Second Reading – Export Grants
Mr PITT (Hinkler) (17:02): I rise to speak on the Export Market Development Grants Amendment Bill 2014. The bill delivers on the coalition’s election commitment to progressively restore funding to the export market development grants program, which was cut by the previous Labor government. The 2013-14 Mid-Year Economic and Fiscal Outlook allocated an additional $50 million over four years to the scheme from which Labor had cut $25 million per year.
The bill also broadens the eligibility requirements to ensure a greater number of small and medium-sized enterprises receive a greater level of assistance to enter new markets. The bill increases the maximum number of grants per applicant from seven to eight, and reduces the required expenditure threshold to qualify for a grant from $20,000 to $15,000. It reduces the current $5,000 deduction from the applicant’s provisional grant amount to $2,500, and about 85 per cent of recipients will receive an extra $2,500 per grant as a result.
What this means is that a new business which has a unique product that only has a market overseas and which is looking for its first sale and is spending just $15,000 on export promotion will now get a $5,000 grant. Previously, they would have received nothing. An experienced exporter who has received seven grants but whose business is suffering due to the high exchange rate will get an extra grant to help try and recover these markets now that the exchange rate is improving. They can receive a grant of up $150,000. Previously, they would have received nothing. This bill will facilitate quicker payment of EMDG in years of low scheme demand or where additional funding is provided. Enhancing the scheme will benefit many small businesses in regional areas like Hinkler. In the last financial year, two businesses in Hervey Bay, which is at the southern end of my electorate, one involving tourism and the other in the fishing industry, received assistance under this program totalling $17,616.
I would encourage more of my local businesses to apply. Expanding into new markets is good not only for the business concerned but for the local economy, and it creates jobs. They only need to look at some of their fellow Hinkler businesses to see the opportunities that exports can create. Hinkler has a proud history of exporting. Last year, Bundaberg Brewed Drinks, the makers of the famous ginger beer, was named Queensland exporter of the year. Regarded as one of Australia’s most diverse food bowls, we export fruit and vegetables, seafood and sugar. As household incomes increase in India and Asia, so too will the demand for reliable, safe and fresh Australian produce. They are all things that we do well in Hinkler—safe, reliable and fresh.
Named after the great aviator Bert Hinkler, the Hinkler electorate is also known for its innovation. From the mechanical cane harvester, to the recreational aircraft built by Jabiru, to beverages like Bundaberg Rum, manufacturing, processing and value-adding is alive and well in Hinkler with the likes of Jakes Candy, Mammino Gourmet Ice Cream and Urangan Fisheries. We also have some large exporters that started out as small local businesses. Bundaberg Walkers Engineering Ltd was established in 1888. Back then it was known as the Bundaberg Foundry.Today, the business is a dynamic organisation servicing the needs of sugar, power generation, mining, marine and general engineering industries in both the domestic and the international market. They export their engineering,technical and design services, and have manufactured equipment to more than 20 countries, including Thailand, Indonesia, Argentina, the US and Sudan.
With recent International Women’s Day celebrations in mind, I note that Bundaberg Walkers Engineering Ltd now has a female general ma nager. Leone Aslett is leading the team of 130 workers in a field that is typically dominated by men. With two daughters of my own, it gives me great comfort to see more women forging careers in the major exporting business. I congratulate Leone. She is a local girl that married a local boy, attended university, raised a family and now has a highly successful career. Hinkler, with its access to quality produce and its proximity to Brisbane, has a manufacturing sector that is facing a period of enormous potential. This bill will ensure that local businesses looking to enter new markets get the marketing support that they need.
We on this side of the House recognise that small businesses are the backbone of regional Australia. They employ about 50 per cent of all Australians working in the private sector. In Queensland, small businesses account for 96 per cent of all businesses in the state. Yet under Labor they were subjected to an ever-growing list of costly and time-consuming red tape, endless rule changes and 43 new or increased taxes. In a period of just three years, the Rudd-Gillard-Rudd government gave us two Prime Ministers, two Treasurers, five Assistant Treasurers and six small-business ministers.
This bill seeks to give businesses certainty so they can begin planning their expansion into new markets. Exporting is a very tough business, and I can give you one example. In my electorate of Hinkler, AustChilli and AvoFresh, which are owned by the local De Paoli family, employ between 80 and 100 people and they inject more than $10 million per annum into the local community through employment, products and services. They supply food ingredients, fresh produce and value added products to supermarkets in Australia and multinational food companies. They are innovative, they are forward thinking and they are continually looking for new markets and product opportunities. At present, exports make up just a small portion of their revenue.
Director Trent De Paoli recently outlined for me some of the challenges they face in exporting from Australia and why their success to date has largely been in domestic growth. The cost of developing and servicing export markets is high. The expense of travelling to your target country is often in excess of $50,000, and that is before you have even started receiving an income from that market. Often with new markets the up-take is slow; it takes years to build viable and financially sustainable returns that reflect the investment made. To be successful in today’s fast-paced world you need to have your own people on the ground to ensure the business trade is accurately supported—again, a high expense that is critical. Import duties can often significantly affect potential success.
Australian goods are very expensive due to the high costs of production, including labour, electricity and water. This impacts our ability to compete globally. However, Mr De Paoli still views the glass as being half full. He says the exchange rate is helping exports. The demand is there. As I stated previously, emerging middle classes globally want high-value products, and Australia is regarded globally as a stable country that produces quality. The export market development grants will help businesses get a foot in the door. They are just one of the things that this government is doing to help small- to medium-sized businesses.
Of particular benefit to my electorate, and as promised, we have also suspended Labor’s flawed marine management plans. We will create a new plan in consultation with stakeholders, one that is based on science. We are providing $6.5 million for 25 research projects to ensure the continued sustainability of Australian fisheries, including expanding the Status of key Australian fish stocks report to include more species. We are producing an agriculture competitiveness white paper to identify ways to grow farm profits and enhance agriculture’s contribution to economic growth, trade, innovation and productivity.
Repealing the carbon tax will begin the process of restoring Australia’s global competitiveness. Even Virgin Australia head John Borghetti has indicated the best assistance the parliament can provide to business is the removal of Labor’s carbon tax, which has cost the aviation industry hundreds of millions of dollars. The carbon tax cost Qantas $106 million in 2012-13. That money would have paid the wages of at least a thousand staff. For my local businesses, the costs of electricity and refrigerant gases, for example, skyrocketed with the introduction of the tax.
We are cutting red and green tape to save businesses time and money. We are dedicating days in parliament to slashing unnecessary red and green tape to lift productivity and boost economic growth. And we recently released full details of the free trade agreement we negotiated with South Korea. The removal of tariffs will benefit a range of Hinkler exporters, including those in the sugar, horticulture and seafood industries. When the agreement is fully implemented, 99.8 per cent of Australian exports will enter Korea duty free, resulting in agricultural exports increasing by 73 per cent by 2030. Korea is Australia’s third largest export market, our fourth largest trading partner and an economy with an above average growth outlook. It is Australia’s largest market for raw sugar. Importantly, this agreement protects our competitive position in the Korean market. With one in five Australian jobs linked to trade, this agreement will provide an important boost to Australia’s economy.
Economic modelling estimates that that agreement will boost our economy by about $653 million after 15 years. And we are working to conclude agreements with other trading partners to boost Australia’s competitiveness in the global economy. This includes the Trans-Pacific Partnership, which involves 12 countries including Australia and represents a staggering 39 per cent of global gross domestic product. Our exports to member countries are worth almost $100 billion a year, accounting for about 34 per cent of our trade overall.
I also welcome the Prime Minister’s announcement that he will visit Japan, Korea and China next month with premiers and chief ministers to strengthen diplomatic and trade ties. He hopes to sign the free trade agreement with Korea while he is there and progress negotiations with China and Japan. The three countries together represent 40 per cent of Australia’s total two-way trade in goods and services, valued at a total of $250 billion. While China is Australia’s largest two-way trading partner, 123 countries around the world are in the same boat. Competition is fierce. A free trade agreement will protect our relationship with China. With that in mind, I note comments made recently by China’s Premier Li that they will seek to accelerate negotiations with Australia. Unfortunately, the negotiations had stalled badly under the previous Labor government. While Labor dithered for eight years, New Zealand beat us to it, reaching an agreement with China four years ago. Since then, New Zealand’s dairy sales to China have increased by $2.2 billion. We have every reason to believe an agreement will be reached with China this year.
This bill ensures the export market development grants program complements the trade agreements and partnerships that we are putting in place, making it easier, not harder, to do business in Australia. This will grow the economy and create jobs for current and future generations—further proof that the coalition is focused on trade, not trade unions.