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From the Top: Emissions Trading Scheme will Hurt Exporters

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At the present time in Australia you don’t have to dig very deep to find a story of great difficulty when looking at the export performance of some of Australia’s best and boldest companies. Press reports in the Sydney Morning Herald about Brown Brothers closing down their office in London, Casella Wines profit reportedly dropping by up to 70 percent and it’s not all good news out there for Australian SME business, particularly those who have taken on the challenge of export. The high Aussie dollar is undoubtedly having a significant negative effect on some sectors of Australian business and not only impacting their overseas sales but hitting domestic sales as well. This week I was speaking to one of my colleagues who produces world’s best practice fittings for the marine industry. After telling me that he has never seen export so bad he went on to say that competition from United States in Australia was intense, to the point that like products are landed in Australia 45 percent cheaper than the local product. On top of that Australian made product is being sourced on the internet ex USA, with no GST, cheaper than the best wholesale price in Australia. I was recently asked by the press to do a television interview on the impact of the high Aussie dollar on exports. They wanted a five second grab. After talking to them for about 15 minutes the interviewer said, "I didn’t think it was such broad topic, it’s really quite interesting". Well, it is a broad topic and, while interesting for some it’s simply devastating for others, particularly SME companies who have limited resources, a house and a family. What concerns me is that over the last 10 years Australia has invested considerable amounts of money developing our export culture, encouraging more companies to "give it a go" and expanding the export horizons of busineses already engaged in international trade. Many of the results have been outstanding; factories have been build, technologies developed and jobs created. Some of these companies today are struggling simply because the dollar, the GFC and cost of doing business is rapidly reducing their ability to be internationally competitive.

Obviously there is little any government can or should do to manage its currency and nobody can see labour rates moving downwards despite being considerably higher than the USA, New Zealand and the United Kingdom, not to mention our near neighbours. Governments must, however, pursue sound and appropriate macroeconomic policies and do all they can to reduce the cost of doing business. In saying that we need to both protect our investment and support all those engaged in export during these almost uniquely tough times. That simply means building confidence through investing in the Export Market Development Grants scheme, negotiating hard on free trade agreements and attacking the considerable costs exporters face in meeting all the government mandated regulatory formalities and procedures by improving trade facilitation. What we don’t need is government adding to the cost of doing business or hitting already stretched exports with yet another tax. That brings me to the subject of the Emission Trading Scheme tax. Do we really have to be world leaders in pursuing an ETS when without any doubt this will add to cost, make little to no difference to global warming and reduce further our international competitiveness? Few argue against the need to act on global warming, and act we must but at a time and in a way that does not further impact on our global business performance. If the Government pursues its current course of action and fails to properly compensate all those exporters affected by the proposed tax on carbon, the current gloomy picture will only get worse, our standard of living will be affected and even more manufacturing will move offshore and jobs will be lost. There has never been a more important time for us all to stand up and be counted in pushing the Government to recognise and address the immediate problems, slow down the pace of unnecessary change and pursue the objective of being world leaders in sensible trade reform which first and foremost benefits hardworking Australian businesses.

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