Commonwealth Numbered Regulations - Explanatory Statements

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Issued by Authority of the Minister for Trade

Export Market Development Grants Act 1997

Export Market Development Grants Regulations

Section 106 of the Export Market Development Grants Act 1997 (the Act) provides that the Governor-General may make regulations prescribing: matters required or permitted to be prescribed, or necessary or convenient to be prescribed for carrying out or. giving effect to the Act; and providing for the procedure to be, followed by Austrade for the approval of joint ventures, approved trading houses and approved bodies.

The Act provides non discretionary grants to Australian businesses which have incurred specified expenses promoting the export of their Australian goods, services, intellectual property rights, and know how. The grant is a partial reimbursement of the expenses incurred.

Details of the regulations are as follows:

Calculation of the "Payout Factor"

Outlays under the EMDG scheme are limited to the amount appropriated by parliament for the relevant financial year. Given the assumption that the demand for funds will exceed the amount provided by parliament, it is necessary to provide a mechanism for the equitable payment of grants within the funding cap.

A grant year runs from 1 July to the following 30 June. Applications for grant are received by Austrade 1 July to 30 November in the immediately following financial year. Grants are assessed on an ongoing basis throughout that financial year. As a consequence, some applicants are paid early in the financial year and others later or at the end of that financial year. Without an appropriate funds allocation mechanism, those applications assessed towards the end of the year would receive no grant payment due to the exhaustion of funds for that year.

The mechanism devised to overcome this unacceptable outcome is as follows.

All grants up to $50,000 will be paid as soon as practical following assessment. Any provisional grant in excess of $50,000 will be paid in two parts. Fifty thousand dollars will be paid as soon as practical following assessment. The balance will not be considered for payment until the end of the financial year. Sometime close to the end of the financial year a date will be set (the "balance distribution date") on which

(i) all unpaid amounts of provisional grants are totalled, and

(ii) the balance of funds remaining in the appropriation is calculated. The relationship between these two amounts is the "payout factor". This factor is then applied to all outstanding provisional grant amounts to provide a pro-rata final payment to each applicant.

Procedures - Approved Bodies, Approved Trading Houses and Approved Joint Venture

There are three categories of 'person' which require specific approval to be eligible to apply for EMD grants.

Approved Body - is an organisation which promotes on behalf of other people and generally does not own any eligible product in its own right. Industry associations are a common applicant under this category. Approved Trading -House - is an organisation which is allowed to promote another person's 'product' as if it were its, own by claiming the cost of incurred promotional expenses. These are very specialised organisations. and few in number. The underlying idea is that they help promote the 'product' of people who are too small or incapable of accessing EMDG in their own right. Approved Joint is a group of 'persons' allowed to enter into a marketing arrangement for a specified and finite project or purpose.

Applicants under each of these three categories of special approval are required to obtain status as a 'person' eligible to apply for grant, in advance of any application for grant.

Consideration of application, variation or cancellation for special status is primarily against ministerially approved guidelines which are disallowable instruments for the purposes of the Acts Interpretation Act 1901, There are two exceptions which require the promulgation of regulations. These are the procedures to be followed by Austrade in handling an application for special status, and procedures for the variation of an existing special status. The regulations provide that Austrade may ask the applicant questions about their application, and that the questions and the applicant's answers must be in writing. With respect to variation, it may only be at the request, of the approved 'person and may only be with respect to limited prescribed parameters.

Proscribed External Services

The Act provides that all external services are eligible external services unless declared by the regulations not to be an external service.

There are several service type activities which are considered not to be appropriate for consideration under this scheme. These are those related to: migration to Australia; the sale or purchase of Australian real estate;, legal services in relation to proceedings under the Family Law Act 1975, legal services in relation to the adoption, custody or welfare of a child, and legal services relating to the maintenance of a person.

A number of activities which may appear inappropriate for consideration under the. scheme have not been proscribed. These would be rendered eligible under the separate illegal activities provisions of the Act.

Eligible Internal Services

The Act provides that eligible internal services be prescribed under regulation. The regulation prescribes a wide range of eligible services. The more obvious exclusions are the legal, migration and real estate services similarly excluded under external services, plus services in the field of banking and insurance.

Eligible Tourism Services

The Act provides that eligible tourism services be prescribed under regulation. Amenities included as eligible tourism services cover a wide range. The regulation includes also the provision for events and special or unusual facilities to be considered for grants consideration. There is no limit placed on the number of, or combination of, amenities which may be provided by an applicant.

These regulations are required following the revocation of the Export Market Development Grants Act 1974 and the enactment of the Export Market Development Grants Act 1997 which commences on 1 July 1997. The regulations will not have effect before that date.

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