EMDG recipients mistakenly told they’d get no money

Denham Sadler
National Affairs Editor

Recipients of federal government export grants were mistakenly told by the government they would not receive any second tranche payment before later being informed that they would get a payment – but only about one-third of the maximum amount on offer.

The Export Market Development Grant (EMDG) scheme provides funding of up to 50 per cent of eligible export promotion expenses. The program, which is not competitive, has an annual allocation of $157 million.

A series of controversial changes made by the previous Coalition government significantly broadened the scope of companies eligible for the grants, leading to substantially less funding on offer for each individual company.

For some companies, this meant the size of grants cut by nearly 80 per cent, while the number of companies that accessed the scheme nearly doubled.

For EMDG recipients in the 2020-21 financial year, the export grant was split into two rounds. The first round was an initial payment of grant entitlements up to the initial payment ceiling amount, calculated based on the total number of applicants under the scheme.

The second round was based on the amount of provisional grant entitlement above the initial payment ceiling amount, with the final amount based on how much funding was remaining.

Austrade last week sent an email to applicants for the EMDG scheme that there were no funds available for second tranche payments for the 2020-21 financial year applicants.

To compensate for the increase in companies accessing the scheme, the previous Coalition government confirmed that $26 million would be taken from the funds set aside for the second tranche of payments for the 2020-21 cohort to pay for the new scheme in 2021-22.

This led to concerns that no second payments at all would be made to companies under the previous scheme, concerns which were confirmed following receipt of the email from Austrade.

But at the same time as being told there were no funds available, applicants were also sent an email confirming a funds transfer with 37 per cent of the payout available. A second email was then sent confirming that 37 per cent would be on offer.

A spokesperson for Austrade confirmed the email was sent in error due to a “system glitch”.

“An email was sent to some EMDG applicants last week that contained outdated information about second tranche payments due to a system glitch,” the spokesperson told InnovationAus.com.

“We updated all affected recipients by email the same day, as soon as we were aware of the issue.”

Export Consultants Association Incorporated (ECAI) chair Rod Campbell said this caused “significant distress” among EMDG recipients.

“The issue was rectified but not without causing some very disgruntled applicants. While applicants have expressed appreciation there was a second tranche payout, there has been universal disappointment that this was 37 per cent of assessed grant benefit,” Mr Campbell told InnovationAus.com.

“For applicants at the top level that is a reduction of grant payout of some $74,000. The incoming government has inherited a policy initiative from the Coalition that has disrupted the EMDG program enormously.”

According to Austrade, EMDG applicants shouldn’t rely on any funding being available in the second round.

“You should not plan or make financial commitments that assume you will receive any level of second-tranche payment for which you provisionally qualify,” the Austrade website said.

“Austrade accepts no liability for any loss arising from the actions of an applicant who assumes any level of payment under the EMDG scheme.”

Applicants for the EMDG for the 2022-23 year were due to open earlier this month but were paused following the change in government. The round will now open on July 6 and close August 17.

Do you know more? Contact James Riley via Email.

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