RECENT changes to the Export Marketing Development Grant program have drawn fire from some of Western Australia’s exporters who say the funding is now harder to obtain.
They also say the grants are skewed towards smaller businesses that are less likely to succeed in export markets.
A 23 per cent increase in grant applications last year, up from a 5 per cent growth in the previous year, along with an annual EMDG funding cap of $150.4 million, has meant some companies only received 32.84 per cent of their provisional entitlement greater than $60,000 last year.
The maximum grant was $200,000 with grants being paid under a split payment system.
Grants up to and including $60,000 are paid in full, with larger grants paid on a pro-rata payment from funds remaining at the end of the year.
Changes to the EMDG program, which reimburses half of the marketing and development costs Australian exporters incur in overseas markets, mean the scheme now targets small business.
The changes, which are due to take effect for EMDG claims received and paid from July 1 2004, form part of the Federal Government’s push to increase the number of exporters by 2006.
The changes include reducing the annual turnover ceiling for applicants from $50 million to $30 million, reducing the number of grants generally payable to applicants from eight to seven, removing the provision for additional grants for entering new markets and reducing the maximum grant amount from $200,000 to $150,000.
Last year the allocation went up to $400,000 to allow for administration costs, however, funding for the EMDG program has not been increased so competition for the funds will be tough.
Austrade is dealing with the concerns of grant recipients who say it is too difficult to budget the grant into company cost estimates.
ineedhits CEO Clay Cook said while the EMDG funding was appreciated, it was no longer something that could be relied upon in terms of budgeting for exports as the amounts were not guaranteed.
Mr Cook said the funding did not ease the difficult or expensive nature of exporting.
“As a large exporter we’re being hit by the value of the Australian dollar so it’s a bit of a double whammy,” he said
WA Business News 40under40 winner and Commtech chief Nathan Buzza said while the EMDG program was an excellent initiative there should be stricter criteria.
“What is frustrating is how the Government has backed out of the scheme and changed the game plan half way through,” he said.
“I’m a great advocate of exporting, however, I think we should double the number of exports, rather than the number of exporters.”
Austrade Export Finance Assistance Programs general manager Margaret Ward said while the Government had shifted its focus to micro business there were stringent means to test whether a company should receive EMDG funding.
“In terms of a policy issue, the Government has stated that it wants to focus the scheme on small exporters to lift the proportion of firms that increase exposure to the international market,” she said.
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