THE COALITION’S POLICY TO SUPPORT AUSTRALIAN EXPORTERS, Brisbane
3rd August, 2010
Thank you Phil for that introduction. And thank you Ian and your colleagues and members of the Australian Institute of Export for organising this breakfast event. I also acknowledge my colleagues, Senator Ron Boswell, the fishermen's champion, and Ray Stevens, LNP member for Mermaid Beach.Since 1901, there have been 52 Trade Ministers. Some have held other portfolios attached to the Trade Ministry - sometimes Trade and Customs, the great Black Jack McEwen was Trade and Industry, Doug Anthony held Trade and Resources. But never before the Gillard Government has the Trade portfolio been a junior part of Foreign Affairs.
The fact is that the Rudd/Gillard Government have treated Australian exporters with contempt. Since taking over trade, Stephen Smith has issued just two media releases. One announcing the astonishing first tranche EMDG payment of just $27,500, on which I will have more to say later, and another on the monthly trade figures.
Since becoming Prime Minister, Julia Gillard has not bothered to contact the leaders of our most important trading partners, China and Japan. She did not bother to contact Indonesia before announcing her East Timor refugee centre debacle, and of course in East Timor she contacted the President rather than the Prime Minister. Actually its no wonder Stephen Smith has little time for his Trade portfolio while he struggles to paper over his Leader's diplomatic gaffes.
The Coalition understands that trade is the key engine of growth for Australia. It creates new jobs, improves living standards, and ensures our future as a prosperous nation.
One in seven jobs in Australia is directly linked to exports while one in ten is dependent on delivery of imports. Overall, more than one in five Australian jobs, or around 2.5 million positions, is trade related. Trade liberalisation over the last 20 years has boosted real family incomes by between $2700 and $3900 per year.
One in four jobs in regional Australia is directly or indirectly linked to exports. When the Coalition was last in government, exports from regional Australia grew three times faster than did exports from major cities. About a quarter of regional Australia's income now comes from exports.
Trade is a two-way street, and Australia will continue to import the finance, technology and innovation needed to develop the country and make our industries more competitive. We also need to import consumer goods that we do not produce, and to use imports to ensure year-round supplies of seasonal foods. As a result, it is essential that Australia's quarantine and inspection services receive sufficient funding and support to counter any pest or disease threats which imports may pose, and to ensure our products being exported are of the highest standard and meet the requirements of our export markets.
Under Labor, the Doha multilateral trade negations have stalled; a Free Trade Agreement with ASEAN has been signed which provides minimal benefits to Australian exporters; funding has been slashed for Australia's quarantine and border inspection services; and the Export Market Development Scheme has been seriously under funded.
As many of you are only too well aware, Labor has made a complete mess of the Export Market Development Grant (EMDG) Scheme.
The EMDG scheme reimburses eligible enterprises for 50 percent of costs spent on specific export promotion activities, above a threshold. The scheme has been capped at $150 million per annum since 1997, and through the forward estimates, except in 2008-09 and 2009-10 when a $200 million cap applied.
Claims are reimbursed retrospectively for expenditure incurred in the previous financial year pro rata up to the cap. Around 5100 enterprises per year apply for grants, of which 80 percent are small and medium enterprises.
Soon after taking office, Labor expanded the scheme by lowering the eligible expenditure threshold from $15,000 to $10,000, increasing the number of grants from 7 to 8 and increasing the maximum grant from $150,000 to $200,000. The cost of these changes was estimated at $50 million per year, but increased funding was only provided for 2009-10.
There was a shortfall of about $30 million for grants payable in 2009-10 and there will be a shortfall of around $80 million in 2010-11. This means that exporters who have invested in good faith in developing markets will have their reimbursements drastically reduced.
In June 2010, Labor amended the scheme to essentially reverse the 2008 implementation of its election commitments. These changes will reduce the total value of grants claimed to about $200 million per annum. This means there will continue to be a shortfall of $50 million per year in 2011-12 and subsequent years and payment of grants will be reduced accordingly. The shortfalls of $30 million in 2009-10 and $80 million in 2010-11 will remain.
In other words, the changes made by Labor do not solve the problem. Under Labor, every year from now on applicants will receive a small initial reimbursement, and every dollar claimed over this amount will be reduced by up to 80 cents.
The Government has already announced that the first tranche payment for this financial year will be a paltry $27,500, down from $50,000 in 2009-10 and $70,000 when the Coalition left office. The impact on the cash flow of, in particular, small and medium enterprises, will be quite devastating.
The Coalition's highest trade policy priority remains the Doha negotiations, which are being conducted under the auspices of the World Trade Organisation (WTO). With its global framework of agreed trade rules, the WTO remains crucial in preserving the openness of markets around the world and in delivering further trade liberalisation.
A Coalition Government will pursue an ambitious and comprehensive outcome to the Doha Round which delivers genuine, new commercial opportunities for our farmers, manufacturers and service providers.
We will establish the permanent position of Ambassador for Trade Reform to promote further trade reform internationally. The Ambassador for Trade Reform will serve as the focal point for coordinating, promoting and intensifying the Australian Government's international efforts to encourage trade reform. The Ambassador will have a key role in facilitating cooperation between Australian agencies and their counterparts in other countries on global trade reform issues.
We will continue funding the position of Trade Representative for Australia's Agricultural Industries and establish the new roles of Trade Representative for Australia's Manufacturing Industries and Trade Representative for Australia's Services Industries.
We will build coalitions of like minded countries to progress multilateral trade negotiations, and increase pressure on all members of the WTO, particularly the major agricultural subsidisers like the European Union, the United States and Japan, to reduce their farm support and work towards a successful completion of the Doha Round.
We will seek to negotiate new rules on trade in agriculture that reduce trade distorting practices and improve market access. We will work hard to reduce international barriers for industrial products (or non-agricultural market access - NAMA) and expand exports in this sector by increasing access to new and existing markets.
We will pursue a new international initiative to break down trade barriers in services and to achieve improved access to overseas markets for the Australian services sector. The services sector is central to a vibrant and resilient economy.
We will push for the Sensitive and Special Products categories to be operated in an easily understandable, pragmatic and transparent manner, which will deliver significant new commercial opportunities and the best outcomes for Australian farmers.
A new Coalition Government will be more vigorous in using the WTO dispute settlement system as an essential strategic element of Australia's overall trade policy to ensure that markets are not unfairly closed to our exporters. We support measures to guarantee that the international trading regime of the WTO is open, equitable and enforceable.
The Coalition has a proud tradition of negotiating bilateral free trade agreements (FTAs).
In many instances, FTAs offer the prospect of quicker and more extensive gains in our trading relationship with individual countries, or groups of countries, than can be achieved through the WTO. We will ensure that all new FTAs are comprehensive, ambitious and WTO plus.
The proliferation of FTAs around the world means that, to secure and protect Australia's competitiveness in our key export markets, we too must be prepared to negotiate FTAs.
The objectives of a Coalition Government will be to pursue FTAs that are comprehensive, provide liberalisation across all sectors, and provide substantial commercial and wider economic benefits to Australia more quickly than would be possible through multilateral efforts. FTAs like this can have a positive effect on the multilateral system and act as building blocks for global trade liberalisation and reform.
A new Coalition Government will consult with industry bodies and associations to ensure industry priorities are taken into account during negotiations to complete FTAs that provide opportunities for Australian exporters and investors to expand their business into key markets. We will re-establish the Trade Advisory Council, abolished by Labor, as the Coalition's pre-eminent source of advice from the business sector on Trade and investment issues.
A Coalition Government will devote increased resources to the effective conclusion of high quality and comprehensive FTAs with China, Japan, Malaysia, the Gulf Cooperation Council, the Republic of Korea and Indonesia. We will explore the feasibility of an agreement on services with the European Union.
Asia Pacific Economic Cooperation (APEC) economies account for 60 percent of Australia's trade, and APEC remains the principal forum for advancing Australia's engagement with the Asia-Pacific region.
A Coalition Government will explore and develop regional trade opportunities and build on existing relationships with nations in the Asia-Pacific.
As well, we will actively pursue effective structural reform so as to ensure a more predictable and transparent regulatory environment in regional economies. This agenda includes progressing the Doha Round negotiations, advancing regional economic integration, clean development and responses to climate change, counter-terrorism and health pandemics.
A Coalition Government will support the development of the Trans-Pacific Strategy Economic Partnership Agreement, based on the expansion of the P4 free trade agreement between Brunei, Chile, New Zealand and Singapore. The Coalition views this as a stepping stone to a longer term goal of a Free Trade Area of the Asia-Pacific.
Labor's mismanagement of the EMDG Scheme underlines its sheer administrative incompetence, its inability to keep its election promises and its complete lack of understanding that what business needs most is certainty.
In 2007, the Labor Party promised it would revitalise and provide certainty for the Export Market Development Grants scheme. In practice, the only certainty that Labor has provided is that the level of EMDG reimbursement will be uncertain.
I announce today that a Coalition Government will increase the EMDG cap to $200 million effective from 1 July 2011. This restores the $50 million funding shortfall caused by Labor's mismanagement of the scheme. It means that businesses undertaking export promotion activities in this and future years can reasonably anticipate that their claims will be reimbursed in full.
Furthermore, in government the Coalition will examine the merits of removing the cap altogether. Provided payments can be kept within reasonable bounds, a cap makes little sense and simply adds unnecessary bureaucracy and administrative cost.
Thank you for coming along this morning to join me in this launch of the Coalition's Trade Policy.
I wish you well in your endeavours to establish new and expanded export markets for Australia.
