More funds needed for export grants scheme

The need for greater funding should be the focus of a review into the Export Markets Development Grants scheme launched yesterday, a leading export think-tank says.

Trade Minister Simon Crean yesterday launched a wide ranging review into Australia’s trade policy and ways to boost the performance of the export sector. The EMDG scheme will be high on the agenda of the review.

Small and medium sized business have had mixed feelings about the EMDG scheme in recent years – while it is widely considered to be an effective way of helping Australian businesses build export markets, a funding shortfall has left some participants disappointed at the size of the grants they receive.

In the 2006-07 financial year, the scheme was reportedly oversubscribed by almost $30 million, resulting in many businesses receiving a smaller than expected reimbursement for their export marketing costs.

Labor has promised to add $50 million to the recurrent $150 million budget for the scheme in 2009, but exporters are likely to continue to receive smaller benefits from the scheme until the increase takes effect.

Ian Murray, the executive director of the Australian Institute of Export, says while changes could be made to improve the operation of the scheme, the fundamental change needed is an increase in funding.

“There is a problem in that this year funding will be below what the demand is – changes to the scheme some time ago were good and attracted people to the scheme, but there wasn’t sufficient funding to go with it, that is the basic problem,” Murray says.

Other changes the inquiry should consider making to the scheme suggested by Murray include:

• Broadening eligibility criteria to allow excluded sectors such as education and training to apply for grants under the scheme.
• Extending the period of time exporters are eligible for funding under the scheme from the current seven years.
• Lift the cap on the size of business eligible under the scheme to capture medium sized business.

The review, to be headed by Australia Post and Leighton Holdings chairman David Mortimer, will call for public submissions and will be completed by 31 August 2008.