Monday, 29 February 2016
Trade Legislation Amendment Bill (No. 1) 2016; Second Reading
I rise today to voice Labor's support for the Trade Legislation Amendment Bill (No.1) 2016, which implements two categoriesof changes to Australia's trade legislation. Firstly, it gives effect to a name change of the Australian Trade Commission, commonly known as Austrade, to the Australian Trade and Investment Commission. Secondly, it makes a number of minor and technical changes to the Export Market Development Grants Act 1997.These modest amendments will improve the operation of the Export Market Development Grant scheme.
The EMDG scheme is a key part of Austr alia's export promotion effort. It has been ever since it was instituted by the Whitlam government in the 1970s. It is good to see something that both sides of the House are supporting because it does provide good opportunities for our local companies, in particular by providing government grants to help Australian small and medium sized the enterprises—something I know my colleague at the table is very passionate about—and it helps them promote their products in export markets. 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.
As we know, one of the unfortunate realities about the way that the business community does not take sufficient advantage of all of the various trade deals that are available to them is that only 19 per cent of Australian exporters make use of free trade agreements, which leaves a lot of room for improvement in this country when it comes to ensuring that our businesses get a slice of the action in our region and that our businesses get a slice of the action when it comes to taking advantage of these FTAs. I was involved in a committee process which tried to dig into some of the issues that are preventing a lot of our businesses from taking full advantage of the agreements in the region and beyond. I think it is important that Austrade and the EMDG program and all of that are geared towards helping businesses make the most of those opportunities. The EMDG scheme helps small businesses to grow and to take advantage of export opportunities. It also helps the wider Australian economy to improve its export performance , which is good for growth and jobs. That is why Labor has been for some time such a strong supporter of the EMDG scheme .
The scheme has been reviewed a number of times since it was instituted by the Whitlam government in the 70s, most recently by Mr Michael Lee , who handed his report to the g overnment 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. We also know modelling done by KPMG concluded that the scheme generates a net benefit for the Australian economy. That modelling estimated that each dollar provided to SMEs generated $7 in benefits when industry spill-overs and productivity gains are taken into account. So $7of benefit from every dollar of that of money going into the scheme is good bang for the buck. That is a good outcome for the Australian people as well as for the specific businesses involved. Mr Lee recommended that the EMDG scheme be maintained with a number of changes to improve its operation and performance. Some of his recommendations are reflected in th e amendments contained in this bill that we are debating today.
For example, the b ill removes the EMDG A ct's current sunset provisions. Under the a ct's existing sunset arrangements, the EMDG scheme would effectively lapse unless it is extended by legislation every five years —that is a pretty bizarre state of affairs . It is good to see that discarded in the amendments today. By amending the a ct's d efinition of a grant year, the b ill will ensure the EMDG scheme continues on an ongoing basis rather than requiring periodic reauthorisation. Labor supports this change because it will deliver greater certainty for business about the future of the scheme.
The opposition notes that the b ill also provides the minister with greater flexibility over the timing of reviews of the EMDG scheme. Under the amendments we are talking about today, the m inister will be required to commission an independent review to report by 31 December 2021. After that, the m inister will be required to commission subsequent reviews for completion on dates that he or she determines, rather t han on dates prescribed by the a ct. I think that is a much better way to go about it, so long as it is not abused and so those reviews are not conducted too frequently. I think that is a good way to go about it. The o pposition believes the EMDG scheme, which costs taxpayers more than $130 million a year, should continue to be subject to regular reviews , even with the additional flexibility that has been provided to ministers in this bill we are talking about .
The b ill makes other amendments which amount , in my view, to sens ible fine-tuning of the scheme. These include: c ommunications 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; t he promotional literature or other advertising expenditure category will include material in electronic form —commonsense changes to keep up with the available communications technology ; p rovisions for reim bursement of in-country travel—other than air fares— will be repealed and the daily allowance for overseas visits will be increased from $300 to $350; e xpenses incurred on activities or products which the CEO of Austrade considers may have a detrimental impact on Australia's trade reputation will be excluded from the scheme; A ustrade will be permitted to direct funds from other sources towards EMDG administration costs. These are the sorts of changes that the bill before us today makes to the current arrangements.
As flagged at the outset of my contribution today, the bill also changes the official name of Austrade from the Australian Trade Commission to the Australian Trade and Investment Commission. By this point of the speech, I think honourable members get the impression that, while many of these changes are worthy changes, it is not exactly a substantial bill, it is not a particularly visionary piece of legislation and it is a bit of a reflection that we are spending time on some of these more minor issues. You do really get the sense of an absence of a broader plan for investment and a broader plan for the economy.
Since coming to government, those opposite—under the member for Warringah and now the member for Wentworth—have talked about Australia being open for business. Unfortunately, when it comes to investment, and foreign investment in particular, this sort of sloganeering is little more than a fancy website, a new logo or some of those cheap pull-up banners that you see at trade fairs around the place.
The fact is that when it comes to the investment community there have been some pretty inconsistent actions from the government which are having the opposite effect of building confidence in the investment community itself. For example, the changes to the Foreign Investment Review Board screening thresholds and new application fees have meant more hurdles for foreign investors in an already overburdened Foreign Investment Review Board system. Labor recognises Australia is hungry for an increased share of highly competitive foreign direct investment flows to underpin our future economic development. That is why we have opposed the government's anti-investment FIRB legislation changes in this place.
Labor's position on the government's FIRB changes has been supported by the Business Council of Australia. For example, 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 in the agriculture and food sectors. The BCA criticises the government for swathes of new red tape, onerous Foreign Investment Review Board screening thresholds and new application fees for would be investors. In their report, the BCA says very clearly:
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.
Alarmingly, the report finds that the new rules may result in diminished investment returns in those agriculture and food sectors. The BCA also criticises the Turnbull government for amending FIRB thresholds without undertaking a proper regulatory review process.
The BCA is not alone in its criticism of the Liberal government's foreign investment policies. The investment screening thresholds have also been criticised by the Australian Food and Grocery Council, the Cattle Council of Australia, the Queensland Farmers Federation, the WA Chamber of Commerce and Industry, the Australian Lot Feeders' Association, the Financial Markets Association, Wellard, GrainCorp and Ridley Corporation—
As the member opposite interjects, in a disappointed way, all of these so-called friends of those opposite have lined up to take a swing at the antibusiness approach of those opposite when it comes to foreign investment in this country.
Under a banner of 'open for business', those opposite have actually introduced and progressed a 'closed for investment' policy in relation to FIRB. These are changes that will make Australia less attractive as an investment destination. It will make it harder for farmers and food manufacturers to raise capital and it will put downward pressure on the values of farm assets.
This was the type of economic incoherence we came to expect under the member for Warringah, but it is disappointing to see it continue under the member for Wentworth. Unfortunately, it is another example of how the Prime Minister says one thing and does another—in this case when it comes to investment in our country. Given all the other minor changes that the current bill brings—the name changes, the travel allowances from $300 to $350 and all of these sorts of minor worthy things—when we are debating issues of this magnitude, it really does shine a light on the absence of a substantial economic policy from those opposite. Whether we are a few weeks or a few months from election, the government's legislative priority is a bill which changes the name of a government agency.
We support the very modest changes to the scheme which are contained in this bill. We support the bill itself. But we call on the government to provide us with substantive trade and investment legislative amendments that will provide deep and lasting economic benefits for Australians as part of a genuine, broader, well-considered economic plan.
The growing middle class of Asia is to become one billion, or 1,000 million, over the next decade and this will be a crucial piece of the puzzle in Australia's economic prosperity. Whether it be trade agreements or the export market development grant—the EMDG scheme that we are talking about today—the coalition is providing the foundations and policy initiatives for a better Australia and, importantly, to allow Australian companies to grow. The EMDG scheme is a key Australian government financial assistance program. It provides support, by way of a reimbursement of eligible export promotional expenditure, to Australian small and medium sized businesses that want to begin exporting or grow their export markets. The design of the scheme recognises that developing export markets takes time.
Having worked in Europe, assisting South Australian companies expand, I know the challenges faced by these businesses that are keen to explore new markets. Furthermore, from my time in the private sector, I have assisted companies to access the EMDG and other government grant programs, and I know how valuable they are. They are particularly valuable to the over 3,000 recipients from around Australia who have received $141 million in grant payments. Sixty-four per cent of recipients were from services industries—a real growth area of our economy—including 14 per cent from education and culture, 11 per cent from ICT services and over 10 per cent from tourism and related industries. Importantly, 31 per cent were from manufacturing sectors as well.
I want to talk about trade in a bit more detail as this provides significant opportunities for our future. The recently signed trade agreements will bring unprecedented opportunities for my state of South Australia, with our Asian neighbours demanding a diverse range of goods and services: health and aged care, tourism, education and high-quality foods and wines. Thanks to the federal government, South Australian businesses and primary producers have been provided with the platform to tap into this market. For all the news about the South Australia's unemployment rate and the decline in manufacturing and downturn in the resources and energy sector, there is always hope. Agriculture and services such as education, tourism and health remain strong foundations and offer potential.
On the future, I am an optimist. I want to reflect on why I am a strong believer in our future. The Turnbull government is to deliver and will continue to deliver a great outcome for our nation. To provide the context, I need to look back at recent years. As I said in my maiden speech:
Innovation, knowledge and creativity are the new drivers of economic growth in developed nations around the world.
… … …
… We need to foster an environment where innovative sectors can grow and entrepreneurs can flourish. We need to seek and encourage greater business and technological innovations.
The Turnbull government's National Innovation and Science Agenda is so important in this respect, not just the $1 billion in initiatives that the government has announced but also the new focus on an enterprising nation, a country where entrepreneurs and growing companies are celebrated and where business and industry better understand the need to invest and innovate.
During my first term, I have spoken to a number of successful South Australian businesses and leading manufacturers like Philmac, in the irrigation pipes and fittings area; Seeley, in air conditioners; Coopers; and Australian Vintage, in wine. What these companies have done well is innovate, expand and grow their businesses, helping jobs and the local economy. A number have also been successful and received strong financial support from the federal government as part of our $155 million fund to help the economy transition from the downturn in the automotive sector. However, many of these companies are well established. The innovation statement and Prime Minister Turnbull's focus are on encouraging the next Apple, Google, or Amazon to come from Australia and not the United States.
The potential of how much value we can derive from this announcement is really now back in the hands of industry …
With exports surging into China, the FTA will allow us to build on our strength that we have in the market. With China's middle class growing at levels that are hard to get your head around, this is an exciting time for Australian winemakers.
From wine to food: that is another sector in which my state has standout companies such as San Remo and Thomas Foods. If we are talking about Thomas Foods, they employ 3,000 people. They are one of the fastest growing companies in our state. If we move from meat to tuna, there is Hagen Stehr, from the Stehr Group, saying that the China FTA will open a new market, and they are hoping to export 200 tonnes of tuna to China over the next year. Catherine Barnett, the Chief Executive Officer of Food SA, said that the free trade agreement provided a gift for food industries in South Australia. She said:
It is now up to businesses to seize this opportunity to grow by being smart with their marketing, branding and positioning …
Darren Thomas, owner of South Australia's largest meat exporter, Thomas Foods International, said that the tariff reduction would allow the meat industry to be more competitive, especially against the New Zealand market. He said:
We certainly have had a heightened focus on … China with the Free Trade Agreement in mind. We are working closely with our clients to ensure they are aware of the benefit of the FTA.
Transporting food and wine to the port and then to the export markets is vital in the supply chain, and that is why the north-south corridor in Adelaide is so important. One of my first priorities upon being elected to parliament was to make the case for a better South Road. Just over two years later, we see the construction of the Torrens-Road-to-Torrens-River section, with Darlington due to start this year. Furthermore, the coalition government announced the billion-dollar Northern Connector project. These three projects show that the government is committed to South Australia. Further, these projects will result in hundreds of jobs and a better economy.
When one thinks of industries in South Australia, defence is close to the top of the list. As I said in my maiden speech:
The many employees in the defence sector in Hindmarsh look forward to the coalition's commitment to increase defence spending to two per cent of GDP … The air warfare destroyers and the next generation of submarines are two such examples where Australian workers, South Australian workers, will be part of something special.
Just last week in the defence white paper we reaffirmed our commitment to increase defence spending and, importantly, committed to build nine frigates in Adelaide and bring the project forward to 2020 to mitigate the downturn in defence projects as a result of Labor not making a decision on defence shipbuilding in 2011. And, as residents of Hindmarsh know, I have been outspoken in my desire to see the submarines built in Adelaide. These projects will deliver more jobs for South Australia, some 2,500 for shipbuilding, with more jobs to come once the evaluation process for the submarines is completed.
So, as we progress into the third year of the coalition government, the residents of Hindmarsh and South Australia are seeing results and action as a consequence of a federal government that is delivering for them. There are green shoots across key sectors such as food and wine, infrastructure and defence. Yes, there are challenges for my state as the automotive sector closes down. We have seen the Holden announcement, Nissan in the 1990s, Mitsubishi in 2007 and Ford in the last months of the Labor government in early 2013. But, just as the state recovered from the decline in the whitegoods and clothing sectors in the 1980s, we will again recover and prosper. I look forward to continuing to work with local companies and delivering on projects creating more jobs, a better economy and a better future.
I support the passage of the Trade Legislation Amendment Bill (No. 1) 2016 with my Labor colleagues. The purpose of the bill is to amend the Export Market Development Grants Act, or the EMDG Act, and the Australian Trade Commission Act. The Export Market Development Grants scheme is a great Labor initiative that has been very successful in promoting Australian businesses in international markets. There are many businesses, particularly small to medium-sized businesses, in the electorate of Kingsford Smith that have benefited from this program. Labor supports this bill, which comprises mainly minor amendments and technical changes designed to improve the operation of the scheme.
The scheme was established in 1974 by the Whitlam government and administered by Austrade. Its primary focus is to bring benefit to Australians by connecting and nurturing foreign markets for Australian goods, services, intellectual property and general capability. This is done by providing financial support and advice on prospective markets and opportunities to small and medium Australian businesses actively seeking out and developing export business. Further support is provided in the form of on-the-ground assistance in targeted countries.
Small business of course is the backbone of the Australian economy, employing 4.7 million Australians as at June 2014. EMDG have assisted a number of businesses to excel both domestically and abroad. Some of the success stories are well known. Xelon Entertainment, a prominent digital music distribution company, has grown to represent over 150 labels, both domestically and worldwide. Thanks to the EMDG scheme this company has been able to regularly attend international conferences and international music summits. It is the face the new music industry in Australia. The scheme has helped it develop and expand its export sales significantly in recent years, to over $1.5 million in 2014-15.
Another success story is SAGE Automation. A leading independent system integration company, specialising in industrial automation and control systems, SAGE has managed to leverage the help it has received through the EMDG to break into markets, particularly in computerised global supply chains, and secure big customers, such as Glencore, BHP Billiton, Orica and Santos. It has allowed the business to have up to $40 million in revenue a year.
Under section 106A of the EMDG Act the scheme was scheduled for review in 2015. The review was aimed at increasing the number of businesses that develop into exporters, increasing the number of businesses that achieve sustainability in export markets and generate additional exports, and further developing an export culture in Australia. The review found that the EMDG scheme generates a net economic benefit and recommended that it be maintained with minor changes. That review conducted by Michael Lee made a number of recommendations including: the removal of sunset provisions from the act, which said that the act sunsetted, or was discontinued, every five years; the augmentation of Austrade's budget to free up EMDG funding for export promotion grants; and Austrade to continue monitoring changes to any program's accessibility and processes as well as the outcomes of progressive changes. Further amendments to the act contained in this bill include a limit of $15,000 on the free sample expenditure category, provisions for reimbursement of in-country travel, and expenses incurred on activities or products considered detrimental to Australia's trade reputation being excluded from the scheme.
Modelling by KPMG estimated that each dollar provided to SMEs through this scheme generated $7 in benefits when industry spillovers and productivity gains are taken into account. There is no doubt that the scheme provides a net economic benefit to Australia. 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 the EMDG scheme continues on an ongoing basis rather than requiring periodic reauthorisation. Labor supports this change because it will deliver greater certainty for business about the future of the scheme.
The opposition notes that the bill also provides the minister with greater flexibility over the timing of reviews of the scheme. Under the amendments 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 on dates prescribed by the act. Labor believes strongly the EMDG should be subject to regular reviews. This way business and stakeholders are given the opportunity to raise concerns and have input into the ongoing operation of the scheme, which should help the scheme continue to be responsive and meet the specific needs and expectations of small and medium enterprises while delivering value for money for taxpayers.
The bill makes other amendments which amount to sensible finetuning of the scheme. Most notably they are: communications will be removed from the eligible expenditure category to reflect the reduced cost of communications as a result of advances in technology—a lot of companies are now using social media as a means of promotion, which in many respects is free; the promotional literature or other advertising expenditure category will include material in electronic form; and Austrade will be permitted to direct funds from other sources towards EMDG administration costs.
In conclusion, I am pleased to support this bill and the changes embodied by it. It will help consolidate the scheme and bolster its effectiveness as a major supporter of small and medium Australian businesses and ensure it can continue to support Australian business well into the future.
I rise to speak in support of the Trade Legislation Amendment (No. 1) Bill 2016. The bill amends the Export Market Development Grants Act 1997 giving effect to several key recommendations from the 2015 review of the Export Market Development Grants scheme. Further, it improves the operation of the EMDG Act 1997, delivering savings that better align the scheme closer to its budget.
The bill makes a number of common-sense cost savings to what is a very important Australian government financial assistance program. It provides support, by way of reimbursement of eligible export promotional expenditure, to Australian small- and medium-sized businesses that want to begin exporting or grow their exports. Eligible exporters can access up to eight grants. These grants do not need to be in consecutive years; exporters can pick the years that they access the scheme, so that they can maximise the benefits that the scheme delivers. The design of the scheme recognises that developing export markets takes time.
In Calare there have been a number of great business taking advantage of, and benefiting from, this scheme. Angus Barrett Saddlery specialises in leather tanning, fur dressing and leather product manufacturing. Angus Barrett has been doing leather work and selling his handmade goods since 1986, when he was just a boy. Angus worked across Australia on farms and cattle stations and in mines and drilling camps and finally decided to settle in Orange. In 2000 Angus registered his business and started manufacturing his saddlery goods part time. In 2005 Angus purchased his first manufacturing premises and committed full time to his craft. In 2007 he undertook his first big research and development trip, travelling to the USA to enhance his saddlery skills and manufacturing techniques and to source modern machinery. Angus studied under two very experienced and talented saddlers: Randy Severe in Oregon, USA, and Joey Jemison in Texas, USA—and, having a daughter and a son-in-law involved in the horse industry in Texas, USA, I can tell you that is where the horse industry resides.
Angus is a prime example of how Calare residents and other Australians can look outside the box and to other industries for new ideas and manufacturing techniques that have helped grow his business. Angus and his wife, Sarah, continue to look for innovative ways of continuing his craft, taking his second research and development trip to Europe and the UK in 2012. His forward thinking and ability to learn from the international community have seen his business grow from a small tool box to an industry-leading business. I had the pleasure of opening his business in its modern premises a few years ago, and he has really done well. In fact, on his trips—I think it was on his trips—I think he was the first person to try cutting leather with a very modern air and sand type cutter, which does an amazing job despite actually being designed for other articles.
Other recipients in Calare include Emirates Hotels (Australia), who own and operate the award winning Wolgan Valley resort; Innotec Building Systems from Orange; Orange's Pixc Co. Pty Ltd, an internet publisher and broadcaster; Madrez Wine services, who sell the fantastic cool-climate wines being made in the Calare electorate—mind you, there are a lot of fantastic cool-climate wine producers in Orange and Calare, and I can attest to that; and Bathurst's Tru-Flo pumping, who specialise in pump and compressor manufacturing.
The bill ensures continuity of the scheme and certainty for exporters. The EMDG Act currently contains a definition of a grant year up to 30 June 2016. The bill amends the definition of a grant year so that the scheme can continue beyond this date. It also removes the requirement that a review be conducted for the specific purpose of making a recommendation about the continuity of the scheme. The scheme will still be regularly reviewed, and the amendment sets a date for the next review, with later reviews to be completed and reports given to the minister by dates determined by the minister.
In a place like Calare, we are not paper shufflers. We are not hanging around waiting for something to happen. The people of Calare are doers. They dig things up. They make things. They grow things. They create energy. We export the products of forestry, mining and agriculture in all its varied forms, whether it is horticulture, meat or wool. It is a truly wonderful part of the world, and it is the engine room of the state and one of the engine rooms of Australia.
That is why the trade situation is just so vital to it. Without trade, Australia is done for, and I guess any legislation which encourages innovation by emerging businesses or people who have never tried being involved in overseas trade or the expansion of current trade is just magnificent for regional Australia and our part of the world in particular. Of course, we have such possibilities.
I cannot underline enough the importance of this sort of legislation, which provides assistance to someone like Angus Barrett, who was running around a property a few years ago and is now a serious businessperson with serious export opportunities. Over the last year or so, we have concluded a lot of trade deals. In fact, Andrew Robb, when he was still the trade minister, was planning to come out to our electorate next month, which has kind of gone by the wayside. Our businesses have nothing against Steven Ciobo, who has now taken over the reins as Minister for Trade and Investment, but they want the new envoy, the man who was there and who did it all, to come out and explain to them what their opportunities are, and certainly we will be working towards that point. This is just another part of making not just regional Australia but the whole of Australia totally competitive, with all those businesses taking the opportunities that exist now or that can exist in the future and most certainly will exist in the future.
It is a great honour to rise to speak on the Trade Legislation Amendment Bill (No. 1) 2016. We live in a world that is more connected than ever before. We live in a world that is very much defined by globalisation, and the great challenge for us as a country is to be brave enough and bold enough to think of ourselves not as a marketplace of 23 million Australians but as a marketplace that has access to all global citizens, and particularly to the billion people who are coming into the middle class in our north, in Asia. It is a very difficult thing to comprehend, as a country of 23 million people, what a billion people looks like. As our neighbours in our north move into the middle class, they will increasingly want to buy not only our resources, food and fibre but particularly our services, our products and our ideas, which really are changing the world for the better. This represents an amazing moment in history—an amazing opportunity for us to seize the opportunities of globalisation by selling our products, our businesses, our services and our ideas into that global marketplace, to those billion people coming into the middle class to our north.
We have managed to unlock this incredible opportunity. We have managed to give ourselves a seat at the table, predominantly through the free trade agreements secured by this coalition government and particularly the former Minister for Trade and Investment, Andrew Robb. He has done an incredible job at giving us access into the Korean marketplace, the Japanese marketplace and, particularly, the Chinese marketplace that no other country on earth has, and certainly no other Western country has, particularly on the service side of the economy, whether that is in health care or education or legal services or financial services. It is an amazing opportunity, should our country be brave enough, be bold enough to seize this moment, to seize that opportunity, to sell our products into the Asian marketplace, which will drive our future prosperity as a country for decades to come and, ultimately, ensure that we can hand over to the next generation of Australians a country that has more opportunity, not less, a country that has increasing job opportunities and rising living standards. It is this growth in our region that will drive our future prosperity. I want to commend the former Minister for Trade and Investment on achieving this seat at the table. But, of course, it is then up to us to seize that moment and to fully utilise these free trade agreements.
The Export Market Development Grants scheme is a pivotal way that Australian businesses can fully utilise the opportunity that presents itself when it comes to exporting to a global marketplace. The Export Market Development Grants scheme is a government financial assistance program which has helped grow and will continue to expand our great export industry. The EMDG scheme provides significant marketing support through reimbursing eligible export promotional expenditure for Australian small and medium sized businesses that are aiming to begin exporting or to multiply their exports. What exporter does not aspire to do that? Eligible exporters can access up to eight grants, and these grants do not need to be in consecutive years. Exporters can select the years they access the scheme to maximise its benefits. The premise of the scheme and accompanying framework recognise that developing export markets takes time. For the first two years, applicants can combine expenses into a single claim, and exporters do not need to satisfy an export performance test until their third year in the scheme.
The then Minister for Trade and Investment, the Honourable Andrew Robb, when introducing this bill to the parliament, proposed that the EMDG scheme might indeed be one of the most successful programs that the Australian government has known. It has had bipartisan support since 1974—an incredible thing in this place—and is particularly extolled by the small business sector. Mr Deputy Speaker, I am not sure what you were doing in 1974, I am not sure what members opposite were doing in 1974, but I am sure it was your heyday.
That the two sides of politics can come together since 1974 in this place to support a piece of public policy is a truly remarkable thing, and I think it shows the virtues of this program—one that has stood the test of time and will continue to drive future prosperity for the Australian economy and generations to come.
At the core of this bill is an amendment to the definition of a grant year, which is currently up to 30 June 2016. In effect, the scheme will be made evergreen so that it may continue beyond that date. This bill will, in fact, remove the need for a four-yearly reauthorisation review, which can create uncertainty for those very claimant exporters it seeks to serve. As the former trade minister pointed out, given that it has enjoyed more than 40 years of bipartisan support, there is little to be gained by subjecting the scheme to prescribe four-yearly sunset provisions—surely a common sense approach to this policy.
The reach and the impact of the scheme are striking. For the 2013-14 grant year, paid in the 2014-15 financial year, more than 3,100 recipients from around Australia received over $141 million in grant payments. The average grant was a pretty significant $44,270. Fifteen per cent of recipients were from rural and regional areas—a great achievement for our rural and regional enterprises and exporters. Sixty-four per cent of recipients were from service industries, including 14 per cent from education and culture, 11.8 per cent from professional scientific and technical services, 11.3 per cent from ICT services and 10.6 per cent from tourism and related industries. I think we can expect those numbers to grow in the decades to come. The mining boom and the agriculture boom has been a great thing for our country—my family are farmers, my brothers work in the coal mines; it has served our country well. As our country continues to transition and diversify its economy post the mining boom, this will really drive that future job creation for the next generation of Australians—those high-skilled, high-paying jobs in the service industry. This represents an incredible opportunity. This piece of policy has really driven their ability to access that global marketplace to sell our services across the globe.
For the 31 per cent that are from the manufacturing industries, I think often we forget the ability of Australian manufacturers to export to the globe. To give you a great local example, Packer Leather in my electorate is a 100-year-old manufacturing firm. It manufactures the leather that goes into Kookaburra cricket balls, the kangaroo leather that goes into Nike and Adidas shoes—it is in the RM Williams boots that I am wearing today. This is an incredible textile manufacturer that is exporting into the Chinese marketplace. To think that Australian manufacturers cannot compete on the global stage is, seriously, to talk ourselves down and miss the opportunity that is presenting itself. Seventy-two per cent of recipients were small exporters reporting annual income of $5 million or less. This is a great opportunity for our small and medium enterprises who are making a big difference on the global stage.
The benefits and opportunities really do hit home. They are reverberating through local economies and communities such as mine. In my own electorate, we have seen four local businesses that have recently been awarded EMDG grants. There is Akwa-Worx Pty Ltd, a water waste and treatment enterprise which, again, is punching above its weight on the global stage. There are some incredible businesses in the safety, performance and management of pole assets that are accessing these grants and selling to the global marketplace. We are seeing local, internationally renowned workplace training organisations accessing these grants. One that I am particularly excited about is Prolific Designs from Beachmere, a signage expert providing intellectual capital as well as the actual products to a global marketplace. They are making a very significant difference.
In conclusion, I think we stand at a very exciting time in human history, as the Prime Minister likes to say. Globalisation is presenting enormous opportunities, and we should not allow fear to define our response to a changing world. Instead, we should seize those opportunities and the ability to market our businesses, our products, our services, to the global marketplace, particularly the billion people coming into the middle class in our north. The free trade agreements that have been concluded by this government give us a very powerful seat at the table, but, if we are to fully utilise that opportunity, it is good public policy like this one that we are supporting in the House today that will drive our future prosperity. For those reasons, I commend this bill to the House.
I am pleased to speak on the Trade Legislation Amendment Bill (No. 1) 2016 this afternoon. I would like to start by saying that I was very disappointed with the member for Rankin in his speech. He gave the impression that this bill was unworthy of the House's time. He clearly did not understand the importance of the Export Market Development Grants scheme to this nation, to our exporters and to our future prosperity. Ninety-eight and a half per cent of the world's commerce occurs beyond our shores. What is going to drive the future prosperity of our nation is innovative, experimental small businesses, taking risks to take their products offshore and sell them in those markets. That is why the free trade agreements, the trade liberalisation agreements, that this government has struck with China, South Korea and Japan are so important. For the shadow Assistant Treasurer to come in here and play down the importance of this bill is very disappointing. He simply does not understand the importance of this legislation.
We also heard him claim that the coalition somehow has some antibusiness approach with regard to this. I would remind the member for Rankin that it was the Labor Party that slashed the funding for the Export Market Development Grants scheme when they were in government. They slashed it from $200 million back to $125 million. That was how much they slashed it, and yet we know the KPMG reports show that this scheme, for every dollar of government investment, gets a $7 return to the economy—seven for one. The former Labor government had money to spend and throw everywhere, yet they slashed this scheme back from $200 million to $125 million.
We do not have an unlimited budget. It would be very nice if we here in the coalition government could restore that funding back to $200 million and then index it. With the times that we live in and the budget constraints that we have, unfortunately that is just not possible. But what we have done is we have kept our election promise: we have increased funding for the scheme. Another $12.5 million went into it in the 2014-15 year, so the scheme now sits at $137.9 million. It would be nice if we could increase it further, but we need to live within the budget restrictions that we have.
It was interesting that the member for Rankin, as I said, talked about the antibusiness approach of the coalition, yet he is part of a party that plans to increase capital gains tax by 50 per cent. What antibusiness message does that send? If the members of the Labor Party are planning to increase capital gains tax in this country by 50 per cent, they are sending an antibusiness message to every single investor, to every single business, in this country. They do not know the damage that they are preparing.
It was also interesting to hear the member for Longman, the Assistant Minister for Innovation, talk about how the Export Market Development Grants scheme was first introduced in 1974. I actually first applied for an Export Market Development Grant about eight years after that, in the 1982-83 year. I think I am one of the few people in this place who has actually filled in one of these forms and who understands the importance of the scheme to small business and how it actually works.
I will give an example of how this scheme is important to incentivise small business. I was working for my parents' company in the mid-1990s, and we had been successful doing an export job in Singapore, for the Ritz-Carlton Hotel. It was very successful. It created a lot of jobs, a lot of employment, a lot of work, for people here in Australia. At the time, we thought, 'Is this just a one-off or is this a market—up in Singapore—that is worth exploring more?' The Export Market Development Grant scheme was available, so we decided, on the back of that scheme, to take the risk and to participate in a trade fair in Singapore. It was an expensive exercise, because you needed to design a stand, make the samples, pack them up, airfreight them all to Singapore and fly up yourself. Then you had your accommodation on the ground and you had the cost of going into the exhibition. It was an expensive exercise and it was a risk-taking exercise. But what tipped the decision in favour of doing that, of taking that risk, was the fact that we had that Export Market Development Grants scheme behind us. We would have to cough up the money up-front, but there was a little bit of a relief there from government to help offset some of those expenses down the track if we were unsuccessful. From that exhibition, I remember we wrote about $1 million-plus worth of orders that we would never, ever have achieved otherwise, purely because of the scheme. And that is just one example of the thousands and thousands of companies that have taken advantage of this most important scheme.
So, contrary to what the member for Rankin says, this is a very worthy bill to take the time of the House and spread the message to those small businesses out there in this country today who are thinking of what they can do to expand. I would say to most businesses in Australia today: look at what you can do in the export market. We are in a unique period of human history. Never before have we seen so many people lifting themselves out of poverty and into the middle class who can become consumers of goods made here in Australia.
'Made in Australia' carries a lot of weight. It is not all about competing on price; it is about competing on quality and style—and with the 'Australian made' logo behind it. It is the high end of the market. That is where our future prosperity lies. So we as a government need to do everything we can to encourage businesses to go out there, take that risk and explore those markets. For the member for Rankin not to understand the importance of that and come into this chamber and say this bill is all just a waste of time is frankly a disgrace.
Since the scheme has been going, since 1974, there have been four-yearly reviews. This legislation gets rid of those four-yearly reviews. Each review has been important. Each review has made minor changes. But we think this scheme should be legislated with no sunset clause, and that is exactly what this bill does. The message we are sending to small businesses out there is that this is how the scheme works: if you have eligible export promotional expenditure, the first $5,000 is not counted; above that, you are able to get a reimbursement of 50 per cent of all of your eligible expenditure and you are able to get grants for eight years. That can be consecutive years or it can be spread out. After the first two years there is an export performance test to make sure the grant money is being wisely given out and people are spending it wisely. The maximum grant is $150,000—although, as the assistant minister said, the last year averages $44,000. That is the message that we should all be selling and sending out to our businesses in our electorates to encourage them to get out there, have a go and utilise the scheme.
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. The other one is the removal of communications. As someone who sat up at night and spent many long hours on the phone talking to customers over in the Middle East, I would like to see communications still in there.
Although these things have been removed, this is still a very good scheme. This is still a very important scheme for our economy. It shows the commitment that this government has to the small businesses of this country. It shows the commitment that we have to risk takers—those who innovate and will drive the prosperity of our nation forward in future years. I commend the bill to the House.
It is my pleasure to sum up on the Trade Legislation Amendment Bill (No. 1) 2016. In doing so, I thank those who have contributed to this debate—in particular, the member for Hughes. He is always on the positive side of business and talking up the government's agenda, innovation and the fact that we are talking about jobs and prosperity going forward. He need not be alarmed, or even surprised, about the member for Rankin objecting to this legislation. On 10 February, when the member for Goldstein announced his retirement, the member for Rankin criticised him—or did not pay him due respect—for the trade deals he had negotiated. Coming into this chamber and pouring scorn on the Trade Legislation Amendment Bill is typical of the member for Rankin, who does not actually understand business. I do not think he always understands the need to push productivity and create more jobs. I am not surprised; he used to work for the member for Lilley. Hr should have taken some notes from the Leader of the Opposition's magnanimous speech about the member for Goldstein. Minister Robb has done a wonderful thing for this parliament and for this nation in securing trade deals with China—our biggest trading partner—South Korea and Japan. His name will be revered for as long as those trade markets continue to flourish. His name will be etched in gold, let me tell you.
I will give you some of the key facts on the grant scheme payments. As the member for Hughes has just pointed out, more than 3,100 recipients from around Australia received more than $141 million. The average grant was $44,270. Even just my own electorate had five recipients of these wonderful grants—Paul Pearsall's Australian Grain Link Pty Ltd, involved in cereal grain wholesaling at Wumbulgal in the Leeton Shire was one. Berton Vineyards Pty Ltd received the grant for wine and other alcoholic beverage manufacturing—it is located at Yenda. Flip Screen Australia Pty Ltd at East Wagga Wagga—Sam Turnbull started that particular business in 2002 to manufacture and market his invention, the flip screen, a portable mechanical screening attachment built for skid steers, excavators, wheel loaders, backhoes and telehandlers. This grant is going to enable him to better enhance his export capabilities.
There is Quarisa Wines Pty Ltd, another fabulous winemaker from near Griffith—actually Tharbogang—and also RFM Ag Pty Ltd located in Wade Street, Coolamon. It is a leader in developing revolutionary technology for efficient no-till planting—something that is so important for the Riverina where so much of this nation's food and fibre is grown. That is why these export market development grants are so crucial. Fifteen per cent, as we heard the member for Longman say in his contribution, were from rural and regional areas. Sixty-four per cent of recipients were from service industries, including, as he pointed out; 14 per cent from education and culture; and 11.8 per cent from professional, scientific and technical services—so important, we are talking a lot about science and innovation, the agenda that we are getting along with.
We heard the member for Longman say in his contribution about the need to look at services such as information and communications technology, which were the recipients of 11.3 per cent of these grants. It is so very important, given the fact that we are transitioning from the construction phase of the mining boom. We are looking at diversifying the economy. Agriculture is always important—that has been enhanced, enlarged and expanded by our trade negotiations—but there is so much more that this country can export. We only have to look at the member for Goldstein's successful negotiation of the Trans-Pacific Partnership agreement.
Elsewhere, with these grants, 10.6 per cent were from tourism and related industries. Thirty-one per cent were from manufacturing industries, including eight per cent from the machinery and equipment manufacturing sector—I mentioned a couple of those from my electorate—and 6.4 per cent from food and beverage manufacturing such as those two fabulous wineries in the Riverina.
When we talk of the Riverina, people have heard me say it in this chamber before that one in four glasses of wine is produced in Griffith alone—right across Australia, a quarter of the wine is produced in Griffith. Just in recent weeks, Casella Wines, of course, famous for its trademark yellow tail brand, has bought Howcroft Estate Vineyards near South Australia's Limestone Coast. It is the first big vineyard's deal of 2016. Family-run Casella is one of the country's biggest wine producers with brands including yellow tail, as I said before, Peter Lehmann Wines and Brand's Laira. It has bought that South Australian vineyard. It is building more containers, more storage units, at its massive processing plant at Yenda. It provides many, many jobs. It underpins the Yenda economy. Indeed, it is a wonderful success story of the Murrumbidgee Irrigation Area. May long that success of the Casella family continue.
The importance of the Export Market Development Grants scheme is a key Australian financial assistance program. It provides support by way of a reimbursement of eligible export promotional expenditure to Australian small and medium sized businesses which want to begin exporting or grow their exports such as those producing food and fibre from the Riverina. We heard how important this is for regional businesses.
Eligible exporters can access up to eight grants, and these grants do not need to be in consecutive years. So there is the ability for them to gain these grants and promote, market and build their businesses. How important is that? How valuable is that to many of those businesses which are providing so many jobs, so much security and sustainability for country communities right across the Riverina, regional New South Wales and our nation?
In introducing this bill into the parliament, the then Minister for Trade and Investment, the Hon. Andrew Robb, argued that the EMDG scheme might indeed be one of the most successful programs the Australian government has known. Of course the member for Moncrieff has taken over that important portfolio from the member for Goldstein and he is getting on with the job of not just building on what the member for Goldstein did but looking at other markets—and of course India is a huge market with huge export opportunities that I know my Riverina winemakers, producers of cotton and everything else are looking at being able to tap into in the years to come after we, hopefully, can secure that market as well.
The 40 years of bipartisan support that the EMDG has enjoyed—and we heard the member for Longman talking about 1974 being a starting point—certainly supports the views of the former minister for trade, the member for Goldstein, when he argued that the EMDG scheme might well be one of the most successful trade grant programs that the government has known. Indeed it is.
Australia's exporters work in markets around the world. It is so important that they are able to do that. It is so important that we are able to tap into those valuable markets, those valuable export opportunities, to grow trade and investment in our country.
The Turnbull coalition government is committed to supporting Australian exporters. In 2013, the coalition committed to progressively restore funding to the EMDG by allocating an additional $12½ million per year for four years beginning in 2013-14. Last year the EMDG scheme supported more than 3,100 small and medium sized exporters to develop export markets for their goods and services.
This bill gives effect to several recommendations of the 2015 Lee review of the Export Market Development Grants Scheme, tabled in parliament last year by the member for Goldstein. The bill delivers several minor policy and technical amendments to improve the operation of the EMDG scheme and aligns the scheme closer to its budget. The bill amends the definition of a 'grant year' so the scheme can continue beyond its current sunset of 30 June 2016. While the requirement for a review to be conducted simply for the scheme to continue has been taken away, the scheme will still be regularly reviewed, as it ought to be, and this bill sets a date for the next review.
The bill removes communications as an eligible expenditure category, reflecting the reduced cost of international communications from technologies such as Skype, Viber and WeChat. To bring the scheme in line with modern business practises, promotional literature or other advertising expenditure can now be in an electronic or digital form. The 'free sample' expenditure category has been limited to $15,000. In-country travel expenses other than airfares are no longer reimbursable expenses. However, the eligible daily allowance for overseas visits has been increased by $50 to $350. Activities, things or products that, in the opinion of the Austrade chief executive officer, may have a detrimental impact on Australia's trade reputation can now be excluded expenses.
The bill permits Austrade to direct funds from its other funding sources towards administrative costs of the EMDG scheme if required. The bill will also change the name of the Australian Trade Commission to the Australian Trade and Investment Commission, in recognition of its role as Australia's investment, promotion and attraction agency.
I do thank those members who have contributed to this debate. Providing small and medium-sized businesses, those engine-room providers of the economy, with certainty about the EMDG scheme rules is vital, as they start making their marketing plans for the new financial year. I commend the bill to the House.
Question agreed to.
Bill read a second time.