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Thursday, 17 June 2010
Page: 5701

Mr CREAN (Minister for Trade) (9:29 AM) —I congratulate the member for Oxley on not only his contribution to this debate but the way in which he has brought home the significance of the EMDG Scheme, what it means, to businesses and small- and medium-sized enterprises in particular within his electorate. The great potential for this nation is our ability to grow our trade. Trade is not just exports, as I will go on to explain. The fact is that trade is the multiplier of economic growth in this nation, and the more we can do to assist more of our people to export and those who already know their potential to export to get into more markets the better off this country will be, in terms of not only economic growth but also job opportunities. I also thank all of the other members who have participated in this debate. In particular I thank the opposition for their support for the amendments that we are proposing in the Export Market Development Grants Amendment Bill 2010.

The Export Market Development Grants Scheme, the EMDG Scheme, does make a valuable contribution towards building a strong national export culture for this nation. It reduces the information gap about export markets by supporting marketing activities in new markets and it lends a much-needed helping hand to small- and medium-sized enterprises seeking to get into those markets to take advantage of the opportunities through the increasing trade liberalisation and the success of our trade negotiations. The scheme also reduces the financial barrier to exporting, by providing enhanced access to funds. It increases the competitiveness of Australian companies by exposing them to competitive overseas markets, and this in turn forces non-exporting local companies to become more competitive.

EFIC’s 2009 global readiness index shows that one in five jobs in this country are related to trade; one in seven jobs, to exporting; and one in 10 jobs, to imports. This year, the EMDG Scheme will help support the jobs of over 140,000 workers employed by grant recipients—small- and medium-sized Australian exporters. Analysts have long accepted that companies which export tend to pay higher real wages than non-exporting companies. So not only is trade good for economic growth; it is good for jobs and it is good in terms of its tendency to drive real wages higher. The Export Market Development Grants Scheme is itself a great multiplier: for every dollar spent under the scheme, we generate over $5 in taxpayer benefit, and studies show that EMDG recipients tend to enjoy much greater levels of labour productivity in their workforce.

I made the point earlier, but it is worth repeating, that trade is not just about exports; it is also about imports. To underscore this point, many export market development grant recipients highlight the fact that many exporters value-add imported inputs to finished products which are then themselves exported. I will give a few examples. Optalert Pty Ltd manufactures an advanced driver assistance system for use in the mining and transport sector. Up to 70 per cent of inputs are imported, but the company now has exports valued in excess of a million dollars. Data Signs Pty Ltd manufactures traffic signs which incorporate imported solar panels. The company is exporting finished products to markets including the UK and the United Arab Emirates. Heldon Products uses imported gas fittings to manufacture air-conditioning components which are then exported to markets including India, the UK and the US. These are all companies supported by the Export Market Development Grants Scheme and all good examples of companies that acquire their inputs through imports; but their competitive advantage, their value-add, is the way they convert that into a value-added commodity for export.

This is a government that has demonstrated a genuine and substantial commitment to the Export Market Development Grants Scheme. Since we came to office, we have injected an additional $100 million over the past two years, and this has played an important role in helping Australian exporters deal with very tough global conditions. The fact is we did inherit a mess from the coalition government, which was content to introduce guidelines that increased demand on the scheme but did not see fit to provide the extra funding needed to fund those changes. When we made changes to the Export Market Development Grants Scheme on coming to office, we injected the $50 million needed to fund them and we then had to find a further $50 million to fund the coalition’s changes. This stands in stark contrast to a coalition that was happy to take the lazy policy option: expand eligibility but do not fund it—once again, a policy low-road approach.

But the substantial growth in grant demand in recent years has created a growing imbalance between the scheme’s provisions and the funding available under the scheme. The scheme is now out of balance due to a combination of natural growth and increased demand arising from guideline changes introduced by successive governments. Now is the time to restore that balance, and these amendments will rein in future demand on the scheme and lay the foundations for a more sustainable funding model. The changes will move us further along the road towards the goal of building greater certainty into the scheme—this was a specific recommendation of the Mortimer review of trade policy—and industry itself is broadly supportive of the amendments and accepts the need to restore balance to the scheme.

I am confident that industry will welcome the moves to put in place a more sustainable funding model for the scheme. I personally remain fully committed to the EMDG, and these amendments will help secure the long-term future of the scheme and its role in promoting Australian jobs and Australian exports. Following government actions to address the impact of the global financial crisis, a tight and responsible central budget was called for and in this context the EMDG has had to play its part as well. I remain strongly committed to the future viability of the scheme. These amendments lay the foundation for it. I commend them to the House and I welcome the contributions that have been made to the debate.

Question agreed to.

Bill read a second time.