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Tuesday, 25 June 1996
Page: 2682


Mr NUGENT(7.12 p.m.) —I never cease to be amazed when members from the other side entreat a bipartisan approach, because it seems to me that is always when they want to be into mischief making. It is interesting also to hear the honourable member for Dobell (Mr Lee) invoking the support of Premier Kennett from Victoria, who is, of course, an outstanding Premier. I would remind the gentleman from Dobell that one of the things that Jeff Kennett had to do when he came into government was clean up the mess of the Labor Party in the same way that we are having to clean up the mess in this place from the Labor Party. When Jeff Kennett came to power in Victoria he had to do a lot of things that were unpalatable and that were difficult and that he and I and a number of others on this side would have preferred that we did not have to do, but it had to be done in the cause of cleaning up the mess left by the Labor Party. And it is unfortunate that in this place we may have to do things on 20 August that will cause some pain that we would prefer perhaps not to do, because we have got to clean up the mess that was left behind.

I find it absolutely incredible that we have the gentleman from Dobell coming in here and making comments about how we should be putting the tourism industry on the 50 per cent rate. I have some personal sympathy with that view, as did the honourable member for Dawson (Mrs De-Anne Kelly), but I have to remind the honourable gentleman that it is barely three months since he was the minister in a government that was here for 13 years and failed to deliver. Now you want to stand up and pontificate and say that we should do it in five minutes, when we have got to clear up your financial shambles. I have to say to the gentleman from Dobell that that is absolutely rank hypocrisy.

Let us just have a little look at this bill, the Export Market Development Grants Amendment Bill (No. 1) 1996. The bill was originally introduced by the previous government in the spring session in 1995 and was due for passage in the autumn session in 1996. It lapsed, of course, on the calling of the election. It makes a number of changes to the EMDG scheme, and I am not going to go into all of the detail because that has obviously been covered by many people before. Suffice it to say that at this stage we are talking about making sure that the money goes to the right people. We are trying to improve risk management and accountability; we want to make sure that the money is not wasted. That is an important thing which we should share with those on the other side of the chamber. After all, it was originally their bill.

It is perhaps instructive to quote very briefly from the 1994-95 Austrade annual report in respect of EMDG. That report said:

The Export Market Development Grants (EMDG) Scheme is non-discretionary and provides grants mainly to eligible small to medium-sized companies.

The report talks about the size of the grants, the $250,000 now to be $200,000, and so on. It goes on to say:

To be eligible, exporters must have export revenue of less than $25 million and have incurred at least $30,000 in expenditure in the year of claim.

It is really interesting to note in this report that:

Of those claimants, 97% targeted a market in South East Asia . . .

That is a very significant factor because there is no doubt that Asia in general will be a very important market for this country in the future. I think there are reasons why small companies in particular are attracted to the EMDG.

In the 1994-95 period, there were 3,497 claims processed. It is interesting that over 70 per cent of the grants were directed to companies with 25 or fewer employees. An awful lot of those small companies are still struggling, even though we are supposed to be having a recovery, even though the previous government said it had done a great job economically. The reality is that a lot of small companies out there are struggling today. For many of them, the only way they will improve their lot is by exporting, and exporting into Asia in particular.

Yesterday I had the good fortune to chair a vital issues seminar set up by the Parliamentary Library. These seminars are run on a number of occasions, and we had a visiting speaker, Dr Lee Tsao Yuan, from Singapore. She is a noted academic and bureaucrat and is now a member of their parliament. She actually gave some very interesting figures on Asia's significance and the opportunities that are there for companies in this country.

To give you an idea, we will look at GDP and, effectively, at the three major trading blocs in the world that are now quite clearly emerging—the United States, Europe and Asia. In 1965, which is less than 30 years ago, the United States had 37 per cent of the world's GDP, Europe had 25 per cent and Asia had a mere nine per cent. In 1994, less than 30 years later, the United States' share was 28 per cent, Europe's was 29 per cent and Asia's had risen to 22 per cent. Asia's share went from nine per cent to 22 per cent of GDP in less than 30 years. That is explosive growth.

You can look at it another way—that is, in purchasing power and parity terms. If you look at the purchasing power in 1994 in the ASEAN 10 countries compared with North America and the European Community 15, the ASEAN 10 had a purchasing power of $US7.7 trillion and North America had a purchasing power of $US7.4 trillion. In other words, North America was a smaller market in purchasing power terms in 1994 than were the ASEAN 10 countries. The purchasing power in the European Community 15, which we hear is making a tremendous economic impact, was $US6.7 trillion. Those are World Bank figures; they are not figures I have plucked out of thin air. The ASEAN 10 excludes countries like Taiwan and Hong Kong; it purely means the ASEAN countries.

In terms of world trade percentages, we can take another measure. In 1970, Asia had 10 per cent of world trade; Europe, 44 per cent; and North America, 20 per cent. In 1994, less than a quarter of a century later, North America was on 18 per cent, Europe was on 38 per cent and Asia was on 19 per cent. In other words, Asia had gone from 10 per cent to 19 per cent: it had almost doubled its share of world trade in less than 25 years. So in a very real sense we are seeing the emergence of Asia as a major trading power.

Given that situation, and given the economic difficulties in this country, it is necessary for our businesses to get into the overseas markets. Many of the large companies, the BHPs and the like, have the wherewithal to get over there under their own steam. They have the resources, the expertise, the manpower and so on. Many of them are overseas and have been overseas for many years. Many of the small companies in this country that need to go overseas—not only in their own interests but also in the interests of this country as a whole to start to redress our balance of payments problems and all the rest of it—need some assistance in terms of money and expertise to get them kick-started.

Many of the 7,900 or so small businesses in my electorate see schemes such as the EMDGS as a very attractive proposition. We need to encourage those SMEs not only in my electorate but also right across the country. To give, if you like, a human face to some of those general statistics, I would like to quote from a couple of letters I have received from companies in my electorate.

A company called Jardan manufactures high quality lounge furniture and distributes it throughout major retail outlets and markets in Australia. In addition, in May last year, in quite a recent exercise, it was successful in obtaining its first major export order to Japan—that represented a shipment of two 40-foot containers per month. That was not a large amount but it was a foot in the door. That move gave the staff of Jardan confidence in the product which led to a greater concentration of their efforts towards the development and expansion of potential export markets within South-East Asia. Jardan's Managing Director, Mr Steven Andreae, was pleased to report in his letter that `this has already resulted in orders from five new export customers in this past year'. The letter continues:

From an internal viewpoint this new export business has enabled us to employ an additional eight employees and this growth would be likely to continue. Our export business now represents about one third of our turnover which has provided a significant boost for our suppliers, most of whom are also Australian manufacturers.

Most significantly, this export development has been achieved through the support of Austrade and our eligibility for receiving the E.M.D.G.

The letter continues:

The E.M.D.G. forms an integral part of our budgeting process and has allowed us to commit to expenditure associated with the development of export markets for the next two years that we otherwise would not have undertaken due to our limited resources.

Jardan, as I say, is a company in my electorate. I went to visit that company, had a meeting with its managing director and others who were there and toured the site.

That company initially wrote to the Deputy Prime Minister (Mr Tim Fischer), sending me a copy, at the beginning of May; it then wrote to me in the middle of May; and in late May I went to visit the company. Between receiving Jardan's letter and visiting the site a couple of weeks later, the company had had another huge order from Japan which almost doubled the size of its business.

This is good news for Australia—not just for Jardan, not just for Aston, but for Australia. It is jobs, it is export money, and it really does mean that we have the quality and the capability to go out there and compete overseas. That company feels that EMDG has been very worth while from its point of view—and I would agree with it.

Paton's Macadamia Plantations is another company in my electorate. At the table the shadow minister for defence, the honourable member for Brisbane (Mr Bevis), smiles wryly wondering how they grow macadamias in suburban east Melbourne. We do not, of course. The company owns a bit of Queensland, where the shadow minister at the table comes from, where it grows its macadamias. It then brings them down to Melbourne for processing.

The range that this company has is absolutely unbelievable. It has all sorts of chocolate-coated and toffee-coated products, and goodness knows what else. It has a high-class product which it exports extensively around the world. That company has written to me and said:

You would be aware of the substantial foreign revenue generated for Australia in relation to every EMDG dollar spent. In fact, the EMDG scheme has contributed to Paton's Macadamias achieving over 50% of total sales being exported.

We consider the further expansion of our export market as being critical to our long term ability to grow, invest and employ.

That company sees the EMDG scheme as being very important.

I could go on. Kenman Kandy is another company—we appear to make a lot of sweets. There are other technical companies that have been to talk to me about this, companies that are in engineering, manufacturing and so on. I think the point is that we are not—and should not be—in the business of trying to support these companies on a long-term basis. But it is important that we give them some seed funding to get them into the market overseas. Of course, once they are established, then they are able to fly on their own.

There has been speculation in the media and elsewhere about the future of the EMDG scheme. I am unashamedly a supporter of the EMDG scheme, as are many members on this side of the House. There is no question about that. But there has been some speculation, and that is what the amendment moved by the other side is all about. Those opposite want us to stand up here today and say, `Yes, we're going to maintain the EMDG scheme on an ongoing basis.' As I started off by saying, the reality is that we would like, and fully intend, to do that. The realities of life are, however, that it may not be possible, and we will not know until 20 August when the budget comes down.

If the EMDG scheme has to be one of those things that in fact suffers, it will be the responsibility of those on the other side of the chamber. Those opposite are shaking their heads as though they have heard this message before—you have heard it before, and you will hear it again. The reality is like it is in Victoria, as was referred to by the honourable gentleman from Dobell when he talked about Jeff Kennett. As I said before, when Jeff Kennett came into power, he had to do some hard things that he did not want to do but which were necessary for prudent financial management—and that may well have to be the case here.

Of course, none of us wants to see that happen. But, if it does have to happen, we all know where the responsibility will lie—and that will be with the former Keating government and its then finance minister, now Leader of the Opposition (Mr Beazley). I commend the bill to the House because I believe it is a sound bill. I urge the House to reject the amendment moved by the Labor Party. I believe this scheme is generally a good one and I hope that we will be able to keep it in the long term. I hope also, much more importantly, that we will be able to get this country back onto a sound financial footing after the mess we have been left with by the Labor Party.