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Thursday, 29 May 2003
Page: 15387

Mr VAILE (Minister for Trade) (9:13 AM) —I move:

That this bill be now read a second time.

The Export Market Development Grants Amendment Bill 2003 will refocus the EMDG scheme to further assist small and medium business, and in doing so better support the government's goal of doubling the number of exporters by 2006.

Each year this government invests $150.4 million in the EMDG scheme to support eligible export promotion activities of small and medium Australian businesses by partially reimbursing their eligible expenses.

The EMDG scheme has been regularly reviewed and is consistently hailed as a benchmark of effectiveness in terms of government industry support programs. In 1999-2000, following extensive econometric analysis of the scheme, Professor Bewley of the University of NSW found that an additional $12 in exports was generated as a result of every grant dollar spent.

Last year around 3,100 small and medium exporters received grants through the scheme. These businesses generated approximately $5 billion in export revenue and employed over 60,000 Australians to fill their export orders.

Support was provided to small and medium enterprises across virtually all industries and in all parts of Australia. Importantly, 21 per cent of grant recipients were located in rural and regional Australia.

Demand for grants has grown considerably in recent years, demonstrating the continued success of the scheme. Austrade informs me that it has received over 4,000 applications for the 2001-02 grant year, an increase of 23 per cent by number on the previous year. Over 1,500 businesses applied for a grant for the first time.

Small business is one of the fastest growing sectors of the export community and is the key to doubling the number of Australian exporters. Austrade estimates that 97 per cent of all Australian exporting firms are SMEs—these are the businesses that need to be nurtured.

Accordingly, since 1996 we have made a number of changes to make the EMDG scheme much more attractive and accessible to small business. These include:

· Reducing the minimum expenditure required to access the scheme from $30,000 to $15,000;

· Doubling the grant rate available to the tourism industry;

· Improving access for family businesses;

· Reducing red tape and documentation requirements;

· Introducing a $5,000 minimum grant; and

· Broadening the range of eligible export promotion expenditure.

The government has also taken steps to improve access of small businesses in rural and regional Australia to the scheme by ensuring that related domestic costs are included in the EMDG Overseas Visits Allowance.

The changes proposed in the Export Market Development Grants Amendment Bill 2003 will further simplify the scheme and put greater focus on assisting small and emerging exporters—that is, those businesses that most need assistance.

The proposed amendments include:

· Reducing the income ceiling for applicants from $50 million to $30 million;

· Reducing the maximum grant amount from $200,000 to $150,000;

· Reducing the maximum number of grants from 8 to 7;

· Removing the $25 million export earnings ceiling; and

· Removing the provision for additional grants for entering new markets.

The proposed changes are to take effect for EMDG claims from the 2003-04 EMDG grant year onwards—in other words, to applications received and grants paid from 1 July 2004 onwards.

The total budget for the scheme will not be affected by the changes. Funding will remain at $150.4 million—a decision that reflects both the government's firm commitment to the scheme and its strong fiscal stance at a time when there are significant demands on the federal budget. The proposed amendments will, in fact, ensure that a greater number of claimants from the scheme's target group—that is, small business—receive a grant.

The EMDG scheme is but one important element of our government's comprehensive strategy to double the number of Australian exporters by 2006. Last year for instance, we committed $21.5 million to expanding the TradeStart program over four years. TradeStart is designed to assist small businesses break into potentially lucrative overseas markets through an extensive network of specialist export advisers in 51 locations across metropolitan, rural and regional Australia. It also puts the international market expertise of Austrade's global network across 58 countries at the fingertips of small business.

And the early signs are encouraging. In 2000-01, the base year for the doubling target, the Australian Bureau of Statistics estimated there were approximately 25,000 exporting companies in Australia. Last financial year that number increased by almost 6,500 firms, or over 25 per cent.

But there is still an enormous amount of work to be done. In considering this bill it is important to keep in mind that the EMDG scheme is all about assisting small businesses to become sustainable exporters.

One such business is Queensland company Aleis International. Since humble beginnings in 1987, Aleis now provides its electronic livestock identification products to most major properties, saleyards and abattoirs across Australia. In the last few years the company has looked at expanding into overseas markets and recently won a tender (the biggest of its type) to provide electronic identification equipment for the entire cattle herd in Botswana. In 2002 Aleis received its first grant under the EMDG scheme enabling it to defray some of the costs associated with marketing its products around the globe.

Aleis and thousands of small companies like it are the unsung heroes of Australia's continued economic success. This bill will ensure that EMDG funding is focused on cultivating small and emerging exporters such as Aleis, and in turn contribute to the long-term strength of the Australian economy.

In conclusion, I would like to reinforce the point that the government is better targeting the EMDG scheme at a time when there are significant demands on the budget. We believe that the proposed changes, as outlined in the Export Market Development Grants Amendment Bill 2003, will ensure the program continues to assist those businesses in most need—small and medium exporters. I commend the bill to the House and present the explanatory memorandum.

Debate (on motion by Mr Edwards) adjourned.