Mr BARTLETT (4:54 PM) —It had been my intention to restrict my remarks to a few specific comments regarding the Export Market Development Grants Legislation Amendment Bill 1999 . However, the second last speaker for the opposition, the member for Griffith, used the opportunity to try and launch a somewhat unfounded attack on the government's economic management. I am sure he would be disappointed if I did not respond at least partly.

I would like to draw his attention to a few facts: for instance, the fact that under Labor unemployment averaged 8.7 per cent, but under the coalition it is now 7.4 per cent; the fact that under Labor real wages grew by a paltry 0.5 per cent in 13 years, but under the coalition so far they have grown by 2.5 per cent; the fact that under Labor inflation averaged 5.2 per cent, but over the last three years under the coalition it has averaged only one per cent; the fact that under Labor interest rates reached record levels of 18 per cent for home loans and 25 per cent for business loans, but under the coalition they are down to 6½ per cent; and the fact that under Labor, in its last five years, it managed to more than treble Commonwealth government debt, from $27 billion to $97 billion.

I would also like to respond to the member for Griffith's comments about foreign debt and the current account deficit that were equally as selective and equally as misleading. The member for Griffith tried to argue, crudely and simplisticly by looking at the dollar value of foreign debt and the dollar value of the current account deficit, that these were in some ways worse than what had been recorded under Labor. The point is that, when looked at in real terms and percentage terms, the reality is totally different.

It is worth pointing out that, during Labor's term, net foreign debt grew from $23 billion to $190 billion—an increase of some 700 per cent in Labor's 13 years, an increase of 51 per cent a year. During Labor's 13 years, net foreign debt grew by 51 per cent a year, and they have the hide to come in and criticise us, when we have managed to trim that back to a growth of only 10 per cent a year. It grew by 50 per cent a year under Labor.

Further, it is worth pointing out that, during Labor's time, net foreign debt as a percentage of GDP almost trebled, from 14 per cent of GDP to 38.4 per cent of GDP. The other point that needs to be made is that under this government our capacity to service foreign debt has improved markedly. In fact, the capacity of export earnings to service foreign debt is now just 11 per cent, the lowest it has been since 1984. For Labor to trot out crude, simplistic dollar figures does nothing for their credibility and simply confuses the issue.

The same could be said about their comments regarding the trade deficit and the current account deficit. The reality is that, while in dollar terms the current account deficit might appear to be high, as I have said, in terms of our servicing capacity and in comparison to GDP, it is really relatively low.

For the December quarter, the current account deficit was 5.4 per cent of GDP. Certainly it is higher than we would like it to be but, given what is happening in the rest of the world and given what is happening in our export markets, 5.4 per cent of GDP is far, far better than was achieved at several times under Labor—figures under Labor of 6.5 per cent in March 1986, 6.6 per cent in March 1990 and 6.6 per cent, again, in March 1995. These were years during which the rest of the world was growing rapidly, during which Asia was booming, yet Labor still managed to let our current account deficit blow out to over 6½ per cent of GDP. And they dare to criticise us because we have managed to keep it down to less than 5½ per cent of GDP at a time when world markets are in a state of turmoil.

I would like to make a few specific comments about the Export Market Development Grants Legislation Amendment Bill in detail. This bill does two things. Firstly, it extends the Export Market Development Grants scheme for another two years, to the year 2000 and the year 2001. This involves extra spending, as we have already been told, of over $300 million over these two years to assist Australian exporters penetrate and get a hold in new markets overseas. Secondly, it tightens the administration of the scheme, which is what taxpayers would expect, so as to ensure its integrity and to enhance its effectiveness by better targeting the grants to ensure they achieve the results that they are intended to achieve.

This legislation is further evidence of this government's ongoing commitment to assisting our vital export industries, particularly our emerging export industries. This legislation follows a number of improvements to the scheme which were introduced two years ago, two of which particularly come to mind. The first was making the grants easier for small and medium businesses to access, resulting in over 200 new exporters, who were previously ineligible, becoming eligible for grants because the threshold was lowered from $30,000 in expenditure to $20,000. In total some 3,000 exporters were assisted in 1997-98 through grants averaging $52,000. The second improvement was the extension of access to the grants to tourist operators, our highest export earners. In 1997-98 international tourism generated over $16 billion or 14.4 per cent of total export income.

Both of these measures have benefited my electorate. As most of the businesses in Macquarie—in the Blue Mountains and the Hawkesbury—are small or medium sized businesses, the change in the threshold meant that some who previously were ineligible became eligible. Tourism is one of the main income generators in my electorate, particularly in the Blue Mountains. The tourism industry directly employs close to 1,900 people, with many more employed indirectly. The estimated one million international visitors to the Blue Mountains each year generates some $50 million in local income. The extension of the rules for EMDGs to allow tourist operators access to these grants has been of great benefit to my tourist operators. In the 1997-98 financial year businesses in Macquarie received export market development grants totalling some $250,000, much of this going towards allowing our local tourist operators to promote the Blue Mountains to overseas markets.

It is appropriate to recognise the great effort made by our export operators, particularly in the difficult times they have had in the last two years. From the middle of 1997 when the currency crisis started to spread through Asia, it was feared that our export markets would collapse. Indeed some markets did take a hammering. Overall our exports held up remarkably well. Although the steady growth which had been occurring in previous years did plateau somewhat, our total export figures have remained remarkably steady, with quarterly totals around $29 billion and accumulated annual levels staying around about $115 billion. Considering what could have happened and considering what happened to other countries' export markets, Australia's export markets have held up remarkably well.

The remarkable strength of our exports has been due to a number of factors, including a flexible exchange rate, an appropriate Reserve Bank response to the Asian crisis and a diversification in our export orientation. Clearly a large degree of praise is deserving to our exporters. Their determination to rise above the turmoil in the Asian markets, their flexibility, their effectiveness in locating new markets, the quality of their products, their professionalism and their strategic approach to marketing were all part of the formula that enabled them to survive a difficult couple of years, with an outcome that could have been far worse.

The situation with regard to tourism exports illustrates the point. The steady growth in total tourism numbers which had been occurring for a number of years stabilised at around $16.5 billion, a slight fall from the 15.7 per cent of export earnings, down to 14.4 per cent in the last financial year. There was a grave downturn in tourism from our major Asian markets, with arrival numbers declining in Japan by 14.1 per cent, Korea 5.9 per cent, Indonesia 16.4 per cent, Malaysia 4.4 per cent and Singapore 12.1 per cent. However, there was a significant increase in arrival numbers from other markets. For instance, there was a 17.4 per cent increase in the number of tourists from the UK and a 13.4 per cent increase in the number of tourists from the USA.

The same trend was in fact reflected in tourism to the Blue Mountains region of my electorate. It experienced a decline of 10 to 12 per cent in total visitor numbers, with a dramatic fall in visitor numbers from some parts of Asia. However, there have been encouraging increases in the number of tourists from North America and Europe.

For exports generally the same diversification helped stem the tide of the Asian loss. The 21.9 per cent loss in exports to South- East Asian countries was balanced by a rise of 41.8 per cent in exports to European Union countries and a rise of 30.6 per cent in exports to North America, leaving an overall rise over the last financial year of 4.9 per cent. Again, much of the credit for this belongs to our exporters for their professionalism, their commitment to quality, their resilience, their determination and their entrepreneurial skills. The government's job is to help them as much as we can. The extension and improvement of the Export Market Development Grants scheme will ensure that necessary assistance and encouragement is given to our export industries. We cannot do it for them but we can certainly help them in any way we can.

It is equally important that our other policy settings also help our exporters, and they have been. For instance, the low interest rates achieved by this government—the lowest for 30 years—have eased pressure on all businesses, including exporters, making it cheaper for them to obtain finance and facilitating the process of capital investment so vital to improving their productivity and competitiveness.

If we, as a country, are serious about helping our exporters, if we are really serious, then we need also to urgently address the tax burdens that weigh so heavily on our exporters and create such a burden for exporters. The current wholesale sales tax system does exactly the opposite. The current wholesale sales tax system to which the Labor Party is committed is a burden to exporters. It increases the cost for exporters. It reduces their competitiveness. The embedded sales tax in the price of inputs where it cannot be rebated and the high costs of fuel and transport greatly penalises our exporters.

Countries with value added tax systems generally systematically remove those taxes from exports. They do not accumulate along the line, but Australia does not remove the current wholesale sales tax embedded in products used by our exporters. Our exporters are penalised because of the wholesale sales tax system. Our competitors' products have those taxes removed and therefore have a competitive edge over our exporters. Our exporters are disadvantaged. Yet Labor would seek to continue the disadvantage, to continue to hinder our exporters, to continue to reduce their competitiveness.

The government's proposed tax reform package will reduce costs to our exporters by an estimated $4.5 billion a year, a reduction in costs of $4.5 billion a year, which will directly improve their ability to compete on world markets. This is one reason that it is essential that the government's tax reform proposals are allowed to proceed. The staggering thing is that Labor and the Democrats, the opposition parties, are intent on maintaining the cost imposition on our exporters. They are intent on retaining these crippling indirect taxes. They are intent on handing a competitive edge to our competitors. If the opposition were really concerned about our export industries, if they were really concerned about generating jobs, if they were really concerned about the health of our economy, they would stand aside and allow these tax changes, tax changes that would further assist our exporters, that would help Australian businesses and Australian families.

Our exporters are working hard to penetrate markets overseas and to gain market share, particularly in a difficult world climate. Our government is striving to do what we can to assist those exporters. The challenge for the opposition is to come on board and to help our exporters, rather than hinder them.