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Thursday, 24 May 2001
Page: 26965


Mr VAILE (Minister for Trade) (9:31 AM) —I move:

That the bill be now read a second time.

The Export Market Development Grants Amendment Bill 2001 delivers on the government's promise to extend the EMDG Scheme for another five years and provides a number of improvements to the scheme.

The EMDG Scheme provides $150 million per annum to support the export promotion activities of eligible businesses under $50 million per annum turnover, by partially reimbursing the expenses that eligible businesses incur in promoting their exports.

The scheme, administered by Austrade, is a proven success in assisting small business to export and supports this government's strategies for a robust, internationally competitive economy.

Last year nearly 3,000 businesses received export market development grants—700 of which received a grant for the first time. These businesses generated $4.5 billion in exports and employed thousands of Australians to fill the export orders. An estimated 54,000 jobs are attributable to the exports generated by EMDG recipients. With the average grant being $45,000, the EMDG Scheme is achieving its objective of providing effective assistance to businesses seeking to develop export markets. Importantly, 21 per cent of these grants go to businesses in rural and regional Australia.

Studies by Austrade and the University of New South Wales have shown that exporting businesses are successful businesses; good for the employers, good for the employees and good for the country. Exporting businesses on average pay their employees more than non-exporting businesses. Exporting businesses better utilise technology and modern management practices, than typical non-exporters.

But despite recent gains and our improving export performance, research from Austrade and the Australian Bureau of Statistics shows that Australia needs to continue to encourage business to export. According to this research, less than five per cent of Australian non-farm private sector businesses export, which does not compare well with many of our trading partners.

Against this background, the Austrade board conducted a comprehensive review of the scheme in 1999 and 2000, featuring broad industry consultation, a survey of the scheme's clients, and independent analysis provided by Professor Bewley of the University of New South Wales and from PricewaterhouseCoopers. The board then provided a detailed report of its recommendations and findings, which I tabled in August 2000.

As an initial response to the review's findings, the government announced it would extend the scheme until 2005-06 and bring forward legislation to implement its overall response to the review by the end of this financial year. This bill fulfils that promise to the Australian small and medium sized business export community, and implements the key elements of the government's response to the recommendations of that review report.

Most importantly, this bill extends the EMDG Scheme until 2005-06, with a provision to review the performance of the scheme by June 2005.

The Austrade board recommended the EMDG Scheme be extended after econometric analysis by Professor Bewley found that an additional $12 in exports was generated as a result of every grant dollar. The review found that the scheme's assistance is very effective in generating additional export promotion that otherwise would not have occurred and that, importantly, the assistance is well targeted, delivering value for money for Australian taxpayers.

As well as providing certainty for current and future EMDG recipients by extending the scheme, this bill also improves the scheme by making it more flexible and improving access for small business, in line with the business community's input to the review and with many of the review findings themselves.

This bill improves small business access to the scheme by:

· reducing from $20,000 to $15,000 the minimum expenditure required to access the EMDG scheme;

· reducing the period that related family members need to be employed in a business before their travel expenses are eligible from five years to one year; and

· removing the current requirement that intending first-time claimants must register with Austrade before applying for a grant.

To provide enhanced flexibility for EMDG applicants in how they direct their export marketing activities, this bill contains provisions to merge the existing categories relating to overseas representation and to short-term marketing consultant expenses. It removes the requirement that marketing consultancies be `short term' only, and caps the new combined category at $250,000 per application.

Similarly, this bill broadens the expense category relating to trade fairs to include genuine export marketing activities—seminars, in-store promotions, certain international forums and private exhibitions—which are currently excluded.

The bill also contains an amendment—suggested by the review—to expand the EMDG Act's prohibition on grants relating to the export marketing expenses of pornographic film products to all forms of pornographic material. This government is not interested in providing taxpayers' funds to the pornography industry.

The bill also provides that, consistent with the government's overall strategy that the Australian business number be used as an identifier for business dealings with Commonwealth agencies, entities wishing to receive an EMDG grant must hold an ABN.

The EMDG Amendment Bill 2001 also contains a number of technical amendments:

· to provide more consistent treatment of service exporters

· to ensure that education services exporters who are not properly accredited do not receive grants

· to tighten the rules targeting the scheme to firms with exports of less than $25 million per annum

· to provide Austrade with more flexibility in relation to the time within which EMDG applicants should respond to requests for information by Austrade, and

· to streamline the application of the EMDG Act's insolvency provisions.

As well as the measures in this bill, Austrade will action the findings of the review report covering:

· better promotion of the scheme's support for Internet and e-marketing costs

· ensuring that related domestic costs—including those of business people flying from regional destinations to capital city airports on the first leg of an overseas promotional visit—are included in the EMDG overseas visits allowance

· reviewing the grants entry process with a view to simplifying it and making it more effective, and

· continuing to seek improvements in the EMDG assessment process.

I would like to thank the individuals, business people and organisations that contributed to the review of the scheme. The suggestions to improve the EMDG Scheme were listened to and the government has incorporated many of them into this bill. I believe these changes to the EMDG Act will be warmly welcomed by the export sector.

In considering this bill, it is important to keep in mind that EMDG is all about helping smaller Australian businesses become more successful exporters. One such business is Nu-Lec Industries Pty Ltd of Brisbane, which is now a major exporter of electrical switchgear with exports exceeding $50 million annually. Nu-Lec no longer receives EMDG but recently wrote to me supporting the scheme.

Nu-Lec's vice-president, Neil O'Sullivan, said that when Nu-Lec first started exporting it was a small company and that, without Austrade's support through the EMDG Scheme, it would have been `virtually impossible' to fund the costs associated with export marketing.

Nu-Lec received EMDG grants for seven years from 1992 until 1999 and Mr O'Sullivan said it was the EMDG payments that made it possible for the company to achieve the export success it has.

It is people like these exporting heroes this government is sworn to help and that the EMDG Scheme is designed to assist.

I commend this bill extending the EMDG Scheme to the House and present the explanatory memorandum.

Debate (on motion by Mr McClelland) adjourned.