Madeleine King (Brand, Australian Labor Party, Shadow Minister for Trade) Share this | Hansard source

[by video link] Thank you very much, Deputy Speaker Claydon. It's very good to see you again, and I look forward, of course, to seeing you again in person when we are able to. Today I am speaking in support of the Export Finance and Insurance Corporation Amendment (Equity Investments and Other Measures) Bill 2021. From the outset, I will be clear: Labor does support this bill. This bill seeks to broaden the range of transactions that Export Finance Australia can finance by enabling it to make equity investments.

As an open trading nation, Australia has been among the architects of, and a beneficiary of, the multilateral rules based trading system that has operated for decades, and Australian businesses have benefited from these rules to support export growth. As businesses have benefited, so too have the people of Australia, as there are an increasing number of job opportunities in those export related industries. On average, Australian businesses that export hire 23 per cent more staff and pay 11 per cent higher wages than non-exporters. In 2019-20, Export Finance Australia supported 136 Australian businesses with $1.1 billion in support, enabling $2.5 billion of export contracts which supported just under 10,000 jobs right around this country. Australian businesses from all sectors of the economy have been the beneficiaries of Export Finance Australia's support to grow their exports, and I'm going to take the House through a few examples of the companies and businesses around this country that have had support from the EFA which has benefited us all.

Australia is a world leader in both mining and what's known as METS, or mining, engineering and technology services, and EFA is assisting Australian companies to sell this expertise all over the world. A company known as RUC Mining utilised EFA support to support their underground coppermining business expanding into the dynamic South-East Asian markets. After securing a contract in one of the world's largest copper deposits in Mongolia, the Australian company needed special hoists, known as winders, that are used to raise and lower conveyances within the mine shaft. Australian banks had little appetite finance equipment for use offshore, and Mongolian finance had steep interest rates. Fortunately for this company, AEC Mining, EFA was available and worked with this company and granted them a US$12 million loan. This assisted AEC Mining to grow their workforce from 120 workers in 2004 to over 2,000 today.

In renewables, Australia supports Australian businesses on the cusp of the booming international demand for renewable energy exports—for example, Altus Renewables, which produces and markets biomass based fuels, converting wood based waste into densified wood pellets and absorbents for domestic and industrial use. Around 95 per cent of Altus's operations are export facing. After securing a contract with a Japanese buyer last year, Altus Renewables turned to EFA to support the upgrading of its facility for greater capacity and to enable it to complete the construction of a dedicated storage and export facility at the Port of Bundaberg.

Then there's Western Australian company Biogass Renewables, which specialises in the construction and operation of bioenergy plants using a technology known as anaerobic digestion, in which the plants convert organic matter, like food and agricultural waste, into biogas. This can then be used for electricity generation and heating and can even be converted to natural gas. One of Biogass Renewables's upcoming projects is to install an onsite biogenerator for a major Australian grain business, enabling that business to generate their own electricity and expand their operations to increase their exports. Though Biogass Renewables aren't a direct exporter in this project, their work is a critical part of their customer's export supply chain. So EFA is providing this innovative company with a performance bond and warranty bond totalling A$850,000 to provide securities under the construction contract. It's a very practical means of an Australian credit agency providing support for an emerging industry that is helping global supply chains for other Australian industries.

In the areas of pharmaceuticals and science, as well as general chemistry research, Export Finance Australia's contract loans have enabled Perth based Epichem to expand and grow its business workforce and capabilities. I visited Epichem in May of this year. The CEO, Colin La Galia, kindly showed us around his laboratories and technology park in Bentley, where he oversees an amazing workplace culture, with hardworking, friendly and enthusiastic staff working on the cutting edge in entrepreneurial pharmaceutical development. Epichem carries out a vast range of services, including custom synthesis and analytical services as well as technical problem-solving for scientific and chemically related problems. Epichem's customers range from small operators to large multinational pharmaceutical companies in over 35 countries, yet it operates out of a couple of small laboratories in Bentley, Western Australia. Over 80 per cent of the business's revenue is derived from an international customer base made up of many well-known pharmaceutical companies, biotechs and research organisations, as well as some not-for-profit NGOs. The laboratory I visited in Bentley was in part financed by an EFA export contract loan of $750,000. That lab is now double the size it was and I'm sure it will continue to grow, and it will all be because of that initial kick-starter loan that EFA was able to provide where others were not.

Another beneficiary of Export Finance Australia has been local Australian designers seeking to enter the global market—for example, jeans company ThreeByOne, which comprises three high-quality brands: Neuw Denim, Rolla's Jeans and Abrand Jeans. These brands are sold in stores across the world, including Canada, Japan, Norway, the UK, and the US, and through online retailers like ASOS and boohoo. With global expansion has come higher demand to keep stock on hand, putting pressure on their working capital. So Export Finance Australia provided ThreeByOne with a $2.5 million export line of credit to support their expansion overseas. With the finance able to cover the cost of stock, the brand can continue to focus on building their presence in the global market. The company has since doubled its USA business in the last 12 months, with this trend projected to continue. It's a great Australian business success story—and in fashion, which is not something I speak about much. Congratulations to all those involved in these projects.

Another local brand Aje was in high demand overseas, but the company couldn't finance its move into the international arena without affecting the cash flow of its Australian business. In just over a decade, the company has grown its retail presence locally from one store in Noosa in Queensland to more than 20 stores across Australia, one store in New Zealand and an online platform, ajeworld.com.au. EFA provided Aje with a $350,000 small business export loan to ensure that the cash flow of its Australian business was uninterrupted and that it could fulfil its export orders. This enabled Aje to strengthen relationships with existing buyers and reach new customers in the UK, US and Asia. And, can you believe it, Deputy Speaker, Adrian Norris, co-owner of the company, came across the EFA and its services via a newspaper article! It's good to see print media doing what it needs to do, and to see advertising within print media by EFA and others doing its job and bringing greater awareness of what's available to new and emerging export industries and their ability to access funding through Australia's export credit agency.

We know that Australia is renowned for its agricultural exports, so it goes hand in hand that Export Finance Australia would also support this integral industry in our economy. One beneficiary of EFA is Australian Organic Meats, AOM. This is a Queensland based exporter of premium quality, grass-fed, certified organic beef to wholesalers worldwide. Founded in 2011, AOM is a partnership between two longstanding traditional organic farming families, the Tully and O'Leary families, which each have over 100 years of farming history in Australia. AOM's key export markets are the Middle East, Asia and the US, with export sales making up around 80 per cent of the company's revenues. The high cash-flow nature of the business means it's important to have a substantial forward finance strategy in place to meet any growth in demand. Given the significant working capital required to meet increased demand from its distributors, AOM needed additional finance to manage this preshipment phase. Export Finance Australia provided a $500,000 export working capital guarantee to help AOM, enabling it to borrow the additional working capital.

More opportunities to export Australian goods and services to the world means stronger Australian industries, and that means more jobs for more Australians. The current lack of an equity investment power restricts Export Finance Australia to a narrower range of transactions. An equity investment power will complement its existing suite of financing powers, comprised of loans, guarantees, bonds and insurance. The amendment outlined in the bill before us today, the Export Finance and Insurance Corporation Amendment (Equity Investments and Other Measures) Bill, will align Export Finance Australia with export credit agencies in other countries like the USA, China, Japan, Canada and South Korea, and also with other Australian government financing agencies like the Northern Australia Infrastructure Facility and the Clean Energy Finance Corporation. The kinds of equity investments that it will enable are matters such as shareholding in companies and in unit trusts, and participation in partnerships and joint ventures. This increased financing power will be used to support important infrastructure investments in the Indo-Pacific or export-linked projects in Australia, similar to the ones I mentioned earlier.

This bill will also give legislative effect to the government's decision to provide Export Finance Australia with the ability to offer guarantees for overseas infrastructure transactions without needing to provide a loan for the same transaction. This improves the flexibility and efficiency of EFA and the Australian Infrastructure Financing Facility for the Pacific, which oversees infrastructure financing activities, particularly in the Pacific where transactions may be most appropriately financed in local currencies. Export Finance Australia providing a guarantee for another lender's loan in the local currency is an effective way of facilitating local currency borrowing, and this will inject finance directly into emerging economies in our region. EFA's equity investment power will also be available to the AIFFP, which relies on EFA's governing legislation for delivery of its loans. Importantly, the bill has appropriate safeguards which constrain government spending in this arena. Any equity investment will be on EFA's national interest account, which requires government approval. EFA's other account, its commercial account, will remain unable to be utilised for equity investments. There will be no legislated cap on equity stakes; however, every transaction will require ministerial approval.

I will reflect for a moment on how this bill may assist our investment in the Pacific. The government has claimed that the bill will support Australia's economic engagement with the Pacific and Indo-Pacific. In 2019, EFA was granted wider powers to support financing infrastructure in the Pacific in line with the government's so-called Pacific Step-up initiative, which we know has broadly failed to make a meaningful impact and has simply taken resources away from South-East Asia. We are yet to see a step change in EFA's operations following this. Officials argue that this is the nature of inherently long-term infrastructure projects. But we do know of an undersea cable in Palau, wind farms in Vietnam and an airport in Fiji which have all been beneficiaries of the EFA's increased pivot into the Pacific.

Despite the talk about a Pacific step-up and engagement in our region under Prime Minister Scott Morrison, Australia is more dependent than ever on China for our exports and export related jobs, and, in fact, we depend on the Chinese market more than any other country in the world. At the same time, Australia's economic relationships with some of our other most important neighbours, including India and Indonesia, have gone backward, and backward by a long way.

When it comes to the Pacific, the Prime Minister's delivery has fallen well short of its announcements. The Prime Minister announced the $2 billion Australian Infrastructure Financing Facility for the Pacific back in 2018. Now, 2½ years later, that facility has provided less than $90 million of the proposed $2 billion in Pacific infrastructure financing. With this government it's all talk, no action and all announcement, no delivery. The same could be said of this part of the EFA's remit into infrastructure funding in the Pacific. It surely must be a national priority to make sure it happens. This change enabling equity investments will be part of that, but this is many years later than when this initial $2 billion fund was promised. Our relationships with the Pacific and across the Indo-Pacific must be nurtured through years of hard work, relationship building and resources on the ground and not just hot air from a do-nothing, announcement-loving Prime Minister and his government.

Labor will support this bill, as I've said, because we support Export Finance Australia and the work it does and has done over many years. We support's Australia's economic engagement in the Pacific and the Indo-Pacific. We support emerging exporters, and equally we support those exporters that are having difficulty finding finance for their novel ideas that, with the support of EFA, turn into established businesses that provide jobs. Labor knows that helping Australian businesses and growing emerging economies in our region is in everybody's interest. With that, I will conclude and confirm that Labor does support this bill.

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