For three years in a row Australian exporters have been shortchanged due to a shortfall in funding for the EMDG scheme. Today Austrade commenced making the final Export Market Development Grant payments for GY 2015-16. The Minister for Trade, The Hon Steven Ciobo MP has formally determined that a final payout factor of ~ 64.5% will apply to all Australian Exporters entitled to an EMDG of more than $40,000.

These Grant Year 2015-16 claimants will receive a mere 0.6450483 cents in the dollar for amounts owing over $40K, meaning that many Australian exporters will not receive their provisional grant amount in full, making this announcement the worst EMDG result for Australian Exporters in six years.

This year an EMDG grant recipient expecting a maximum grant payment of $150,000 , will now receive a grant of only $110,955 representing a shortfall of $39,045.

The EMDG scheme is currently underfunded at $137.9M PA and Austrade is banking on recent changes to the EMDG Act to remedy that situation. Under the Liberal/National Coalition Government (2013-2016), the payout factor for GY 2014-15 grantees was 0.726602 and in GY 2013-14 0.6528365 . Under a Labor (2010 – 2013) the EMDG scheme was fully funded and Australian exporters received their full entitlement. More…

Austrade determines an applicant’s provisional grant amount at the time of assessment. The provisional grant amount is the maximum amount each applicant is entitled to in respect of a grant year. (GY; is the year eligible expenses were incurred) The provisional grant amount is calculated according to the rules outlined in the EMDG Act. The maximum provisional grant amount payable is $150,000

Applicants receive their entitlement in full when their provisional grant amount does not exceed the initial ceiling amount. The initial ceiling amount for GY 2015-16 was set at the $40,000 and Austrade have also announced that the initial ceiling amount for GY 2016-17 will remain set at the same $40,000 level.

Applicants whose provisional grant amount exceeds the initial ceiling amount are paid in two tranches. The second tranche payment is paid on a pro-rata basis when demand for EMDG exceeds the budgeted amount ($137.9m). Expenditure under the Export Market Development Grants Act 1997 is set through annual Appropriation Acts. The rationale for a capping mechanism ensures that expenditure under the scheme is limited to the amount appropriated.

Austrade announced last week that the Export Market Development Grants (EMDG) scheme had attracted 3,537 claims from Australian businesses this year reminding applicants in an Austrade News post of changes to the Export Market Development Grants Act 1997 via the Trade Legislation Amendment Bill (No.1) 2016 that will affect the eligibility of expenses incurred from 1 July 2016 (and claimed from 1 July 2017). In short measures designed to reduce the demand on the EMDG scheme by limiting claim amounts for some expenses categories.

Parliamentarians of both persuasions when in or out of Government spruik that they are determined to support Australian exporters in their key role generating ‘Jobs and Growth/Prosperity’ for Australia and that the EMDG scheme is an important part of supporting Australian exporters.

The introduction of measures to reduce the demand on the EMDG scheme by limiting claim amounts for some expenses categories as above may result in an increased payout factor going forward. It will in my view do very little to increase the number of SME exporters nor encourage our current and aspiring SME exporters to have the confidence to take on the risks of export market development that we as a nation are banking on.

EMDG funding needs to be increased as recommended in The 2015 review of the EMDG Scheme such that the budget allocation for EMDG be progressively increased by $12.4 million per year over the next three years (2016–17 to 2018–19) to $175 million.