Mr TIM FISCHER (Farrer—Minister for Trade) (9.33 p.m.)—I move:

That the bill be now read a second time.

This bill delivers on the government's commitment to maintain the export market development grants scheme and to provide full rate eligibility, for the first time, to the tourism industry. It simplifies the scheme, better targets its support to small and medium enterprises and retains a well funded program despite the budget black hole of the Labour government.

The EMDG scheme has been assisting Australian exporters for over 22 years. During that time, the Export Market Development Grants Act 1974 has been amended many times. As a result the act is now quite complex and difficult to use, and has been criticised as such by exporters.

The bill before the House is a very much easier to read document than the act it will replace. As far as is possible it puts like matters with like, it flows logically from subject to subject, and it presents concepts and terminology in relatively simple language. It uses around only half the number of words of the existing act.

Two significant measures have been introduced to direct more funds to small and medium enterprise. The minimum expenditure threshold has been lowered to $20,000 per grant to benefit more SMEs. In addition, applicants with income in the grant year in excess of $50 million will no longer be eligible to receive a grant for that year, thus freeing up available funds for those exporters most in need of assistance.

The government has also recognised the significant contribution made to our exports by the tourism industry. We have increased the grant rate for all tourism providers to the full rate of 50 per cent, allowing free samples of services provided and access to approved joint ventures.

As a result of the fiscal legacy of the previous Labour government, the cost of the EMDG scheme has also had to be addressed. The government has, therefore, decided to place a cap on annual funding. This is consis tent with the government's wider goal of fiscal restraint. Most importantly, the mechanism for effecting the cap will provide for full payment of smaller grants at the time of determination. Claimants eligible for larger grants will receive a partial advance at the time of determination and a pro-rated balance at the end of the year.

If demand for grants exceeds the $150 million available, larger grants will be reduced. To minimise the potential reduction to individual grants, the government has introduced a number of policy changes which will simplify the scheme, address fraud and better target it at those SMEs in the early years of exporting.

Eligibility to claim air fares continues for the first two grants, assisting businesses take that difficult first step of visiting export markets. Air fares incurred by an overseas representative will continue to be claimable for all grant years within an overall expenditure cap for overseas representatives of $200,000 per grant year.

The fundamental principles of this scheme have not been altered. The scheme will continue to provide assistance to small and medium Australian exporters and potential exporters through the partial reimbursement of selected promotional costs. Under this bill, the scheme retains its open access nature.

In the interests of broad consultation with industry and getting the bill right, an exposure draft of the bill was widely circulated late last year for public comment. Over 160 submissions were received. I thank those who provided submissions. Many of the issues raised in those submissions have been included in the bill that is before the House today.

This bill demonstrates the commitment of the government to assisting Australian SMEs enter and develop export markets. Not only have we retained a well funded EMDG scheme which encourages smaller firms into export; we have made substantial progress towards reducing the budget deficit and providing a better macro-economic environment for all Australian exporters. I commend the bill to the House. I also present the explanatory memorandum.

Debate (on motion by Mr Stephen Smith) adjourned.