Proposed changes to Export Market Development Grant could increase red tape, halve available funding and reduce eligibility

Kate Whitehead Avant Group

Avant Group managing director Kate Whitehead. Source: supplied.

The federal government has proposed changes to its Export Market Development Grant (EMDG) scheme, touted as measures to simplify access to the funding.

But, according to Avant Group managing director Kate Whitehead, the changes would actually tighten eligibility criteria and reduce the dollar-figure available to businesses.

At best, the changes make for yet more uncertainty at a time when that’s the last thing businesses need.

The proposed changes are being touted as a simplification of the grants scheme, allowing applicants to get funding upfront, rather than offering reimbursement after expenditure.

But, Whitehead says the changes also effectively reduce the amount a business could be eligible to claim, and add uncertainty for business owners at an already uncertain time.

The amount a business can apply for has almost halved, she says, and the number of years a business can claim funding over has also been reduced.

This means, Whitehead says, that the total amount a business can claim is effectively reduced from about $1.2 million to $770,000.

Further, the changes would implement a two-step application process, which she argues would increase the administrative burden on business owners.

The eligibility criteria is also changing. While the EMDG grants were previously available to businesses with a turnover of $50 million or less, it will now be available only to those with a turnover of $20 million or less.

The changes are due to come into play at the end of this financial year. But, in business terms, that’s not far away, Whitehead says.

And, amid the COVID-19 pandemic, this comes at a time that’s already economically tumultuous.

“Why would you announce such changes to a scheme that’s been around for eons in the middle of COVID, when businesses are already impacted?”

One of Whitehead’s clients runs a beauty export business, and has long-term overseas sales reps on her books.

“She did that on the basis of knowing she would have an additional five years of export grants she could claim,” Whitehead explains.

She also points specifically to the travel and tourism sectors. Many tourist destinations — think historical sites and zoos — make use of the EMDG scheme, and make more than $20 million a year.

“They’ve had COVID and border closures and no flights, and now you’re saying the assurance of your export grants have disappeared,” she says.

“It’s going to have big ramifications, and negative ramifications, for a lot of businesses.”

The changes are based on a review of the scheme undertaken last year. But, they were sent out in an email earlier this month.

“It was almost worded as though it was an enhancement to the program, which was questionable, considering they’re carving the value of it, and there’s reduced eligibility for a lot of businesses,” Whitehead explains.

There was a webinar on the topic, seeking input from the industry, just last week, she adds. But, the guidelines hadn’t been finalised yet.

“We were asking a whole bunch of questions, and nobody could answer them,” she says.

“We don’t really know how to plan to deal with these changes.”

The changes to the grants scheme are by no means set in stone, but it’s the uncertainty that makes things difficult, Whitehead says.

She compares it to the R&D Tax Incentive legislation, which has been under discussion for months now, with the final verdict being pushed back three times.

“All it does is it creates concern and people are worried,” Whitehead says.

“How do you make decisions?”

Still, it’s not all doom and gloom. Whitehead notes that the government has been proactive in the past, listening to exporters and acting on their concerns.

The problem is they’ve listened to concerns pre-pandemic.

Now, businesses are operating in a completely different environment.

“I don’t believe that enacting changes right now, where there’s so much uncertainty, is the right time.”

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