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Thursday, 14 March 2013
Page: 2135


Mr TRUSS (Wide BayLeader of The Nationals) (11:06): Once again, I rise to speak to the Export Market Development Grants Amendment Bill 2013. I say 'once again' because this is the third major amendment that this government has made to the EMDG scheme since it came to office in 2007. This is just another example of Labor's shambolic policy processes. It creates uncertainty through these regular changes. Once again, this emphasises the fact that no-one in business can take the government's word that it will deliver a program and do so with the level of confidence and stability that is necessary to achieve the program's objective. That is why people are talking about sovereign risk now when they talk about Australia, because so often the government changes its mind, alters programs and leaves businesses stranded. Labor does not seem to care about or understand business, and people in business—exporters in this case—simply cannot rely on government programs anymore.

At the 2007 election, Labor promised a huge boost to the EMDG scheme. Then shadow minister Crean trumpeted his proposed changes to the scheme at that time and boasted about the new benefits Labor was going to provide under the EMDG. When elected to government, Labor changed the grants scheme to make it more generous and extended eligibility to a number of criteria. Labor also increased the funding available for the grants from $150 million to $200 million.

The EMDG is a capped scheme, but under the coalition the money provided was adequate to meet all of the claims made, in full. In 2006-07 there was a requirement for a top-up to enable the scheme to pay all of its bills, but Labor never provided that top-up. Instead, it provided $50 million extra for the following year to implement what was to become a more generous scheme. However, the scheme was capped and paid pro rata to applicants and, as there were more people applying for grants than money was available, they would not always receive a full payment. Under the coalition, the money was topped up so that payments, except those for 2006-07, were made in full.

In 2010 the Labor government came back with another amendment to the scheme that changed the grant funding cap back from $200 million to $150 million. So the higher funding was made available only in one year. This trashed the government's election promise and reversed most of the promises the government made at the previous election—promises which were not funded and therefore led to a significant blowout in the cost of the Export Market Development Grants scheme.

The government set up the Mortimer review which looked at the changes the government had made to the scheme, but, in effect, it looked at the whole EMDG scheme. It was about the 10th or 12th review of the EMDG scheme. It has been subject to regular review, both under the coalition government and the Labor government after that. It has been reviewed to death. The government set up another review under Mortimer. To the government's great embarrassment, the Mortimer review recommended that the changes Labor had made in 2008 be reversed—that the previous, coalition government's scheme was better than the scheme Labor had introduced. The government then introduced legislation to essentially reverse the changes it had made in 2008 and reverted the scheme to the arrangements that applied under the previous government. They actually reversed it right back to what had originally been put in place as far back as 1997.

That brings us to the Export Market Development Grants scheme amendments that are proposed today. This time the government tells us that the changes will fundamentally save $25 million from the grants, effectively capping the scheme at $125 million, the lowest cap ever. So, at a time when our exports are falling, when our competitiveness in the international market is coming under serious stress, when we have a high dollar, when we have changed industrial relations and higher wages in this country, when we face increased competition from low-cost labour countries around the world and when our country has significant trade deficits, the government's response is to reduce the amount of assistance available to Australian exporters. To me, that does not make any sense.

Yesterday, in the Federation Chamber, there was another bill under debate to take $200 million away from the Export Finance and Insurance Corporation. That is the body that helps provide funding for Australian exporters to compete on international markets and to consummate trade deals with other countries, and the government is taking $200 million away from it to prop up its budget deficit. The reality is that that is the wrong signal to send to Australia's battling exporters at a time when they are facing increased competition from other countries that have massive export insurance and financing arrangements to subsidise and support trade deals. Our government is taking money away from the only body that is really able to provide that kind of support in Australia. In parallel to that, $25 million is being taken away from the Export Market Development Grants scheme. The government described these changes as sensible, but what it really demonstrates is that government policy is in disarray.

There may be people in the chamber who are confused, because it is a rather complicated scheme, but many of the exporters who have received these grants in the past and have benefited from these grants will again be confused. They are getting increasingly frustrated with the constant changes to the scheme. How can they plan an export strategy when the government keeps changing the rules? How can they know they will actually get a helping hand to break into a new market when the government keeps changing the rules?

These amendments will affect Australian businesses that are trying hard to break into export markets. Small and medium business owners, farmers and manufacturers—they are all doing it tough at the present time. Whilst on the world stage a high dollar might look good, it does hurt our exporters and industries that are heavily dependent on exports to overseas markets to survive. Throw in the carbon tax, the industrial relations reform, the change in shipping arrangements, all of which are adding cost to Australian industry and making it much more difficult for us to be competitive. This government simply does not seem to be serious about promoting our export industries.

These amendments not only reduce the amount of funding available but introduce more favourable treatment for exports to East Asia, frontier and emerging markets at the expense of grants to other markets. The amendments will increase the period for grants to East Asia, frontier and emerging markets from seven years to eight years and reduce the number of grants available to the United States, Canada, the United Kingdom and the European Union from seven years to five years. This is because the government argues that these markets already know and accept the Australian brand and so therefore Australian businesses will be able to do business more freely. In a sense, they are saying some export markets are more valuable than others: 'Some export markets we are going to foster and others we are not interested in.' Frankly, that is illogical. If we can find an export market anywhere, we should value that. Surely we are not going to say in the future that exports to the US or Europe are somehow or other inferior because they are not going to Asia? Certain products fit the European and United States markets and other products fit the Asian market.

One of our big advantages in our trading situation as a country is our reputation for quality and clean, green products. That reputation is probably less valuable in the US and Europe, where they have high standards of their own, than when putting our products into Asian markets, where they can command a premium price. So the government's argument that it is somehow or other easier to put products into European countries or the United States is not valid. It may be true for some industries, but in other cases it is harder to get products into those countries. The need for support under the Export Market Development Grants scheme in Europe and America has not lessened.

We know that the government is obsessed with Asia. I share the view that it is important for us to expand our markets there wherever we can. There has already been significant growth in those countries, and we will need to have that in the future. But it defies logic that we should be proposing to walk away from significant markets in other parts of the globe because Labor wants to flash around its recently discovered interest in Asia.

I want to reiterate what the Deputy Leader of the Opposition stated in her comments on this bill—that we should not have just an Asian century; we ought to have a global century. We as a nation need to recognise that we have to engage with the world wherever we possibly can. In order to see our economy grow, we need to encourage trade on a global scale. It is important therefore that we do not send a signal to traditional markets that they are now less important. In the same context, as we work to develop new markets in Asia, that needs to be undertaken in a consistent and diligent way. It is perhaps regrettable that under this government our relationship with many of our most important Asian markets, many of our nearby friends, has deteriorated. Our relationship with Indonesia is at a particularly low ebb because of the ineptitude of this government over the live animal trade and so many other issues. Our relationship with Korea is at a low ebb because of this government's ineptitude in handling arrangements, especially concerning defence contracts but in a whole range of other areas as well. Even in places like China and Japan this government has not managed the relationships in a constructive way. A lot of work will now have to be done to help rebuild the trust that has been lost because of the way in which this government has mismanaged our relationships with people in other parts of the world. A slight extension of the Exports Market Development Grants scheme to give people more time in those markets is not likely to undo the damage that has already been done by this country.

Japan, China, Korea and Indonesia are big importers of Australian products, and the promotion and protection of these markets will remain and continue to be of great importance to Australia in ensuring that our economy grows and returns to strength. But we should be encouraging business not only to grow these markets but to be innovative in looking in other parts of the world and in markets where our products are well known. The EMDG scheme does help; however, Australian exports are not just limited to Asian countries. That is the issue that concerns me.

These amendments will impact viability of our exports to the European Union, the United States, Canada and the United Kingdom. I will just give you one example that perhaps many people may not be aware of. Take, for example, the producers of the world's most consumed meat—that is actually goat meat. Not only is goat the most consumed meat in the world but Australia happens to be the largest exporter of frozen goat meat. In 2011-12 Australia exported 24,478 tonnes of goat meat, and the largest market for Australian goat meat happens to be the United States. In fact, the US takes over half of Australia's total goat meat exports. By reducing the number of grants available for the US market, the government could be potentially reducing the viability of Australian producers who are looking to export into that critical market.

Sometimes Australians will be surprised at where Australia is exporting, where we do well, the times we send coal to Newcastle and the times when we are able to penetrate markets where perhaps it would not be expected. Indeed, it is interesting to note that the second largest exporter of frozen goat meat in the world is Ethiopia. If we lose these markets they are potentially gone forever and are very difficult to get back.

We saw similar things with the disastrous bungled live export of cattle to Indonesia. If Australia cannot meet the demand of importing countries then those countries do not change their eating habits; they look for somebody else to supply it. That has certainly happened in Indonesia and in the live animal trade. It has also happened in the Middle East and other places at times when we have imposed bans. I get lots of letters from people saying to me, 'Why don't we process all this meat in Australia?' Of course, we would all like to do that wherever we possibly can. But some markets are not able to take frozen or chilled beef because they do not have adequate refrigeration. Where Australia says to countries, 'We will not supply you live animals,' they do not then say, 'We love you so much that we will therefore take some other product that we do not want.' What they actually do is move around and look for another country that can supply them with live animals, and there are well over 100 countries in the world that are involved in the live animal trade. In every case where we have imposed bans on countries, we have not been rewarded by having greater exports of chilled and frozen meat. Those countries have looked to other countries—anyone but Australia—to supply their product, because they feel grievously offended when we have intervened in ways that they consider to be inappropriate.

The amendments introduced in this bill highlight the government’s mismanagement of its budget, because they are essentially being put in place to save just $25 million. This also demonstrates this government’s complete lack of understanding of small business in this nation. It is a false economy. There is an oft quoted statistic that every dollar spent on the Export Market Development Grants scheme delivers $12 of exports. One dollar in expenditure delivers $12 in exports. So, by cutting the expenditure on the EMDG scheme, this government is effectively cutting our exports. That is simply illogical. At a time when we have bad trade balances and where we have struggles with our manufacturing sector and other parts of industry in trying to find new markets and new opportunities, this government is taking away the helping hand and making it more difficult for them to do their job.

For many years, the previous coalition government managed this scheme. More money was allocated in the budget when it was required and claims were paid in full. The coalition remains committed to the EMDG scheme and will also make other reforms to help it easier for Australian exporters to compete. We will be reducing red tape for Australian business and in turn helping the export sector by abolishing the carbon tax and the mining tax to encourage the development of industry in Australia. Of course, we need to do all this to reduce Labor’s debt and get rid of their fiscal mismanagement.

There are job losses and mounting job insecurity in this country. We need to have a stable support scheme for our exporters. We need to be doing what we can to make sure that the small business sector can have confidence in government programs, can proceed with innovative new plans and can look at quality export markets around the world. We need to ensure that those who battle on the world trade market get all the help they possibly can to achieve their objectives, because, when they export, our whole country benefits.