Funding through the Export Market Development Grants program will be delivered upfront and eligibility for the popular scheme will be tightened under legislation introduced to Parliament this week.
The Export Market Development Grants (EDMG) offers reimbursements of up to 50 per cent of eligible export promotion expenses above $5000, such as attending trade shows, digital advertising, marketing consultant fees and visa fees. It offers a total of $150,000 per year to eligible businesses.
The scheme currently requires a company to apply for the grant in the financial year after the activity takes place.
The Coalition provided a $60 million top up to the scheme in the lead up to the 2019 election, and a further $49.8 million in the 2019-20 financial year.
The federal government commissioned a review into the EMDG late last year and released the final report and its response last month.
The review found that the EMDG scheme was too complex and uncertain for many companies accessing it, with companies not guaranteed the funding until after the export activity has taken place.
It recommended that the EMDG payments be made in advance of the export activity being taken place, targeting it to smaller companies and a tiered approach to eligibility.
The government accepted all of the review’s recommendations in principle, and has this week introduced legislation to Parliament making significant reforms to the structure of the scheme and the eligibility criteria.
Under the changes, funding from the EMDG will be made available before the eligible activity takes place rather than after the fact. Eligibility for the program will be tightened though, with the annual revenue threshold dropped from $50 million to $20 million.
The grants will be on offer across three stages of the “export journey”. Companies that are new to exporting will be able to access a total of $80,000 over two years, while those with an existing presence in current markets or are looking to enter new markets will be able to get up to $240,000 over three years.
The final tier is for exporters who continue to expand into new markets, with $450,000 on offer over three years.
Previous export performance tests and a requirement for a recipient to have the prospect of success have been scrapped, replaced with a requirement that they are “export ready”.
Funding will also be on offer to industry bodies and alliances to assist SMEs in their export activities, with up to $150,000 available per year and training added as an eligible activity.
The EMDG will not be a competitive grants program, with funding on offer to every eligible company that applies for it.
Education Minister Dan Tehan introduced the legislation to the lower house on Wednesday.
“The Morrison government wants to assist SME exporters to recover from the effects of COVID-19 and grow the number of SME exporters by providing better targeted direct financial assistance in a more simplified and streamlined way,” Mr Tehan said.
“This will help grow and diversify Australia’s export markets, while also improving government service delivery and reducing regulatory imposts on business. We want to ensure taxpayer funding is used in the most effective and efficient way possible, with the greatest impact.
“The bill changes EMDG from a reimbursement scheme to one which will see eligible SMEs entering up-front grant agreements that provide them with funding certainty over multiple years.”
The government first announced the changes to the EMDG in September, saying the current model lacked certainty and was overly complex.
“By shifting away from a reimbursement model to a grants scheme, eligible exporters will now receive funding closer to when they incur costs, giving more confidence that EMDG funding will genuinely boost their international marketing and promotional activities,” trade minister Simon Birmingham said.
“At the same time, simplifying processes and reducing the administrative burden on exporters whilst still maintaining integrity in the scheme will allow recipients to focus on boosting export activities and ensure maximum return on taxpayer’s investment.”
The changes will kick in from July next year, and will likely sail through Parliament.