Recommendations of the review of financial assistance to SME exporters
The Review of Financial Assistance to SME exporters had ten recommendations.
The government should continue to provide financial assistance to SMEs to encourage them to enter and grow export markets
The principles underpinning the EMDG scheme are valued by exporters and should be retained in a simplified and streamlined scheme
An SME should be ‘export ready’ before it receives financial assistance. The International Readiness Indicator Tool (on Austrade’s website) provides key points that could be used to shape eligibility criteria for receiving financial assistance. There’s an opportunity for Austrade to work with jurisdictions to refine the Tool and collect user data to monitor export-readiness. This could help governments to respond to changing exporter needs
Austrade should increase awareness of existing export readiness programs, rather than develop additional ones. There are many programs already on offer by Australian and state and territory governments, industry bodies and private providers
Financial assistance should be aligned to the stages of an SME’s exporter journey. The program should be re-targeted and have two tiers.
Tier One – New to Export: For SMEs that are export-ready with an established business, doing business overseas for the first time. Criteria for this tier should include:
- Meeting an Export Readiness Test (see Recommendation 3)
- Access to a once-only entitlement, payable over two years
- Minimum eligible export marketing and promotion expenditure at a similar level to the current EMDG scheme
- Focused on SMEs with a turnover of less than $20 million.
SMEs that have received two EMDG payments should not be eligible for this assistance.
Tier Two – Expanding Exporters: For SMEs with established revenue from at least one market, and actively seeking to grow their business (either within the market or to new markets). The entitlements for this tier should be administered in the following way:
- SMEs will have access to two entitlements, each payable over three years
- The second entitlement will be contingent on the SME making a strategic shift in its export business.
Other criteria for this tier should include:
- Minimum eligible export marketing and promotion expenditure at a similar or slightly higher level to the current EMDG scheme
- For businesses with a turnover of less than $20 million.
In designing Tier Two of the new program, government should consider appropriate cut-off points for eligibility based on an SME’s EMDG grant history.
Research and EMDG administrative data shows some correlation between export revenue and the sustainability of an SME in the program, which could be included as another element in a detailed program design.
A re-targeted program should focus on simplifying the way financial assistance is provided to SME exporters by:
- removing complexity
- providing more certainty.
This could be achieved through:
- Amending the Export Market Development Grants Act 1997 and introducing simplified legislation that incorporates the key principles detailed in Recommendation 2.
- Adopting an entitlement-based payment and a simplified funding agreement to establish the value of the payment before the SME incurs any expenditure.
- Taking advantage of the Streamlining Government Grants Administration policy to deliver assistance through a Grants Hub, provided it is cost effective to do so.
Consultations should inform the detailed program design (for example, on eligibility criteria and expenditure items). To provide SMEs with reasonable notice of the changes, the new arrangements should commence from 1 July 2021.
Include training as an eligible expenditure item in the New to Export stream to encourage businesses to build their in-house export marketing capabilities early in their export journey.
Work is underway across government to improve business awareness and use of all forms of export assistance, and the Australian and state and territory governments should maintain momentum to ensure gaps in awareness and use of these resources are addressed.
The Exporter Journey Map is a valuable resource that needs to be updated regularly.
The government should continue to fund export-focused industry bodies
or alliances promoting on behalf of members (Approved Bodies).
Their role and funding should be expanded to include facilitating education and training for members to increase the number of SMEs that are ‘export ready’. As noted in Recommendation 6, this program should have simplified and streamlined administrative arrangements.