The Export Market Development Grant (EMDG) program in Australia is about to take a hit. According to the recently unveiled 2023-24 federal budget, the program will face a substantial $61 million funding reduction over the next four years.
The good news is that the cuts will not affect any funding commitments that have already been made or applications that are currently under assessment. But how the cuts will impact future rounds remains to be seen.
Let us talk a bit about the EMDG program itself. It has been around since 1974, supporting Australian exporters in their endeavours. However, things changed when the former coalition government introduced what they called EMDG 2.0 in July 2021. Under this new version, more firms became eligible to participate, expanding the program’s reach. The revamp transformed the program from a reimbursement system to a multi-year grants program and removed the requirement for firms to meet the “export ready” threshold.
As of today, three rounds of EMDG 2.0 have come and gone, and in February Trade Minister Don Farrell announced that Austrade would be having talks with stakeholders ahead of the fourth round in 2024. These discussions followed an operational review and that more firms would apply for migrants, which would result in smaller amounts being awarded. It also pointed out that the available budget might not be enough to match the program’s popularity or the expectations of all the stakeholders. You know how it goes—when there are too many people lining up for a piece of the pie, the slices just keep getting smaller. And that is exactly what happened here. The maximum grants awarded under EMDG 2.0 have decreased. In fact- between 2011 and 2021, 56% of firms received reimbursement amounts below $40,000. Comparatively, in the first round of EMDG 2.0 98% of applicants were offered grants equal to or less than $36,600. So, it is no surprise that individual grants are currently falling way below the maximum limits for all program tiers.
What is a surprise is the announced budget cuts considering that shortfall. The government has not specified the reasons behind these cuts to the EMDG program. But an Austrade spokesperson has confirmed that the measure will not impact organisations with existing grant agreements or ongoing applications. Phew, that is a relief! Austrade plans to consult with stakeholders to figure out a strategic re-focusing of the program. They want to make it clear that there are no immediate changes to the program, so rounds one to three will continue as usual, following the current rules and requirements.
In conclusion, we cannot ignore the concerns raised by the $61 million reduction in the popular Export Market Development Grant (EMDG) program, as revealed in the 2023-24 federal budget. The EMDG program has been an invaluable resource for Australian firms aiming to expand their reach into international markets. The recent changes under EMDG 2.0 were meant to broaden its horizons and allow more firms to participate. But with these budget cuts, there is a genuine worry that the program’s effectiveness will be compromised, and the opportunities available to businesses looking to grow globally will be limited.
It is crucial for the government to carefully consider the implications of these budget cuts on Australian businesses’ ability to compete in the global market. Striking a balance between fiscal priorities and supporting export-oriented firms is essential for sustaining economic growth and prosperity. It is high time for thorough stakeholder consultation and a strategic re-focusing of the program to address the identified concerns and maximise the potential benefits of the EMDG program.
If you are concerned about how the budget cuts to the Export Market Development Grant (EMDG) program may affect your business, we recommend reaching out to an R&D tax consultant for guidance. Navigating through funding reductions can be challenging, but with the right expertise, you can explore alternative strategies and ensure your export endeavours continue to thrive.
Do not hesitate to seek professional advice and find innovative ways to overcome these obstacles. Contact our consultants today to discuss your specific situation and chart a path forward in this evolving landscape. Your business’s global growth is worth the effort.