Trade Legislation Amendment Bill (No. 1) 2016: Export Market Development Grants Changes and Review

On 10 February 2016, the  Trade Legislation Amendment Bill (No. 1) 2016 (the Bill) was introduced into the House of Representatives in Commonwealth. In his Second Reading Speech, the Minister for Trade and Investment, The Hon Andrew Robb, described the bill as giving " effect to several key recommendations resulting from the 2015 Review of the Export Market Development Grants (EMDG) scheme."

Background to the EMDG Scheme

The EMDG scheme is a key Australian Government financial assistance program for aspiring and current exporters. Administered by Austrade, the scheme supports a wide range of industry sectors and products, including inbound tourism and the export of intellectual property and know-how outside Australia.

The EMDG scheme: 

• encourages small and medium sized Australian businesses to develop export markets;
• reimburses up to 50% of eligible export promotion expenses above $5,000 provided that the total expenses are at least $15,000; and
• provides up to eight (8) grants to each eligible applicant.

2015 Review of the EMDG Scheme

According to the Minister's media release, a "comprehensive, independent review of the Export Market Development Grants (EMDG) scheme has found the grants remain integral to the success of Australia’s international businesses."

The 2015 Review of the EMDG Scheme was proposed on 10 December 2014, with the appointment of Mr Michael Lee, the former CEO of Zip Industries, as the Reviewer for the 2015 Review of the EMDG scheme. A written report was provided to Minister Robb on 30 June 2015 and it was further tabled in Parliament on 19 August 2015.

The Review focused on several key areas, including whether the EMDG scheme, as currently structured, was effective in:

• increasing the number of exporters;
• increasing the sustainability and growth of export markets; and
• further developing an export culture in Australia.

The Review also concluded that Austrade should continue its current management of the EMDG scheme, which received funding of $137.9 million for 2015–16. It was undertaken in accordance with section 106A of the Export Market Development Grants Act 1997 (Cth).

The Review concluded with recommendations for:

• Effectiveness of the EMDG Scheme (4 Recommendations);
• Building a better scheme (5 Recommendations); and
• Client and Stakeholder Engagement (1 Recommendation).

Amendments Contained in the Bill

According to the Explanatory Memorandum, Schedule 1 of the Bill amends the Export Market Development Grants Act 1997 (Cth) (the Act) to give effect to several key recommendations resulting from the 2015 Review of the EMDG scheme. It also makes minor policy and technical amendments to improve the operation of the Act, and delivers savings to align the scheme closer to its budget.

The purpose of Schedule 1 of this Bill is to amend the Act to:

• Remove communications as an eligible expenditure category to reflect the reduced cost of communications as a result of advances in technology;
• Place a limit of $15,000 on the free sample expenditure category, noting that for claimants that are combining two years of expenditure, and one of these years is the 2015-16 financial year, no limit applies;
• Describe the promotional literature or other advertising expenditure category so that it mentions literature or material in electronic or any other form;
• Repeal the provision allowing for the reimbursement of in-country travel (other than air fares) and change the amount of the daily allowance for overseas visits from $300 to $350;
• Add to the list of excluded expenses those relating to eligible promotional activities, things or eligible products that the CEO of Austrade considers may have had a detrimental impact on Australia’s trade reputation;
• Permit Austrade to direct funds from other sources towards EMDG administration costs;
• Remove the requirement that the independent review of the scheme is to be conducted with a stipulated commencement date for the specific purpose of making recommendations about the continuity of the scheme. Instead, set the date by which the next review is to be completed and that later review completion dates are to be determined by the Minister; and
• Amend the definition of a grant year, which is currently up to 30 June 2016, so that the scheme can continue beyond that date.

Schedule 2 of this Bill amends the Australian Trade Commission Act 1985, changing the Commission’s name from the Australian Trade Commission to the Australian Trade and Investment Commission, and makes consequential changes to other Acts as a result of this change. The purpose of Schedule 2 of this Bill is to better reflect both the agency’s significant role in promoting and attracting foreign investment and the priority the Government has placed on attracting foreign investment to secure Australia’s future prosperity.

The Bill is expected to be further debated as Parliament continues to sit throughout this week (22-26 February).

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Trade Legislation Amendment Bill (No. 1) 2016 and Secondary Materials as reproduced on TimeBase LawOne

2015 Review of the Export Market Development Grants (EMDG) scheme

Minister for Trade and Investment Media Release