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Wednesday, 11 December 1974
Page: 3424

Senator DURACK (Western Australia) - The Opposition supports the Export Market Development Grants Bill 1974. 1 do not propose to take up very much of the time of the Senate in saying why we do so. The fact is that the subject matter of this Bill- that is, the whole principle of export incentives, assistance and encouragement of one sort or another- was pioneered by the Liberal-Country Party Government many years ago. A week ago in this Senate we passed a Bill which replaced a scheme for the insurance and guarantee of export payments and which widened that scheme. The title of that Bill was the Export Finance and Insurance Corporation Bill. On that occasion I was able, on behalf of the Opposition, to welcome an improvement in the scheme for the insurance and guarantee of export payments which had been implemented during the term of the Liberal-Country Party Government.

However, on this occasion I am bound to say that the scheme contained in this Bill, which is for the payment of grants for export market development, is not an improvement on the scheme contained in legislation which was pioneered, implemented and carried on for many years by the Liberal-Country Party Government. That scheme of export incentives, as it was known, was a very notable scheme in this whole field of encouraging Australian exports, particularly exports of manufatured goods. It is said that that scheme was open to some abuse, that it was costing about $100m a year, that certan excessive benefits were being given to the larger companies and larger exporters and so on. When the present Government came into office it indicated that it was going to bring in a scheme of its own, and that is what this Bill does.

The Opposition takes the view that if there were certain abuses in the old scheme- I think they would have been relatively minor abusesthey could have been rectified by amendments to the legislation; that there was no occastion for the Government to abandon the old scheme and to bring in a scheme of its own. Under the scheme contained in this Bill, payments for export encouragement and incentives for the development of new markets and the expension of old markets have been greatly reduced in their scope. As I said, the old scheme had been providing sums of up to $ 100m a year. The new scheme is estimated to cost about $2 7m a year, although, as I undertand it, payments will be in the form of grants and will be taxable. So, at the rates of company taxation, it may well cost a good deal less. It is apparent that the actual incentives provided by this scheme will not be nearly as great as those provided under the scheme of the Liberal-Country Party Government. When we are returned to government we will look at this scheme again very closely to determine whether we cannot improve upon it and upgrade the incentives which it contains.

I do not propose to go through the actual details of the scheme. They have been set out in the second reading speech of the Minister for

Agriculture (Senator Wriedt). I think the major objections and criticisms which can be levelled at this Labor scheme are in relation to the very considerable limitations that are placed upon the grants which can be made for expenditure on market development.

Despite the provision that grants will be payable on eligible export market development expenditure in respect of any goods, there will be a ceiling payment on this form of grant. It limits amounts in any one year to $100,000 or 10 per cent of export earnings. This limitation will not apply in certain circumstances, but there is no real exception to the overall ceiling of $ 100,000 except in relation to eligible expenditure incurred on Australian Government sponsored trade promotions. However, companies do not always wish to participate in this type of scheme, but the only way in which they can claim reimbursement of expenditure above the ceiling of $100,000 is to take part in this scheme and then they can only get an additional amount of up to $25,000 in respect of eligible expenditure on Government trade promotions.

I think one of the major deficiencies of this scheme is the discouragement on the expenditure of money in developing an existing market. Under this Bill grants will be available in the form of reimbursement for money spent on market development at 2 rates. If the money is spent on the development of a new market it will attract a reimbursement rate of 85 per cent within the total ceiling payments which I have mentioned. However, if the money is spent on the development or expansion of an existing market the rate of reimbursement will be only 60 per cent of eligible expenditure. It is quite clear that as far as Australia's interests are concerned it is just as valuable- in fact it may be even more valuable- to expand an existing market rather than simply to develop a new market. Therefore it seems rather strange that there should be this discrimination against those who are actually developing or expanding an existing market. As I said, in order to attract the maximum grant- the rate of 85 per cent- they have to be developing a new market.

The overall ceiling of $100,000, to which I have referred, is of course a discrimination against the larger operators in this area. Although it may be a very worthy cause to provide out of a limited cake more money for the small exporter- certainly he needs all the encouragement and assistance he can be given- it is foolish simply because the Government may have some sort of prejudice against the larger exporter not to give that exporter encouragement to expand or develop new markets. Bearing in mind the size of the firms operating in this field an amount of $100,000 for this purpose may be in fact a small proportion of total expenditure in this field. However, there is some extension of the scheme of which I should make mention and for which I should give credit. That is that in future statutory marketing corporations which were not eligible under the old scheme will be eligible for assistance under this scheme. That is of course, to be commended.

In summary, the Opposition is thankful for small mercies. I suppose that the Australian manufacturers and exporters are thankful as well. At one stage we may all have had some fears as to whether the Government would have continued this type of scheme at all. As I have said, it is doing so in the shape of the scheme contained in this Bill. It is a reduced scheme from the one which operated under the Liberal-Country Party Government. The benefits are certainly less. When the Opposition is returned to power it will certainly look at the scheme again with a view to expanding it and making it as good a scheme as it has been in the past.

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