Austrade’s Export Market Development Grant (EMDG), a key financial support for Australian businesses aiming to expand overseas, is under fire from local exporters. While the grant has historically aided over 51,000 small and medium-sized enterprises (SMEs) since its inception in 1974, recent changes have sparked significant frustration among applicants.
Ray Radice, a grant consultant, likened the application process to a “Melbourne Cup sweep at the pub,” highlighting the chaotic and competitive nature of securing funding. This sentiment is echoed by numerous business owners who have expressed their grievances with the federal trade department’s handling of the EMDG.
Grant Process Under Scrutiny
Concerns about the EMDG have intensified as the grant undergoes a mandatory five-year legislative review. The timing coincides with additional challenges faced by Australian exporters due to international trade tensions, including tariffs imposed by former US President Donald Trump.
The EMDG, designed to assist businesses with costs related to overseas marketing and product development, requires applicants to match the grant amount dollar-for-dollar. Victoria Harvey, whose family business HealthGuard has benefited from the grant in the past, described the funding as a “big relief” for their export-reliant operations. However, recent application rounds have proven problematic.
Changes and Challenges
Austrade’s recent modifications to the EMDG program have introduced “tiers” categorizing exporters by stages and shifted from reimbursing costs to providing upfront payments. This transition, intended to deliver more impactful grants, has inadvertently increased demand and reduced individual grant amounts.
In a notable change, Austrade announced that applications would be assessed on a “first in, best dressed” basis. This approach, intended to alleviate budget pressures, has led to a frantic rush for funding. Kate Whitehead, a prominent consultant, criticized the model, stating it created chaos despite warnings to Austrade.
“Applications will be assessed and grants will be offered in the order we receive applications until funding is fully allocated,” Austrade guidance stated.
On November 12, the portal for “tier 2” funding, offering $31 million annually, was overwhelmed, closing after just three-and-a-half hours. This left many businesses, including Melbourne-based tech company Ferve, without the support they had previously relied on.
Expert Opinions and Implications
Dr. Tao Bai, a senior lecturer at the University of Queensland, highlighted concerns about new eligibility rules and smaller funding pools. He noted that many businesses would be ineligible for support in the upcoming fiscal year, further complicating their financial planning.
“This has created a chaotic application rush,” Dr. Bai stated, adding that the “first in, first served” model disadvantages smaller businesses without consultants or those with poor internet access.
Despite these issues, Dr. Bai acknowledged some benefits of the recent changes, such as upfront funding improving liquidity and reducing financial risk for SMEs.
Long Waits and Uncertain Futures
Austrade received 2,693 applications during the November round, yet nine months later, over 30% of applicants, including HealthGuard, are still awaiting decisions. This delay has significant implications for businesses like QuickFlick, a cosmetics brand, which has had to postpone international marketing and expansion plans.
Kate Whitehead’s firm, which assists businesses with their applications, has faced increased workloads due to Austrade’s procedural issues, including document access problems.
“We’ve had several instances where clients have received a notification of rejection from Austrade because Austrade can’t open [application] documents,” Whitehead explained.
Calls for Reform and Increased Funding
Trade and Tourism Minister Don Farrell has appointed Timothy Yeend to lead the current review of the EMDG, seeking feedback on the contentious November funding round. Meanwhile, the Export Chamber of Australia Incorporated (ECAI) is advocating for an industry-led review, emphasizing the need for a simplified application process and increased funding.
The ECAI’s review argues that the current budget of approximately $110 million per annum is insufficient, noting that the program typically generates a return on investment. The last government review in 2020 also highlighted the economic benefits of the EMDG.
As Australian exporters navigate the dual challenges of navigating Austrade’s grant process and international trade barriers, the need for a streamlined and adequately funded EMDG program becomes increasingly urgent. Submissions for the government’s review remain open until September 12, offering a glimmer of hope for reform.
