The Export Consultant Association Incorporated (ECAI) says changes to the Export Market Development Grant Program (EDGP) will see many exporters locked out of the initiative.
The EDGP supported Australian businesses to start, expand, and diversify their exports into overseas markets.
In March, trade and tourism minister, Don Farrell, announced updated rules for the program, saying, “After extensive business and industry consultation, it was clear that the uncertainty and declining size of EMDG grants significantly reduced the value of the program for our exporters”.
Farrell said, the update has increased grant sizes so that eligible Australian businesses can access more money to support export market activities.
But the ECAI, which claims it advises and assists approximately 50 per cent of the businesses that apply for the EMDG, said, “it would deliver possibly bigger grants to about 30 per cent of exporters from a smaller fund pool. The rest of Australian exporters will be locked out”.
ECAI estimates the proposed amendments will adversely impact at least 80 per cent of current and prospective EMDG applicants.
“Businesses that applied for EMDG in the previous three Rounds (FY22-FY24) will not be able to access EMDG in FY25 as their grant agreements come to an end on 30 June 2024.
“We believe that approximately 7000-8000 businesses will be affected by the decision not to provide access to EMDG for the FY25 year,” it said.
ECAI said it’s more complicated with 1200 businesses having grants until 30 June 2025.
“SMEs seeking to develop international trade opportunities for their business that do not have access to EMDG for this same period will be unfairly disadvantaged and cause a rush of applications in future rounds that will bar many new and existing businesses from obtaining the funding,” it said.
But Farrell said the changes would allow businesses to diversify their trade by allowing Austrade to identify key markets for grant tiers.
“Additional changes include improved eligibility requirements so grants can go to businesses that are ready to start, expand and diversify their exports.
“This will be in addition to the ability to show applicants what the maximum grant amounts are up front, giving exporters greater certainty about how much grant funding they will receive if they are successful,” he said.
The grants would also be awarded on a first in first served basis.
ECAI likened this change to queueing online for tickets to a major concert or sporting event.
“Austrade is creating a significant degree of uncertainty and ignoring the administrative burden involved in applying for a grant that has been repeatedly demonstrated to benefit a recipient’s business success.
“Tied to this is a 30 per cent reduction in the total amount of EMDG funding available, more complex application rules, and a lack in transparency of the application process.”
Farrell said that for the first time, Austrade would be able to pay eligible businesses part of the grant much sooner after they have been assessed.
“This will be a significant boost for exporters who have previously had to fund their grant activities out of their own pocket and wait for EMDG payments to arrive later in the grant year or in arrears,” he said.
ECAI said, “It is disingenuous to suggest that SMEs applying for EMDG will be provided any degree of certainty of benefit when the administration of the program is primarily focused on allocating funds until funds are exhausted without regard to the respective entity applying for a grant or the fundamental principles of industry assistance programs.
“The manner in which funds will be allocated will not achieve the stated objectives of the EMDG program. The administrative burden to be imposed on SMEs will create uncertainty, and EMDG 2.0 still does not provide a robust method of measuring the effectiveness of the EMDG program (value to the taxpayer).”
According to its data, ECAI said between 2500-3500 SMEs would be offered a grant, assuming an average grant of between $30,000-$45,000.
“This would suggest that a substantial proportion of applicants, up to 70 per cent or approximately 6000-6500 SMEs, will not be successful in their application for EMDG,” it said.
