Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Hansard source

I and my Labor colleagues have serious concerns about the Export Finance and Insurance Corporation Amendment (Support For Commonwealth Entities) Bill 2016—in particular, the aspect of the bill that broadens the definition of eligible export transactions to include funding for projects that are predominantly based overseas.

When Efic was established, its guidelines were very clear: to support Australian businesses to build and grow their export industries in other nations. That, of course, implies that jobs for Australians would be paramount and that supporting Australian businesses would be the reason for the establishment of the corporation. Through a series of amendments to the operation of the Export Finance and Insurance Corporation, we seem to be getting further and further away from that initial aim. This amendment bill appears to represent that. That is why Labor will move amendments in the Senate to this bill that will strengthen the provisions of the bill and ensure that the aim for which Efic was established—most notably, to support the growth of Australian businesses through exports in other countries—is paramount.

The purpose of the Export Finance and Insurance Corporation Amendment (Support For Commonwealth Entities) Bill is to amend the Export Finance and Insurance Corporation Act for two main purposes. Firstly, it is to permit the Export Finance and Insurance Corporation, or Efic, to provide specialist financial advice to Commonwealth government bodies, subject to ministerial approval. Secondly, it is to broaden the definition of eligible export transactions, such that a wider range of businesses will be able to receive a range of insurance and financial services and products from Efic, as the Australian connection required to access Efic's assistance will be relaxed under the amendments proposed under this bill. In practice, the second objective would allow Efic to more easily loan money to Australian companies to increase their international trading opportunities, which would bring benefits to the Australian economy. However, it would also allow Efic to loan money to Australian companies to increase their manufacturing capabilities overseas, or to a company to set up a call centre in another country. So there is a real concern that this bill will promote the shifting of Australian operations to other nations and ultimately result in a net loss of jobs for Australian workers.

Efic can provide a range of insurance and financial services and products under part 4 of the act. Specifically, Efic can provide: export payments insurance contracts; guarantees and subsidies in relation to loans to Australian suppliers; guarantees and subsidies in relation to loans to overseas buyers; guarantees to co-lenders in relation to export transactions; tender guarantees and performance guarantees; reinsurance of guarantees; and also loans to finance eligible export transactions. Whether a particular service or product can be provided depends on whether the transaction is an eligible export transaction or a transaction that involves the Australian export trade. Though not legislated, it is expected that Efic will operate on a commercial basis, and Efic must not provide financial services or products on its commercial account unless Efic is satisfied that the private sector providers are unable or unwilling to support financially viable business activities, and Efic should ensure its activities fill the market gap where private provider finance is not forthcoming.

As I mentioned earlier, I and my Labor colleagues hold some concerns about the objective of broadening the definition of 'eligible export transactions'. Despite the internal Efic policy stating that any loan cannot result in net Australian job losses, I feel that that is not strong enough to safeguard the protection of Australian workers and their interests. It is Labor's strong belief that Australian taxpayer money should be spent to benefit Australian taxpayers—in particular, to grow jobs in the domestic economy, be that through domestic operations or export operations. Any potential loophole that allows this basic principle to be circumvented should be firmly shut.

As a result of these concerns, Labor sent this bill to a parliamentary committee to investigate the potential effects of broadening the range of projects to benefit from Efic's financial support. This best-practice measure offered stakeholders an opportunity to weigh in and provide some insight into the measures' practical impacts.

In the evidence provided to that committee inquiry, the committee found that the Australian Fair Trade & Investment Network submitted that, in the absence of the requirement for firms to actually produce goods and services in Australia and employ Australians, there would be no incentive for firms receiving Efic loans to have any Australian content, leading to the perverse situation that an Australian government institution could be providing finance and support for firms that are offering no employment in Australia. That is a ridiculous situation, and no Australian taxpayer would believe that that is a fair situation or should be a basis upon which Efic should be lending money to or providing guarantees for finance to particular Australian businesses.

The Australia Institute expressed concern around the potential for further offshoring of Australian manufacturing, saying:

For example, a garment company based in Australia could move all production offshore, but still be eligible for Efic's services.

The ACTU simply stated:

It is in the national interest that companies which receive government loans are required to use that money in a way which benefits Australian employment.

And it said that the removal of such provisions could potentially result in the loss of Australian jobs. Despite these concerns, Labor is not seeking to vote down this bill altogether. We are seeking to make it a better piece of legislation and to improve the operations of Efic so that it does meet its establishment obligations to provide support to increase exports and to grow jobs in the Australian economy.

We acknowledge the government's claim that this will save business $12,000 in red tape and time. Labor is committed to supporting Australian business and securing Australian jobs, and we support the bill, but with the amendments that have been outlined by the shadow minister in this debate. Those amendments, we feel, will serve to strengthen it against the undesirable consequences flagged, in committees, to the Australian parliament as being against the interests of workers and businesses.

So we will move those amendments in the Senate. The amendments will ensure that, prior to approval of a loan or guarantee for an overseas investment, Efic must be satisfied that: firstly, the investment will lead to jobs growth in Australia, which is a very, very important obligation and a principle for which Efic was originally established; secondly, the investment will not be used to replace a function currently being undertaken in Australia, the important notion here being that it should be a growth strategy, not a replacement strategy or a strategy to shift business to other parts of the world; and, thirdly, the investment will not have any negative commercial impact on a company engaged in the same business in Australia. Those are the three amendments to this bill that Labor will seek to move in the Senate, to strengthen the bill's provisions, make it a better use of Australian taxpayers' money and, importantly, support Australian workers' jobs. I commend all those senators involved in this debate to support those sensible Labor amendments.

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