Govt set to ‘refocus’ export grants scheme

Eligibility reforms and payment caps are among the changes to the popular Export Market Development Grant program being considered by the federal government to address long-term structural problems with the scheme.

Austrade has begun consulting on options to “refocus” the scheme, including by strengthening eligibility requirements to balance demand with the available budget, with a view to amending the legislative underpinnings.

The move comes just weeks after the 2023 federal Budget revealed that funding for the program would be cut by $61 million over the next four years and the savings redirected to other government priorities.

The cuts followed a 2022 review of the scheme, conducted in response to criticism from exporters about dwindling grant amounts, that found the changes to the program by the former Coalition government were largely “positive”.

Those changes in 2021 transformed the EMDG program from a reimbursement scheme to a multi-year grants program opened on an annual basis, and scrapped a requirement that firms meet an ‘export performance test’.

But the review also predicted that with the number of applications set to increase, the grant amounts awarded would continue to drop to a point “where the budget available may not sufficiently match the level of interest… or deliver amounts in line with stakeholder expectations”.

In a discussion paper released on Wednesday, Austrade said that the “EMDG program will be refocused to maximise the benefits to businesses and government”, but that no final decisions have yet been made.

Changes being considered will see the program “support the government’s trade agenda” and other policy priorities, including around climate change, net zero targets, First Nations Australians and diversification.

“The government welcomes feedback on how EMDG can better support Australian exporters to develop new markets, support the Government’s diversification priorities and manage the sustainability of the program,” the paper states.

“Over the past 10 years, EMDG applicants’ predominant region of export has been the Americas, followed by Europe. A refocused EMDG could better support the Government’s bilateral and regional trade priorities… to boost Australia’s two-way trade in the Indo-Pacific region.

The government is also looking at whether to amend the “eligibility criteria” so that more “meaningful grant amounts” are delivered to businesses, while ensuring “government support goes to those most capable of delivering a productive outcome”.

An “enhanced export readiness test”, minimum marketing spend threshold, and minimum business turnover threshold, as well as “adjusting the matching contribution model from 50:50 to 70:30, are among the options on the table.

Changes to improve the “sustainability” of the program are also being considered by the government, including capping the grants at a predetermined number and value for each category or tier of EMDG and closing grants rounds once the specified number of applications are received.

The consultation will close on 11 August 2023. The discussion paper can be found here.

Do you know more? Contact James Riley via Email.

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