The Export Council of Australia supports the Governments industry and innovation initiative, but fails to understand the reduction to funding for the Export Market Development Grants (EMDG) scheme

The Export Council of Australia supports the Governments industry and innovation initiative, but fails to understand the reduction to funding for the Export Market Development Grants (EMDG) scheme.

“The two strategies seem to be in conflict”, Mr. Murray CEO of the Export Council of Australia said in response to the recent announcements. On one hand the Government is saying the manufacturing sector needs to be developed and innovation and export capability building are being encouraged, yet on the other, they want to take away the mechanism that is proven to assist Australian companies launch into export.

“The conflict”, Mr. Murray said, “goes further. Research clearly supports the fact that exporting companies embrace innovation, so why not support them as much as possible?”

Since 2010, the Government has reduced the EMDG scheme by 40% from a $200million cap to just $125million. Since that time there have been years when the payout has dropped to 60% off what exporters’ were expecting. This is despite every review undertaken by Government supporting the schemes excellent return on investment, as well as research by the Council showing that up to 26% of companies would never have entered into export without the program.

According to Mr. Murray this is one of the most difficult periods in the history for Australian business and particularly exporters. Countries around the world are pushing their export activity in an attempt to avoid recession. Low international currencies, low interest rates and strong government support is helping drive the export activity among our competitors.

“Now”, Mr. Murray said, “is not the time to pull back on supporting this important sector; a sector that contributes 22% to GDP and is responsible for one in five jobs.”

The recent changes to the scheme, apart from reducing the cap, include the reduction in support for established markets. Mr. Murray notes that nobody can argue against getting behind the trade opportunities presented by the Asian markets; after all Asian markets are expanding and contribute significantly to Australia’s export activity. However, it is imperative not to underestimate the value of established markets to new exporters. Many companies start out in the US and Europe and build from there. Reducing support in these markets, for what is a relatively small amount of money, simply doesn’t make sense.   

The Export Council of Australia encourages the Government to look at the big picture and ensure that programs designed to encourage industry development and innovation are closely linked with programs designed to build export participation and growth.    

For reference, the Export Market Development Grants Amendment Bill 2013 was introduced into Parliament on 13 February 2013 and contains some important changes to the Export Market Development (EMDG) scheme. A summary of key changes, are listed below:

• Excluding approved bodies and joint ventures, the maximum number of grants has been increased to 8
• Exclude expenses relating to the promotion of sales to the markets of the USA, Canada and the European Union in grant years six, seven and eight for all applicants except approved bodies
• Remove the limit on administrative expenditure from the legislation and introduce a power for the Minister to set the limit on administrative expenditure by determination
• Prevent further approval of joint ventures after 30 June 2013
• Remove event promoters from the EMDG scheme
• Prevent the payment of grants to applicants engaging an EMDG consultant assessed to not be a fit and proper person
• Enable a grant to be paid more quickly where a grant is determined before 1 July following the balance distribution
• Require applicants to acquit claims by individually paying for claimed expenses.

Moreover, the Gillard government released their Industry and Innovation Statement, A Plan for Australian Jobs, on 17 February 2013. Total Government investment in this scheme is $1 billion. Below is a brief summary of their key initiatives:
• A new Industry Participation Authority will help businesses build the capabilities and connections to win work
• Legislating Australian Industry Party (AIP) arrangements, requiring major projects worth $500 million or more to implement AIP Plan to give local industry opportunities to win work on a commercial basis.
• The Government will invest more than $500 million in establishing up to 10 Industry Innovation Precincts to drive business innovation and growth in areas of Australian competitive advantage.
• The first two Precincts will be a Manufacturing Precinct with locations in South East Melbourne and Adelaide and a Food Precinct headquartered in Melbourne.
• A new Industry Innovation Network will allow businesses around Australia to take part in Precinct activities, gaining access to knowledge, support, services and partnerships regardless of their location.
• A new $350 million round of the Innovation Investment Fund to stimulate private investment in innovative Australian start-up companies.
• Changes to venture capital tax arrangements to improve clarity and certainty for investors and encourage participation by "angel" syndicates.
• A new Growth Opportunities and Leadership Development (GOLD) initiative to provide focused support for SMEs with high growth potential.
• Extending the successful Enterprise Connect program for SMEs to more manufacturing firms and to new sectors like professional services, information and communication technologies, and transport and logistics
• A new Enterprise Solutions Program to help SMEs develop solutions to public sector needs and become better equipped to win work through public tenders.

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Media contact
Ian Murray
Executive Director, Export Council of Australia
Tel: 02 8243 7410   M: 0438230245
E: ianmurray@export.org.au