This article originally appeared on Avant Group’s website.

In a significant overhaul aimed at enhancing the effectiveness of the Export Market Development Grants (EMDG) program, Austrade is setting its sights on fostering a more competitive and prepared Australian export sector.

Key changes will commence for grant agreements issued after July 2024 and include:

• Eligibility changes including a requirement for a minimum trading history of 2 years and $100K revenue in the previous FY prior to applying.
• Ability to demonstrate capacity to spend $20K on eligible export promotional expenditure
• A more complex upfront grant application and assessment process
• A need for export training or an export readiness test to be completed
• More powers for the Austrade CEO, including discretion to nominate countries for eligible expenditure
• A use it or lose it model – if you have an agreement in place and don’t claim, then you lose a year of funding (noting a company is entitled to a maximum of 8 claims)

The EMDG program has historically played a pivotal role in supporting Australian SMEs to venture into or expand within international markets. However, the grant’s impact diluted following the 2021 modification, which led to a notable decline in grant values due to an inflated pool of eligible applicants.

The latest reforms, include implementing “stronger eligibility requirements” to temper demand and enhance grant effectiveness. These requirements encompass rigorous “export readiness testing and training” and stipulate a minimum annual turnover to curtail the number of lesser-sized firms benefiting, addressing Austrade’s concerns over underspend among smaller entities.

The forthcoming changes, heralded by a shift to a “first-in, first-served” distribution model, are designed so that only the most export-ready small to medium-sized enterprises (SMEs) benefit from the government’s matched funding initiative. This pivot comes in response to the challenges and opportunities presented by the global trade landscape, aiming to uplift the value of individual grants and, by extension, Australia’s export prowess.

These changes are all driven due to a sever underfunding of the program, which will see the funding pool decrease yet again, from $154M down to $110M in the next cycle.

Central to these reforms is the alignment of the tier three EMDG grants with the federal government’s trade diversification strategy. By focusing on priority countries, the program aims to support more mature SME exporters in making a significant impact on selected markets, although the priority regions remain undecided pending Trade Minister Don Farrell’s approval.

Critics of the EMDG’s previous iteration pointed to the loosened eligibility criteria that allowed underprepared businesses to qualify for grants, an issue that Austrade deputy chief executive for policy and programs, Philippa King, and general manager for visitor economy and client programs, Samantha Palmer, highlighted. The move towards a “first-in, first-served” model is intended to reward companies with viable export strategies and the potential for success on the international stage.

The revision to the EMDG, marked by the EMDG Amendment Rules 2024, introduces an entitlement-based framework that demands applicants to demonstrate a minimum annual turnover of $100,000 and the capacity to invest $20,000 in eligible marketing activities. This adjustment, coupled with the Austrade chief executive’s enhanced discretionary powers to modify eligibility criteria and target funding more precisely, is set to usher in a new era of strategic export support.

By raising the bar for eligibility and focusing on export readiness, Austrade aims to cultivate a cohort of SMEs that are not only prepared to navigate the complexities of international markets but are also positioned to contribute meaningfully to Australia’s economic growth and diversification efforts.

As the program anticipates its next application round in late 2024 or early 2025 and recipients will be eligible to receive a two-year funding agreement.

The EMDG program is aimed at empowering Australian exporters with the tools, resources, and support necessary to achieve sustainable success on the global stage, marking a significant step forward in the country’s trade and export strategy.

Avant Group is a key supporter of the initiative, having worked with the program for over 10 years and continues to lobby for increased funding behind the initiative given these changes, whilst a positive step in ensuring eligibility is adhered to, will obviously result in even less companies receiving support.

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