The Federal Government’s failure to immediately increase funding for the Export Market Development Grant scheme will cost jobs, a leading export adviser has warned.
Minister for Trade Simon Crean said yesterday that the maximum initial payment under the Export Market Development Grant will be $40,000, a sharp fall from 2006-07, when the maximum initial payment was $70,000.
Crean has blamed the shortfall on under-funding of the grant system by the Howard government.
“The Howard government allowed this important scheme to be run down and did not provide sufficient funds to cover changes they introduced to the EMDG scheme’s eligibility criteria,” he says.
“As a consequence we are facing a significant shortfall in funds to cover current applications for expenses incurred in 2007-08.”
Crean says the 1800 companies that applied for grants above $40,000 will be paid at a rate of 30% to 50% of the amount above $40,000.
The Rudd Government has promised $50 million in extra funding for the scheme, but this will not be in place until next financial year.
Ian Murray, the executive director of the Australian Institute of Export, says this isn’t good enough, and that more pressure needs to be placed on the Government to fully fund the scheme now.
“It’s not a good thing for a number of reasons. Number one, the economic environment in terms of overseas business is difficult, despite the fact the dollar is more competitive.
“The second thing of course is that so many other sectors in Australia are getting assistance, and there appears to be no real concern in helping the export sector,” Murray says.
“I think it’s the only way it’s going to instill confidence for exporters to go and spend what’s needed to be spent.
“If you accept the notion that one job in five is export related, the flow-on to jobs would be substantial.”
Warren Cross, chief executive and legal counsel for exporting group Export Incentives, says the Government is letting opportunities slip by.
“By Labor just sitting there, they are absolutely screwing the scheme. In the current economic environment where every one of our competitors is funding exports, how can they let the brightest, best and SMEs get stiffed? It’s just a joke.”
Cross says the Mortimer report, which recommended the Government increase funding for the EMDG scheme, has been largely ignored for the sake of playing politics.
“They’re propping up dinosaur companies that have no future and small exporters are getting duded. I just can’t understand it. They’ve been sitting on the Mortimer report and they’re just pretending like the report doesn’t exist,” Cross says.
“The whole problem with the scheme is that it has developed a real lack of certainty as to what rebate a company is going to receive. And without certainty as to what the rebate is going to be, companies cannot commit very valuable dollars to high risk value development without any knowledge as to whether they’ll get a rebate or not.
“We’re only talking about $25 million; that’s a drop in the ocean compared to the $42 billion stimulus. It would turn the scheme from chugging in second gear to flying at top pace.”
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Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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