EXPORT MARKET DEVELOPMENT GRANTS AMENDMENT BILL 2003: Second Reading
Mr CADMAN (Mitchell) (7.12 p.m.) —The bill that the House is debating tonight is the Export Market Development Grants Amendment Bill 2003.
This government has a very fine record in export grants and the development of exports. In the year 2001 the government extended the EMDG Scheme for five years, highlighting its commitment to this program. Last financial year the number of Australian exporters grew from 25,000 to 31,450. This scheme is working, and Australian businesses want to export. It is exciting talking to small and medium businesses that are taking up the challenge of finding and moving into foreign markets and successfully capitalising on the advantages Australia has: expert workers; clean, green industries; and a capacity to be competitive and relevant in a global market.
Small business has been the key to doubling the Australian export community, and it is imperative that the $150.4 million budgeted for this year is invested to help smaller and medium businesses. They are the ones that are most interested in exports; they are the ones that are capitalising on these grants; they are the ones that are putting these grants together and gaining export markets and jobs for Australians.
I do not know how the Australian Labor Party are going to go out and explain themselves to small businesses and exporters in the country when they block this legislation. I think it is almost criminal that they go to the Senate and say: `No, we want to have this program confined to large businesses. We want to have it continue as it is.' It would be criminal if such a successful program, which is earning export dollars and providing jobs for 60,000 Australians, were interfered with in the way the Australian Labor Party want to interfere with it.
The amendments proposed in this bill put greater emphasis on the small and medium businesses—the emerging exporters—that are going to take advantage of Australia's comparative advantage in the world: our skilled workers, our capacity to fill niche markets, and our capacity to get out there and claim markets and opportunities for sales.
During 2001-02 around 3,100 small and medium businesses received grants under the EMDG Scheme and the average value of those grants was about $45,000—just enough, in fact, to have the incentive applied to encourage people to do something extra and to earn an export opportunity. Recipient businesses generated $5 billion worth of exports and, as I have said, employed 60,000 Australians. What an add-on factor, what a multiplier there is in the EMDG Scheme, where, for the investment of approximately $150 million, the recipient businesses last year generated $5 billion worth of exports. Twenty-one per cent of the grants went to businesses in rural and regional Australia—the great traditional exporting industries of Australia.
Since 1996 the government has continually improved this program. I will come back to the period prior to 1996 shortly, because there are a couple of reports around that make it worth investigating why it might be that the Australian Labor Party wants to go back to the old days. They are looking backwards and not forwards, Mr Deputy Speaker Mossfield, and I know you would grieve with me that that is the case. Since 1996 these are the changes the government has made. It has reduced the minimum expenditure required to access the scheme from $30,000 down to $15,000—that is very important. I remember struggling to try to get businesses within my electorate to be eligible for this requirement, with the bureaucracy involved and restructuring they had to do as an organisation, only to find that they had to first spend $30,000 before they could make a claim under the EMDG Scheme. However, this government halved that entry threshold and brought it down from $30,000 to $15,000. We provided the tourism sector with access to a 50 per cent grant rate. For the first time, tourist operators—the greatest export industry, a wonderful employer— [start page 16651]
Mrs De-Anne Kelly —A good manager.
Mr CADMAN —And I know my colleague understands that very much indeed from her electorate. She would know more than most the value of providing an incentive to have tourist operators investigate markets where they can attract people from overseas. We improved the access for family businesses and we removed the compulsory registration requirement. That was a hassle in itself, requiring the work of accountants, solicitors and specialist consultants in order to register a company to become eligible for the EMDG Scheme. That changed in 1996. We raised the minimum grant from $2,500 to $5,000 for eligible export promotion expenditure—a very simple but important factor. When somebody goes to a trade fair or is showing their wares in a new country for the first or second time they need to be able to present them effectively. We simplified the EMDG entry requirements for small business. Those are the changes that we have made and those are the results of this fine program under the current government.
There are changes to be made. Certainly the amount of money to be expended is to be capped. It is foolish to argue anything else. But what are we doing? We are targeting more carefully the areas of export that are getting the greatest results. We are targeting it to the small and medium businesses. These are the changes that the government has made. First of all, the annual turnover ceiling for applicants has been reduced from $50 million to $30 million. Thirty million dollars is a substantial turnover amount for a company—it is not a large company, but it is an medium-sized company. I think one of the faults of this program has been that large companies have tended to structure themselves and feed off the benefits of EMDG to the detriment of small business, sucking up funds for export development that they should be carrying out under their own steam.
We have found, as time has gone by, that as Australians understand the international marketplace we have become more proficient and more expert in gaining access and developing markets. The larger companies are able to do this and they have done it successfully. We have reduced the size of the maximum grant from $200,000 to $150,000 and the maximum number of grants from eight to seven. A company now has a seven-year span in which to gain a market. Most people would think, `If you can't do it in seven years you're not going to do it at all,' and I think that is a reasonable proposition. To reduce the number of grants from eight to seven, I think, is an insignificant thing.
We will be removing the $25 million export earnings ceiling—that ceiling is gone—and we will be removing the provision for additional grants for entering new markets. I think these are sensible, targeted decisions and they fit in with the progress of the scheme. Thirty-four per cent of the total export effort is coming from small businesses. That is a huge effort from the small businesses. I only have to look within my own electorate to see this happening in business after business as Australians use their skills and expertise to claim markets. This is a big change from what was happening prior to 1996 when this government came to office. This program was a problem prior to that. [start page 16652]
There were two Australian National Audit Office reports into that program—one was done in 1993 and there was another check-up in 1996—because the Audit Office had concerns about the way this program was being managed. It was complicated and it was bureaucratic. I am sure that colleagues opposite me would be interested to know that the number of fraud cases referred to the Australian Federal Police was steadily increasing. From 1990, when there were five cases, the number gradually grew until, in 1992-93, there were 14 cases; in 1993-04, there were 20 cases; and, in 1996, 33 fraud cases were referred to the AFP. That is an indication that the system was not working properly.
In the report presented in 1996 by the Australian National Audit Office, it says that the scheme was the largest item in Austrade's budget, at approximately 53 per cent, employing 5.5 per cent of its staff. The payments in that financial year amounted to $209.7 million, covering 3,497 grants. We are doing that number of grants for small businesses alone this year. What I am saying is that, with a large amount of money, you are funding large companies. You are giving it to those companies which in fact ought to be capable of finding their own markets. What we are doing now is broadening and doubling the number of exporters out of Australia by allowing those that should have the encouragement to drive access to new markets.
The major recommendations of the ANAO's report No 33, conducted in 1993, were that they needed to see an improvement in the quality of claims and control measures, optimisation of management planning and control, rationalisation of the strategic planning structure, improved responsiveness to the scheme and improved accountability to parliament. That is a condemnation. You do not get many audits as qualified as that. So, in 1993, those were the qualifications of the audit office on the scheme run by the previous government. They then went on to say:
Follow-up was considered important because the EMDG is the largest Austrade appropriation and most material item in its financial statements; there has been recent public criticism of the scheme due to increased staff numbers and administrative costs; the 1993-94 audit found the lack of performance measures combined with Austrade's minimal annual reporting of the scheme had left Parliament inadequately informed of the scheme's effectiveness given its high profile and frequency of legislative change required. It also considered that the audit would assist Government to improve the administration of the Scheme.
That is a highly qualified audit. The follow-up was necessary because of that qualified audit. The follow-up to the EMDG Scheme, conducted by the Australian National Audit Office, occurred in February and March 1996. That disclosed continuing concern, but improvement. With the change of government we revamped the program, as I have already outlined to the House. We have gained great benefit from that, not as a government, but as a nation. Tonight we have the Australian Labor Party wanting to block this measure, which is so beneficial to 60,000 employees and over 3,000 businesses annually. I cannot understand the logic of that. If it is such a flawed program, why do you want to destroy access to it for Australian workers?
Let me give you an idea of it in the electorate of Mitchell. From 1996, when awards to businesses were $656,000, the amount has steadily climbed until, in last year's figures, $1.1 million was granted to the electorate of Mitchell. The 2001-02 scheme is still out, because there is a second tranche of payments being commenced shortly, from the end of June. But, in total, it has been almost $6 million over those five or six years and it has generated so much interest and energy amongst the companies and the employees of my electorate. I think it is shameful that anybody would consider that they possess so much wisdom and knowledge—I would call it arrogance and ignorance—that they would want to change this scheme. [start page 16653]
Let me give you an example of some of the companies that benefit from this scheme. I want to talk about a company called IDS Enterprise Systems, which makes, markets and implements enterprise systems in Australia and globally. Their offices are in Castle Hill, Sydney. The companies they work for are Abbey Australia, Alfa Romeo, CB Norwood, Panasonic, Peugeot and Porsche. They work for Jaguar, Lotus Cars, Mitsubishi Trucks, Subaru—and if any company is highly qualified in engineering, it is Subaru—Volkswagen, Western Star and Yamaha. All sorts of wonderful contracts are being won by IDS Enterprise Systems in Sydney. It is an amazing company. It received a grant of $132,977. Nobody would deny or quibble with the fact that, for the investment of $1.7 million in grants in Mitchell, for every job in a company that was created by the EMDG grants, five were created. That is the scheme that the Australian Labor Party wants to denigrate and knock off here in the House.
The company VASP was started by Virginio Archetti. Virginio is a gifted technician. It is a small company, but what he is doing with telecommunications, extensive Internet and communications services and networking right throughout South-East Asia is amazing. He is more often out of the country than in the country, winning exports in countries like Singapore, where you would not think that Aussies would stand a chance. But Virginio is doing it, and he has a fine and proud work force with him. In Northmead, we have the Australian Hide, Skin & Leather Exporters Association. It is a great organisation. They are adding value to Australian hide, skin and leather industry. They are high quality products. This is an industry organisation that has been able to focus its members on an export drive. They are recipients of EMDG grants.
Here is another one: Zenaust Exports (NSW) Pty Ltd were notified by the minister of a grant of $60,000. You have only to visit this company to understand what terrific value adding this company is getting from exports to build an export market for the pharmaceutical and toiletry wholesale industry that they run. We are selling pharmaceuticals and toiletries into Asia from Zenaust.
Yet another is Creative Packaging Services Pty Ltd, a brilliant company run by Brad Devine and established in 1990. The company wraps and processes packages and is one of the fastest growing and best managed groups I have come across, commencing its efforts into the export markets with a grant of $27,508. Galexo is another one, as is Springfields Aromatherapy Pty Ltd. Can you imagine Australian companies creating aromatherapy perfumes and selling them right across Asia? The brilliant lady in charge of this company is doing so much to expand the market. It is a brilliant company which provides access for Australian products, and Gillian Kerr is an amazing woman. The company received $18,554 from the federal government. AD Instruments is another great company and Nautitech is a brilliant company. Nautitech has done all sorts of amazing things. It received an export development grant of $55,805. They are designing transmission systems for Ferrari. They are doing this and transmitting it by the Internet. This is a marvellous Australian company that is doing great things for our nation. [start page 16654]
Madam Deputy Speaker Gambaro, I know that you, above all, understand the significance of this legislation. It is worthwhile legislation and must go forward, as it is critical to thousands of businesses across the nation. Mark Vaile is an excellent minister. I can tell you that there is a targeted effort to try to prevent people who should have jobs from working in this industry.
Author: Alan Cadman MP
Source: House Hansard - 17th June 2003
Release Date: 3 Jul 2003