THE Federal Government’s export grant program is becoming a victim of its own success, with an increasing pool of exporters clamouring for a grant program capped at just $150 million, irrespective of demand.
The Export Market Development Grant, available to reimburse Australian exporters for half of their marketing and development costs to overseas markets, has been capped since 1996. Last year the allocation went up just $400,000 to allow for increased administration costs.
Whereas in previous years the demand for the grants fell well short of the amount allocated, the Federal Government’s dream to double exporter numbers by 2006, and the favourable export conditions driven by the relatively low Australian dollar, is resulting in a growing field of exporters receiving lower rebates.
In 2000-01, grants totalled $135 million, easily within the $150 million limit. In the following year the fund’s administrator, the Australian Trade Commission, had pegged back the level of grants payable to exporters, due the strong demand for the grant.
The maximum grant is $200,000, however grants are paid under a split payment system. Grants up to and including $60,000 are paid in full, with larger grants paid up on a pro-rata payment from funds remaining at the end of the year. In the last financial year, 28 per cent of applicants requesting more than $60,000 received 75.6 per cent of their claim.
This financial year looks even grimmer for exporters. Austrade communications manager Graeme Regan said there had been a 23 per cent increase in applications this year, compared with a 5 per cent increase last year.
Earlier this year a senate estimates committee warned that the strong growth in demand was likely to mean exporters with claims in excess of $60,000 were likely to get less than 50 per cent. Exporters have to wait until June 30 to know what they are likely to receive.
Already Austrade is dealing with a tide of concern from existing grant recipients, who are finding it difficult to budget the grant into their cost estimates.
WA Business News 40under40 1st Among Equals winner Nathan Buzza, who operates Commtech Wireless, said while the EMDG program was an excellent initiative there should be stricter means testing so that only businesses that had proved themselves up in the domestic market could receive the grants.
“There should be a profitability test. Unless a company can prove that they can be profitable in their own back yard, why support them overseas?” Mr Buzza said.
“It’s a bit like rolling the dice on an unknown company.”
Rather than aiming to double the number of exporters, the Government policy and the grants program should be geared to doubling the level of exporters,” Mr Buzza said.
