Many Western Australian exporters will have to review their marketing budgets after the federal government announced that a big jump in applications for export market development grants will result in a sharp cut in payments.
Many Western Australian exporters will have to review their marketing budgets after the federal government announced that a big jump in applications for export market development grants will result in a sharp cut in payments.
The EMDG scheme, which encourages small- to medium-sized businesses into the export market, will have its appraisal brought forward as part of a government review of Australian export policies and programs.
The scheme, which is administered by export agency Austrade, allows SME exporters with a turnover of less than $30 million per year and an overseas marketing spend of more than $15,000 to claim reimbursement of marketing expenses.
Changes to the scheme introduced last year enabled more SME exporters to claim reimbursements, resulting in 401 WA businesses applying for grants.
Under the current scheme, successful claims of less than $70,000 are reimbursed in full.
Reimbursements greater than $70,000 are paid in two tranches, with an initial payment of $70,000 and a second payment for the balance.
Claims are capped at $150,000 and the amount of the second payment is dependent on the money left in the ‘pool’.
Austrade said the revised budget for the 2007-08 pool is $156.8 million, a reduction of $2.4 million from the previous year.
It has advised EMDG clients that growing demand for the grants has resulted in a 26.8 per cent increase in the total dollar amount claimed.
Early estimates indicate that 2006- 07 applicants qualifying for a second tranche payment will only receive 10 to 15 per cent of their provisional entitlement above $70,000.
The second payment is due to be made at the end of June 2008.
Exportise (WA) Pty Ltd managing director Denver Davies said a lot of exporters had relied on receiving their second tranche and may now encounter financial pressure.
“It’s not just manna from heaven, exporters have been encouraged to allow for it in their budgets and to undertake export marketing activities,” he said.
“It’s tough for ordinary exporters at the moment and now here’s just another blow.
“If the new government wishes to assist Australian industries’ exporting endeavours, they should seriously consider covering the shortfall now being experienced.” Western Australian Fishing Industry Council chief executive officer, Graeme Stewart had a more sanguine view of the issue, explaining that the risk assessment undertaken by his group included the possibility that the full grant would not be paid.
“We set aside funding some time back to underwrite the risk, simply because it was always a possibility,” Mr Stewart said.
He said WAFIC was fortunate enough to be in a position where it was able to put money aside however not all exporters had the same foresight or capital.
Meanwhile the federal government has recently announced a review of Australian export policies, to be completed by August 2008.
