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EMDG - trade off or trade in?

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Hope springs eternal for the Export Market Development Grants (EMDG) scheme debate. New Minister for Trade Craig Emerson comes with a wealth of experience and qualifications. Seeing as Emerson has a doctorate in economics and experience as an economic analyst with the United Nations, he has been an adviser to various Labor government ministers, a senior public servant, both shadow minister and later Minister for Small Business, we can rightfully hope that he will help the export market. My difficulty is not with the background of the new minister. It is the current Labor government's niggardly policy in promoting private enterprise's efforts to tap the export market. Perhaps a look at the 2008 Review of Export Policies and Programs by David Mortimer might help the new minister. Mortimer found that for every dollar of EMDG provided to exporters, it generated between $13.50 and $27 revenue for Australia. In addition, earlier reports found that for every dollar of grant provided to exporters, 40 cents returns to the government in taxes. At a time when every competent economic commentator is pointing out that the best and quickest way out of the GFC is through increasing international trade, where Australia is arguably overly reliant on the export of minerals to China, where the EMDG encourages a diversified trade in goods, services and IP all around the world and the EMDG generates between 13 and 27 times the revenue for every dollar spent and the government in any event gets back 40 percent of the grant anyway, why has the Labor government reduced the total EMDG in its budget to $150 million and refused to increase it for the foreseeable future? This compares unfavourably to the coalition's promise to increase the total of $200 million, which in my view is also too low. For the difference of $50 million, we can expect between $675 million and $1.3 billion less revenue to Australia. The government promotes the EMDG scheme as providing up to $200,000 in EMDG to exporters. Good press, sounds good but it's not true: last year exporters were guaranteed only $50,000 and this year only $27,500. Exporters at a time of increasing value of the Aussie dollar are finding it hard enough. To compete they need to increase marketing, and yet the very scheme designed to promote exports is hamstrung. It's time to uncapped the EMDG scheme and really help exporters. Are any of the independents listening?

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