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Thursday, 14 March 2013
Page: 2139


Mr BALDWIN (Paterson) (11:26): I rise to speak on the Export Market Development Grants Amendment Bill 2013 as the coalition shadow minister for tourism and regional development. I note that, according to the Association of Australian Convention Bureaux, in 2011-12 Australia’s leading convention bureau won and assisted the placement of 456 international business events in Australia. These events are expected to attract 149,475 delegates for 609,385 visitor nights, with an economic benefit of $385.2 million. I refer the House to a media release issued by the association regarding this bill:

The proposed amendment will have significant impact resulting in fewer international delegates for Australia and therefore reduced export revenue, and a reduction in all of the indirect benefits brought to the economy by business events. At a time when current global economic conditions and a high AUD make Australia a less attractive long haul destination, now is not the time to be reducing support for delegate boosting activities.

Given these concerns of the association, I call on the Labor government to immediately explain what impact this bill will have on Australia's business events sector.

Australia’s tourism industry has been hit with so many new or increased taxes under Labor and now they are taking a further hit because of this government’s economic mismanagement. The direction of this bill was explored in the Senate estimates last month, and I note the two critical issues discussed. The first is to reduce the amount that we are funding by $25 million, which will take it down from some $150 million to $125 million. This cut is a result of Labor’s economic mismanagement. Labor have been unable to balance the books. The second is to do some rebalancing of grants so that we increase the number of grants to eight for applicants to emerging and growth markets and reduce to five the number of grants that might be given to applicants for the so-called mature markets: Europe, the United States and so forth. Evidence by a departmental officer at the Senate estimates states:

There was not a considered view by all applicants, and I would say that we did not consult applicants directly; we consulted with industry associations.

It is critically important that the government not only deal with peak bodies but also take the time to listen to the individual operators.

This bill has been rushed through the parliament, and the government has not engaged fully with the stakeholders and properly considered the range of options open to reform. I refer to the pre-budget submissions from the National Tourism Alliance. With respect to the Export Market Development Grants, this bill represents an unfortunate mixed bag of outcomes, resulting from implementing change without going through a proper review as recommended in the last Mortimer review. The National Tourism Alliance recommended that, with such significant changes currently taking place in one of Australia's most important export markets, an immediate review of the EMDG scheme should be undertaken to bring it into line with current shifts in both the Australian export market focus and export marketing practices.

The government has instead rushed this legislation into the parliament in its dying days, rather than observing the principles established under the Office of Best Practice Regulation. Leader of the Opposition Tony Abbott told the tourism industry in July last year:

What you will find from the next Coalition government is a ready set of ears and an enthusiasm to act in partnership with you. You will never find, from the next Coalition government, changes being sprung on you that we haven't talked through because that's not how adult governments operate. Adult governments understand that actions have consequences and they talk about the consequences with the people who will be affected by those actions.

The coalition agrees with the tourism industry that, due to the significant nature and scope of the changes in both Australia's tourism export market focus and the way tourism exporters now market their services, it required an immediate review of the EMDG scheme.

We will adopt the recommendations put by the NTA in its pre-budget submission—conducting a review, consulting with industry and acting on that basis. This was recommended by the Mortimer review—the last time the effectiveness of the EMDG scheme was assessed. Had the government followed this course, it would have dealt with other recommendations of industry at the same time. For instance, the NTA argues that, firstly, a focus of any review into the EMDG scheme must ensure a scheme that has a simpler application process for businesses and provides very clear criteria that provide some certainty around the nature and level of such a grant and, secondly, there should be clarity around how the EMDG is applied to 'cluster' organisations and organisations that receive funding from state government bodies. To quote an Austrade officer, Tim Harcourt, one of the staff at the agency promoting its services online to prospective clients in the business community:

Small is still beautiful … when it comes to exporting, that is. That's the word from the Australian Bureau of Statistics (ABS), whose survey of the Australian exporter community shows that around 90 per cent of Australian exporters are either small or medium sized enterprises (SMEs).

This confirms previous research by the Bureau which showed SMEs to be the 'engine room' of the Australian exporter community in terms of growth potential.

Tourism and hospitality matches this profile exactly, with 90 per cent of businesses either sole traders or small businesses. Tourism and hospitality employs 10 per cent of Australia's workforce and receives around this same proportion of Export Market Development Grants. This part of the services sector—its largest constituent part—is one of Australia's best economic multipliers.

As Minister for Tourism Martin Ferguson stated in Tourism Australia's Corporate Plan for 2012-15:

As well as employing around 500,000 Australians, the industry generates A$94 billion a year in spending which, as a sector, translates into A$71.7 billion direct and indirect contribution to GDP and makes tourism Australia's largest services export.

For every dollar spent on Australian tourism a further 91 cents is generated in other parts of the economy, a multiplier effect which surpasses mining, agriculture and financial services.

I agree with the minister on that. Tourism related services are also one of Australia's most important export industries. While only iron ore and coal earn more for the country, tourism's multiplier effect surpasses mining and agriculture. For the year to 30 June 2011, iron ore exports were $58.4 billion, coal exports were $43.9 billion, and tourism related services $33.9 billion.

People sometimes do not see, as they should, that servicing inbound tourists on shore in Australia is in fact engaging in export activity, but it surely is—through the attraction of foreign spending on Australian goods and services. In my view, there is a very good case to be made for the economy's best multipliers to be the focus of investment of taxpayer funds—whether it is tourism or other activity that derives additional economic benefit for this nation. Tourism not only creates jobs in the tertiary sector, it also encourages growth in the primary and secondary sectors of industry. This is known as the multiplier effect, which, in its simplest form, is how many times money spent by a tourist circulates through a country's economy. Money spent in a hotel helps to create jobs directly in the hotel, but it also creates jobs indirectly elsewhere in the economy. The hotel, for example, has to buy food from local farmers, who may spend some of this money on fertilisers, machinery or clothes. The demand for local products increases as tourists often buy souvenirs, which increases the secondary employment.

Industry multipliers can be derived from the input-output tables published by the Australian Bureau of Statistics. We know this Labor government has driven Australia into record debt. We need to recommit ourselves to prudent economic management to deliver us back into the black and invest in wealth generation. But there are many things we could be doing which do not have a budget impact. For instance, Austrade could be set key performance indicators to include actively seeking meetings with capital funds for inward hotel investment. Furthermore, a responsible government would need to first address the potential for multipliers to overstate the contribution of industries because of the potential for double counting. The multipliers are sensitive to the state of economy. For example, a multiplier is likely to be different when the economy is experiencing a downturn then when the economy is running close to capacity. Finally, a responsible government would need to ensure consistency of methodology and assumptions underpinning figures claimed by competing interests.

The government's explanatory memorandum states:

This Bill aligns the Export Market Development Grants (EMDG) scheme rules to the revised level of scheme funding. It concentrates the scheme more heavily on East Asian, emerging and frontier markets, in line with Austrade's greater emphasis on these markets, and helps achieve savings of $25 million per year.

This sounds awfully familiar. Last year the government increased the passenger movement charge by $8 per passenger to $55 per passenger. Australia now has the highest rate of passenger movement charge of any short-haul market in the developed world, according to the Tourism and Transport Forum. The tourism industry, working with the crossbenches and the opposition, combined to defeat the government's indexation of the passenger movement charge with the consumer price index. The EMDG scheme is meant to dispense government grants, not sustainability grants. Taxpayer funds must be spent wisely on ventures that ultimately lead to self-sustaining business activity. The National Tourism Alliance's 2013-14 pre-budget submission stated:

… the EMDG scheme aims to encourage businesses to promote their products and services overseas, and to become established exporters whose exporting persists as a sustained activity after assistance under the scheme ceases.

We know this government has been unable to construct a consistent message. The right hand never knows what the left hand is doing. This bill does not fit with what the government is doing elsewhere. For example, firstly, there is ongoing special status for US working holiday maker program participants whilst China is excluded from the program, and, secondly, there is no G'Day Beijing or G'Day China annual event to match the G'Day LA and G'Day USA events.

Since taking office this Labor government has made a complete mess of the Export Market Development Grants scheme. The coalition, in government, will review this scheme, particularly to address the increase in red tape that is expected to arise as a result of Labor's changes. The coalition government will restore reward, hope and opportunity for those prepared to invest and develop export markets to the benefit of all Australians. I urge the government to reconsider its approach, engage with industry participants and those that want to invest in Australia and let us all work together to deliver real benefits for the Australian economy and therefore the Australian people.