IThe Minister for Trade, Tourism and Investment, Simon Birmingham has confirmed the government will increase funding to the EMDG Scheme by $20m over the next 3 years commencing from the 2018/19 claim period. This will not assist the 2017/18 EMDG claims which exceed the allocated funding by $67m and is likely to result in the maximum payout to claimants reduced to around $50,000 for an approved $150,000 claim.
Last year, the 3,706 Australian exporters who accessed the EMDG scheme shared $131.6m which resulted in a maximum grant of $72,159 in financial support as reimbursement of some marketing expenses involved in market their products, processes, services, know-how and Intellectual Property to non-residents.
In the current year the number of exporter has increased 16% putting increased pressure on the government to increase funding. At this stage the increased funding is temporary and covers only the next 3 years. This is despite each EMDG dollar generating an economic benefit of $7.03. Compared to the R&D Tax Incentive program which pays over $3.2 Billion annually and has an economic benefit of $1.98
The EMDG scheme has been running for over 40 years. Prior to 2014 all claims were paid in full immediately after assessment which provided certainty and confidence for exporters to risk export activities. Since 2014 the scheme has been capped at $150m with 5% used to administer the scheme. Payments are now made in 2 tranches with an initial $40,000 payable after assessment and the 2nd tranche being an apportionment of the funds available against the grants approved paid in late June. For 2016/17 claims the second tranche was 29.2% (2015/16 was 64.5%). The approved maximum grant remains at $150,000.
While the number of claimants has increased annually since 2014/15, they have not recovered to the maximum claims of 4737 in 2009/10. The significant decline in the number of claims from 2009/10 was attributed to the impact of the global financial crisis.
EMDG claimants generate $3.8 Billion in exports while employing 65,000 Australians. Exporters in Australia on average hire 23 per cent more staff, pay 11 per cent higher wages and have labour productivity 13 per cent higher than non-exporters.
The majority of claimants are in NSW (36%) followed by Victoria (31%) Queensland (13%), and Western Australia (10%). A small portion (14%) are located in regional or rural areas. The major export markets targeted are USA (60%), UK (30%), China (28%) and Singapore (19%) with services accounting for 60% of exports and manufacturing 30%.
The EMDG Scheme reimbursed businesses with a turnover under $50 million for eligible costs of export marketing and promotion, including advertising, overseas representation, social media, attending trade shows, international patents and trademarks.
Written by Bruce Patten: With over 30 years’ experience claiming government grants, Bruce is regarded as the grants expert. He has a passion for helping business succeed. He has a long list of successful clients who have received the government funding they needed for research, development, management, commercialisation, exportation, small business support… and the list goes on. Visit the Patten Group website.