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Monday, 9 September 1996
Page: 3063


Senator COOK(4.47 p.m.) —by leave—I move:

That the Senate take note of the document.

The export market development grants scheme is an important scheme. It has been in existence for a long time. It started under the Whitlam government. I cannot recall in which of the three years of that government's office it was started, but it was, nonetheless, a scheme to encourage medium to small Australian companies to export their goods.

With the current government declaring that the major economic problem for Australia is the current account deficit—one of the occasions in which they identified what their economic policy is supposed to be aimed at—one would have thought that measures to encourage Australian companies to export and earn export income would be important. Indeed, the previous Labor government put a great deal of store in the export market development grants scheme. But, and it has to be said, in the determination to cut down public expenditure, this current government has neutered the scheme and cut out of it huge amounts of support that would otherwise have been there.

In fact, they have slashed $426 million out of the export market development grants scheme for the next four years. That means that the scheme, through which small and medium sized companies in this country would receive what would be a very moderate grant to enable them to send some of their hard-pressed partners, executives or, indeed, workmen in small companies where very few people are involved into a foreign market to find ways and means in which they can sell their good in that market—that is, to visit their potential customers and to get some refund on their air fare for doing that—has now been reduced and made largely ineffective.

That is a major pity. It is a major pity because, first of all, it undermines this government's credentials when it speaks on small business. Cutting back this scheme undermines small business directly. It is a pity when this government speaks about its need to reduce the current account deficit because cutting back on this scheme undercuts the ability of hard-pressed small companies to find the necessary finance to go to a foreign market and meet their customers in order to make a sale. Thus, it reduces the ability of Australian companies to export.

It is a pity that there is only one conclusion one can draw. Whilst almost every other country in the world that has a sophisticated manufacturing sector like Australia provides these schemes and offers this assistance—and some have an even more sophisticated market—the Australian government chooses to reduce that assistance and narrow the level of opportunity for those companies.

It is a pity too because this is a scheme which has been refereed by an independent authority over many years to see how effective it is. The universal conclusion of all the single opportunities that have been exercised to referee this scheme to see if it works is that, yes, it does. It works to this extent: for every $1 of taxpayers' money spent under this scheme, $25 of foreign exports are generated.

If one needed to ask oneself where to put a bit of public investment to generate export, on a one to 25 return on investment, one would choose a scheme like this. If any of us as private individuals had an opportunity to put $1 down and get $25 back, we would snap it up. But this government, taking a public policy position, chooses not to go down that route and to reduce the effectiveness of the scheme.

The document before the Senate is one that is for disallowance. The opposition will consider what it will do about this document after it has fully studied it and all of its ramifications. It was tabled today. We have not had an opportunity to look at it until just now. We have 15 days to make up our mind, but we will make up our mind in that time.

Without prejudicing what the conclusion will be from an opposition point of view, can I say, though, that, in the recent Senate Foreign Affairs, Defence and Trade References Committee inquiry into the export market development scheme, considerable concern was expressed by the business community about the purpose of this document and the regulations it now introduces. It is important to place on the record what were the concerns of Australian business when it looked at the new regulations this government was introducing for export market development grants applications.

The first reservation was that this government had gone to the election, flags flying, promising to reduce the amount of red tape and compliance costs to business, and here they were dramatically increasing it. They were, in fact, flying in the face of one of the solemn vows that the Prime Minister (Mr Howard) made to the small business constituency on election day; that is, he would reduce red tape. What has to be said, irrespective of the merit of the proposal, is that on the plain face of it this massively increases red tape. It does that on small business, who can ill afford the time that it takes to fill out all the forms necessary to get an entitlement to improve the Australian economy and their export performance. That was the first point.

The second point that business made is that there are two ways that governments can go about limiting outlays on a program like this. As we have seen in the budget—and they were only too accurate in their foreboding about what would occur—the first way is to reduce the amount of funds available to the scheme, which the budget did. It cut $426 million out of the scheme. The second way is to impose hurdles that make entry and access to the scheme very difficult, if not impossible, so that companies that would normally expect to achieve recognition under the scheme, and thus take advantage of the subsidies, would not be able to get to the scheme at all. Their concern was that, no matter what type of regulations are structured, it will have that effect.

One of the key reasons the government was introducing this test was not only to make firms export-ready—and I might say that, if it were the only issue here, would be a laudable thing—but also to impose extra and unnecessary regulation in order to prevent firms getting into the scheme at all. Thus the gnomes and bean counters over at Treasury who are concerned about expenditure at all, irrespective of whether it is in a good or a bad cause, would be happy.

I have had a quick look at it in the few minutes available to me. This is not a considered or mature view, but off the top of my head it seems to me that the professionals over at Austrade have again done what one expects to be a professional job. They have consulted exhaustively with industry over the regulations they are now bound by the government, not by their own decision, to introduce on business, and they have seemingly transcribed their brief in a sensitive and responsible way.

The third consideration that industry raised at the Senate hearings is applicable on this point. It is a point that those who have imposed on them the task of drafting regulations always have a problem in interpreting. So it is not a criticism of Austrade to say this. The first point is that, ultimately, any series of regulations like this is intrusive. They want to know all of the ins and outs of a company before they would consider making a grant. Some of the things that they ask questions about, you could ask yourself: is that really necessary, and why do they want to know that type of complex detail about a company's books when really the thrust of this should be about export market opportunity?

The second point about it is that at the final point Austrade themselves will be making decisions based on the information provided by the forms that small- and medium-sized business will now have to fill out. What is the knowledge base and market understanding and commercial acumen of a body like Austrade in making business decisions? To use what business said to me, is this an example of putting bureaucrats in charge of riding a shotgun on business about businesses' decision making for commercial purposes? One would have to say that it certainly bears a resemblance to that. Are those bureaucrats, therefore, fit to make those decisions? Business would say no, and I think they have a fair argument.

Without prejudicing what we will finally decide, I think it is important to put those facts down on the Hansard now, because this set of regulations, if it is finally approved, will be what governs the access for first time exporters to the export market development grants scheme. I repeat: one would have thought a government that has identified the current account deficit as the major economic problem for the country would be a government committed to trying to encourage exporters. In net, this scheme works to discourage exporters. (Time expired)

Question resolved in the affirmative.