Exporters Left with Less from the Federal Gov

'Simon Crean announced that the initial EMDG payment for the 2007-08 grant year would be $40,000, rather than the anticipated $70,000.' .

Exporters can anticipate cuts to the Export Market Development Grants (EMDG) of as much as $30,000, changes which Trade Minister, Simon Crean blames on the former government.

Crean announced that the initial maximum payment amount under the Export Market Development Grants (EMDG) scheme for the 2007-08 grant year would be $40,000.

'The former government's failure to adequately fund changes they made to the scheme two years ago has resulted in a lower payment this year,' he said.
Initial payments under the scheme in recent years have been higher, usually around $70,000.

The scheme, designed to help encourage small and medium sized Australian businesses to develop export markets, reimburses up to 50 per cent of expenses incurred on eligible export promotion activities.

Crean said grant recipients entitled to more than $40,000 would receive a second tranche payment at the end of June 2009, with the amount to be determined at the time.

Opposition trade spokesman Ian Macfarlane said it was ridiculous for the Rudd Government to blame the coalition for the smaller payment.

'Simon Crean has known of the potential shortfalls in the EMDG scheme for more than six months, but has failed in that time to approach Treasurer Wayne Swan and fight to ensure the full payments for the 2007-08 grant year were made,' he said.

AIMEX has voiced its strongest concern regarding the cut in the first tranche payment for EMDG 2007/8 from $70k to $40k and the way this cut has severely impacted their members, all key marine industry exporters.

A number of members did not receive any communication regarding this and it appears a newsletter containing this information is still in cyberspace for many.

The reason given for this drastic cut is the lack of funding put into the scheme by the previous government. Many businesses will suffer severe impact on their cash flow as a result of this reduced payment.

They have already spent this money on export promotion in the current year, in reasonable anticipation that their grant would be paid, at the very least the usual first payment of $70k.

According to Mary Anne Edwards, CEO at AIMEX: "This is now an opportunity for this government to demonstrate that it is committed to providing a strong future for this important sector of the economy by reviewing this decision and giving some confidence to exporters by either reversing the decision to reduce the first payment or ensuring the second payment is increased to make good this significant shortfall."

CEO of AIMEX, Mary-Anne Edwards. - Jeni Bone Click Here to view large photo

A statement from AIMEX continues: "Exporters need certainty of finance from schemes such as the EMDG program. This then provides the confidence to drive their marketing to increase export markets.

'The key activities that incur real costs for exporters are attending trade shows, sending free samples, committing to international advertising, creating new export style marketing materials, engaging overseas consultants, visiting prospective markets, and the set up of promotional offices overseas.

"If exporters see that the government can unilaterally change the funding equation these activities will not be undertaken. These are the exact activities the government wants to encourage and the activities that will provide results to drive extra export revenue for Australia.

"AIMEX is very aware of the work the current government has undertaken to review the scheme and looks forward to the outcome of the Mortimer Report. AIMEX along with the Australian Marine Industry Federation has requested meetings with Hon Simon Crean to discuss these issues and reinforce the impact these decisions have on exporters in the marine sector."

According to the Australian Institute of Export (AIEX), in a statement on the EMDG underfunding situation, 920 Australian companies will have their claims substantially reduced this year, amounting to a shortfall of $28m.
Next year will be worse, with more than 2000 companies expected to be affected.

"Many forms will suffer sever impact on their cash flow as a result of the drastically reduced second stage payment. Manu will have already spent the money on export promotion in the current year, in reasonable expectation that their grant would be paid in full.

"It is too late, with two thirds of the current year complete, for them to reduce or adjust their export marketing undertakings in the face of a reduced grant payment for 07/08."

The AIEX says that it is unlikely that the government's additional $50m for 2009/10 will be sufficient to compensate for the current cuts.
"The reduced marketing activities will diminish the chances of generating sustainable export markets for Australian products, services, IP and know-how."

Carl Amor, director at Aqualuma, says the cuts directly impact on his business - an award-winning and extremely successful Gold Coast company - in myriad ways.
"We are an Australian manufacturer and set our international marketing and show budgets at the beginning of the year based on the government assistance available at that time.

'It is very disappointing to know that this can change without notice and only weeks before the payment is due and after the end of the financial year.

"Whilst the EMDG payment is much appreciated and of great assistance in helping us develop international markets it is essential to make budgets and stick to them.

"We had plans to employ an international sales and marketing person this coming year to generate more overseas sales, this is now in jeopardy as we have essentially had $30,000 taken from our budget buy the Government this in addition to receiving only 24.5% of the previous year's second tranche payment which makes a further reduction in funds of approximately $21,000 - totalling a budget shortfall of $51,000 for the year."

More at www.aimex.asn.auand www.aiex.com.au

by Jeni Bone