Australian Trade and Investment Commission
With Australia’s small businesses claiming increasing grant entitlements under the Export Market Development Grants (EMDG) scheme, the Government has finally announced a $60 million increase in funding over the next three years. This will increase the current $130 million funding cap by adding a further $20 million per year from 2019-20 to 2021-22.
The EMDG scheme helps support Australian businesses export through providing financial assistance to current and aspiring exporters in the form of a 50% rebate of certain international marketing expenditure items.
Companies can receive a grant of up to $150,000 per year with the first $40,000 paid upon grant assessment and the remainder payable at the end of the financial year depending on whether total grant entitlements exceed the Government imposed funding cap. In 2017-18 the payout factor was less than 30% and is likely to be even less in 2018-19.
The Government is taking a step in the right direction, though it is too little, too late. A significant number of Australian businesses currently accessing the EMDG scheme do not receive the 50% reimbursement on eligible promotional costs where their grant entitlements exceed $40,000. The additional funding of $60 million over three years (an estimated increase in benefit of $5,000 per claim) will not come close to providing the required funding for the EMDG scheme in order for claimants to receive the full entitlement, particularly in light of the reduced value of the Australian dollar, which makes our exporters more internationally competitive, but at the same time international marketing becomes more expensive in Australian dollar terms.
The EMDG scheme has proven popular with over 3,500 businesses accessing the EMDG scheme, employing almost 66,500 Australians, and generating exports of $3.8 billion in the 2018 financial year. However, despite the increase in funding, BDO is disappointed that the Government did not take the opportunity to fully fund the scheme and abolish the scheme cap. Given the billions of dollars of unfocussed tax cuts proposed in the Budget, BDO considers that a greater priority should be shown towards providing certainty to thousands of internationally competitive fledgling businesses committed to exporting Australian goods, services and technology.