Speech on the Export Market Developments Grant Amendment Bill 2014

19 March 2014

Dr CHALMERS (Rankin) (12:03): I rise today to speak on the Export Market Development Grants Amendment Bill 2014. As other speakers have noted, the bill amends the EMDG Act to increase the number of grants available per applicant, to reduce the minimum expenses threshold for a grant, and to halve the current deduction from the applicant's provisional grant, among other quite technical amendments. We will be voting in favour of these amendments, several of which were proposed by Labor prior to the election last year, but we do voice our concern about the omission of some important measures which were proposed in Labor's EMDG Amendment Bill, and I will come back to that concern in a moment.

The export market development grants are an important incentive for small and medium businesses, as the member for Eden-Monaro just mentioned, to promote Australian-made products overseas. Goods made in Australia, or overseas from primarily Australian products, are eligible for this scheme as are tourism services and conferences and events held in Australia. Eligible applicants are reimbursed up to half of their expenses related to export promotion as long as their export costs are over a certain threshold. This program does make it easier for Australian producers to place their product in foreign markets and it was worth, I think, just over $120 million in the last financial year.

Foreign trade has been in the headlines a lot recently. We have had stories at least weekly about the Australia-China FTA, the Japan FTA, the TPP, the RCEP and the KAFTA. What all these high-level technical discussions and all these acronyms often conceal—and it is pleasing to see both sides of the House recognising this in this debate—is that it is Australian producers and Australian industries who can be the key beneficiaries of trade liberalisation between Australia and its regional partners if and when the agreements are in our national interests.

When the governments go into discussions with our foreign neighbours and deliver tangible outcomes, that should not be the end of the discussion when it comes to trade. The next key step is for Australian producers and industries to win market share in our trading partners. In a world where bilateral and preferential trading agreements are becoming increasingly commonplace, it is critically important for us to support Australian producers to win contracts and earn sales overseas. That is ultimately what this EMDG scheme is about—giving our small and medium businesses a leg up in touting their wares in market places overseas.

It is true that the nature of international trade is constantly evolving, and the trading environment today is remarkably different from what existed 50 or 20 or even 10 years ago. The nature of production has changed so that huge global value chains have become the norm in many industries.

To take just one example, a recent study has found that the Apple iPhone that many of us carry around in our pockets has components from at least nine companies from five countries—the screen built in Japan, the processor in Korea, the camera in Germany, the Bluetooth in the US and assembly in China. That is just one example of the type of global value chains which have become possible and viable only as a result of the liberalisation of the international trade environment. It is vitally important in this context for Australia to stake out its place in these global value chains, and schemes like the EMDG program allow this government and this country to help Australian businesses get in on the action.

Staking out our claim in global value chains is also important in the face of structural changes in the domestic economy, particularly in the labour market. Every member in this place would be aware that the current unemployment rate, at six per cent, is higher than at any time in the global financial crisis. What this figure does not include is the job losses that have been announced but not carried out over the last six months. At Qantas, Holden, Toyota, Rio, Electrolux, Caterpillar and another 22 major Australian employers, a total of 27,300 job losses have been announced since the election. The reality of the situation is that the vast majority of these jobs are likely now gone for good, at least in their most recent form. Finding a place for Australians at the good, technological end of global value chains is therefore absolutely critical for the goal of future employment. Getting the conditions right in trade and the Australian market for exports, including the best possible scheme for incentivising export promotion, is a critical step towards achieving that goal.

So, in the face of a changing environment for world trade, the opposition will be supporting the amendments to the EMDG scheme. We are particularly supportive of the amendments in this legislation that were suggested by Labor in last year's proposed bill, including the increase in the number of grants available per applicant and technical amendments to enable the grant to be paid more quickly and to ensure that grants are not paid to companies engaging an EMDG consultant found not to be a fit and proper person. The member for Kingsford Smith talked at length about that particular measure. The decrease in the minimum expenses threshold is also welcome, as it allows even smaller players in Australia assistance for access to foreign markets. This will be particularly useful for niche producers to become part of the global value chains that I was talking about earlier.

Unfortunately, the bill does walk back some of Labor's proposed amendments from last year, and that risks Australia missing some opportunities. Before the election, Labor had proposed special incentives in the EMDG scheme for Australian producers to seek market share and promote exports in our Asian neighbours in particular. Everybody knows that in this Asian century our region will become the powerhouse both for production and for consumption. To see this, consider some statistics presented by my colleague the member for Lilley on Sunday, when he said that 60 years ago, in 1950 or so, just 15 per cent of the world's GDP fell within 10,000 kilometres of Australia's shores. Today this share has more than doubled and by 2030, with the continued expansion of China and India in particular, close to 60 per cent of the world GDP is projected to fall within 10,000 kilometres of Australia. This is the biggest story in the world economy in our lifetime—the shift in weight and heft from west to east and the tremendous opportunities flowing to smart countries from the middle-classing of Asia. It is disappointing in that context that the government has ditched the more specific incentives for Australian businesses to take advantage of these spikes in production and consumption, and in doing so we risk missing out on some of that huge growth in opportunity in the world's most dynamic region.

So we are disappointed but not entirely surprised that the government has put Australia at risk of missing the boat in the Asian century. Ever since the days of the Whitlam government and then again under Hawke and Keating, Labor has been the party of engagement with Asia, and the member for Sydney discussed some of this in her contribution to the debate last night. It was widely reported when the Abbott government officially dumped the Labor government's white paper on the Asian century from the Internet, doing their best to banish all traces of it from departmental websites. I commend the Australia in the Asian century report. There are still ways to access it, and anyone listening to this debate should familiarise themselves with this very important document.

If the government had bothered to read the Asian century white paper before they deleted it and removed traces of it from their own websites, they would understand some of the opportunities that we risk missing out on. By 2025, more than two billion people will be living in Asia's cities. By 2050, this number will be more like three billion, close to double the number living in an urban environment now. With Asia's rapid urbanisation and population growth, we will see greater demand from the emerging middle class. After 60 years of trade history with Asia, Australia is perfectly placed to capitalise on Asia's rapidly developing needs for transport, infrastructure, health care, housing, agribusiness, education and more. As the authors of the white paper put it, the tyranny of distance to Europe is being replaced this century by the power of proximity to Asia.

Australia needs to get the domestic environment right for trade promotion so that we can use this power of proximity to its full advantage. The opportunities for Australia for trade in the Asian century are extraordinary and we need to grab them. In agribusiness Australia will be able to take advantage of Asia's growing share of food demand, with more than 60 per cent of international demand to be driven by Asia by 2050. My colleague the member for Hunter was talking in this place yesterday on another bill about the 'dining boom' that Asia presents for Australia, and I think the opportunities in that sector in particular, agribusiness and the related sectors, are extraordinary. In advanced manufacturing Australia has opportunities in pharmaceuticals and aerospace technology exports to Asia. In biotech Australia will provide services and healthcare products for Asia's rapidly ageing population, with almost 700 million people aged over 60 in Asia by 2030. In infrastructure Australia can play a key role in the financial markets and design services of the estimated $8 trillion worth of infrastructure investments in Asia by 2020. And in energy Australia is well placed to provide both the resources and the sustainable energy skills for our regional partners. All in all, across each and every industry, Australia's trade with Asia will only grow over the course of this century.

But these opportunities are going to escape us unless our small and medium businesses become part of the international global value chains that characterise world trade today. To work towards this goal the EMDG scheme should be tailored in the way recommended by the previous Labor government so that exports of goods and services to Asia are given the priority that they need and deserve.

With the large number of regional and bilateral trade agreements currently under negotiation, it is a bit disappointing that the government has not taken full advantage of this opportunity in this bill to help domestic producers take advantage of the biggest economic and demographic shift in our lifetime. This is the big omission from an otherwise commendable bill.