CHAIR —I welcome to the table Mr Peter Yuile, Deputy Chief Executive Officer, Austrade and officers from Austrade. The committee will now examine the budget estimates for Austrade.

Senator TROOD —I will begin by asking you about the portfolio statement and in particular this reduction in promotional activities, which is signalled, of $270,000. Is that right? Perhaps you could just tell me first of all, that is a reduction from how much money? What is the actual budget or does this wipe out the promotional activities of Austrade?

Mr Yuile —There were measures in terms of the Clean Energy and Trade Investment Strategy, measures in terms of the EMDG scheme for this financial year and a savings proposal of $270,000, which goes out over the forward estimates. That is part of the government’s savings requirement as a part of the usual budget processes. Austrade was asked to find $270,000 as part contribution to savings measures. It does not wipe out our promotional activity. It was particularly related to general awareness type expenditure as it particularly benefited potential and new exporters. Austrade is continuing its support for those exporters through a new program called Getting into Export. Apart from that, it is just a savings measure on our budget for this coming financial year and the out years.

Senator TROOD —So this is a figure that is generically coming out of the Austrade budget. Has it been applied to promotional activities specifically or is it coming out of the budget across the range of programs that you are running?

Mr Yuile —I can invite my colleague Hazel Bennett to speak on this in a bit more detail, but it is coming out of a specific area around awareness raising and promotional activity, particularly in relation to new exports. We have replaced that with some other activity but we have had to find savings.

Ms Bennett —As my colleague has said, Austrade runs a number of publicity and promotion campaigns in market and onshore to try and encourage the Australian business community to move into export and to work offshore obviously with international buyers and prospective buyers. Our total budget for publicity and promotions is some $12 million per annum. That is spread across our international network, so this represents a very small part of that. Particularly this was focused on work with new exporters, which is an area that we are relatively giving slightly emphasis to and we felt this was possible to accommodate the savings required.

Senator TROOD —What does this mean in relation to the new exporters? For this kind of money, which is in some respects a modest figure compared to $12 million if that is what you are spending on promotional activity, does it mean fewer brochures advertising the Austrade capacity to assist? Have you identified how you are going to make these savings specifically?

Ms Bennett —We have been moving in the last year or so to try and put a series of training modules, for example, on our website. We are trying to do and in fact do more work with corporate partners in Australia. So it has been a move by Austrade to try and share the work that we do through other avenues to reach more of the business community. As a result of that we feel it is possible to do just slightly less upfront and to use other avenues to reach the export community.

Senator TROOD —Mr Yuile, perhaps I should have asked you this question at the very outset. Could you give me a brief appraisal of the challenges that you are now facing in light of the global financial situation, whether or not you have discovered over the last six months or so that the export market has become that much more difficult not or not or patchy. Are you able to give me a brief account of the kinds of circumstances we are now facing in the international market?

Mr Yuile —I think it is true to say that obviously it has got more difficult, particularly in some traditional markets such as the United States and Europe. On the other hand, we are seeing continuing growth taking place in China, in ASEAN, in India, albeit at lower levels. It is certainly true that exporters tell us of tightened credit circumstances. I think what we expect to see is that there will be fewer exporters that we will have been working with this financial year compared to last year. Although the final numbers are not in on that yet, that is what you would expect in the current environment. But it is not universal by any means. I was talking to an industry leader only today who are saying that in fact their markets have held up better than last year in certain areas. So I think you have got to be very careful about making broad generalisations.

I guess our strategy in the circumstances has been to look at this in three levels. One has been around information sharing, getting information out to prospective and current exporters with respect to opportunities that are taking place in markets notwithstanding the downturn. We did a series of seminars last year in that regard. We are also looking at how we can give practical support to exporters at the second level in things like using our videoconferencing facilities to cut down on costs, getting buyers into our offices and talking to prospective sellers in Australia, and continuing to help with e-business activities.

The third level of support has really been around strategic positioning and working on those priority areas and priority markets, whether it be financial services or in the clean energy and environment area, where we are seeing a lot of expenditure worldwide with the various recovery packages for infrastructure support, transport and those sorts of areas. We are looking to build market strategies for the medium term so that we are addressing not just current circumstances but making sure that we are as well positioned as we can be and that our exporters and investors are for the longer term. It is interesting that the figures I saw briefly that are just out today are that investment into Australia is holding up. That is a good sign.

Senator TROOD —Do you keep a register or a note of the number of inquiries you get from potential exporters? Are you able to tell me whether or not there has been a significant or any decline in interest in using Austrade services? Is this the kind of climate where more people come to see you than they would otherwise have done because it is becoming much more difficult in the international arena?

Mr Yuile —Again, I think there are a range of answers to that. I will invite other colleagues to chip in. In some instances, part of the work we are doing is to raise awareness of those opportunities—for example, those seminars I spoke about. We had record attendances, which was very interesting for us because we were not quite sure what to expect. What we found was that many of those exporters or potential exporters were pleased to hear that there was another side to what was otherwise a pretty dull and dismal story occurring in the press. We do keep records obviously of the inquiries that come in through our website and also through Austrade Connect. I do not have the latest figures with me but Hazel may have those.

Ms Bennett —No, we do not have figures. We tend to look at those at the end of the year. But it would be fair to say that we are seeing low levels of interest. I think the feeling in the business community is just to be slightly more cautious and perhaps delay plans to go offshore if it is their first time. For companies that are currently in one market, we are certainly seeing a higher degree of reflection before they try and move into another market. So in general the business community is slowing down, tightening its belt and just trying to stay in there as a priority rather than going with expressive expansion plans either from one market to another or from a domestic agenda to an international agenda. As my colleague says, certainly what we are observing is in some sense not as bad as some forecasts predicted in terms of the attitude of the business community.

Mr Yuile —The other thing I was going to say, without wanting to be completely pharisaical about it, is that you do try in these circumstances to make sure you are consolidating with those exporters who are already in market places who have expended the money to position themselves. Our experience is that if you pull out after maybe several years it could take you a long time to catch up. Whereas for a new exporter when things might be more difficult you might not encourage them in quite the same way as you might in more buoyant circumstances. I think that is the experience of our trade commissioners as well.

Senator TROOD —You mentioned the clean energy sector, but are there other sectors of activity that are holding up reasonably well in the circumstances?

Ms Bennett —Clearly one of the sectors, as reflected in Australia, is infrastructure. Many of the government’s own stimulus packages have been in the area of infrastructure. Notwithstanding that, it can be quite difficult to ultimately go into infrastructure contracts offshore. That is clearly globally quite a buoyant area. And there are other areas. There are some of the basic things like food. Again, the market has tightened across the world but there are certainly still some strong opportunities for Australian food suppliers. As my colleague said, in Austrade we really try to be very careful and circumspect about keeping businesses in the markets they are in and choosing the right markets for their next plays where we know the market is more resilient—for example, some of the free trade markets where we know there is an element of market access that is protected by the trade agreements. We are trying to help them take advantage of those markets.

Mr Yuile —And I think that is an important prospective area, Senator, both in terms of, for example, the Chile FTA and the ASEAN-Australia-New Zealand FTA, which has been announced and which will shortly be coming into place. In a formal sense, one of the areas our teams in ASEAN as well as in Australia are looking at is how we promote that in terms of the supply side as well as the demand side—raising awareness in-market of opportunities presented by the FTA as well as making sure that our capability is understood and making sure that our exporters and suppliers are in a position and able to position themselves to take advantage of those opportunities.

Senator TROOD —Good. I want to look at some of your programs in a moment, but just before I do that—I see that, even though you were required to find these savings, your staffing level remains much the same. It is pretty constant over the budget year; is that correct?

Mr Yuile —That is our expectation, Senator, yes.

Senator TROOD —I am looking at the portfolio budget statement, page 79, and I see that 952 is your average staff number for 2008-09 and, similarly, for next year.

Mr Yuile —That is our expectation, yes. Perhaps I can invite Marcia Kimball to speak to that.

Ms Kimball —Yes, 952 for outcome 1 and 49 for outcome 2, which is around consular—so just over 1,000 staff.

Senator TROOD —Right, and that is constant across both of these years—last year and next year?

Ms Kimball —Yes.

Senator TROOD —So you are planning to retain the same numbers of people overseas; is that right?

Ms Kimball —Yes. We are still doing some planning around that. As we were saying before, the new measures around clean energy, the Clean Energy Trade and Investment Strategy, and the Automotive Market Access Program, mean we have gained funding which will allow us to bring on some 23 new staff—16 in clean energy and seven in the Automotive Market Access Program—and they will be, predominantly, overseas.

Senator TROOD —Do you know where they are going at this stage?

Ms Kimball —We have not settled finally, but I can give you a sense. In clean energy resources, we are anticipating two into Europe, the Middle East and Africa, with West Europe and London; two into the Americas; three into South-East Asia and India; and five into north-east Asia—that is across China, Japan and Taiwan; and we are looking to place four in our onshore area. Then, in the auto area, there are five new business development managers located predominantly in Asia, with one industry adviser in Melbourne.

Senator TROOD —Where are you placing them in Asia?

Ms Kimball —The automotive people?

Senator TROOD —Yes.

Ms Kimball —At this stage we are looking at Chennai, Guangzhou, Bangkok, Shanghai, Beijing and Seoul.

Senator TROOD —Thank you for that. I want to turn to the auto market—

Senator FERGUSON —Sorry, Senator Trood; could I just follow up on that automotive issue.

Senator TROOD —Yes.

Senator FERGUSON —I noticed in the portfolio budget statement, on page 74, it says:

• the Automotive Market Access Program … will focus resources on assisting the automotive sector to access key markets in the United States, China, Republic of Korea and Thailand

But you have named a number of other places.

Ms Kimball —They are really about supplementing our network. So we would be—

Senator FERGUSON —It might be about complementing your network but—so you are going to have people in the United States, are you?

Ms Kimball —Senator, we already have.

Mr Yuile —We already have.

Senator FERGUSON —But it says you are going to focus your resources on the United States, China, the Republic of Korea and Thailand, and you are now talking about Mumbai and—what was the other one?

Ms Bennett —No, Senator; to clarify, when Ms Kimball mentioned Mumbai, that was to do with clean energy. For the auto sector, Ms Kimball was talking about Chennai—

Senator FERGUSON —Chennai? Yes, okay; that is India.

Ms Bennett —yes, India; and Guangzhou, Shanghai, Beijing in China; Bangkok, Thailand; and Seoul, Korea. So in terms of the development, it is at Chennai that we believe there is an opportunity in India. And we already have a strong auto sector in the US. Sorry, Russell.

Senator TROOD —I wanted to ask you about the Automotive Market Access Program, which begins this year; is that right?

Mr Yuile —This coming financial year, that is right.

Senator TROOD —I would like some clarification as to how this program is intended to operate. I assume from those placements you have made that that reflects what you regard as the priorities for the program. Is that a fair observation, or is that not accurate at all?

Mr Yuile —It reflects where we think there are new opportunities emerging. Clearly the auto sector in China is a massive new opportunity. We see that it is important. Indeed there are Australian companies already in China in the component area and we have seen Chinese investment in Australia. It is clearly one of those where we expect new opportunities will be emerging. Similarly—although it is not explicitly mentioned, as you say, on page 74—because of opportunities in India it was thought worth while to put a locally engaged staff member in Chennai to explore the opportunities in that market.

Senator TROOD —That is from additional budget. How much was it?

Mr Yuile —$6.3 million over four years.

Senator TROOD —That is essentially for personnel. Is that right?

Mr Yuile —That is correct.

Senator TROOD —Their costs of people being in these markets.

Mr Yuile —That is correct. It is $6.3 million over four years, so it is $1.6 million per annum. We stretched that envelope as far as we could in terms of trying to get coverage. As my colleague said, there is a well-established team auto in the US where Australian manufacturers and suppliers have been concentrating effort and will continue to concentrate that effort.

Senator TROOD —What are the opportunities in the United States in relation to automotive? In light of recent announcements it seems an unlikely market.

Mr Yuile —I think that is what we are all watching. Restructuring always brings new opportunities, particularly if they are moving into a different class of vehicle, if there is an opportunity to match the kind of emphasis that we have given in this country to fuel-efficient engines and to some of the component parts that might be part of a green car push. We have seen the Obama administration, for example, clearly single out the whole green economy as an area for particular investment, not only at a government level. We will see in the next 60 to 90 days in respect of GM just how that restructuring plays out.

Ford, as far as I understand, relatively speaking, in the US sector maintains some strength and will also be looking to restructure. I think it would be not prudent to pull out the focus and investment we have made there, modest though it is. In terms of supporting Australian suppliers and manufacturers we should keep our eye squarely on the opportunities that might emerge from that restructure, and of course what it means to the global supply chain both from the US and also from these other markets in Asia in particular.

Senator TROOD —But it is not a case of pulling out; it is a case of you expanding your resources in these places.

Mr Yuile —In the Asian markets. That is correct.

Senator TROOD —So I take it that you have come to a conclusion that the existing personnel that you have on the ground in these places is insufficient to take advantage of the opportunities that exist in the automotive field.

Mr Yuile —It is certainly an area where we have not had the opportunity that this funding presents to give some specific focus and to get dedicated individuals with the kind of in-market knowledge and contact with manufacturers and suppliers into those markets to give it a particular emphasis. That is certainly the case, and the additional money will enable us to do that. What we have done in the United States we have done in conjunction with our colleagues in the department of industry. It has been a particular program that we have been using. I cannot remember the acronym.

Senator TROOD —I think we are all grateful for that!

Ms Bennett —To correct one point: the program was $3.7 million over three years.

Senator TROOD —Thank you. Is the appointment in Washington in the United States?

Mr Yuile —No. These funds will not put a supplementary person in the United States, but we retain a focus on the US out of Chicago.

Senator TROOD —Okay. Mr Kimball, you have given me the figures about the clean energy strategy, which is more or less $15 million over the forward estimates. It is $4.2 million—

Ms Bennett —$14.9 million over three years.

Senator TROOD —I rounded it off. So it is $4.2 million for next year?

Ms Bennett —Yes.

Senator TROOD —And that funds those individuals you mentioned? That is my understanding of the situation.

Ms Bennett —Yes.

Senator TROOD —This is a bit more broad, but I have a general question about the Pacific with regard to some other committee activities. Has Austrade made any progress in relation to Australia’s Pacific Investment Commissioner, which has been discussed as a proposal from around the Pacific on occasions. Has this budget had any impact on a decision that you intended to make about that particular position?

Mr Yuile —We had a Pacific Investment Commissioner. The term of that appointment ended and there has been an evaluation of the program by AusAID. It is AusAID funding this particular position. There has been an evaluation of that program but, as I understand it, no final decision made about the future of that position, though we have obviously been in consultation with AusAID about Pacific trade and aid strategy.

Senator TROETH —But you are sympathetic to this position. Am I right in saying that you see value in this appointment?

Mr Yuile —The short answer is yes. As in many markets, it takes time to build, particularly in the Pacific. We had the experience of a Pacific Investment Commissioner for two years and I think they were able to do some very good basic groundwork. There did seem to be a range of opportunities that were possible, so we do see value in that continuing. We see the possibility of an integrated approach with our colleagues in AusAID, and that is a matter that is under consideration.

Senator TROOD —Thank you.

Senator FERGUSON —You may remember that at additional estimates we had a fairly lengthy discussion about certain export market development grants. I notice that the government has provided in this year’s budget an additional $50 million for the claims lodged in 2008-09. Can you tell me if there is still a shortfall in paying the full entitlements for the EMDG applications in 2007-08? There was, and that was established here in February.

Mr Chesterfield —I look after the EMDG scheme. The 2007-08 grants year is the year that is being paid at the moment—we are assessing the grants at the moment. The money that has been committed in this budget for this financial year will pay the full entitlements for that grant year.

Senator FERGUSON —For that year?

Mr Chesterfield —Yes.

Senator FERGUSON —Is it likely that the $50 million that has been allocated will be sufficient for all the claims in 2008-09 to be paid in full?

Mr Chesterfield —For the 2008-09 grant year, which is the year that people are currently spending money in now to be paid next year, we do anticipate that there will be a shortfall. We are unable to say at this point how much that shortfall might be.

Senator FERGUSON —So you had a shortfall in 2007-08, which looked like it was going to remain a shortfall when you answered the questions in February—

Mr Chesterfield —Indeed.

Senator FERGUSON —There has now been $50 million allocated which will fund 2007-08, but there is no forward estimate to cover—

Mr Yuile —Yes, there is. You might recall in the last budget that there was $50 million allocated for 2009-10, which was in anticipation of payments against the changes to the scheme which the government had introduced. That still left the question of the changes in 2006, which were not funded in the subsequent years and which have been fixed in this budget with the payment of $50 million to cover any shortfall.

Senator IAN MACDONALD —Which year did you say?

Mr Yuile —For this current financial year.

Senator IAN MACDONALD —Did you say 2006?

Mr Yuile —Yes. There were legislative changes in 2006.

Senator IAN MACDONALD —When you extended the eligibility but did not provide any extra funding?

Senator FERGUSON —The situation is that for the budget of 2009-10 you allocated $50 million to cover the shortfall in 2008-09?

Mr Yuile —No. I will let colleagues who are more expert than me speak, but there was $50 million allocated against the changes that the government introduced in June of last year which would then apply for the current year and therefore be payable next year.

Senator FERGUSON —But you do not believe it will be enough to cover it?

Mr Yuile —There is still the question of the changes that were made back in 2006 which, of course, continue to flow through the system. This is the appropriation which has been put forward for this budget to cover this current financial year. Obviously, one of the issues we will not know until we start getting the claims is what the claims will be for 2009-10 and therefore what the final payment might look like. That is the unknown that we are dealing with.

Senator FERGUSON —Forgive me for being a bit thick, but there seems to be one year that is not covered. You have got money that was put into the budget to pay for the shortfalls of 2007-08, I think it was. That is what we were asking about in the initial stages.

Mr Yuile —That is right—2007-08 grant year, which is what we are currently assessing now.

Senator FERGUSON —Which you are currently assessing—although the year is finished. We are nearly at the end of 2009 but you are still assessing the grants for 2007-08.

Mr Yuile —The 2007-08 expenditure is claimed in 2008-09. That is what we are currently—

Senator FERGUSON —For the projected budget, where there is $50 million for 2009-10, do you think there will still be a shortfall in the payments made for the claims in 2008-09? Are you anticipating a shortfall?

Mr Chesterfield —Yes. The current government made changes to the scheme. It committed a further $50 million for it but, as Mr Yuile said, the changes from 2006 carry forward. So that is part of the shortfall that we are expecting to carry forward into that year. In terms of how much shortfall, it is difficult to estimate because the world environment has changed dramatically and the demand on grants has changed dramatically. We are quite uncertain about the level of shortfall that we would expect there. But there is a carry forward.

Senator FERGUSON —But it may be another $50 million?

Mr Chesterfield —Possibly—

Mr Yuile —Wouldn’t want to speculate.

Senator FERGUSON —If we run true to form, there has been a $50 million shortfall in the last couple of years, so it is quite possible that it could be $50 million again, isn’t it? It is quite possible.

Mr Chesterfield —I think $50 million would be the outside.

Senator FERGUSON —One of the difficulties of course is that exporters really need to know whether they are going to be paid in full or only in part. Otherwise it is impossible for them. We heard the minister today carrying on about how successful our balance of payments is, with exporters providing a considerable amount of that surplus in our balance of payments. Of course there are a lot less imports in the current climate as well, which helped. So I guess the real question is that when I asked these questions in February, I asked about the Mortimer report and the Mortimer report’s recommendations and you said it was still under consideration by the government.

Mr Yuile —That is right, Senator.

Senator FERGUSON —It is still under consideration by the government?

Mr Yuile —Yes, it is. I think the minister in fact spoke about that at the time of the budget when he indicated that the government had made available the $50 million in this financial year to cover the shortfall and therefore to pay exporters their full entitlements. He indicated then that of course he has also provided for $50 million additionally for next year for the changes which the government introduced and paid for. But the question of the future of this scheme and the question of addressing Mortimer is something that will be addressed in the next budget. I think he indicated that, given the preoccupation of all governments with the global economic downturn, the government has been making responses as it can to the Mortimer report but, as I think the minister said, it has not been able to make the comprehensive response that he might have liked and that is what he is looking to work on for the next budget.

Senator FERGUSON —It is quite possible that it could be still under consideration the next time we have estimates.

Mr Yuile —As I said, the minister said that it would be an issue that will be addressed in the processes towards the next budget.

Senator FERGUSON —As I recollect the Mortimer report, one of its recommendations was that the number of grants be reduced to five and that the threshold be increased to 30,000, and it would appear in the current economic climate that it might be a pretty good recommendation to take hold of. If we have to wait until after the next estimates and we are asking the same questions, exporters are still going to be in the dark, aren’t they?

Mr Yuile —Certainly everyone wants as much certainty as possible and I think that is what the minister has endeavoured to do to this point. The question of the recommendations in the Mortimer report went to either varying the eligibility criteria to fit a particular level of budget or increasing the level of budget to fit the eligibility criteria. That is the issue which I think the government will need to grapple with.

Senator FERGUSON —On page 83 of your budget statements we have the revised budget for 2008-09, 2009-10 and then a forward estimate for the next three years, which is at a reduced figure, presumably because there is no $50 million of extra additional funding.

Mr Yuile —I think that is what the minister said at the time, on 14 May when he did a press conference. I think he made it quite clear he secured $50 million to pay the shortfall in this financial year. He has provided, and the government undertook to provide, $50 million for next financial year, but the out years are subject to the considerations in the context of the Mortimer report.

Senator FERGUSON —But putting the Mortimer report aside, we have been waiting a fair while for a response to that. Exporters are probably going to have to make their decisions without the benefit of a decision on the Mortimer report and, judging by the forward estimates, exporters are still left in the dark as to whether there is going to be enough money to cover the claims that might be put in by exporters because there is no $50 million in those forward estimates and it would seem as though the amount of applications for grants are running at the same rate.

Mr Yuile —I think, as Mr Chesterfield indicated, the question of what happens next year in terms of the response by the exporting community in the context of the international economic circumstances and in terms of their own forward plans are things that it is difficult to estimate just at this point in time. I think the minister has made it quite clear that it is his desire to see that predictability into the out years, and that will be the subject of the focus in the next budget context.

Senator FERGUSON —This may be my fault, because I did ask you a question which you took on notice last time and I have not seen the answer to that question. It was: do you know how many winemakers or wine export agents are registered for export market development grants in South Australia? You were going to come back on that. Have you got those numbers?

Mr Yuile —Yes, we did respond, and I will just see if I have it with me, in this folder or in another one. The answer was that in 2008-09—that is, for the 2007-08 grant year—there were a total of 140 export market development grant applicants who were involved in the wine industry in South Australia.

Senator FERGUSON —It would be pretty safe to assume, if there is not going to be any increase in the forward estimates for extra funding, that there are going to be a number of winemakers or wine export agents who are registered for EMDG grants who might be disappointed.

Mr Yuile —Not this financial year, I don’t think.

Senator FERGUSON —Not this financial year, but next financial year.

Mr Yuile —I cannot—

Senator FERGUSON —They are going through a pretty tough time right now.

Mr Yuile —Certainly.

Senator Stephens —Chair, I have to say that the government, in providing an additional $50 million to ensure that those people who are already in the system receive the grants that they were expecting, was working on the basis, from the previous estimates questions around this, that people would only be expecting to get between 30c and 50c in the dollar. So I think the $50 million that has been brought forward into this year is providing a little bit of certainty to those people.

Senator FERGUSON —For last year?

Senator Stephens —For last year. It allows them to go forward with a bit more certainty about how the system will work in the future that they did not have until that adjustment was made.

Senator FERGUSON —I imagine they will be hoping for similar adjustments in the future. One of the other questions I asked was about the Cairns Group and the regularity of meetings of that group.

Mr Yuile —I might interrupt you, I am sorry. That is really a question for our colleagues in the Department of Foreign Affairs and Trade, who are coming on straight after us and who have policy responsibility for that.

Senator FERGUSON —Fair enough. I think I asked them at the same time last year, but I can leave those questions.

Senator IAN MACDONALD —Just remind me when the Mortimer report was delivered.

Mr Yuile —It was in September 2008.

Ms Bennett —It was 1 September 2008.

Senator IAN MACDONALD —The minister had committed to responding to that by the end of 2008, and you have just been indicating that, because of changed circumstances, he is not intending to respond until the next budget. Is that what I understood you to say?

Mr Yuile —Yes. He certainly has indicated that. If I can read from his comments:

when the President was here. So there is a lot of activity, if you look at the clean energy focus, the job opportunities—the green jobs that Mortimer talked about—and the clean energy initiative in this budget. It would have been nicer to have announced it as a big package responding to Mortimer but, given that we cannot actually do that at this stage, I would far prefer to be getting on with the elements or the bits that we can announce and for which we can develop a strategic way forward more comprehensively. They were his comments and he indicated that, in respect of the Mortimer processes, that would be an issue to be addressed in the coming budget.

Senator IAN MACDONALD —I do not want you to tell me what it was, but I just make the inquiry as to whether the department has provided the minister with a draft response to Mortimer at any stage since the last estimates.

Mr Yuile —Certainly we have provided the minister with advice, as you would expect, and with some elements in response to two points made in Mortimer, but that is, of course—as you would understand—advice that we have given to the minister. He is considering that, and the government is considering it, obviously, in the context of what has been a very difficult set of economic circumstances that they have been dealing with.

Senator IAN MACDONALD —Mr Chesterfield said—I think I wrote it down correctly—that demand has changed dramatically. Could you just elaborate on that.

Mr Chesterfield —I would have to clarify that. I am not absolutely sure that demand has changed dramatically, but we are anticipating that we will see a drop-off in demand. We had a 26 per cent increase in the dollar amount of grants claimed in the 2007-08 financial year. This financial year we have had a 2.1 per cent increase in the dollar amount. The question of what will happen next financial year remains, but that is the sort of difference in figures that we have experienced and the reason that I made the comment.

Senator IAN MACDONALD —One government leader has indicated that Australia will get out of its current woes by increasing exports—in addition to exports at the top level, with minerals and that sort of thing—with the sorts of exports for which EMDG is always popular. Are you not anticipating that there would be a renewed push for exports of the type that would claim EMDG?

Mr Chesterfield —It is very difficult to answer that question. We certainly are expecting an increase in demand as a result of the government’s election commitment and the changes to the scheme, increasing the number of grants to eight and increasing the maximum grant. With all of those changes that were made by the government, we are expecting an increase in the dollar amount and, indeed, in the number of claimants. For example, dropping the expenditure threshold will also bring in more claimants. But it is very difficult to predict the total demand because some people are suggesting that the amount claimed by exporters will be down because they have wound back their expenditure. Other people are claiming that people are looking to substitute international exploration for slowdowns in domestic sales.

Senator IAN MACDONALD —When do the applications start coming in.

Mr Chesterfield —The applications for this financial year?

Senator IAN MACDONALD —Yes.

Mr Chesterfield —The applications start on 1 July every year and they close on 30 November.

Senator IAN MACDONALD —Do you get a lot of them in July or are they more towards November?

Mr Chesterfield —We get half of them in the last week or week and a half of November.

Senator IAN MACDONALD —Does your intelligence tell you that the tourist industry is looking at increasing its export spend or decreasing it?

Mr Chesterfield —We are having quite a bit of difficulty in projecting forward. We have done surveys of the consultants who work on EMDG and lodge about 56 per cent of all claims in the scheme, and we have also talked extensively to our own staff about the likely forward estimates for numbers of claimants and dollars. We are getting very mixed messages about the answer to that.

Senator IAN MACDONALD —So you have come to no conclusion.

Mr Chesterfield —No.

Mr Yuile —The changes that were made in 2008 leave the opportunity there for peak Aboriginal tourism bodies, as you know. I know that is of particular interest to you and your constituency. But as Mr Chesterfield said, the reports from various sources do not add up to a singular and clear picture, so we are looking to see what happens.

Senator IAN MACDONALD —I have some questions on the free trade agreements. Are they are relevant to you?

Mr Yuile —If they are the policy elements of FTAs, they would be for our colleagues in foreign affairs and trade.

Senator IAN MACDONALD —At Austrade you would monitor very carefully statements which may impact upon the volume and worth of Australian exports. I understand that last week the United States government made a major announcement about issues that could impact upon Australian exports. Are you conscious of that?

Mr Yuile —I am. But if you are talking about EU or US policy decisions in respect of their WTO or other commitments or their policy position on subsidies, that is a question that my colleagues in foreign affairs and trade are better equipped to answer.

Senator IAN MACDONALD —I appreciate that, but it would impact upon the work that Austrade does, wouldn’t it?

Mr Yuile —Depending on what the announcement might be you are conscious of what it might mean for competition in particular markets.

Senator IAN MACDONALD —When you say ‘what the announcement might be’, I understand that it was what the announcement was.

Mr Yuile —Sorry, you have not specified which one. I was speaking in general.

Senator IAN MACDONALD —The one I was particularly interested in was the announcement about dairying.

Mr Yuile —In respect of dairy subsidies?

Senator IAN MACDONALD —Yes.

Mr Yuile —I am saying that it depends whether it could have an impact in restricting market access or increasing or stimulating export competition. Depending on that, with our colleagues in foreign affairs and trade we would be looking at supporting representations which the government would make if those announcements in our view were outside either the spirit or the letter of bilateral or multilateral undertakings and clearly we would be working on what the impact might be and how we mitigate those at a commercial level.

Senator IAN MACDONALD —Are you?

Mr Yuile —In particular with the dairy announcement, I think those representations are still going on with the US government and I am not aware of any specific work that our team in the US has done, but I can check for you.

Senator IAN MACDONALD —Could you remind me: we do have a free trade agreement with the United States, don’t we?

Mr Yuile —We do. As I say, the responsibility for that resides with our colleagues in foreign affairs and trade.

Senator IAN MACDONALD —I appreciate that, but it must have an impact on the work Austrade does in promoting the sales of Australian product into markets generally, including the United States. On that basis have you made an assessment of the impact of that announcement on export sales to the United States?

Mr Yuile —I am not aware of any that we have made explicitly. That is why I said I would need to check for you whether we have done that, in conjunction with our colleagues in the US.

Senator IAN MACDONALD —I was particularly alerted to dairying by a colleague who is very passionate in her support for the dairy industry in her area. But are there other areas where announcements by the US government to date could impact upon the work of Austrade?

Mr Yuile —The government made representations following the ‘Buy American’ campaign which would have been of concern, but that seems to have been addressed and so far as I am aware from any reporting I have seen there has not been a direct impact on our exports.

Senator IAN MACDONALD —So you do not think anything that the United States government has said to date would impact upon Australian exports to North America?

Mr Yuile —Certainly in regard to the Buy American specific announcement, I am not aware of announcements where there have been particular restrictions announced in respect of the US market apart from that recent discussion around dairy.

Senator IAN MACDONALD —In your view—and I will ask more of these questions shortly—has the announcement of the Buy American provisions led you to have some confidence that Australian industry would be protected?

Mr Yuile —I think that in the current circumstances internationally the government has made it clear that it is vigilant and being vigilant in respect of all markets, not just the United States one, and to that extent clearly we would be working with our colleagues in Foreign Affairs and Trade if there were an announcement or a measure which was of concern to us. I think the point is that all governments are under pressure and it is important that we maintain our representations on those issues of particular importance to us.

Senator IAN MACDONALD —What else would I expect of Austrade? You certainly do that. I will save the rest of my questions for the next section.

CHAIR —As there are no further questions for Austrade, I thank Mr Yuile and his officers for attending this evening.

[8.29 pm]