Simon Crean (Hotham, Australian Labor Party, Shadow Minister for Trade and Regional Development) Share this | Hansard source

I rise today to speak in support of the Export Finance and Insurance Corporation Amendment Bill 2006. It impacts on one of the key challenges that face this nation—that is, the issue of improving our export performance. EFIC actually undertakes a number of key functions. It facilitates Australia’s trade by providing insurance and finance to Australian companies and individuals who are involved in exporting, it encourages banks and financial institutions to provide financial assistance to exporters and it provides information and advice to Australian exporters regarding insurance and risk. EFIC provides these services on a commercial basis where the private sector will not. It is a very good example of where government must become involved to correct market failure and to provide a service which assists our economic growth, a service which, if left to the market, simply would not exist.

The provision of these services has become all the more important over the past decade. A growing share of opportunities for export growth in fact goes beyond our traditional developed economy markets, with some of the greatest gains to be found in developing economies and the large number of newly created states. At the same time as presenting new opportunities for export growth, these emerging market economies also present much greater risk, risk which the private sector would probably not be willing to bear. In the circumstances, EFIC can step in and provide the insurance, finance and information for these markets that would not otherwise be available.

We support the bill because it does, as the minister has indicated, really implement a number of the recommendations that were made by the Uhrig review. Essentially, Uhrig came to the view that EFIC should be managed by a board. The bill will result in a managing director being appointed by the board after the board has consulted with the minister. It will also see a reduction in the size of the board. I, too, join with the minister in giving our thanks to those who have served in this capacity in the past. The bill itself will have no regulatory and financial impact on the Commonwealth and EFIC’s mandate and functions; they will not be affected. Along with interest groups and EFIC itself, we support the bill. I note that the webpage of EFIC states that it will be self-sustaining in its operations. We will continue to monitor that as an outcome.

Important as these changes are, they will not arrest Australia’s woeful trade performance. That woeful performance is even more apparent when one considers the appalling trade performance over the past 10 years, particularly the past five years. We had a timely reminder of it on Friday of last week, with Australia recording yet another trade deficit. The deficit, for December 2006, was not only a massive monthly deficit of $1.3 billion but also the 57th in a row. Australia reached a new milestone in 2006 when foreign debt passed the half a trillion dollar mark. I can remember when this government came to office and was making great play of the debt trap. Foreign debt at that stage was around the $180 billion or $190 billion mark. It is now $522 billion, up 170 per cent. That means Australians spent almost $30 billion over the past 12 months on foreign interest payments. That is $30 billion that we had to send overseas just to pay the interest on loans borrowed to buy more goods and services from foreign countries. Interest payments on foreign debt have more than doubled under this government’s watch, yet they want to lecture the opposition about debt and financial pressures.

Australia’s higher debt places upward pressure on interest rates as the risk of lending to Australia increases. That is why Australia has the second highest interest rates of the OECD countries. Australia’s standard household mortgage rate is 7.05 per cent. Compare that with housing interest rates in Canada at 6.3 per cent, the United States at 6.14 per cent and Germany at 5.27 per cent—just to name a few. This is a government that likes to compare what it has achieved in interest rates against the past; it never wants to compare it with the present—the present, as we have indicated, shows that we are well ahead in interest rate payments as a consequence of the massive foreign debt that this country is experiencing.

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