Industry leaders have called on Trade Minister Simon Crean to clarify comments made about the Export Grant Development Scheme, demanding confirmation on how long the scheme will continue to be funded.
In a press conference at Parliament last week, Crean refused to give clear answers on how long the Government would continue to fund the scheme at its current level.
The Government announced an extra $50 million for the scheme for the 2007-08 year in the federal budget, along with a previously promised $50 million for the 2008-09 year, bringing the total funding for the scheme to $200 million for each year.
But the Government has made no commitment for the scheme beyond these two years.
Asked if the Government had taken a position on the extended funding, Crean replied that “it hasn’t taken a decision and it won’t be able to take it”.
He also gave no answer on the Government’s response to the Mortimer report, which recommends changes to the EMDG scheme, saying that “there’s acceptance that the Mortimer processes have been deferred…because of the global financial crisis”.
The Export Grant Development Scheme works by reimbursing emerging exporters for promotional costs, but costs incurred in one financial year are not paid until the next.
Warren Cross, chief executive for exporting group Export Incentives, says that exporters rely on the scheme because they plan promotional tours in advance, and argues that several of his clients will be deterred from spending if they do not know how much they will be repaid.
“The problem we’ve got is that it’s extremely unclear what the level of rebate moving forward will be. The extra money being committed is to rebate money already spent, and that’s where people are getting confused,” he says.
“The worst case scenario is that funding drops back to $150 million, but that is unclear from what the minister is saying. When clients ask me how much they will receive in a rebate, I have to answer that I do not know because the Government hasn’t committed more funding.”
Cross says the initiative is an important one for start-up exporters, and that smaller companies will be more likely to spend money on promotions and trading if they are given an assurance that costs will be repaid.
“I don’t think this minister gets it, I don’t think the last minister got it. It’s not a hand-out, it’s a cashflow initiative,” Cross says. “Crean has got to get serious. It’s time to deliver on promises, and you can’t blame the international financial crisis.”
Cross says another problem is that the Government has introduced plans that will allow a greater number of exporters to apply for the grant.
Because the grant works in two tiers, (companies are each given one payment and if enough money is left over, they will receive a second), this will affect the number of businesses applying to have their grant applications paid in full.
“Minister, you must address this issue,” Cross says. “If this means changing guidelines to cut the number of companies that can claim the grant, then that must be what is done. You can’t go forward with a lottery scheme, because it’s too important to small and medium exports.”
Ian Murray, executive director of the Australian Institute of Export, says that the Government needs to make a “speedy decision” on the future of the scheme, which may lead to helping the economy recover.
“Our position is that we’re very pleased with the outcome of the additional $50 million in the budget, but we would like the Government to make a decision on future funding. We think the most important thing is maintaining confidence and that will be maintained if they make a decision sooner rather than later,” Murray says.
“I’d like to see them take up a minimum $200 million for the scheme. Everybody accepts that international trade will be a big factor in helping us return to a more normal cycle of business. I don’t think there’s any question.”
Related stories:
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
