Mr GRIFFIN (11:31 AM) —We are here today to debate the Export Market Development Grants Amendment Bill 2001, which has the support of the opposition. I would like to talk a bit about the actual scheme itself—what it does—and then make some comments, in particular with regard to what has happened to the scheme over the last few years under the current government. I am going to quote extensively from some information provided by the Parliamentary Library to make some points in respect of that.

The bill extends the life of the current Export Market Development Grants Scheme for five years until the end of the 2005-06 financial year. The bill also affects aspects of the administration of the scheme which are intended to improve access to the scheme by smaller Australian businesses. The EMDG Scheme has provided support to Australian exporters since 1974. It has been reviewed and modified on a number of occasions. The last review was undertaken in 2000 at the request of the Minister for Trade. The 2000 review was conducted by the Austrade board with the assistance of a steering committee comprising representatives of industry and other government agencies. The results of the review were published in June 2000 and included a review of the EMDG Scheme by PricewaterhouseCoopers and an econometric analysis of the effectiveness of the scheme by Professor Ronald Bewley of the University of New South Wales.

The current EMDG Scheme provides direct financial assistance in the form of taxable grants to small and medium sized businesses to assist their export promotion activities. This is paid as a 50 per cent subsidy for marketing and promotion expenditures. Eligible SMEs may receive eight grants of up to $200,000 in total. The budgetary cost of the EMDG Scheme is fixed at $150 million per year, as are administration costs which are fixed at a maximum of five per cent of budget funding, which is $7.5 million. Around $143 million is therefore available to new and existing exporters each year. Since the grants are taxable, currently up to 36 per cent of grants could return to consolidated revenue in the form of company tax. In 1998-99 there were over 3,000 recipients of EMDG Scheme grants, with the average grant being around $45,000.

Grants are available to Australian based businesses—individuals, partnerships, companies, associations, cooperatives, statutory corporations or trusts—which are developing export markets for Australian goods, services, intellectual property rights and know-how. More specifically, eligible goods and services, intellectual property and know-how include: goods made in Australia that have at least 50 per cent Australian content; goods made outside Australia, of which at least 75 per cent of their components have 50 per cent or more Australian content; services delivered outside Australia; services delivered within Australia to non-residents and inbound tourism services; trademarks owned, assigned or first used in Australia; and know-how resulting from substantial research or work performed in Australia.

For a business to be eligible for a grant, it must: be spending at least $20,000 a year on eligible export promotions—for the first year, a business may combine two years expenses to meet the threshold; have annual export earnings of less than $25 million; have a total income of less than $50 million; have received less than eight grants; and not be under insolvency administration. There are six categories of eligible expenses under the scheme: overseas representation—the cost of maintaining ongoing and long-term representation; market visits—$200 per day travel costs allowance for accommodation, entertainment, et cetera; communications; the provision of free samples; trade fair literature and advertising; and short-term marketing consultants. Expenses that cannot be claimed include those that: relate to trade with New Zealand; are of a capital nature; are commissions, discounts and sales related expenses; are subject to reimbursement by a third party; and are fraudulent or related to an illegal activity—fair enough.

This scheme dates back to 1974 under the Whitlam government and was reviewed by all governments since but it was particularly adjusted into its current form under the Hawke and Keating Labor governments. It really shows the commitment of those governments to modernising and internationalising the Australian economy. We need to look at the question of how we can develop our export capacity, particularly utilising what I think has been the strength of the Australian economy over the last four or five decades, and that is the development of innovative small and medium sized businesses that can go out and compete—particularly in niche market opportunities, which is where I think many of us see the principal future that we have on an industry basis in developing export capacity and possibilities. That thriving export culture is very important to Australia. Our market is too small to sustain our businesses. Studies have consistently shown that exporting companies provide better paying and more interesting jobs than those that rely solely on the domestic market.

I mentioned the analysis by Professor Bewley which showed, as I understand it, that every $1 provided under the EMDG results in approximately $12 in additional exports. That does not take into account other issues around the question of tax revenue and other positive economic spin-offs and employment in other areas. The funny thing is that despite its success this particular scheme has been slashed by the Howard government. The real level of funding in 2001-02 will be 37 per cent lower than funding in 1996-97, the last year of Labor's administration of EMDG. The number of grant recipients under the scheme has also declined steadily since 1996. If we look at Professor Bewley's analysis we find that, if Labor's levels of funding had been maintained, an additional $90 would have been available under the scheme in 2001-02, which would have resulted in over $1 billion in additional exports and $16 million in additional tax revenue.

We see here another example of what the Howard government has done in relation to small business. It talks about being a government of small business; but when it comes to the crunch and we look at the GST and decisions taken on grants schemes such as this, we see that the real agenda of the Howard government is to talk about assistance. In the end, talk is basically what businesses have been getting—talk and more paperwork. When we look at the effect of the GST and at what could have happened with schemes such as this but has not occurred, we see a great missed opportunity for the Australian economy. This government is responsible for that.

These adjustments to the current scheme are fine, but there are other issues that need to be looked at. We still believe the scheme is too bureaucratic. The declining number of applicants also suggests there are problems for small business in accessing it. That does not augur well for the future. The scheme needs to focus a lot more clearly on the needs of small businesses that are considering exporting for the first time. Often those businesses will need very basic assistance in order to be able to export and to have the opportunity to take advantage of schemes such as this. If that opportunity can be taken up, and if those circumstances can be picked up by government schemes such as this, we can see a situation where small and medium sized businesses will do a much better job in exporting in the future. That is what this bill is about, but it is inadequate; it does not go far enough. More will need to be done to the scheme, and after the next election it will be done because we will be looking at the scheme, making changes and ensuring that it has better capacity and is a much better vehicle for small businesses in Australia to go out and earn export dollars.