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CONTENTS
Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer and Copyright Details
Export Market
Development Grants Legislation Amendment Bill 1999
Date Introduced: 10 March 1999
House: House of Representatives
Portfolio: Trade
Commencement: Royal Assent
Purpose
The purpose of this Bill is to extend the life
of the Export Market Development Grants Scheme (EMDG Scheme) for a
further two years, and to make minor changes to the Scheme.
Background
The Export Market Development Grants Scheme
(EMDG Scheme) commenced in 1974. The Scheme was established by the
Export Market Development Grants Act 1974. That
Act was repealed in 1997 by the Export Market Development
Grants (Repeal and Consequential Provisions) Act 1997 and
replaced with the Export Market Development Grants Act
1997 (the Act).
On 8 December 1997, the Government released its
industry statement Investing for Growth. The statement
included an extra $300 million to fund the EMDG Scheme for a
further two years, which would extend the scheme until 2001-2002
(though the final year for the purpose of eligibility for grants
would be 2000-2001).
The EMDG Scheme provides financial assistance
primarily to small and medium enterprises as an incentive for them
to seek out and develop export markets. The Act currently provides
for the scheme to operate for the 1998-1999 grant year but not
beyond that. The proposed legislation extends the grant years until
the end of the 2000-2001 financial year.
The EMDG Scheme repays part of the promotional
expenses which enterprises incur pursuing exports, where the
products exported are of substantially Australian origin. The
Scheme provides up to 50% reimbursement of eligible expenses where
a person has spent over $20,000 per annum on eligible export
promotion, although the first $15,000 of expenditure is deducted.
First time applicants can combine two years' expenses. A maximum of
eight grants of up to $200,000 per grant is available, although
additional grants may be claimed for expenses incurred in 'new
markets'.(1) The Australian Trade Commission (Austrade) administers
the scheme.
To be eligible for assistance, enterprises must
have an income of less than $50 million in the grant year with
export earnings of less than $25 million for that period.(2) For
the purpose of calculating these earnings, related companies are
treated as one entity.
First time applicants must satisfy certain
requirements. The Government paid $138m in grants to 2,933
recipients in the 1996-97 grant year. The ratio of exports to
amount of grants paid was 35:1. All applicants provisionally
entitled to more than $50,000 had the full 100 per cent balance of
their grant entitlement distributed to them at the end of the
financial year.(3)
Senator Peter Cook, the Shadow Minister for Trade, promised
during the 1998 Federal election campaign to provide an additional
$90 million to the EMDG Scheme over three years and to broaden its
scope.
Position of significant interest groups/press
commentary
One exporter group has suggested that the EMDG
Scheme is particularly vital to exporters if a goods and services
tax is introduced. In August 1998, the Export Consultants'
Association called for the Government to legislate to extend the
EMDG Scheme to June 2001 as announced by the Government, stating
that if a goods and services tax is introduced with zero rating of
exports, this tax measure alone is an insufficient basis for export
assistance.(4)
Main Provisions
The Bill is comprised of two Schedules.
Schedule 1 amends the Export Market
Development Grants Act 1997.
Item 11 repeals sections 20, 21
and 22 of the Act and replaces them with new provisions. The
proposed amendment to section 20 removes the obligation for
Austrade to administer a 'grants entry test' and replaces it with
an obligation for Austrade to decide whether a person meets the
'grants entry requirements'. The proposed amendment to section 21
states that when determining the grants entry requirements,
Austrade is limited to requirements that are relevant to the
enterprise's prospects of success in relation to the export
enterprises for which grants are being sought. A determination of
grants entry requirements is a disallowable instrument for the
purposes of section 46A of the Acts Interpretation Act
1901.
Austrade currently considers eight key areas in
relation to grants entry requirements:
-
- Planned export activities
-
- Achieveability of proposed plans
-
- Involvement and ability of management
-
- Financial capability
-
- Staff numbers and skills
-
- Production and supply capacity
-
- Lawfulness or practicality of activity, and
-
- Realistic export earnings projections.(5)
Item 12 provides that the
amendments to sections 20, 21 and 22 will not apply to persons
registered under section 19 of the Act before the Bill commences,
and that determinations under section 21 in force before the Bill
commences continue to have effect.
Item 15 amends section 61 of
the Act so that the Minister and Austrade determine some of the
things affecting the amount of a grant. Section 61 currently gives
power to Austrade to determine some of the factors (such as the
initial payment ceiling amount) that are used in the calculation
process. This is currently inconsistent with section 68, which
provides that the Minister may determine the initial payment
ceiling amount.
Item 17 amends section 68 of
the Act, which requires the Minister to determine the initial
payment ceiling amount and the balance distribution date. The Act
currently provides that such a determination is a disallowable
instrument. The amendments mean that Ministerial determinations of
the initial payment ceiling amount and the balance distribution
date are no longer disallowable.
Item 19 amends section 73 of
the Act to prevent Austrade from considering an application made
more than 5 months after the end of the grant year to which it
relates.
Item 26 is a savings provision
which allows any guidelines formulated by the Minister for
determining whether a person was genuinely carrying on a business
in Australia during a grant year which were in force before the
proposed legislation commences to continue to have effect. It
provides that the disallowance provisions cannot be re-applied to
guidelines which continue to be in force because of item 26.
Item 30 is the most important
provision in the Bill. Item 30 amends the definition of 'grant
year' so that the final grant year commences on 1 July 2000 rather
than 1 July 1998. The operation of the EMDG Scheme is therefore
extended by 2 years so that the final grant year ends on 30 June
2001.
Item 32 provides that the
amendments in Schedule 1 will apply for the purposes of determining
eligibility for, and amounts of grants for, the grant year 1 July
1998 to 30 June 1999 and onwards. The exceptions to this are
items 18 and 19 which amend the
grounds on which Austrade may refuse to consider an application in
order to prevent Austrade from considering applications made more
than five months after the end of the relevant grant year, and
item 30 which amends the definition of grant year
so that the scheme is extended a further two years.
Schedule 2 makes minor
amendments to other legislation. Item 1 of
Schedule 2 amends section 94 of the Australian Trade Commission
Act 1985 to permit Austrade to make available the name and
address of a person who has received a payment under the EMDG
Scheme, as well as the amount of the grant, and the industry to
which the grant relates.
Item 2 of Schedule 2 amends
section 5 of the Export Market Development Grants (Repeal and
Consequential Provisions) Act 1997. That Act currently allows
an 'approved body' under the repealed 1974 legislation to continue
to exist unless cancelled by Austrade or until the day on which it
would have ceased to be in force under the 1974 legislation, if
that legislation had not been repealed. This is different to the
1997 Act, which limits the life of an 'approved body' to three
years with discretionary extensions. The proposed amendment will
ensure that approvals under the 1974 legislation are in line with
approvals under the 1997 Act, and have effect for three years after
approval, unless cancelled sooner.
Endnotes
-
- Australian Trade Commission, Annual Report, 1997-98,
p. 93.
- Ibid.
- Ibid, pp. 96-97.
- Export Consultants' Association, 'Exporters group gives GST
cautious reception', 14 August 1998, media statement.
- http://www.austrade.gov.au
(accessed 16 March 1999).
Fiona Walker
19 March 1999
Bills Digest Service
Information and Research Services
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ISSN 1328-8091
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