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Tuesday, 25 June 1996
Page: 2667

Mr LINDSAY(5.39 p.m.) —I thank the honourable member for Cunningham (Mr Martin) for the speeches he gave yesterday and tonight. I would like to make it very clear up-front, as the member for Goldstein (Dr Kemp) did in the second reading speech on the Export Market Development Grants Amendment Bill (No. 1), that introducing this bill is in no way an indication of the progress of the budgetary discussions. I have heard suggestions that this program might be about to disappear due to budget funding cuts. Such speculation concerns me for a couple of reasons.

Firstly, it would appear that the export market development grants program has been a successful program. While I feel the Australian businesses and corporate sector should become less reliant on government for support in establishing trade links, be it export or import, government assistance does have a limited place and if utilised properly can be of great benefit to the country. Sound programs which assist Australian businesses should be supported.

Secondly, it concerns me that if rumours turn out to be just that—rumours—it really does not do anybody any good at all. Scaremongering just means the program suffers as businesses are left uncertain as to where they stand. It is a fact that the deficit left to the Australian people will be on the shoulders of those opposite—a going away present following the last election. I have said very clearly to my electorate that the country just cannot continue to spend more money than it has. That will be considered as part of the budgetary process.

I appreciate the opportunity to speak in support of the amendment bill tonight because of the increasingly large role that export and market development have in my electorate of Herbert in Townsville. In my first speech, not so long ago, I tried to put the spotlight on a number of export oriented projects being developed in the Townsville region—some big, some small. I firmly believe that Townsville is one of Australia's brightest stars in export potential and has begun a period of significant growth and economic development.

Townsville's future is supported by mineral deposits of world significance and by marine science and tropical medicine research of major significance to the Asia-Pacific region. One such project announced today by James Cook University will play a major part in a world health strategy. There is going to be a collaborative centre developed by the World Health Organisation from the filariasis control section of the Department of Public Health and Tropical Medicine underwritten by Dr Paul Turner. I advise the parliament that I received confirmation a couple of moments ago that that will happen.

Asia is also looming large in the picture with Korea demonstrating considerable interest in our region, predominantly through the choice of Townsville as a site for a zinc refinery. There are a couple of other trends in the Asian region that are occurring in conjunction with rising average gross domestic products.

According to the Queensland Department of Primary Industries' agribusiness marketing analyst, Mr Robert Doolan, the development of the food store retailing industry is occurring at a rapid pace across all Asian countries. Modern chain supermarkets, convenience stores and department stores are replacing traditional `wet' market stalls in the developing and emerging Asian economies. Opportunities to supply these modern retail outlets with Australian raw and processed food materials should be capitalised on—in other words, assisted with export market development grants.

The other main trend which is occurring is the development of food service industries in Asian markets. This industry, Mr Doolan says, is the fastest growing industry in the Asian agribusiness system today. The growth in food service, which is essentially all food prepared away from home—for example, restaurants, fast food outlets, catering, hotels, hospitals, schools, the military and so on—has risen out of a number of common demographic trends. Increasing disposable income in Asia, busier lifestyles, an increasing number of working women and more single parent families mean less time to shop and prepare food. Therefore, it is easier to eat out or take away, and demand inevitably dictates supply. Australia should be focused on this opportunity for export.

In Japan, for example, 45 per cent of food is prepared away from home. The other 55 per cent is bought at retail outlets and prepared at home. This trend to increasingly eat out is being mirrored in other Asian countries as consumers become more pressed for time and demand greater convenience products.

The expansion and penetration of formula driven chains in these markets in the fast food, restaurant and associated industries will mean greater opportunity for supply of processed foods and raw ingredients to the food service markets in these countries—in particular, meat products such as chilled beef, frozen beef patties and steaks, frozen and fresh cut vegetables and fruit, dairy products, seafood and wine.

Demand for convenient food inevitably means greater demand for convenience food such as microwaveable products and frozen foods, says Agribusiness Marketing Services. Australia has an advantage in its proximity to the Asian markets, so we can supply fresh food produce quickly.

Last year, the Queensland Department of Primary Industries released a series of reports, the Food Retail 2000 series, which provided detailed strategic business information for Australian businesses wanting to trade in the food markets of South-East Asia. According to an article in the October 1995 issue of Asia Pacific food industry, a major theme of the report series was the need to develop supply relationships with food retailers in East Asia.

Three independent studies have supported the view that Townsville and the northern region are a perishables export growth area, reliant on excellent international transport links to accelerate this growth. According to the North Queensland Economic Development Board, agribusiness alone has the ability to create a demand for international airfreight capacity into North Queensland. Townsville in particular is perfectly situated to take advantage of developments in Asian markets across a wide variety of fields, food and retail industries included.

As I have already mentioned, in my first speech to parliament I flagged the fact that there are a number of areas with export potential in Townsville and North Queensland, which certainly make them well positioned in this respect. One of those areas was the possible development of Townsville airport's airfreight operations, particularly in the area of perishable goods transportation. The Burdekin and Bowen areas of north-east Queensland produce about one-fifth of the state's fruit and vegetables, at the moment most of it tagged for internal sale and consumption. With the development of cold storage and other facilities at Townsville airport, the possibility is clearly there for airfreight operations to South-East Asia.

While they would not fall under the export market development grants shadow, with the upgrading of facilities at Townsville airport there would be many fresh food and processed food producers in Townsville for whom export market development grants could well assist in the establishment and operation of small business exports with our northern neighbours.

Live cattle exports are a further area in which Townsville is set to capitalise on the remarkable growth we have seen in the last four or five years in South-East Asia. Only last week, as I understand it, about 50,000 head of cattle went through the Townsville port destined for the Asian market. Live cattle exports is the only shining light in an Australian beef industry that continues to suffer from the effects of drought and low prices. The extraordinary growth Australia has witnessed in live cattle exports over recent years has been directly linked to growth in demand for beef in South-East Asia.

With more emphasis placed on developing these export markets, North Queensland and Australia stand to benefit enormously. It is the potential of areas such as those I outlined tonight which makes it necessary that this bill be passed.

I would like to quickly touch on two points relating to the bill. Firstly, schedule 1 of the bill reduces the maximum grant payable in any one year by $50,000, lowering the upper limit of $250,000 to a maximum of $200,000. From that will come a better, more fair distribution of available funds to small and medium size export businesses. The reduction will be able to cater for the larger exporters as well.

I refer to the small business sector. The government is keenly aware of the significant impact the small business sector has on the performance of the economy. Indeed, as the Prime Minister (Mr Howard) says, small business is the engine room of our economy. To illustrate that, there are more than 860,000 small businesses throughout the country. This represents almost 96 per cent of all enterprises. They generate almost a third of the country's gross domestic product. They are responsible for nearly half of total employment in Australia, which translates to about 3.6 million jobs. Over the past decade, employment in the small business sector has been growing at about 3.6 per cent a year. This is twice the national average.

Small business is also playing a prominent role in research and development. For example, in 1993-94 the small business sector spent almost half a billion dollars on research and development. This represented 15 per cent of the total amount spent on R&D in Australia by all business enterprises. By any measure, the small business sector is a major driver of wealth creation and economic prosperity in Australia. I thank the Minister for Small Business and Consumer Affairs (Mr Prosser) for providing me with that information.

Secondly, I would like to refer to schedule 9 of the amendment bill. It establishes a grants entry test for first-time export market development grants claimants. It is important to have safety nets, or certain checks, to make sure the money the government invests in any program is well spent. Providing financial support for bad programs time and again is simply throwing good money after bad. Currently, 12 per cent of first-time recipients never reapply. This figure needs to be reduced.

While the grants entry test will not be overly onerous, it will be there to provide that checking element. It will check that the claimant has a product or service for export, that the necessary planning is in place, that research and development has been done and that adequate resources and commitment to management exist to give the claimant the best possible opportunity to do well.

We have consistently heard of the need to pay attention to our Asia-Pacific neighbours. For many Australian businesses, especially in North Queensland, the next five to six years are going to be very important in establishing footholds in South and East Asia. Asian markets and businesses, particularly in the retail food industries, are rapidly catching up in being able to provide quality products. They already have the jump on Australia in production and labour costs. The ground floor elevator is waiting for Australian businesses in many of the areas I have highlighted here tonight. I therefore commend this bill to the House.