Exporters and grant experts are calling for the Federal Government to increase the amount available for businesses under the export market development grant, as SMEs struggle under the increasing value of the Australian dollar.
Those fears have been magnified after economists predicted late last week the dollar could hit parity by the end of the year, and may stay there until well into 2011.This morning the dollar was trading at about US99c.
Ian Murray, executive director of the Australian Institute of Export, says he will send a letter to the Federal Government calling for an increase in funding for the scheme as a response to the dollar’s rapidly rising value.
The EMDG is available for companies which have spent over $10,000 on export-related expenses, and have turnover of less than $10 million.
But while funding was set at $200 million for the 2009-10 year, (for which applications are now being received), funding for the 2010-11 year will drop to $150 million.
“They need to fix the EMDG scheme straight away, and I would like to see it happen retrospectively. I want to see the cap lifted to $200 million for the 2010-11 program, and then continued through to the end of the program in 2017.”
“I think they need to fix it immediately because exporters are suffering. Taxation relief has quite a long lag, but hopefully this could instil some confidence relatively immediately.”
Grant expert Adrian Spencer from Grant Ready agrees and says the EMDG scheme has become “political ping-pong”.
“This is very frustrating for applicants of the program, because the rules keep changing every year. Essentially, they keep moving back and forth, and companies are confused as to what they should be doing.”
Both Spencer and Murray have called for the EMDG to be fully funded to $200 million, and remain at that level for years. Spencer has also called for a reduction in the amount of time it takes to receive payments, which currently can take as long as eight months.
“We need a method of accelerating the payments faster,” Spencer says.
“AusTrade has increased it, but in commercial times it’s just too slow and there needs to be a speed-up there.”
Murray also points out exporters are suffering a double blow, with many international markets suffering heavily in the aftermath of the global financial crisis. “Domestic markets may be doing well, but overseas markets haven’t received the same bounce and that’s extremely hard for exporters,” he says.
But overall, Spencer says the program simply needs certainty without rules changing from year to year.
“This is the overall problem with the EMDG. One year it’s $150,000, and the next it’s $200,000. One year the spending requirement is $20,000, and the next it’s $10,000. EMDG programs are critical and the uncertainty is really holding them back.”
“The amount of money being given is fine,” Murray says. “It’s just the pool available is too small and many companies are missing out. The more funding will allow more companies to receive the benefit and will instil more confidence in the sector.”
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
