On March 24, 2024, the Minister for Trade and Tourism, Senator Don Farrell announced “Rules changes to deliver bigger grants for exporters”, an update to its Export Market Development Grant Program (EDGP), that was last updated in 2021. It will deliver possibly bigger grants to about 30% of exporters from a smaller fund pool. The rest of Australian exporters will be locked out.
The statement promised, “The updated rules will see increased grant sizes so that eligible Australian businesses can access more money to support export market activities. These changes will also allow the EMDG to encourage Australian 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.”
Beneath the sales pitch, however, the Export Consultant Association Incorporated (ECAI), that advises and assists approximately 50% of the businesses that apply for the EMDG, has uncovered some awkward truths.
In fact, the ECAI estimates, the proposed amendments will adversely impact at least 80% of current and prospective EMDG applicants. The first serious concern involves eligibility, the ECAI states. “Businesses that applied for EMDG in the previous three Rounds (FY2022 – FY2024) will not be able to access EMDG in FY2025 as their grant agreements come to an end on 30 June 2024. We believe that approximately 7,000 – 8,000 businesses will be affected by the decision not to provide access to EMDG for the 2024-25 year,” ECAI states.
This is further complicated because approximately 1,200 businesses have grant agreements that end on 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.
Tied to this is a 30% reduction in the total amount of EMDG funding available and more complex application rules and what the ECAI calls “a lack in transparency of the application process.” This includes a new “first in, first served” methodology of allocating EMDG. According to the ECAI, “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. This is no different to queueing online for tickets to a major concert or sporting event.”
The body that understands the challenges SMEs face first-hand anticipates that 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).
They add, “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.”
In short, according to ECAI data, “between 2,500-3,500 SMEs will be offered a grant, assuming an average grant of between $30,000 - $45,000. Furthermore, this would suggest that a substantial proportion of applicants, up to 70% or approximately 6,000 – 6,500 SMEs, will not be successful in their application for EMDG.”
Contact details:
For Immediate Release
PR Contact Adrian Falk
02 9388 0033
afalk@believeadvertising.com
Interview Opportunities Are Available With ECAI
