Wednesday, 20 February 2019
Export Finance and Insurance Corporation Amendment (Support for Infrastructure Financing) Bill 2019; Second Reading
Australia has proven to be an extraordinarily successful liberal democracy, perhaps indeed the most successful in all of human history. That success is built on many things, not the least of which is our geography. As an island continent hanging from the tip of Asia and linking East Asia with the vast South Pacific, Australia was almost predestined to be a nation underwritten by trade. From the days of John Macarthur through to the TPP-11, Australia's wealth and success, indeed our very security, first as a colony, then as a dominion and finally as a proud, independent nation, have rested on a vigorous free trade agenda.
That agenda is no better demonstrated, and strengthened, then by the dazzling array of game-changing free trade agreements negotiated and concluded by this Liberal-National government with the governments of Japan, China and Korea. Together with the TPP-11 they will open markets and opportunities right across the Pacific basin from Singapore to Chile. But any nation, like any business or individual, must never lose sight of where it comes from and the importance of its strength and relationships. These invariably lie in your own backyard. For Australia, our backyard is the South Pacific and, to even greater extent, the Indian Ocean. Relations across both oceans effectively bookend not just our geographic reality but also our future prosperity, as they also benefit the security, stability and sovereignty of our friends and neighbours across this vast region.
Australia's engagement with this region, and with the Pacific in particular, is vitally important. The Prime Minister recently made Australia's abiding interest in a strategically secure and economically stable Pacific clear to all. Each trade, aid and foreign policy initiative of the Australian government must acknowledge the strategic security and economic stability of the Pacific as a fundamental objective so that all sovereign nations across our region can individually and collectively prosper in a climate of open free trade and cooperation to better meet the needs and aspirations of their citizens.
It is certainly no coincidence that this mutually beneficial objective to broaden and deepen Australia's engagement with our friends and neighbours across the region is also a key aim of the government's 2017 foreign-policy white paper and, as such, will guide the foreign affairs and trade agenda of Liberal-National governments for years to come. With these principles in mind, the Export Finance and Insurance Corporation Amendment (Support for Infrastructure Financing) Bill represents just a part of the wider package of measures that are very much in lockstep with the key objectives of the foreign policy white paper and further strengthens Australia's support for the Pacific and will maximise Australia's participation in infrastructure projects across the region.
Here in Australia debate is long and loud on infrastructure due to an almost insatiable demand for improved productivity, safety and convenience—and so too in the Pacific. In particular, in the South Pacific, there is a demonstrable increasing need for infrastructure. The Asian Development Bank estimates that the Pacific region will require US$3.1 billion in infrastructure investment each year through to 2030. Australia can, partly through the agencies empowered by this bill, play an important role to help meet this burgeoning demand. We need new creative ways of financing and funding, new ways of bringing groups together to offer skills and solutions that effectively leverage our strengths and truly work for the communities concerned.
Here in Australia we have sought to embrace new ways of delivering long-term plans and infrastructure. That might include helping unlock private capital through public-private partnerships or even the City Deals that this government pioneered here in Australia, and the like. It follows, therefore, that we also need to embrace new arrangements when it comes to assisting our friends in the Pacific with their planning, financing and funding of critical long-term infrastructure. To this end, international alternative arrangements must be considered; arrangements that include proposed amendments to the Export Finance and Insurance Corporation Act, which are the subject of this bill, and form part of a significant new package of security, economic, diplomatic and personal relationship initiatives that will build on existing strong relationships in the Pacific. Better infrastructure solutions across the Pacific will contribute to stronger growth not only in the communities and countries concerned but also across the region as a whole, including in Australia. The Australian government strongly believes that productive and sustainable infrastructure development is mutually beneficial to Australia and our friends across the Pacific, and the government has made a clear decision to invest accordingly.
This bill seeks three principal amendments to the Export Finance and Insurance Corporation Act 1991. Firstly, the bill will allow the Export Finance and Insurance Corporation—commonly referred to as Efic—the ability to finance overseas infrastructure projects, based on an Australian benefit test that will open a larger pool of potential projects eligible for Efic financing. The benefit test will not only account for direct benefits such as the immediate involvement of Australian businesses and for indirect benefits such as greater access to supply chains and new markets, and, therefore, more Australian jobs but will also hold the promise of future benefits to Australia such as improved transport infrastructure and regional connectivity, which will, over time, encourage better economic integration.
Opportunities for dramatically improved regional connectivity are already underway, thanks to the leadership and foresight of this Liberal-National government. Australia is already a key project partner with the governments of Papua New Guinea and the Solomon Islands in the Coral Sea cable, which will soon link PNG and the Solomon Islands with Australia. The Coral Sea cable is a very significant piece of regional infrastructure, one that promises boundless opportunities for deep and lasting connections between each of the nations involved; not just economic opportunities but also improved education, health and person-to-person pathways that have the prospect to open and develop further, to provide better solutions. E-health, e-education: this is where infrastructure counts, and we're already doing it.
Secondly, the bill will increase Efic's callable capital by $1 billion on its commercial account. This amendment will give Efic greater flexibility and credibility when managing the expectations of infrastructure project proponents and finance partners. This amendment also provides the means for Efic to offer more commercially significant financing to large overseas infrastructure projects. This additional $1 billion in callable capital represents an effective increase in Efic's capital base of approximately 150 per cent. It is a substantial commitment from the Liberal-National government to increase opportunities for Australia while at the same time assisting our Pacific neighbours. Further, the decision to increase callable capital by legislative amendment will also, with the deliberative authority of the parliament, provide a higher level of certainty for all parties involved.
Thirdly, this bill allows Efic to conduct future operations under the trading name Export Finance Australia. This simpler trading name and stronger brand recognition that references Australia will no doubt boost the profile and work of Efic among Australian businesses and in overseas markets. Only last week I tabled a report in this parliament, on behalf of the Joint Standing Committee on Foreign Affairs, Defence and Trade, that was the product of an inquiry into how small and medium Australian businesses leverage free trade agreements. One of my takeaways from the 153 submissions and 16 public hearings of that inquiry was the relatively low level of awareness and understanding of the work of Efic. Thus I have every confidence in the simplification of its branding name for the purposes outlined in this bill. It will be welcomed, especially by small and medium Australian businesses.
It should be noted, nevertheless, that this bill makes no change to the existing strict risk controls and prudent lending guidelines for Efic in its enhanced infrastructure role or in its commercial renaming, which are made possible by way of these amendments. Efic has achieved a consistently strong record of profitability with high due diligence standards over the last 20 years, which, together with Efic's equally robust environmental and social risk assessment criteria, will be meticulously maintained. There can be little doubt that a greatly enhanced role for Efic, including its ability to complement the Liberal National government's new Australian Infrastructure Financing Facility for the Pacific, will boost Australia's attractiveness as an effective partner in regional infrastructure development, improve opportunities for Australian businesses and help to drive sustainable economic growth.
This is such a quintessentially Liberal-National reform. I say this because the amendments outlined in this bill are not simply worthwhile in an immediate or operational sense but also demonstrate great strategic foresight and have tactical merit by seeking to leverage our existing strengths. This bill is not just about empowering Efic to support infrastructure projects and support Australian businesses; it will feed in and complement other initiatives, such as the recently concluded free trade agreements and extensive domestic reforms that support and grow small and medium businesses in Australia.
Yes, this Liberal-National government has its fingerprints all over these reforms, and proudly so. This bill is yet another textbook example of effective policy implementation from the Liberal-National government, policy that is productive, sustainable, mutually beneficial and, most importantly of all, of fundamental importance to Australia, and it's in the best interests of Australians and, indeed, our nearest neighbours. I commend the bill to the House.
The Export Finance and Insurance Corporation Amendment (Support for Infrastructure Financing) Bill 2019 allows the Export Finance and Insurance Corporation, Efic as it's more commonly known, to fund offshore infrastructure projects in our region, most notably in the Pacific. It's an area that's dear to my heart as a former parliamentary secretary for the Pacific Islands. I worked for an extended period of time with many of our dearest and nearest neighbours, their governments and their people.
I understand the need for greater support from Australia for development initiatives in the Pacific, particularly around infrastructure funding. It's hopeful that this bill will provide that support. The bill will provide Efic with an additional $1 billion in capital to do so. These loans will be done on a commercial basis and must meet an Australian benefit test. Of course, infrastructure development is one of the most critical needs in the region, particularly the Pacific Islands. There is a clear expectation of many of those in the Pacific region that Australia will take a lead in supporting development in those nations.
The fact is that the Pacific is not travelling well at all. Many in our region face a range of development challenges. These include small domestic markets, narrow production bases, weak regulatory and private sector capacity, low savings and investment rates, and high trade and business costs. They also have a young and very fast-growing population that needs growth and jobs.
The Pacific has also performed as one of the worst regions when it comes to meeting millennium development goals. On the current measures of relative development, it's possible that it won't be too long before Africa overtakes the Pacific on progress towards achieving those development goals. That would mean that the Pacific would be the least developed region in the world. That is quite a scary proposition: the Pacific—our backyard, our neighbours, our friends—being the least developed region in the world. Australia should be a natural partner of choice to assist our close neighbours in their development needs.
Of course, under this decaying Abbott-Turnbull-Morrison government, we haven't been providing that leadership that our friends in the Pacific have needed. Our leadership role has been eroded under this government. Labor has been warning for some time now that, under the Abbott and Turnbull governments, Australia has dropped the ball in the Pacific. One obvious need in the region is for greater infrastructure investments. As Labor has repeatedly stated, infrastructure investment projects should be transparent; conform to environmental and social safeguards; and not place unsustainable debt burdens on regional countries. Australia has an interest and a responsibility to assist our small regional neighbours with projects that best meet their development needs and provide them with maximum benefit.
That is not to say this is not about any other country; it's about the role that Australia wants to have within the region. That's why Labor welcomed the announcement in July last year by Australia, the United States and Japan of a trilateral partnership to invest in infrastructure projects in the Indo-Pacific region. Labor strongly supports moves to engage more closely with our neighbours within the region. While infrastructure cooperation is a good start, the government needs to do much more. We need to be proactive within the region and to demonstrate our commitment to our Pacific neighbours. The changes to Efic proposed in this bill align with Labor's policy on financing infrastructure within the region. Efic will also be the instrument for providing the loan components of the new Australian Infrastructure Finance Facility for the Pacific, the government's new, other mechanism for providing infrastructure projects.
Of course the Prime Minister's attempts to repair relations with Pacific nations were dealt a blow when the former Minister for International Development and the Pacific, Senator Fierravanti-Wells, launched an extraordinary attack midway through the Prime Minister's tour of Vanuatu and Fiji in January this year. In an opinion piece to the Sydney Morning Herald and The Age, the former minister slammed the Prime Minister's key Pacific initiative, accusing it of being 'disingenuous'. Labor has strongly argued that Australia must demonstrate greater leadership in the Pacific and play our part in ensuring a stable and prosperous region, but the one thing that we shouldn't be doing is demonstrating chaos and division and misunderstanding about the needs of our Pacific neighbours. We should be playing our part to ensure a stable and prosperous region.
The Liberals' announcements of funds for projects to deal with the impacts of climate change are welcome, but they're very late. No issue has done more damage to Australia's standing in the region then the coalition's refusal to take the issue of climate change seriously. When I was the representative of Australia to the Pacific Islands as the parliamentary secretary, whenever I would meet with representatives of the Pacific Islands, their No. 1 issue affecting the livelihoods of people within their region and their countries is climate change. When you talk about a place like the Marshall Islands or countries like Tuvalu or Kiribati, populations are facing the prospect of having to move. Governments are buying land in other countries to move those populations because they simply can't inhabit the lands that have been their traditional homelands for thousands of years—because of wells becoming salinised, because of being unable to cultivate or grow crops on salinised land, because sea level rise means water is literally lapping up onto vital infrastructure that they rely on for transport. This has been an issue that we've known about for the last decade.
It is unconscionable for the government to come along and have this argument within their caucus and within their party room about whether or not climate change is real and removing a price on carbon emissions, cutting back support for renewable energy development, trying to close down the Clean Energy Finance Corporation and trying to close down the Australian Renewable Energy Agency, which is financing projects that will reduce carbon emissions in our country, which will have a direct effect on the livelihoods of people in the Pacific. That is why our Pacific neighbours are upset with this government. That is why they've had enough of the bickering and the disingenuous nature of the debate that's been going on within this coalition about whether or not climate change is real, when every other nation in the world seems to accept the science of climate change, and want it to get on with the job of reducing carbon emissions.
The Pacific has felt the impact of the record $11 billion in aid cuts under this government. A quick trip by the Prime Minister to the Pacific, after years of his government's neglect of these critical relationships, isn't going to fix that. Unlike the Abbott-Turnbull-Morrison government, Labor will treat our Pacific partners with respect. Unlike the coalition, we understand the need to reflect our commitments to our Pacific neighbours in our actions, particularly around climate change. A Shorten Labor government will work in partnership with Pacific island states to contribute to their security and prosperity and that of the entire region and will particularly work with those nations to boost living standards through infrastructure development and important social projects around health, education and women's rights in these countries but, most notably, around taking a serious approach to climate change, getting fair dinkum about reducing carbon emissions in our country so that the effects on our Pacific neighbours can be reduced into the future.
Part of being a good and responsible global player means supporting and assisting our neighbours. This is a standard tenet of international relations conventions. It encourages prosperity and peace, and that benefits everybody. Economic integration into the Pacific is not new to Australia. Our country has been deeply enmeshed in the region for well over a century, and we have issued white paper after white paper committing Australia to more ambitious engagement in the region to ensure long-term sustainable growth, increased economic resilience and national security.
The people of the Pacific islands are our neighbours. As my colleague the member for Kingsford Smith has mentioned, they are in the bottom percentile of socioeconomic status in the world. This is not a record we as a wealthy and prosperous nation should be proud of—that our direct neighbours across the Pacific are amongst the poorest in the world. We can and should be doing a lot more to ensure that the nations of the Pacific are prosperous, stable and democratic and that their people are healthy, educated and able to participate fully in the community of nations.
This bill, the Export Finance and Insurance Corporation Amendment (Support for Infrastructure Financing) Bill 2019, builds upon what is already happening by providing the Export Finance and Insurance Corporation, Efic, the ability to further fund offshore infrastructure projects in our region through the provision of an additional $1 billion in callable capital. This will be done through the provision of loans on a commercial basis and which, importantly, meet an Australian benefits test. So it's a hand up, not a hand out.
In October last year, the Leader of the Opposition announced that a Labor government would create a government funded infrastructure bank for the region, saying:
My vision for Australia is to actively facilitate concessional loans and financing for investment for vital, nation-building projects through a government-backed infrastructure investment bank.
The bill before us and the proposal that it includes align strongly with this ambition. Financing infrastructure of our shared region of the planet is happily a goal shared across the aisle.
Importantly, Efic will be the instrument that provides the loan component of the new Australian Infrastructure Financing Facility for the Pacific which was announced in November last year. The bill, alongside the mechanisms implemented through the AIFFP, will allow Australia to provide financial assistance to the region to build critical, nation-building and high-priority infrastructure through the facilitation of concessional loans and investments into relationships which are fundamental to the region's stability and our long-term security.
I mention long-term security quite deliberately. It's in our interests to have a stable neighbourhood. In your neighbourhood at home, in your own house, it is in your interests to have neighbours who are also in stable homes. We do best when we look after each other. It's in Australia's security interests to have a stable region. So we can provide this sort of assistance, for want of a better phrase, for the right reasons—to assist people, to lift them out of poverty and to nation-build—but also to look after our own interests. Australia is not the first country to sign on to such a program. New Zealand has one. Japan and the United States are exploring options.
It's our responsibility in Australia to ensure that our region is supported. The Asia-Pacific's infrastructure market is expected to grow by seven or eight per cent a year over the next decade. That's estimated to reach a value of $5.36 trillion a year by 2025, representing, I'm told, 60 per cent of the world's total. I do stress that that's the Asia-Pacific, not the Pacific. The nations of the Pacific can be part of this story, but the challenges there need to be faced and overcome, particularly underinvestment and difficulty in accessing finance in order to maintain and replace ageing infrastructure. Pacific nations need investment in electricity and energy assets, manufacturing facilities, transportation networks and water infrastructure. Without this investment, our neighbours risk falling behind even further, leading to even lower living standards and poorer outcomes in health and education.
I take up the comments of the member for Kingsford Smith: climate change is absolutely the No. 1 issue facing Pacific nations. The leadership of the Pacific Islands Forum even place it above global national security concerns. They say climate change is an existential threat to their countries. We've seen the reports of seawater literally washing communities away. It's affecting fresh water supplies. We all remember that infamous joke from the Minister for Home Affairs with the former Prime Minister, Tony Abbott, when they were caught with the sound mic over them, having a bit of a joke about water lapping at the feet of people in the Pacific islands. Well, it's no joke to them. It might be a joke to people in the nice, wealthy suburbs of the North Shore of Sydney, but it's no joke to the people of the Pacific, who are living with an existential threat of climate change.
It's our responsibility to be part of the solution. It's not all our responsibility; it's a shared responsibility, but, if we are truly going to be a leader in the community of nations, we have to shoulder our burden. It's part of our responsibility, and we have to face up to that. Physically we're an island, but morally we shouldn't be. Providing assistance for infrastructure development means that Australia is being a good neighbour and friend, but, unapologetically, we are, of course, looking out for our own interests.
It's fair to say that some in Australia will view any assistance to overseas nations as a waste of money or as money that should instead be spent in Australia. Some of the comments that members may hear when they're doorknocking around the community are: 'Why should we be supporting poor people overseas when we have our own poor people to look after? What about the pensioners?' We all hear it: 'Why aren't we doing more for the pensioners? Why aren't we doing more for our own people instead of looking after people overseas?' Labor's view is that it's not either-or; it's both. We can and should be a decent member of the international community, not instead of being good and decent for our own people but as well as. We can do both. There is enough wealth in Australia to ensure that we can meet these obligations jointly.
I am drawn to the famous example of the rich man, the poor man, the refugee and the 100 beans. The rich man hoards 99 beans for himself and then whispers to the poor man, who has been left with one bean, 'Hey, watch that guy'—meaning the refugee, who has nothing—'He's after your bean.' We see this scenario played out day after day in Australia. Those with extraordinary wealth and power are turning Australians against each other, pensioners against students, retirees against sole parents, workers against the unemployed. Blame each other for your problems in life! Blame your neighbour who is darker skinned than you or who worships a different God, the woman who demands equality, the kid who's gay. These are the people to blame for your problems and your troubles in life—just so long as you never cast your eye to those who own the billions, who live in the mansions, who fly the private jets; just so long as you never say, 'Maybe you've got more than your fair share.'
But I digress. We invest in the Pacific because it's both the right thing to do as an international citizen and the right thing to do for our own national interest. Many people look at these problems with a sense of disconnect. They look at the road issues in the Pacific region without a sense of appreciation for how addressing the issues there can impact our own lives here in Australia and the wellbeing of the local economy in places like Tasmania. But by investing in the region, by boosting Pacific economies and improving Pacific infrastructure, Tasmanian exporters, for example, are better able to access new markets. Having improved roads and transport networks through the Pacific means that our exporters are better able to get their goods to market there. It opens up opportunities in the Pacific for people to be able to perhaps afford the goods that we have to sell. So it's a symbiotic relationship.
Tasmanians do have a significant presence in the Asia-Pacific. The Asia-Pacific loves Tasmanian produce, and exports from our island are growing year on year. Our produce is trusted. It carries a high brand recognition and it demands a premium. Mainland China remains our biggest export destination, closely followed by Malaysia, Taiwan, Japan, Vietnam, Indonesia, the US, Thailand, Hong Kong, India, South Korea, New Zealand, Singapore and Sri Lanka. I look forward to the Pacific islands joining that list of export markets for Tasmanian produce. There's a lot that we can share together in this regard, and Efic, which of course is to be renamed Export Finance Australia as part of this bill, can be part of that success story.
I look forward to having a continuing appreciation of the export success story that Australia has in the Pacific region. We can and should do more to be in partnership with our neighbours in the Pacific. I had the great pleasure, when I used to work for Duncan Kerr, who was a former parliamentary secretary for the Pacific Islands, of travelling to the Pacific with him and seeing firsthand both the opportunities and the challenges across those nations. They're hardworking, resilient people, and we can and should be doing more, as neighbours, to ensure that we have a greater partnership. I note in passing the Pacific Islander fruit-picking scheme, where Pacific Islanders come to Australia for the fruit-picking season; they'll do a bit of fruit picking and send the proceeds home, and those proceeds then support their families back home. That's laudable, and it helps get the fruit picked, which is difficult to do in Australia and certainly Tasmania; it's difficult to get the labour to have that done. So the Pacific islands have a role to play there. The more we can forge good relationships with our Pacific neighbours and the more we can build on a trusting, respectful relationship across the Pacific and see ourselves as part of, not ancillary to, their future, the better off we all will be. Thank you.
I welcome this opportunity to speak on this bill, the Export Finance and Insurance Corporation Amendment (Support for Infrastructure Financing) Bill 2019, and I thank my colleague the member for Lyons and all those from the opposition for their contributions today. I guess this is just another example of the coalition following Labor on policy. It seems to be happening a lot, which is probably not a bad thing. Imitation is the best form of flattery. So we'll see how this goes. I know it's being referred to a Senate inquiry. We'll look forward to what comes out of those recommendations. I'm sure the Senate will look at those when this bill comes to their chamber.
We announced a policy on 29 October, and the Prime Minister announced his on 8 November. Obviously, our policy is to strengthen those partnerships that we have with Pacific nations, and a number of factors that were announced around that have come through the coalition's policy. But the Liberals' commitment has only come about because of their history of blunders, sadly—their missteps, their insults and their policy failures when it comes to the Pacific. These failings came to a head in the last quarter of 2018, since the current Prime Minister was given the role. You can contrast that with Labor. Here on this side of politics, we genuinely want to engage with the Pacific. I'd like to put on record the work of the member for Corio and of Senator Claire Moore, who, sadly, is departing this place. They are both very strong advocates for Australia's role in the Pacific and for the partnership that we have with the Pacific. Their contributions have been very valuable. The member for Corio will continue to do that, as well as a number of other people in this place, but Senator Moore will be sadly missed in her advocacy for the Pacific.
This proposed legislation is welcome but it is long overdue. But it does seek to reaffirm our place in the Pacific, which is a good thing—a place which, sadly, has been compromised by this government, which has clearly taken its eye off the ball. As a result, other nations are gaining a foothold in the region. That, in itself, is not necessarily a bad thing but Australia, as the nearest neighbour, should be playing a leading role. The member for Lyons made some valuable points: it is good for security in our region and there are also opportunities for our businesses to work in collaboration with those nations.
The former minister Senator Fierravanti-Wells' successor, Senator Ruston, was appointed as an assistant minister by the PM after all that kerfuffle with the leadership changes. The former minister said that it sent the wrong signal. She said: 'I'm disappointed that this is happening at a time when we have growing interests and growing contestability in the Pacific region.' I guess this is just further proof that this government has not been taking the Pacific seriously at all. Another example was when the Prime Minister snubbed Pacific islands leaders by failing to attend the Pacific Islands Forum in early September. Other leaders were there but our Prime Minister was missing in action, which does not send a good signal at all.
And then we have the issue around the current environment minister, Melissa Price. Senator Fierravanti-Wells called her 'an L-plate minister', which is a little bit harsh—but I guess they are all up for criticism! It was reported that, at a Canberra restaurant, the environment minister said to the former president of Kiribati, Anote Tong: 'I know why you're here. It's for the cash. For the Pacific, it's always about the cash. I've got my chequebook here. How much do you want?' I think we were all pretty offended by that, not just those Pacific nations and Mr Tong. It is reported that Nuie's Premier, Toke Talagi, said: 'People say some stupid things sometimes.' When you are dealing with our neighbours, you need to be a bit more diplomatic in your approach. That's another failure of this government.
Commenting on the issue, Cook Islands Deputy Prime Minister Mark Brown mentioned the government's policy failures on climate change. He said: 'I do understand that science is a difficult subject for some people, but some of these comments coming from Australian ministers kind of resemble the comments you hear from the flat earth society.' I very much agree with him. I think there are a number of people on the government benches who are still debating whether the earth is flat or round! Seriously, we have to get with the times; it is quite embarrassing, really. I agree with the Cook Islands Deputy Prime Minister's comments.
The September Pacific Islands Forum declared climate change to be 'the single greatest threat to the livelihood, security and wellbeing of the peoples of the Pacific'. This was a forum that our Prime Minister did not attend—and, sadly, he leads a government full of sceptics. There is an opportunity for that to change in just a few weeks time at the upcoming election. Whilst this proposed legislation is welcome, you can't have a Pacific policy if you don't have a climate change policy. We need to do our bit but first we've got to agree; among those opposite, sadly, there are many that don't.
Another example of the chaos and division of this government is the agriculture visa debacle. We have to look at that as undermining existing programs. It will undermine Tasmania's horticultural industry, which relies on the seasonal worker program. In my electorate, I have a berry farmer, a major large company, which needs thousands and thousands of workers and really does rely on the Pacific islands seasonal visa program. It helps with their product and it helps with the expansion. They are incredible workers. I know a number of the Niueans who are working in farms just near where I live, and they are some of the most amazing strawberry pickers you could ever come across.
This agriculture visa was really a thought-bubble concocted by the National Party to give the new leader of the National Party a win. It didn't happen because the senior coalition partner slapped the junior down—
It is important to reiterate the importance of the relationship this country has with our Pacific nations and some of the failures of the current government, but I do acknowledge that we are supportive of this bill. We will see what happens in the Senate inquiry. The relationship is very important to the people in my electorate, and that's what I am talking about when I am talking about the agricultural visa. You might like to say that it is bit of foreign aid to have people like the Niueans come and pick strawberries in my electorate and then send that money back home to their country. I think it's very, very relevant. Maybe the member is a little bit offended by what I've said because it is actually true. But we then look at the backpacker tax, which does has significant implications for some of those workers. That was an issue where this government failed to address the labour shortages in a lot of regional Australia, and some of those are National Party seats, would you believe. Anyway.
We'll go now to the cuts to foreign aid where this government has cut $11 billion. That's a direct impact on the people on those islands. That aid went directly to the Pacific. This is another policy failure—proof, yet again, that this government does not take the Pacific or its people seriously at all. The Pacific will be a core business for Labor. As I said before, we announced some policy and then the government followed late last year. For starters, we will tackle climate change, because we don't believe the earth is flat and we do acknowledge that it is a significant issue of great concern to the people in the Pacific. We welcome the fact that the government has woken up and mirrored our plans in this bill, as I said before, which is important, and I think that's very relevant. Labor has a plan to create a government-funded infrastructure bank for the Pacific to drive investment in the region. New Zealand is already doing this. It's a bit sad when we have to follow our friends from over the ditch, but that's what happens when you act very, very slowly. The United States has passed the BUILD Act. This will establish a development finance corporation called International Development Finance Corporation. A similar body exists in the UK. They will invest solely in Africa and Asia. The international community is acting, and it is welcome that this government is again following.
Labor also welcomes the Australian benefits test that forms part of this bill. This test means any alliance provided by Efic must have a benefit to Australia or a person conducting business in Australia. I just note some of the businesses in my state, those in advanced manufacturing, who can play a critical role in some of the infrastructure building in the Pacific, whether it be through renewable energy generation, with new technology that we can assist Pacific Islanders with, and, of course, addressing climate change. This test means that any loans provided by Efic must have a benefit to those people, which is really important for our own business. Labor will reposition Australia in its rightful place as a friend to the Pacific. In all those examples I mentioned before, we do have some groundwork to make up to re-establish the important partnership that we have. We will enhance security and prosperity in the region. This government can't do it because of their inaction and inability to accept climate change, which our Pacific friends so desperately need us to act on. This proposed legislation is welcome. We will be supporting it, but if the other side were genuine they would also join Labor by making a genuine effort to address climate change.
I reckon a lot of people don't think much about Efic, the Export Finance and Insurance Corporation. I have to confess that I didn't know a lot about it until several years ago when I got to spend some time working with Efic, with the corporation, and learning what they do. The people who do know about it, exporters, those who've really worked hard to find finance for overseas projects that they're involved in from Australia, know that it is really a key quiet achiever, assisting Australian businesses with financing and insurance to help them expand their reach internationally.
We obviously support the Export Finance and Insurance Corporation Amendment (Support for Infrastructure Financing) Bill 2019 to expand the remit of Efic in this place. But we look forward to it being sent to the Senate Foreign Affairs, Defence and Trade Legislation Committee.
There are two things that this bill does. One is to change Efic's name to Export Finance Australia. I'm sorry, but I'm a bit sad to see the old name go; I like the name 'Efic', and I don't think 'Efa' has quite the same ring to it! So I'm a bit sad about that, but I know it will continue to bridge the gap in financing for entrepreneurial Australians who can see export and overseas opportunities. The main change in this bill is giving Efic an extra billion dollars in funding to finance infrastructure investments in the Pacific region, and that includes East Timor. This is a $1 billion hit—a big amount of money—of callable capital to individual countries or companies, being provided at a commercial rate. It's a change because, currently, Efic can only fund projects on its commercial account when it's an export opportunity with a defined minimum of one-third Australian content and Australian job creation measures. Under this bill we get what's called an Australian benefits test, which means it must have a benefit to Australia or a person carrying out business or other activities in Australia—so it is a change in the way that they need to think. I see that the change also means that projects can use local content and local labour. When we're talking about the Pacific, that counts as real development benefits for the host countries.
I do want to point out that there is a strong shared view about the need for Australia to provide funding for projects in the Pacific. In October last year, the Leader of the Opposition announced that we would encourage the private sector to invest in projects, in much the same way as New Zealand, the US and Japan are doing or are considering doing, and that Labor would actually facilitate concessional loans or financing for vital nation-building projects. This is about being a partner of choice for Pacific development, and I think we're all very mindful that that has huge benefits for this nation as well as for our neighbours. I think it goes a long way to enhancing security and prosperity in our region. I was very pleased to see that, less than 10 days after the opposition leader's announcement, we had similar words coming from the Prime Minister announcing both this extra funding for Efic and the creation of the infrastructure financing facility for the Pacific and Timor-Leste.
What the Senate work will allow for is an exploration of how Efic will provide the loan component for that new facility, to ensure there are no unintended consequences and to see if there's a better structure. There are concerns in the investment community about the size of the additional capital for Efic and what consequences that has for the quality of projects that might flow from it. This is also a big change for Efic—a different way of thinking. Until now, it has focused on projects that are in Australia's interests. This bill is now asking it to assess projects that are in another country's interests. I think big changes deserve careful consideration.
We do have a real responsibility, as the biggest of the Pacific Islands, to help them tackle the challenges that come from climate change, a lack of health facilities and other gaps in infrastructure. We need to do it right. I refer to something the member for Braddon said. In her words: 'You really can't have a Pacific policy if you haven't got a climate change policy.' Hopefully, we will see those things put in place so we can do the best by our Pacific neighbours.
I also rise to speak on the Export Finance and Insurance Corporation Amendment (Support for Infrastructure Financing) Bill 2019. We have heard from previous speakers that it will allow Efic to fund offshore infrastructure projects in our region, will provide Efic with an additional $1 billion in callable capital to fund infrastructure projects in our region and will renew our commitment to partnering with and investing in our closest neighbours.
We all know here that infrastructure development is one of the most critical needs in the region, particularly for our Pacific neighbours and Timor-Leste. The development sector, however, and some key stakeholders have raised some concerns about this bill, including the reason for the large increase in the callable capital for Efic. They have questions about the quality of projects that will be funded, the lack of accompanying policy work to improve development outcomes and the conflicted nature of Efic to fund overseas infrastructure projects that were in Australia's interests but not in the interests of the recipient country. We are aware that there need to be strong policy frameworks around this bill. There are many academics and others who have made submissions with respect to that. We need to get this right. A Senate legislative committee has been agreed to by both major parties to examine the impacts of this particular bill. I think that's the right step going forward.
It is interesting, though—just to give a bit of context to this bill—that very recently Labor made a very important announcement in this policy space on financing infrastructure in the region. The Leader of the Opposition, Bill Shorten, last year on 29 October talked about:
My vision is for Australia to actively facilitate concessional loans and financing for investment in these vital, nation-building projects through a government-backed infrastructure investment bank.
When our Pacific neighbours look for partners to invest in critical infrastructure projects, a future Labor government would make sure that Australia is the first place that they look. We'll make sure, to quote the Leader of the Opposition again, that Australia is seen as the partner of choice in our region. Of course—and this is interesting as well—within a couple of weeks of the Leader of the Opposition's announcement, Prime Minister Morrison effectively copied this announcement. In November he announced the government's new mechanism for providing infrastructure projects, the Australian Infrastructure Financing Facility for the Pacific. Efic, of course, will become the instrument for providing the loan component of this new mechanism.
This is about the role that Australia, as a middle power, should play in our region. It's about our role as a good, responsible international citizen. When we help our neighbours prosper, we all prosper. Our world becomes a safer one. Our region becomes more secure. When you engage, interact with and support countries in our region, it's actually in our national interest. It benefits us as well as them. Good governance, better governance, less poverty and better systems in place mean less violence, less conflict, more trade, more engagement and, of course, healthier and happier people right throughout the region.
Do you think that this government understands this? They have cut $11 billion in development assistance on their watch over the last five years—development assistance that is critically important for these goals, for our goals and for our national interest. When our neighbours can thrive, whether it's through their transport, their telecommunications or the energy and water infrastructure that they need, our region is the better for it. We as a nation are the better for it. This goes for development assistance as well as these concessional loans.
We know that these loans will be granted on a commercial basis and must meet what's called an Australian benefit test. We need to help build local capacity to ensure that domestic policy frameworks are embedded so that Australian infrastructure support goes as far as it can. It creates the positive impact that these recipient countries need. Both the major parties have agreed to a Senate legislative committee which will examine the impacts of this bill. Pending this review, the shadow minister for trade, who's here today and sitting right next to me, has foreshadowed that there will be certain amendments that may be needed in the Senate. This is the right step forward.
I'd like to thank the members for their contributions to this debate on the Export Finance and Insurance Corporation Amendment (Support for Infrastructure Financing) Bill 2019. I acknowledge the bipartisan support for this important component of the government's strategy for enhancing our engagement with and support for our Pacific neighbours. As the Prime Minister has said, Australia has an abiding interest in a Pacific region that is secure strategically, stable economically and sovereign politically. We remain the largest aid donor to the Pacific. This bill enhances our regional commitment, especially to infrastructure. Better economic infrastructure in the Pacific will contribute to stronger growth not only in individual countries but also across the region, including Australia. Productive and sustainable investment is, therefore, mutually beneficial.
This bill also ensures that Australian companies will have the opportunity to apply their technical expertise, project management experience and innovative solutions to the challenges facing our close friends in the Pacific. This bill provides the certainty required by project proponents, financiers and contractors when undertaking major infrastructure projects. As such, this bill further enhances Australia's place as a valued partner and friend in the Pacific. Finally, the bill allows Efic to operate under the trading name Export Finance Australia, which more clearly describes its role. I commend this important bill to the House.
Question agreed to.
Bill read a second time.
Message from the Governor-General recommending appropriation announced.