The Export Market Development Grant (EMDG) scheme is a financial assistance program to help aspiring and current exporters. In 2019, over 4,000 small and medium enterprises accessed the EMDG scheme.
Changes announced in 2020
Earlier in the year – in response to the pandemic – the Federal government committed around $50 million to the EMDG scheme on top of funds already committed through the budget. Changes to the scheme announced in April included:
- Removal of the payout factor for 2018/19 applications;
- Removal of the export performance test for 2019/20 applications; and
- An increased first tranche payment of $100,000 for 2019/20 applications.
Many of our clients have already benefited significantly from these measures and more changes to the scheme are afoot.
Following an independent review of financial assistance for small and medium enterprise exporters, in September the Australian Government announced a number of reforms to the Export Market Development Grant (EMDG) scheme. While the review found many businesses were positive about the EMDG scheme, it also revealed that the current reimbursement model provided a lack of funding certainty and that administrative processes were too complex.
The review outlined 10 recommendations which highlighted the need for a streamlined approach to funding and a simplified application process. The review also identified that the issue many exporters faced in the scheme was the delay of payment.
In response, the scheme will move from a reimbursement model to a grants scheme where eligible exporters will receive funding closer to when they incur costs. This will be managed through a mechanism called “funding agreements”.
The funding agreements will have a three-tiered approach ranging over multiple years. They will consist of payments that will give the exporters clarity into the amounts entitled, thus removing previous uncertainty:
Tier 1: New Exporters; accessing $80,000 over two years.
Tier 2: Current Expanding Exporters; accessing a further $240,000 over three years.
Tier 3: Exporters Continuing to Expand; accessing a further $450,000 over three years.
Under the proposed changes, all recipients will need to be “export-ready” with a maximum of $20 million in turnover to be eligible.
The application process will also be simplified to reduce administrative burden on applicants whilst still maintaining integrity in the scheme.
Legislation to give effect to these changes will be introduced into parliament later this year, with the scheme intended to commence on 1 July 2021.
Please contact us if you would like further information about the program.