Major changes to the Export Market Development Grant scheme exhausted $62 million in funding in less than four hours, leaving some businesses empty-handed after what one expert called a Taylor Swift-like rush for government support.
In an attempt to increase average grant sizes, the Australian Trade and Investment Commission (Austrade) this year reformed the long-running Export Market Development Grant (EMDG) scheme with a new ‘first in, first served’ model.
“We will assess and award grants to eligible applicants in order of application receipt,” Austrade said.
Businesses seeking a share of $209 million in available grant funding were asked to submit their export plans to a digital Austrade portal, which opened at 10am on November 12.
But a flood of applications for Tier 2 funding — applicable to businesses looking to grow their existing export markets — meant all $62 million earmarked for Tier 2 was fully allocated by 1.30pm.
Austrade advised businesses of the new first in, first served model in the weeks prior, urging exporters to have their applications ready when the portal opened.
But some exporters who missed out on Tier 2 claim technical problems with the online portal prevented them from filing a submission before funding was fully allocated.
Michael Murray is the managing director of Rakumba Lighting, a Melbourne-based manufacturer of premium lights, lamps, and chandeliers.
Rakumba Lighting has benefited from around $250,000 in EMDG funding over the past five years, helping it grow in key European export markets.
Murray told SmartCompany the business was ready to submit its latest EMDG application at 10am.
But a timeout error on the portal cost him half an hour, and further difficulties with formatting and confusing check-boxes delayed his application by another 45 minutes.
“It was about 1:36pm that I pushed the submit button and was rejected,” Murray said.
Without experiencing technical bugs — and with a little more time — he believes Rakumba Lighting may have been in line for further government support.
“I can’t really complain, because we’ve had a lot of funding in the past,” said Murray.
“But as far as I’m concerned, we missed out $100,000 in funding that I think we should have been eligible for.”
Tier 1, targeted at first-time exporters, and Tier 3, for exporting businesses expanding into entirely new markets, remain open for applications.
Murray said Rakumba Lighting may be eligible for Tier 3, but charging into entirely new markets would require the “cynical” overhaul of its established business plan.
Austrade has not indicated it will move unallocated funds from other tiers to Tier 2.
Percentage of funds allocated by tier, as of November 22
As some businesses rue lost opportunities, others are concerned for the exporters who did successfully submit their plans.
Ray Radice is director of Grants Pro, a consultancy helping businesses access government grants, and a former Austrade employee.
In a statement, he called the new EMDG format turned a successful grant program into a “chaotic scramble that feels more like trying to get Taylor Swift tickets than applying for government funding”.
Speaking to SmartCompany, Radice said those businesses face an uneasy wait.
If every Tier 2 applicant requested the full amount on offer, Austrade would award 620 Tier 2 grants.
But Radice feared many more applications were successfully filed before the 1.30pm cut-off — meaning many businesses with solid grounds for Tier 2 funding will ultimately be rejected.
“We don’t know how many they accepted, but just talking to other consultants and people who are out there close to the ground, I think they accepted a little bit over the 620,” he said.
With applications “coming in so fast, I wouldn’t be surprised if they’ve accepted 1,000, 1,200 applications before they waited to turn off the tap”.
Like Murray, Radice described technical issues affecting the portal, but he said Grants Pro supported around 70 clients as they successfully entered their applications.
Even among successful applicants, “no one likes the system,” he said.
“It’s too stressful, it’s too it’s too uncertain. You can’t make it a race.
“Austrade should have known that Tier 2 was going to be severely oversubscribed.”
He is now calling on Austrade and Trade Minister Don Farrell to ensure all businesses that successfully submitted applications “receive fair consideration and are fully funded”, regardless of their place in the first in, first served queue.
In a statement provided to SmartCompany, an Austrade representative said the first in, first served model was developed after extensive consultation with the Australian business community and previous grant recipients.
Reviews into the EMDG system heard that prior iterations provided too little funding per applicant, diluting the scheme’s effectiveness.
The result: a scheme that prioritised a smaller number of large grant payouts, instead of dispersing smaller grants to a larger number of businesses.
Applicants were fully informed of the scheme’s operation, grant amounts, and review rights in advance of applications opening, they added.
“Austrade communicated the maximum grant amounts ahead of time so eligible applicants would know how much they would receive if their application is successful,” the spokesperson said.
“With this certainty, applicants were able to decide whether or not they wished to pursue a grant.”
Austrade “conducted thorough testing of the online portal to ensure it could handle demand when applications opened,” they added.
“We understand some issues were experienced by those applicants who started their application in the system prior to the relevant tier opening.”
While Austrade planning to assess applications in accordance with the published guidelines, it appears businesses locked out of Tier 2 will stay that way.
“As a business who is serious about exporting, and is forecasting to spend a large amount of money, we’ve missed out through, in my mind, a process which has not been well designed,” Murray said.
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Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
