The Australian government has announced an overhaul of a grants scheme for exporters after a review found it should be streamlined.
The Export Market Development Grants (EMDG) programme, which has been running for almost half a century, allows existing exporters and businesses that want to sell internationally to apply for reimbursement for partial cover of expenses such as marketing, representation and travel in overseas markets.
A government-commissioned review published last year found that while there is widespread support for the programme, businesses found the application process tricky and wanted more certainty about how much money they would be approved to claim back.
Australian trade minister Dan Tehan said last week that the system will be changed from reimbursement to pre-approval, with successful applicants being notified in advance of how much money they will get.
Exporters will also only have to apply once for the two to three-year grants, replacing the current system of annual applications, according to updated rules released on April 29.
“Cutting red tape around the EMDG programme will help more businesses take advantage of our government’s support,” Tehan said in a statement.
“We provided more than A$192mn to more than 4,000 Australian businesses to support their exporting activities through the EMDG programme in 2019-20; these businesses employed more than 70,000 people and generated around A$4.3bn in export income.”
Arnold Jorge, CEO of the Export Council of Australia, an industry group, says it broadly welcomes the changes to the programme.
“The Export Council of Australia was supportive of the original intent behind the EMDG reform. However, implementation will mean the difference between success and failure.
“EMDG remains a crucial tool for SME exporters. The new EMDG must allow SME exporters to access and receive funds with confidence. Applications must be easier, including through more lenient eligibility criteria.”
Stuart Mitchell, whose Mitchell & Co is among many that are approved by the government to help exporters make EMDG applications, says that while the changes will bring more certainty, they may also mean some businesses may get less money than they would under the current scheme.
The new system has an overall cap of A$770,000 per applicant over eight years, while previously the maximum a business could receive was A$150,000 per year over the same period.
“Exporters in my view are worse off because of the [reduced] time to claim, some funding caps and issues that reduce the overall amount of money available to them. Only time will tell whether the new changes really will produce a result or not,” Mitchell tells GTR.
The government has also introduced tiers so that the amounts that businesses get will depend on the number of years they have been in the scheme and their level of export development.
This was a top recommendation of the government-commissioned review, The review recommended that a tiered system could be “tailored to meet the needs of the different stages in an SME’s export journey”, after some businesses new to exporting confessed they weren’t sure what to do with the funds once they received a grant.
The changes will go into effect on July 1, the beginning of the new financial year.
While the government has said the tweaks will mean the system is easier to navigate, Mitchell cautions that that will depend on the detail of the guidelines, which are yet to be published and will explain the detail of the new application process.