Review calls for bigger Export Market grants

Brandon How

Changes to the Export Market Development Grants program aimed at increasing the value of individual grants will be considered following the release of the program’s operational review on Thursday.

Under the previous Coalition government, reforms were made to the Export Market Development Grants (EMDG) program to change it from a reimbursement programs to a non-competitive grants program.

Alongside other changes, the number of eligible applicants to EMDG 2.0 increased, meaning individual grants are well below the legislated maximum.

While the legislated maximum value for tier three, the largest tier, of the EMDG 2.0 is $150,000, the average grant amount awarded under round one of was $36,396 and the expected maximum to be awarded under round two is $28,000.

According to the review, consultations and survey results “left no doubt that businesses are positive about the EMDG 2.0 program” but that “in some instances they expected more from the program”.

“The program design was consistently raised, notably in terms of significant dissatisfaction with lower-than-expected grant amounts,” the report reads.

However, the review also argues that “on examining historical data, the grant amounts in [EMDG 2.0] round one are not significantly different from past EMDG rounds”.

“From 2011-2012 to 2020-2021, 56 per cent of reimbursement amounts were under $40,000 (70 per cent under $60,000 and 84 per cent under $100,000),” the report said.

When considering the grant amounts offered in round one of EMDG 2.0, 98.4 per cent of applications received grant offers equal or less than $36,600.

Trade minister Don Farrell said that “the Government is committed to continually improving EMDG, the most comprehensive and generous program of its kind globally”.

“Austrade will undertake further stakeholder consultation ahead of Round Four in 2024, in order to consider further EMDG improvements to help balance interest in the program and ensure it continues to support Australian businesses to grow and expand,” he said.

The minister also noted that the previous government’s decision “to run the final round of the old EMDG reimbursement scheme at the same time of the first round of the reformed EMDG program caused confusion and uncertainty for applicants”.

Several short-term changes have already been made to the guidelines for round three of the EMDG, which opens on March 15, including reducing the term of grant agreements, improving communication, and clarifying the definition of “strategic shift”  to align with the government’s trade policy objectives on product and market diversification and improve clarity.

Ahead of round four, the review recommends adjusting policy settings to increase the size of grants awarded through the program. It lists several potential options “available to address the imbalance between the level of interest in the program and the available budget appropriation”.

However, it notes that “further work will be required to determine if or how changed program parameters could skew behaviour or result in other unintended consequences”. Potential options are as follows:

  • Introduce a minimum business turnover threshold, which could limit applicant pool size
  • Re-introduce a ‘minimum marketing spend’ that applicants would need to meet before becoming eligible to claim EMDG funding — a feature of EMDG 1.0)
  • Re-introduce an Export Readiness Test requiring evidence that the applicant is export ready before becoming eligible to claim EMDG funding — a feature of EMDG 1.0
  • Adjust the matching contribution model (where exporter spend matches EMDG grant) from 50:50 ratio to, for example, 70:30 (with 70 the exporter-spend and 30 the EMDG grant)
  • Prioritise tiers to receive EMDG funding
  • Prioritise businesses within certain industries or sectors, or which produce certain services or products, to be eligible for EMDG funding
  • Prioritise businesses that are exporting to markets or regions identified as priorities for government’s trade policy agenda, and/or who can achieve employment outcomes, for EMDG funding
  • Reduce the number of financial years applicants can be eligible to apply for EMDG
  • Close EMDG round once a specified number of applications are received, to manage grant outcome size

The review also calls for an upgrade to the EMDG IT systems “to improve automation and deliver quicker and higher quality application processing”.

“Investment in the IT infrastructure would reduce manual processing, thereby reducing Austrade’s administration costs, which are currently above the allocated 5 per cent appropriation due to resourcing required to administer the program,” the review said.

Do you know more? Contact James Riley via Email.

Leave a Comment

Related stories