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Monday, 29 August 1994
Page: 518

Senator IAN MACDONALD (6.36 p.m.) —I rise to speak on the Export Market Development Grants Amendment Bill 1994. I support the comments made by the other coalition speakers who have already contributed to the debate. As the other speakers have indicated, the amendments relate primarily to the management and control of approved joint ventures, consortia and approved trading houses.

  Whilst debating the bill before us, I want to take the opportunity to speak about the accessibility of grants under the export market development grants scheme for tourist operators. I want to do this because, as senators will be aware, I represent a very important tourist area of Australia; an area that is rapidly increasing in significance to the whole of Australia and particularly to our export earnings.

  The EMDG scheme was established for any Australian resident company, partnership or individual promoting goods or specified services. The tourist industry was eligible for grants under the scheme from 1978 to 1985, and then from 1985 to 1987 through a scheme parallel to EMDG called the TOPS program.

  In 1990 the tourism industry was readmitted to the scheme, but in a limited way. Multi-service operators became eligible for grants but, to qualify, tourism operators had to supply at least three of the following services: transport of passengers by land, air or water; accommodation; tour escort services; or admission to a tourist attraction.

  On 4 May this year, after pressure from the industry, Minister Lee released a statement advising that all tourism operators could now access the export market development grants scheme, but there was a catch. Operators who did not provide three or more of the services mentioned could not access the scheme at the 50 per cent level enjoyed by operators in other industries.

  Single or dual tourism operators could only access the scheme at 25 per cent. A grant would only be given at half of the rate normally given under the export market development grants scheme. Grants would only be given for 25 per cent of a company's international promotional expenditure rather than the 50 per cent which everyone else received.

  Apart from unfairness, the industry has expressed concern at the distortion that this gives in the provision of tourism services. Single and dual operators are now encouraged to move into other products to assess the scheme; products which would not normally be viable to them in their own particular businesses. The argument put forward by Austrade for this handicap is that all that Australian firms are doing is promoting their products in competition with other Australian suppliers. This is, of course, patently ridiculous. Anybody who understands the tourism industry knows that the promotion of a service overseas involves considerable promotion of the region where the service is located. The free benefits to the region from these promotions far outweigh any free promotion that multi-national tourism operators may receive.

  There are concerns that using the number of services as a selection criterion for EMD grants is inappropriate. Some industry sources argue that selection criteria would be more appropriate if they involved some weighted measure of international tourist numbers and revenue—weighted so that small tourism operators were not disadvantaged.

  The industry also has concerns about the $30,000 promotional expenditure limit to access the scheme. The Far North Queensland Promotions Bureau, which is the primary representative body for tourism companies in the Cairns region, has a membership of 580 companies. Of those 580 companies, 80 per cent are small businesses with fewer than 20 employees while 40 to 50 per cent employ fewer than five people.

  Small businesses form a very important part of the tourism industry, particularly in far north Queensland. It is important that this $30,000 limit does not put the scheme out of reach of these businesses. Unfortunately, the legislation does not permit these small businesses in the tourism industry to form joint ventures and consortiums to develop overseas markets together.

  The Far North Queensland Promotions Bureau itself has been unable to access the EMDG scheme because it does not have approved body status. Apparently, the Department of Trade prefers to grant approved body status to national rather than regional bodies. This is unfortunate, particularly in the instance I mentioned, because the Cairns bureau is very active and should be able to access support in the same way as national bodies. Having looked at the list of bodies approved under the Export Market Development Grant Act, I am concerned that the Far North Queensland Promotions Bureau has not been able to get into this scheme. There are many bodies on the list which have not been as active internationally as the Cairns promotion bureau.

  There are also problems with the lack of information about the scheme being channelled to north Queensland tourism operators. In an article which recently appeared in the local Cairns newspaper a Cairns financial consultant was reported as saying that more than half the local businesses entitled to make a claim under the EMDG scheme had not made a claim because of lack of know-how. The consultant also referred to industry concerns that the process of applying for a grant was too hard.

  Industry sources in Cairns have told me that it is not worth their while to apply for a grant because of the time and money associated with the process. It is not worth $15,000 in accounting fees to get a grant of about $12,000. The application forms, formulae and regulations are complicated. Financial people have advised me that the documentation requirements for the EMDG application are far more stringent than for a tax audit.

  In addition, the definition of tourism services which can access the scheme is unclear. Although the legislation is not yet before the parliament, it seems that casinos, convention centres, restaurants and hire car services are not able to access the scheme and will not be included under that definition. However, any Canberra bureaucrat who came up to Cairns and Townsville and said that these sectors were not exporters in the tourism industry would be laughed out of town.

  Currently, $38 million is being invested in a convention centre in Cairns which is hoping to get more than 50 per cent of its business internationally. The convention centre will be developing and promoting a wide range of international packages in conjunction with local hotels, tour and cruise companies, restaurants and tourist attractions. The convention centre's expenditure on international promotions will be immense. The economic and trade benefits to Cairns and to Australia of this convention centre are obvious. It is likely that the Cairns casino will be in much the same situation. Yet the export market development grants scheme does not seem to apply to those sorts of businesses as it is flagged.

  Obviously, the scheme has a lot of problems in its present form but, as I said, the government has not yet drafted legislation in relation to this aspect. It is of some concern to the industry that legislation is so long in coming. It is important that these problems are quickly solved and that legislation entailing changes regarding the tourism industry is brought before the parliament for debate at the earliest possible time.

  Mr Acting Deputy President, I hope the minister takes these matters into account at this time. Although not directly related to the bill, these things relate to the scheme. I hope that the minister will be able to take them into account when drafting the next piece of legislation so that Australian tourist operators, who are such an important part of our export earnings drive, can be properly and fairly catered for in this scheme.