Feedback on the EMDG Round 4

For those that know me, know that I was critical of the changes implemented for Round 4 of the Export Market Development Grant (EMDG) process opened in November 2024. 

Austrade has recently asked for feedback on this process.  So, on the basis that you can’t complain if you don’t contribute, I have submitted the below as my feedback

Describe your experience with the current EMDG program and processes

I have been involved with the EMDG process for over 10 years.  And in that time the most significant change was the moving from a re-imbursement scheme where you applied after the fact, to a more grant-based scheme where you applied upfront.

This improved certainty for businesses as they would know, that if they spent money on eligible activities, they would get the agreed grant moneys paid to them.

This has been a significant improvement and made more business owners feel confident that they can get some support to expand their business overseas.

But there have been a number of things that have adversely impacted the EMDG program.

Value of the Program

Firstly, it is the value of the program to the business. 

As we know there is a cap of money that the Federal Government allocates to this program each year.  And normally there is more applications than money available.  So not every business can get back 50% of their eligible expenses.

Under the process when I first got involved in with EMDG, the more you spent, the more you got back.  A business who spent $300,000 in eligible expenses, would generally get more than a business that spent $100,000.   

Under the most recent round, if both businesses were accepted in tier 2, both of these businesses would have received $50,000.  One got 17% recovery and the other got 50% recovery.  I personally don’t consider this an equitable way to allocate the funds. 

In addition, I have personally seen businesses, who are getting these lower recovery rates, questioning as to whether they get more economic benefit from a different structure. 

In this regard, I am seeing more and more businesses forgoing the EMDG grant, knowing that they get more economic benefit from setting up a subsidiary in a foreign country.  This is defeating the purpose of the EMDG.  It is supposed to drive export income for Australia, not drive revenue and economic value out of Australia.

It is recommended that the flat rate apportionment of the EMDG per tier be reviewed.

Tier 3 Rules

Secondly, the definition and rules for Tier 3 are considered inappropriate and inconsistent with how business operate.  Under the most recent round, if you had any export revenue from one of the targeted countries, you were ineligible for Tier 3. 

In the real world, businesses who are already successfully exporting, don’t decide to launch effective 1 July in a year to expand to a new country.  Typically, they do some activity to see if there is any interest in that country before launching more in-depth marketing.  And if they receive some positive response, which may be the odd invoice, they then look at expanding those activities.

One such business I work with had done just this.  They had over $1.4m in export sales from the USA and were looking to expand to the UK and Asia.  They had one invoice from the UK for $32k and another from Singapore for $12k.  This was less than 3% of their export income.  This made them ineligible for Tier 3 in respect of the 2 markets they wanted to launch in. 

It is recommended that the rule for Tier 3 eligibility should be adjusted to allow for minor export activity (say less than 10% of total export revenue) to those designated countries.

Otherwise, you just push more and more business into Tier 2, which is probably why there was so much focus on Tier 2 and a reason why Tier 2 applications were closed within 3.5 hours of the system opening

Unused Funds

With the new system of funds being allocated upfront, there will be many businesses who don’t spend their planned expenditure and the EMDG payment is reduced.  This will free up funds in the program.

What actually happens to those funds?  Are they added back for the next round or are they just removed from the program.  Maybe there is a way to allocate any surplus funds to eligible businesses, maybe through a separate process.

Requirement for a Bank Statement

It seems absurd that a business had to supply a bank statement dated around November 2024 showing cash of at least $20,000 to fund expenses between July 2025 and June 2026.  What relevance is this?

It is recommended that this be removed from the process

The Application Process

Changing the application process to a first lodged first awarded process was a nightmare in November 2024.  Firstly, the demand for Tier 2 was so high, many people had system and other issues that meant that they could not lodge their applications in time. 

Also how did Austrade staff even determine when the application portal should shut.  Did they assume that every application would be approved.  Or did they keep it open slightly longer on the expectation that some applications would be rejected.  Which may have meant some business who thought they lodged on time were rejected.

This was an absolute mess and the key question was how was this fair to all business owners who wanted to access the EMDG support.  Many a business owner I spoke to, who had successfully participated in the EMDG program in the past, missed out and were extremely disappointed in this. 

Yes, I understand this was an attempt to give selected businesses the full amount of funding for each tier, but this has rarely been the case in previous years, when I have been involved in the EMDG program.  Why was it changed this time, to the disadvantage of how many other businesses.

It is recommended that this first in first served approach be removed.  If you want to shorten the time frame, just reduce the period applications remain open to some reasonable period such as weeks or a month, not 3.5 hours.

Outline your view on how the government supports small and medium enterprises (SMEs) to export

Given how small the % moneys paid to each business are in recent rounds of the EMDG as compared rounds the early 2010’s, all Governments need to look at how they can help increase the impact of the money business spend to grow their export markets.

I have worked with numerous businesses, who actually got more value out of the support of both Federal and State governments in respect of trade shows and other events that they attended in their various export markets.  For example, Investment NSW and their Going Global Export Program has helped many business owners have a cost effective presences at applicable overseas events.  The branding of your business on a say Federal or State Government stand would significantly help many business owners.

But whilst these trade shows and events are great, there is minimal financial support for the business to actually attend these events.  This may mean some businesses don’t attend these trade shows and other events.

One recommendation is that the Federal Government should put aside some funds for trade shows and major events in the countries / regions where the government has economic or trade objectives.  This money should be for both hosting stands at these events and provide some assistance for the business to actually travel to the event and be ready to deliver their product or service in that country.

Maybe this can be done in conjunction with the State Governments to increase the leverage of their programs. For example, NSW has recently announced its “Take-Off Fund” and maybe this can operate in conjunction with, and not compete with Federal Government resources.

Also, other Federal Government resources like the Small Business Export Loan, Austrade Tradestart and the new Go Global Export Academy need to be better marketed or highlighted to business owners planning to export

Overall

Overall, business will take any support that the Government provides to help them grow their export markets.  But that support has to be fair and equitable to all so it not just like a lucky draw if you can participate in the EMDG. 

Doing this will bring back some trust and belief in the process.

Contact Wayne on wayne@arealcfo.com.au or 0412 227 052.

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