Thursday, 3 June 2010
Export Market Development Grants Amendment Bill 2010
Debate resumed from 26 May, on motion by Mr Stephen Smith:
That this bill be now read a second time.
This Export Market Development Grants Amendment Bill 2010 underlines yet again the sheer administrative incompetence of the Rudd Labor government. It breaks at least four specific election promises. It is another botched program that shows this government’s complete lack of understanding that what business needs most is certainty.
In 2007 the Labor Party promised before the election that it would revitalise the Export Market Development Grants Scheme. It said it would increase the maximum grant by $50,000 to $200,000. It would allow the cost of patenting products in the international marketplace to be treated as an eligible export marketing activity. It would allow approved regional not-for-profit economic development bodies, including tourism bodies, with remote Australian exporters to access the scheme. It would lift the maximum turnover limit of eligible applicants from $30 million to $50 million. It would cut the minimum threshold of expenditure by $5,000 to a $10,000 minimum. It would extend the limit on the number of annual grants from seven to eight annually and it would replace the list of eligible services provided in Australia with a negative list which means all services would be considered eligible unless otherwise specified. The Labor Party said in its election platform:
These sensible changes will revitalise and update the EMDG and will assist businesses, especially small businesses, to break into the export market. The program will be more accessible, especially to businesses in the service sector and those based in regional areas.
I can recall debating these issues at the Lowy Institute with the then shadow minister for trade, the current minister, when he outlined the importance of all of these measures and promised Australian exporters that there would be a much more generous EMDG scheme in the future.
This bill breaks four of those commitments. One, the negative list for items to be covered, was never even implemented. So, in effect, almost all of the Labor Party’s pre-election promises to the trading sector and almost all of the reforms that the government promised to make to the EMDG scheme are being reversed in this legislation. The scheme will largely go back to the scheme that was in place before Labor came into office. They said they would make substantial reforms. The reforms have not worked and now Labor is reversing those changes.
This bill will reduce the maximum grant from $200,000 to $150,000. It will reduce the maximum number of grants available for an individual recipient from eight to seven. It will cap intellectual property registration expenses at $50,000 per application. It will increase the minimum expense threshold from $10,000 to $20,000 and it will increase the eligibility income limit for members of approved joint venture consortia from $30 million to $50 million. If we go back through these listed changes, the government in this legislation is reducing the maximum grant from $200,000 to $150,000. That is precisely the size of the maximum grant that the previous government had in place and that the government said it would change. They have decided to reduce the number of grants available to an individual recipient from eight to seven. The number of grants available under the previous government was seven.
They are increasing the minimum expenses threshold from $10,000 to $20,000 and that is a specific reversal of the commitments that the government has made. It is indeed a humiliating backdown. The government is returning the scheme largely to the one that they inherited. All of the specific changes that the government said it would make are being reversed. The EMDG scheme operates by reimbursing eligible enterprises for 50 per cent of the cost spent on specific export promotion activities above a threshold. The scheme has been capped at $150 million per annum since 1997 and through the forward estimates except in 2009-10 when a $200 million cap applied.
Labor knew that its changes to the EMDG scheme would cost more money but it only funded an amount for an increase for just one year. There was no additional funding provided in the long-term even though the government knew that a more generous scheme would inevitably cost more. So that they could allow for better refunds in 2007-08, there was some top-up funding in that year. That was the top-up—the payments to the scheme—of the previous federal government. So Labor knew that the scheme was more than exhausting the funds that were available. They promised additional grants and additional benefits but, in reality, did not offer the money that was going to be necessary to fund those benefits. Because this is a capped scheme, it meant inevitably therefore that thousands of small businesses—exporters—did not get the export market development grants that they expected—and had a right to expect—on the basis of the rhetoric of the government before the election.