Will the 2018 budget help SME exporters?

“Overall, this is positive budget for SME exporters” said Heath Baker, head of policy at the Export Council of Australia (ECA). “But it’s an incremental step forward, not a major leap.
“The government has rightly been a champion of trade and has trumpeted its achievements in signing a number of FTA”, said Mr Baker. “But if you want to grow trade, FTA are only part of the answer. This budget goes some way to addressing SME exporters’ other needs — but there’s still more to be done.”
The ECA welcomes the $20 million allocated to establish an SME export hubs’ program, as well as extending funding for the export growth centres. These programs should help many SME make the jump into international business and the ECA looks forward to seeing the detail.
DFAT’s economic diplomacy efforts receive a valuable injection of $15 million. This will go towards expanding FTA outreach, helping businesses better access DFAT’s economic and security insights, as well as developing a strategy to address the ‘non-tariff measures’ that stop businesses from exporting. Austrade has received a small boost, including $3.2 million to develop a new national brand. Future budgets will need to commit significant money to implementing this brand if it has any chance of succeeding.
“Australia’s offshore agricultural counsellors play an essential role in facilitating trade in food and agriculture, and so adding six new counsellors is a wise investment,” Mr Baker said. “The ECA also welcomed additional funding for initiatives to increase agricultural access in key markets.
“Getting goods out of Australia should become a little easier with additional infrastructure spending, including the $400 million Port Botany line duplication. There’s also a $10.5 million commitment to complete a business case for a ‘single window’ for international trade — but this is slow progress given that implementing a single window was a 2016 election commitment.
“Aviation security will tighten, which could complicate exporters’ supply chains. While exporters accept the need to ensure aviation safety, these measures need to be implemented in a business-friendly way, and supply chain participants will need adequate time to adjust.
“On the downside, the Export Market Development Grant (EMDG) is still underfunded. This blunts some of the good measures in place to grow exports, as new exporters will only be able to fully realise international opportunities if they invest in building their brands overseas. Underfunding EMDG means they will lack the certainty and confidence to fully commit to building their brands.”
The ECA’s 2018 trade policy recommendations highlight practical steps the government can take to increase the number of SME exporting and the value they export. You can read the ECA’s recommendations here.

Xenophon says end of auto scheme will accelerate industry’s collapse

South Australian Senator Nick Xenophon has criticised the federal government’s decision to end the Automotive Transformation Scheme in 2018, saying it will speed up the demise of the sector.

Treasurer Joe Hockey, who delivered his first budget yesterday, said the scheme will end due to the decision by Ford, Holden and Toyota to end car manufacturing. They will all have shut their factories by the end of 2017.

The predicted savings from ending the ATS are $176.7 million in 2018-19, followed by $95.2 million and $28.6 million in the two years following.

Xenophon said there would be a “manifestly inadequate” $400 million remaining in funding from 2015 in the scheme, which has been running since 2011 and assists those involved in the automotive industry to diversify.

"They have simply chopped the scheme off at 2018 without bringing that funding forward to the years in which it could make a real difference to the automotive supply chain,” he told the ABC.

"The consequence of that is that there won't be a chance for the industry to restructure and transition for the 10,000-plus jobs that are involved in the automotive products sector."

Richard Reilly from the Federation of Automotive Products Manufacturers said it would harm research and development in the sector.

The task of transitioning away from automotive for suppliers in the industry is generally seen as a difficult task. Industry expert Professor Goran Roos has predicted that around 20 – 25 per cent of auto suppliers who have not yet diversified will survive.

Image: News Corp

Ford may leave before 2016: union

Ford could cease manufacturing cars in Victoria before 2016 if the government cuts assistance to the car industry, according to the Australian Manufacturing Workers Union (AMWU).

As the ABC reports, Ford intends to continue making cars at Broadmeadows and Geelong until 2016. However, the AMWU said that any changes to the Federal Government’s Automotive Transition Scheme could jeopardise that plan.

Dave Smith, the head of the Australian Manufacturing Workers’ Union vehicle division told the Herald Sun that, of the three car makers, Ford’s position is the most uncertain.

“While Toyota and Holden seem to be quite genuine that they want to stay in Australia until 2017 and build cars, Ford’s position is not as clear,” he said.

“The component industry is very fragile, it can fall over at any moment.”

Referring to the possibility that the Automotive Transition Scheme could be altered in the May budget, Smith said, “If they decide to drop off on that, then it (the car industry) will be over very quickly.”

However, Ford spokesman Neil McDonald told the Herald Sun the company remains committed to an October 2016 departure date.

“Our aim is to continue manufacturing until October 2016. We are committed to the new Falcon and Territory models and those cars will be on sale at the end of the year,” he said.

Meanwhile, the Herald Sun reports that there have been calls for the announcement of successful recipients of funds from the Melbourne North and Geelong investment funds to be sped up.

The schemes, funded by Ford as well as the federal and state governments, are intended to boost employment in the manufacturing sector in the wake of the decisions by all car makers to pull the plug on their Australian manufacturing operations.

Broadmeadows state Labor MP Frank McGuire has called for successful recipients to be announced all in one go to give councils the chance to co-ordinate necessary training needs of workers.

McGuire claimed the government is “drip feeding” the announcements for political reasons.

However, according to a spokesman for State Manufacturing Minister David Hodgett, they are being drip fed not only so the companies are publicised but also because some of them haven’t signed contracts yet.

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