Export grants set to shrink again

Exporters looking for help from the Federal Government’s Export Market Development Grant scheme should get ready to be disappointed – the number of subscribers has jumped dramatically and grant amounts will shrink.

Exporters looking for help from the Federal Government’s Export Market Development Grant scheme should get ready to be disappointed – the number of subscribers has jumped dramatically and grant amounts will shrink.

The scheme, designed to help SMEs by reimbursing promotional costs, has seen an 11% jump in the number of exporters seeking payments. A Senate estimates inquiry reveals the total amount requested by exporters is also up 5.5%.

Earlier this year, Federal Trade Minister Simon Crean announced that the initial maximum payment under the program for 2007-08 would be $40,000, around $30,000 less than 2006-07. The total shortfall in the scheme was around $30 million.

According to reports, the shortfall for the 2008-09 grants could be as high as $47 million.

The Rudd Government pledged increased funding for the scheme of $50 million in the May budget, but this does not come into effect until 2009-10.

A spokesperson for Austrade says the former Coalition government made changes to the scheme, and that these changes were not funded.

“Businesses didn’t miss out – eligible companies are able to apply. What happened last year is that on the second payments the funding available under the scheme was not sufficient to meet demand, and thus those payments were reduced.”

However, a Federal Government review of the scheme released in September recommended further funding should be injected into the scheme, but the Government is yet to act on those recommendations.

Warren Cross, lawyer and chief executive of Export Incentives, has worked on the EMDG scheme and says the Government is “sitting on its hands”.

“The report told them that the scheme is working, and working well, but is underfunded. The minister has been sitting on his hands now with that report for months. The problem is going to be compounded even further.”

Cross points out the scheme’s budget was set at $150 million in 1997 and has never increased, not even to adjust for the rate of inflation. He argues while other countries such as China are increasing export payments, Australia is doing exactly the opposite.

“I think the whole thing is lunacy,” he says. “There’s going to be a dramatic shortfall; the Government has been told it must fix the funding problem because companies cannot finance their exports independently.”

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