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Wednesday, 19 June 1996
Page: 1786


Senator COOK(12.15 p.m.) —Earlier in this debate Senator Chris Evans moved an amendment to the second reading and I wish to take a few minutes to address that amended motion. The motion is in three parts and expresses, if carried, that the Senate:

(a) is of the opinion that the EMDG scheme is:

(i) a successful scheme which enhances Australia's export performance,

(ii) a source of job creation and benefits Australia's balance of payments, and

(iii) a successful export incentive for small and medium sized enterprises;. . .

That is the first part of this amended motion. I have already spoken to that and made a number of points, but perhaps I should reiterate them quickly.

The first point concerns the excellence of the EMDG scheme. As given in evidence to the Senate committee, this scheme creates a one to 10 advantage and for experienced exporters a one to 25 advantage. The evidence given came from Austrade and is based on calculations done during a review of the scheme overseen by Treasury and Finance which was then reported. The calculations were done by Professor Ron Bewley who is the professor of econometrics at the University of New South Wales. We heard in evidence that, whilst the scheme currently ranks at approximately $200 million on the outlays side of the budget, it generates $2 billion in exports, according to the calculations done by this independent authority.

Any diminution of the scheme will reduce the ability of Australian companies to compete in foreign markets and therefore earn less income for Australia. If the scheme is abolished, we will be cutting off our noses to spite our faces, because we will make a saving of about $122 million—and I will explain that calculation in a minute—for an outlay of $200 million. But we will be losing $2 billion worth of income to the nation because of the exports generated by this scheme. That is a classic case of cutting off your nose to spite your face and that is why the opposition wants this stake put in the ground now. We want Australia to understand that, if this government moves to abolish this scheme as it is rumoured everywhere that it intends to, that will be a classic case of destroying Australia's international competitiveness and blunting the ability of Australian companies—in particular small to medium sized companies—to win export markets overseas.

On average the multiplier is 10 to one. For experienced exporters it is 25 to one, according to the independent findings. That means that experienced exporters can make even more money out of this scheme for the nation. The Australian Information Industries Association—the body covering the manufacture of software, computer parts and computers—says that the multiplier is 30 to one for experienced representatives of their show. What more critical element of industry could there be than the enabling technology of information technology?

When we say in this amendment that it is a successful scheme, we base that assertion on the clear and independent findings of a recent review of the scheme and what it means to the nation. If the scheme is then blunted, undermined or set aside as the rumours suggest, Australians will lose jobs, the current account deficit will blow out even further and small and medium sized companies in this country, which have taken the government's word at face value and gone into exports, will be undermined and undercut.

A report has come to me that on 4 June this year the estimates for Austrade came before the ERC. Of course the government has declined to verify this, but it is a programatic fact that it occurred on that date. Austrade was told by the ERC to find 24.3 per cent in savings, that is, a 24.3 per cent cut in its running costs. Austrade administers this scheme and it takes a lot of manpower in Austrade to do it effectively. It is what Austrade should do and Austrade exists to support Australian companies in overseas markets. If Austrade's running costs are cut by a quarter, by linear calculation one would assume that it will be a quarter less effective in administering the scheme. Austrade is an ingenious and administratively adept organisation, so it will not be as much as that, but there will be a significant impact on the ability of Austrade—the agency appointed to do this—to support Australian companies in the field in their export efforts. There will be job losses in Austrade as well.

In the second part of this amendment to the motion we express grave concern about the mooted abolition of the scheme. The important thing to remember is that this is a consistent rumour. The bureaucracy leaks, industry knows about it and industry is up in arms. There is no other explanation for the number of industry organisations that came before the Senate committee of inquiry and gave evidence of their concerns about the abolition of this scheme. All of them put a stake in the ground and said that this scheme should stay. All of them said in unanimous harmony that, if the government abolished this scheme, it would be a retrograde step. There is no clearer understanding of where industry stands on this than the actual words of industry itself and that has to be borne in mind.

The other significant fact is: what did industry believe was the government's mandate when it came to office? In order to assess what the mandate of this government is, one has to go to their election undertakings. On three occasions we know that this government, in the run-up to the election, made it abundantly clear to industry that this scheme would stay and, in fact, it would become better and bigger. That is not being complied with by this bill, and some industry organisations said that they believed this bill would not come forward because of the undertakings given in the pre-election period by this government.

If the scheme is to be removed, it flies in the face of a specific undertaking given by the Minister for Trade (Mr Fischer) at the National Press Club in February. It flies in the face of a specific undertaking in an election campaign document released by the Minister for Industry, Science and Tourism, Mr Moore, when setting out the government's proposals on this scheme. It flies directly in the face of private and personal assurances, which were reported to the Senate committee by industry associations, given in meetings between them and the Minister for Trade in his chambers prior to the election.

For those reasons, this opposition will fight as hard as it can to ensure that the government is held to its election undertakings, that the expectations of industry are delivered on and that the government does not repudiate its public position. Of course, if the bean counters have their way and it is repudiated, the government must wear the responsibility for that.

The third part of this motion that is before the chamber relates to a condemnation of the government for its failure to meet its election commitment to extend the EMDG scheme by making full market development grants of 50 per cent available to the tourism industry. I have in my notes—and I do not have sufficient time to go through all of them—copious copies of Hansard and a debate in this chamber on 20 June last year. This was a debate on the EMDG scheme. This was a debate which was led for the then opposition by Senator Warwick Parer, now a minister in this government, and he led in his capacity at that time as the shadow minister for tourism. He sought to amend the bill to increase the payments to the tourist industry.

I might say that he made an excellent case. It is good reading. He made an excellent case about the importance of the tourist industry to Australia: why it is an area of major growth, why it is an area of major income, and why it is so important and significant to the current account deficit. The growth in tourism in Australia over the last several years—the years of the Labor government—is a story in itself, but it is a dramatic story; it is a story about an inexorably upward moving graph and about increasing the income earned to this nation and to tourist operators because of more and more tourists flocking to our shores.

Senator Parer then sought to increase in the bill at that time, 20 June, advantages to the tourist industry, which the government at that time rejected. But in the election undertakings these undertakings were underpinned again. My question really is: can the tourist industry trust this government? This is the first opportunity this government has to deliver on those promises to the tourist industry, and they are not in this bill. They have not delivered on them, and they have not shown the slightest inclination to do so. Therefore, when can the tourist industry expect that this government will own up to its electoral undertakings and deliver on those promises?

There is a precedent for this. This bill that we have before the chamber now is substantially, but not entirely, the same as a bill that was produced by the former government and was introduced for debate in November of last year. While it is not entirely the same, it is substantially the same, and one does not take exception to the differences.

There is a precedent for this government to introduce a bill of the former government but attach to it an advantage to a special interest group because it believes it is appropriate. That was the customs excise bill relating to the diesel fuel rebate scheme, where the announcements of the previous government in the 1995-96 budget gave rise to a bill to modify the scheme to cut out unfair claims upon the scheme so the scheme met its original direction. That bill came up here, but it came up here with an extra clause attached to provide a particular advantage to farmers.

I do not criticise the farming community for that. Obviously the government had promised them that at the fist opportunity they would insert into the diesel fuel rebate scheme a provision that provided additional advantage beyond the advantages that were there, and the government may have been wanting then to deliver on an undertaking that it made. But why does it draw a distinction? Why is it all right for farmers when it is not all right, in the case of the tourist industry, to do what the government promised the industry it would do at the first opportunity when it introduced this bill? Why does the government regard this industry, which has been the star performer in Australian industry over the last decade, as a second-class citizen to the farming community when it comes to delivering on promises? As a consequence, we have a provision in this motion which, if carried, will condemn the government for its failure to do that.

Before I conclude, there is another quite significant fact that ought to be said in support of this motion as well. One of the key election promises of the government was to reduce the level of compliance costs by small business, to reduce the amount of red tape that small business had to deal with when seeking government assistance or conforming to government requirements at the law. The government has climbed on high and with a flourish of bugles announced that it has set up a committee that will examine this. We wait with baited breath to see what the findings of this committee will be if and when it actually returns a finding.

We know already that there has been some backtracking by the government, because the minister responsible for small business has tried now to soft pedal on the amount of red tape that will, in fact, be cut. The small business summit last week turned out to be an absolute fizzer as no real changes were made but, nonetheless, the matter is under study. We will continue to follow that debate and see what the study produces. This bill introduces the complexity.

I had the opportunity—which I acknowledge was extended to me by the Parliamentary Secretary to the Minister for Trade, Senator Brownhill, because of my concerns about the administrative complexity that this bill will add to small business—to be shown by Austrade a pro forma document which Austrade is consulting industry about so as to finalise their position on the regulations for the execution of the provisions in this bill, should it be proclaimed. That document produces a form that requires businesses to fill out 10 pages of quite detailed material on their performance, the nature of their accounts, the market they expect, the competitors they expect to meet in that market and a number of other things—10 pages of considerable detail in order to comply with the requirements of the scheme.

I think Austrade is an excellent organisation and I wish it well in reducing those 10 pages to one or two pages. I hope they succeed. My cynical nature suggests that they have the task ahead of them but I wish them well in their endeavours. The point is that the 10-page, detailed proposal that small business needs to fill out in order to comply with the requirements to access this scheme is a huge paper burden. The election promise of the government to reduce compliance costs by 50 per cent has taken a smashing blow because, while the government is saying to small business on the one hand that it wants to reduce those compliance costs, on the other hand it is increasing the amount of red tape by virtue of this provision. It is not just increasing it a bit; it is increasing it dramatically.

The committee looking at the red tape issue for the government start not from scratch but from behind scratch in the amount of work that they have to do. As I say, I wish Austrade well and I wish the committee reviewing the red tape well. I hope they succeed. My cynical nature tends to think that they will not and that the government's election promise was an empty rhetorical promise, full of sound and fury, signifying nothing. It will be seen through on the first couple of occasions that small business run up against this sort of legislation. I know it outrages many people in small business who are feeling used and duped by this type of rhetoric from the government.

I conclude by saying that this is a bill of some importance to the opposition and, I know from their contributions, to the minor parties. On current performance, this scheme generates $2 billion worth of exports for Australia. That is an independently and arms-length refereed figure, not one plucked out of the air by me. This bill provides an opportunity for industry in Australia to put a stake clearly in the ground saying that this scheme—a $2 billion advantage to this nation—should continue and that the government, which promised to continue the scheme, should be held to that promise.

The bean counters in Treasury and Finance have been after this scheme for a long time—I saw the submissions coming forward during the former government. They do not like this scheme. If they succeed in overwhelming the industry minister, the trade minister and the others who have a vested advantage in defending this scheme, then we in the opposition will fight them. It will be a tooth and nail, down to the wire fight. The government will not be let off the hook. That is a firm promise from me. I have great pleasure in supporting the motion moved by Senator Chris Evans and I trust that the Senate will see the wisdom of it and carry it.