors like the USA do.

The beef industry provides a classic example. The National Farmers Federation notes that:

Under the current arrangements, Australia’s $645 million annual beef trade with Korea is subject to a 40 per cent tariff.

However, after signing a Korea-US FTA, United States beef is subject to only a 34.6 per cent tariff, 5.3 per cent less than Australian beef. But the differential will become massive as time goes by since US beef exports to Korea will be completely tariff free by 2026.

This government has publicly admitted that a key sticking point is its unilateral veto of what are called investor-state dispute settlement clauses. The Howard government used the potential inclusion of an investor-state dispute settlement clause as a negotiating position for bilateral agreements and so such clauses were included in some of Australia's FTAs concluded under the Howard government, as well as in the one with ASEAN and in the free trade agreements with Chile, Singapore and Thailand. But they were not included in others—for example, the FTAs with the United States and New Zealand. Inclusion of such clauses should be considered on a case-by-case basis.

It is true to say that the Australian business community does not have a united view on the matter. However, in 2011 the Gillard government stated that they were opposed to investor-state dispute settlement clauses, despite the previous inclusion of such clauses in the Chile and ASEAN agreements finalised since 2007. In contrast, the coalition remains open, as a negotiating position, to including ISDS clauses. The fact is that the EMDG cut is just another blow in the general mismanagement of our export trade.

We are also concerned by the extra regulatory burden which will be placed on exporters by the changes to the EMDG scheme. Should we be elected to government, we are determined to cut red tape and overregulation. This bill is just another example of this government making changes which will lead to additional red tape and regulation.

In conclusion, therefore, I move:

That all words after “That” be omitted with a view to substituting the following words:

“whilst not declining to give the bill a second reading, the House:

(1) condemns the Government for breaking its 2007 election promise to increase spending on the Export Market Development Grant (EMDG) scheme and instead cutting the program over the course of the last 5 years;

(2) notes that the cuts to the EMDG scheme:

(a) are directly due to the budget mismanagement of the Government and its wasteful expenditure policies; and

(b) represent further evidence of the Government’s inability to understand the plight of Australian exporters as they meet huge challenges in the quest to build their international markets;

(3) expresses concern that the Government has introduced increased red tape in the administration of the EMDG scheme when what is required across the Government is a reduction in red tape; and

(4) recognises that the Coalition, when in government, commits to reviewing the changes in the bill to establish their true budgetary and administrative impact on business, especially small and medium enterprises.”

See this speech in context