The TRADE LEGISLATION AMENDMENT BILL (NO. 1) 2016 aka the EMDG Amendment Bill passed the Senate today – 18 March . These changes to the Export Market Development Grants Act 1997 will affect the eligibility of some expenses incurred from 1 July 2016 (and claimed from 1 July 2017) . The scheme is underfunded and hopefully the Government will use the budget in May to take into account demand for the scheme and these savings measures to adjust funding and address this years $33m shortfall .

The Manager of Opposition Business in the Senate Senator Claire Moore spoke to the Bill on behalf of the opposition who in principal supported the Governments Bill. That must have been a relief for all Senators given the marathon all night sitting. However and despite their exhaustion the Senate soldiered on debating the remaining items on today’s Senate agenda. Senator Xenophon raised exporters concerns about the cap on Free Samples, the cross bench and the Greens were silent on the Bill.

Senator Moore was critical of the proposed name change of the Australian Trade Commission to the Australian Trade and Investment Commission using it as a segue to criticize the Governments position on Foreign Investment as “anti investment” describing this element of the Bill as another example of the “governments preference for slogans over substance.” and citing their opposition to the layers of red tape imposed on the Agricultural, Agribusiness and food manufacturing industries due to recent legislation changes to Foreign Investment Review Board, a position supported by the Business Council of Australia.

Senator Moore went on to mock the the name change and the Governments position on foreign investment stating that was, “an empty attempt to increase needed foreign investment into Australia ” that does ” little to reverse the impact of the governments actions to deter foreign investment” and “will by itself do little to attract and retain much needed foreign investment into our economy.” , “before us we have a Bill that actually changes a name”.

“This current Bill just reconfirms this lack of economic and substantive policy making by this Liberal Government” , said Senator Moore however when it comes to the actual changes to the EMDG Act that will affect exporters the opposition was singing from the same song sheet as the government, reminding all who were listening that the EMDG scheme was a “Labor initiative” first introduced in 1974.

The amending Bill removes the sun-setting provisions, (continuation of the scheme ongoing for a period of five years subject to the 5 year review process) the Minister for Trade will now have discretion regarding the timing of future reviews. As per the current Act there is one scheduled review which must be completed, and a written report given to the Minister, by a date determined by the Minister that is not later than 31 December 2021. Each subsequent review must be completed, and a written report given to the Minister, by a date determined by the Minister.

Amendments:

The changes to the Export Market Development Grants Act 1997 that will affect the eligibility of expenses incurred from 1 July 2016 (and claimed from 1 July 2017) are:

• Communications costs have been removed as an eligible expenditure category
• A limit of $15,000 has been placed on the free sample expenditure category, noting that for claimants that are combining two years of expenditure, and one of these years is the 2015-16 financial year, no limit applies
• The provision for the reimbursement of in-country travel (other than airfares) has been repealed and the amount of the daily allowance for overseas visits has been increased to $350 (from $300)
• The list of excluded expenses now includes those expenses relating to eligible promotional activities, things or eligible products that may have had a detrimental impact on Australia’s trade reputation.

NB:With the exception of the “free sample” cap, these changes apply from the 2016-17 grant year onward and will therefore also apply to year 1 claims for that grant year that are combining two years of expenses.

The Free Samples cap will ‘save’ and estimated $1.7m and affect 120 export businesses. The removal of the communications allowance will save an estimated $4m, not nearly enough to make up the budget shortfall and these two ‘savings’ measures may well be offset by the increase in overseas visitor allowance from $300 to $350 per day.

Putting aside these so called ‘savings’ measures the Government has done little with this amending legislation to address the fact that the scheme remains underfunded. Demand for the scheme has increased from $136M for claims lodged in 2013-14 (2,715) to $170M for claims (3,321) lodged in 2015-16 a shortfall of $33m when viewed in the light of the current budget allocation of $137m PA. This shortfall will result in many Australian exporters being shortchanged when the second tranche payments are made in June 2016 .

I expect we are going to see some election lobbying in the lead up to the 2016 election from the Export Consultants Association and Export Council of Australia and others focused on increased funding for EMDG . I for one will be making the case to the Liberal party, Labor party the Greens and the Nick Xenophon Team for an increase in EMDG funding.