Exporters have attacked the Federal Government for slashing the amount of money available under the Export Market Development Grant program, saying the reduced expenditure will keep crippled exporters under even more pressure, which has already been exacerbated by the high Australian dollar.
The comments come after Parliamentary Secretary for Trade Justine Elliot said late last week that companies applying for the grant will receive up to $27,500 as promised last year, but further payments will only be paid at a rate of between 45-65 cents in the dollar.
Export lawyer Warren Cross says the shortfall in funding means exporters may not receive the full amount of money for their expenditure.
“Exporters are bleeding, the dollar is at parity and because we are isolated we’re very much in pain. Anyone that’s involved in exporting is experiencing the toughest trading conditions in many people’s lifetimes,” he says.
Justine Elliot told SmartCompany this morning that she will not speculate on whether funding will be increased next year.
Australian Institute of Export executive director Ian Murray says the reduced funding shows a lack of faith on behalf of the government towards exporters.
“I think the way the funding has been reduced is a sign the government has very little interest in what they’re doing,” he says.
The secretary announced late last week that the EMDG scheme had attracted more than 4500 claims from Australian businesses for expenditure made during the 2009-10 year, with the total value of those claims being $211 million.
“These payment amounts are the result of strong demand for this popular program and a finite pool of funds,” the secretary’s statement reads.
“In keeping with the Government’s commitment to return the Budget to surplus total funding for the EMDB scheme has returned to its historical average.”
Exporters say the current level of funding isn’t good enough.
Cross points out that when the Rudd government came to power it promised to fund the scheme and funding was lifted to $200 million, but last year the government reduced that funding to $150 million.
Cross says the number of changes made to the scheme was confusing for exporters, especially considering how the fund works – businesses are encouraged to spend money on exports but only find out how much they will get back the following year.
Justine Elliot defended the scheme this morning, saying that "research indicates that exporters take support from the scheme into account" when making decisions on where to spend money.
“The design of the scheme is to prompt exporters to spend in areas they may not have otherwise done,” Cross says. “But how can you be encouraging them if you’re constantly changing the rules?”
He says the scheme needs to be fully funded and payments must be guaranteed as soon as possible after expenditure is made.
“Exporters are bleeding, the dollar is at parity and major markets are in a meltdown. The reason for the EMDG is to create employment but it’s being undermined,” he says.
“I really don’t think Labor understands what the point of this scheme is – how can you be telling intelligent exporters to go out and have a go if they are being underfunded?”
Murray says the institute has been disappointed by the government’s approach and wants the scheme fully funded immediately.
“Now is the time to assist exporters. If you’re going to have a plan in place it has to actually provide incentive for people to actually go and spend money in a difficult environment,” he says.
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The EMDG's are not an ongoing export susbsidy but a short medium term grant for initial export market development. However, many smaller companies e.g. less than $500,000 turnover would not be eligible as they would not be able to budget for the minimum threshold. Thus it favours medium to large entities, not smaller who need more assistance than most (and Austrade will say that they are only interested in the big companies...., top people..... etc.)
Further, what we see in the international education sector, that EMDG's seem to encourage physical marketing requiring travel to offshore physical events and meetings as a first step in international marketing (versus internet, telephone, video etc.), that was the way in 80s and 90s, not any more....
Why this occurs is that the recipient of siginificant proportion of these funds is Austrade, who charge consulting fees to Australian entities to set up one off events and meetings, or merely refer clients onto other event organisers (which any company can do independently), without marketing the entity all year round (and I suspect bonus payments to personnel without direct industry expertise for consulting hours billed).
So there is the issue of EMDG's going round in circles i.e. susbidising Austrade offices offshore. When asked by those in other industries e.g. agriculture, watersport apparel etc. I suggest first researching online, use their intra industry and community contacts, while for fee paying activity, consider the charted accounting/consulting companies where many personnel are Australian or have related expertise.