Funding for the popular Export Market Development Grant program will be cut by $61 million over the next four years, with the savings to be redirected to other federal government priorities.
According to the 2023-24 federal Budget, Austrade administered payments for the scheme is being cut by $75.8 million overall, with the difference made up by $14.8 million in new departmental payments.
This means the total administered payments for the scheme in 2025-26 and 2026-27 will fall to $110 million. Administered payments will fall by $47.9 million and $27.9 million, respectively.
But Budget papers confirm that “no funding already committed or applications currently under assessment will be impacted” by the cuts to the EMDG program.
The EMDG program has been run since 1974. Changes to the scheme under the former Coalition government, dubbed EMDG 2.0, came into effect in July 2021 and greatly increased the pool of eligible firms.
The changes transformed the scheme from a competitive reimbursement program to an uncompetitive multi-year grants program opened on an annual basis, and scrapped a requirement that firms meet an ‘export ready’ threshold.
Firms must have an annual turnover of less than $20 million to qualify for the EMDG program. Grant amounts equivalent to up to 50 per cent of eligible marketing and promotional activities can be applied for.
In February, Trade minister Don Farrell said that Austrade would “undertake further stakeholder consultation ahead of round four in 2024” after an operational review made several short- and long- term reform recommendations for the program.
It predicted the number of grant applications to increase, meaning the amounts awarded would continue to drop to a point “where the budget available may not sufficiently match the level of interest in the program or deliver amounts in line with stakeholder expectations”.
The review was launched in response to criticisms from exporters, including “unmet expectations for higher grant amounts for [EMDG 2.0] round one resulting from the high volume of applicants”.
Individual grants awarded to firms are currently well below the legislated maximum available across all tiers of the program, with the actual maximum grants awarded under EMDG 2.0 having fallen between the first and second rounds.
According to data contained in the review, under EMDG rounds between 2011 and 2021, 56 per cent of firms received reimbursement amounts below $40,000. Round one of EMDG 2.0, 98.4 per cent of applicants received grant offers equal or less than $36,600.
Export Consultants Association chair Rod Campbell – representing EMDG export consultants who have collectively worked with over 4,000 Australian exporters – highlighted that while tier three of the scheme can offer a maximum of $150,000 a year, the actual maximum awarded under round two was $28,000.
Mr Campbell also said the cuts to the program in the latest federal Budget have “trivialised export support”.
“Where I find the irony and somewhat of a contradiction is the government touting its great initiative in regard to the Industry Growth Program, as it being a cornerstone support program for [small to medium sized enterprises] into the future,” Mr Campbell said.
“The majority of businesses need to commercialise internationally, so whilst the government is engaging in supporting [local companies] with funding through the Industry Growth program, where does that leave those whose success is targeted towards an international market?”
A request for comment sent to Minister Farrell’s office was redirected to an Austrade spokesperson, who did not specify why the cuts to the program were made.
“None of the organisations that have received grant agreements or applied for current rounds will be impacted by this measure. Austrade will consult stakeholders on the strategic re-focussing of the program,” the spokesperson said.
“There are no immediate changes to the program with rounds one to three being administered as per the current program rules and requirements.”
Tech Council of Australia chief executive Kate Pounder emphasised the popularity of the EMDG program among tech startups and flagged that it “can help spark global success – Atlassian is a high-profile example of this”.
“The recent review of the program has raised some concerns with the design and administration of the program, which we appreciate need to be addressed. If the government can iron out these issues and the program can generate more success stories like Atlassian’s, then I think there would be a good case to consider investing more into the program in future,” Ms Pounder said.
“We appreciate the government’s decision to hold back the budget cut until 2025, which ensures that businesses that already have funding approved or applications under assessment are not impacted.”
Editor’s note: This story has been edited to include comment from Tech Council of Australia chief executive Kate Pounder.
