Senate debates

Wednesday, 6 September 2017


Export Finance and Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2017; Second Reading

9:39 am

Photo of Sarah Hanson-YoungSarah Hanson-Young (SA, Australian Greens) Share this | Hansard source

I rise to speak on the Export Finance and Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2017 before us today. The Greens have significant concerns with this bill and believe the government missed an important opportunity to reform and progress meaningful reform to Efic, reform that we know is very much needed, before we expand the powers of this particular body. Chief among our concerns is the fact that Efic already has a very poor record in assessing the impacts of its investments and has a very poor record of being transparent with the parliament and with the Australian people—the taxpayers that fund these operations. Yet, despite this history, the first amendment of this bill expands Efic's powers. According to the explanatory memorandum:

The policy objective of the first amendment is to allow Efic to offer its specialist financial capabilities in the operation and administration of Commonwealth financing programs, where there is no connection to exports.

Expertise, I guess, is in the eye of the beholder. When you see the very dark, opaque way that Efic has been operating, you have to wonder what expertise indeed we are talking about.

Instead, we need to strengthen the accountability practices of Efic before we consider and contemplate expanding its powers. Efic must get its own house in order before it starts telling other government agencies what to do and how to do it. Efic has repeatedly demonstrated a failure to conduct proper due diligence, evidenced by human rights and environmental violations at Efic sponsored projects overseas. One of those violations is in Efic's work in PNG, one of the most illustrative examples of Efic's poor decision making and lack of transparency—namely, in support of the ExxonMobil led PNG LNG project in 2009. It was at the time the largest single loan that Efic had given. Much of this transaction was done on the National Interest Account and was thus undertaken with the cooperation of DFAT. Nonetheless, it never could have happened without passing Efic's due diligence standards, which have clearly been found wanting.

In 2009, and again in 2012, Jubilee Australia found two major shortcomings of the project. Firstly, from a macroeconomic point of view, the expected financial impacts on the PNG economy were likely to be mixed, and poor governance in PNG meant that it was likely that this project would undermine any predicted widespread benefits for the ordinary people of PNG. Secondly, Jubilee warned that the unrealistic promises, combined with inadequate landowner mapping and political pressures on the landowners to sign on to the project agreement, would eventually lead to landowner discontent. We know that that indeed is what has happened. Jubilee Australia further warned that if this discontent caused low level conflict, the PNG government might send in the military, which would lead to an escalation and bloody civil conflict in the area. This is precisely what has happened. Efic was grossly incompetent in assessing this project's social, economic and political risks.

I question the expertise of Efic in relation to other government agencies and projects and the ability to expand Efic's powers under this piece of legislation. This is just one example, and there are others. One is that Efic has been unable to assess the risks associated with other large resource projects. In the early 1980s, Efic financed and assisted in the expansion of the Rio Tinto controlled Panguna mine. The exploitation associated with this mine led to the Bougainville Civil War. Efic has never really taken responsibility for the role that it played in this, the largest and most destructive conflict in the South Pacific region since World War II.

I don't just highlight these as one-off examples. This is an ongoing systemic problem we have with this agency and its ability to conduct proper risk assessment on social, economic and political risks and take responsibility for the role that this agency has had in escalating problems throughout our region.

The list, of course, goes on. We get to the role that Efic has had in relation to the Northern Australia Infrastructure Facility, the NAIF. In addition to the overseas projects, we now know that Efic is tightly entwined in the operation of funding of projects through the NAIF. Efic's role in the Northern Australia Infrastructure Facility does nothing to inspire confidence in its ability to provide advice to other Commonwealth entities and agencies and to assist them in conducting due diligence. With Efic's support, the NAIF is a secretive organisation that is considering blatantly unethical and illegitimate investments like Adani's billion-dollar rail line from its proposed Carmichael coalmine to the Galilee Basin. NAIF and Efic have advanced the project to the due diligence stage, despite the fact that Adani made clear on 5 December that the loan was 'not critical' and that they applied for it 'because it's available' and 'it doesn't mean it's a make or break for the project'. In light of that statement, the Adani project clearly fails NAIF's own investment mandate. You have to wonder why Efic has allowed it to progress to the due diligence stage.

Illustrative of the Efic-NAIF problems is the recent resignation of Efic's independent non-executive director and audit committee chair, Annabelle Chaplain. As a board member, Ms Chaplain oversaw Efic's work for NAIF from the beginning until her recent resignation. She gave notice to the minister, Mr Ciobo, on 19 July, just weeks after Environmental Justice Australia publicly pointed out a potential conflict of interest; and, despite being referred to as a board member with a term to 31 July 2019 in Efic answers to questions on notice, Ms Chaplain has now resigned. Ms Chaplain's potential conflicts of interest were obvious. She was a board member of Efic, the body assessing the suitability of the Adani taxpayer loan, at the same time as she was a shareholder and chair of Downer EDI, which has an arrangement for $2 billion worth of work with Adani—of course, if it is to go ahead. She is also the chair of Queensland Airports Ltd, which owns the Townsville Airport, which is working to 'secure the opportunity for Townsville to be the FIFO hub for the Adani mine'. No public explanation has yet been made as to Ms Chaplain's resignation beyond 'unexpected commitments'; nor do we know what measures she took previously to avoid the conflicts of interest prior to resigning. In the committee stage, I will be asking the minister specific questions in relation to this opaqueness around Efic and potential conflicts of interest of board members, and I'm warning the minister that it'd be helpful if we could get some answers when we get to that point.

Perhaps the Productivity Commission said it best when it recently summarised its criticisms of Efic. It said:

There is much to be learned from the long experience of EFIC providing concessional export finance. Some of these lessons cover what not to do.

The assisted expansion of the Rio Tinto controlled mine is one example. The exploitation associated with the Panguna mine led to the Bougainville conflict war. These, of course, are things that have to be taken into consideration. The Productivity Commission's review of Efic found that it was failing to support small and medium enterprises where market gaps in access to export financing were likely. The commission also found governance problems such as insufficient internal and independent oversight of compliance with its mandate. The commission was not satisfied that the Efic board was provided with sufficient information in board papers to evaluate whether finance facilities submitted for approval met the requirements set out in the minister's statement of expectations. That, of course, has come directly from the Productivity Commission's review.

Given our concerns about Efic's actions overseas as well as at home, through the NAIF and through overseas exploitation, we will be moving amendments to strike out these provisions in the bill. We cannot support an expansion of Efic's remit when it is so clearly failing to fulfil its current requirements.

We are extremely worried about the lack of transparency to the parliament and to the Australian people in relation to the activities and funding of projects through Efic. We will be moving amendments to remove Efic's exemption from the freedom of information laws. Concerns about Efic's lack of transparency and accountability were identified during the Productivity Commission's inquiry in 2012. The inquiry found that Efic's exemption from the FOI Act should be removed and that Efic should be required to release more information about social and environmental impact assessments. Efic has failed to meaningfully improve its transparency and accountability mechanisms since the Productivity Commission's report, having only adopted a grievance mechanism and introduced a weak and secretive human rights policy. It is high time that we follow the Productivity Commission's recommendations and remove Efic's exemptions from FOI laws.

We will move this amendment, and I call on all members in this place, including the opposition and fellow crossbenchers, to support this amendment. There is no excuse for an exemption from FOI, particularly for an organisation that has proven itself to be untrustworthy when it comes to these issues, looking at the impact of the projects that it funds and taking responsibility for the consequences. This is, of course, taxpayers' money, and FOI exemptions such as what currently exists undermine the ability for the public and the taxpayer to know that their money is being spent appropriately and in line with common standards.

This bill also misses the opportunity to remove one of the many subsidies provided to the fossil fuel industry, which continues to be a bugbear with this government. These fossil fuel subsidies were estimated to amount to $7.7 billion of taxpayer funds in the 2016-17 financial year alone. It is well established that export credit agency funding for fossil fuel development should be considered a fossil fuel subsidy, as that funding is provided by the government. But of course we never hear an acknowledgement by the government of just how much Australian taxpayers' money is going to subsidise the fossil fuel industry, allowed by the federal government. Efic currently lacks policy guidance in these areas, and it is therefore not required to consider the carbon emissions associated with investments it supports. We believe that Efic should not be able to use taxpayer funds to subsidise the fossil fuel industry anymore. Of course, we're not happy with Australian taxpayer money being used to subsidise a mates-rates-type loan for Adani, and the last thing we want to see is the ability for Efic to fund more projects like this into the future.

As the world moves to address the crisis posed by climate change, and especially in the light of the Paris Agreement coming into force in 2016, the role of fossil fuel subsidies is increasingly under international scrutiny. We must end these polluting subsidies, and this is an opportunity to do that here today. That's why we'll be moving an amendment to ensure that Efic does not fund transactions that directly or indirectly support the extraction of fossil fuels in relation to the NAIF or any other agencies that Efic lends its expertise to.

One of the other issues in relation to this bill—and this was covered by Senator Carr extensively in his speech on the second reading—is of course the concerns in relation to offshoring of Australian workers' jobs overseas. We are concerned that this bill will result in further offshoring of Australian manufacturing positions and deprive companies that produce in Australia and in some cases give advantage to their competition in other countries.

I will be keen to see further clarification around the opposition's amendments when we get to committee stage, and we look forward to seeing if we can in some ways improve that aspect of the bill. We do know that the ACTU wrote that it could not agree with this part of the bill, because they feared it would make another blow to Australian manufacturing and the services sector. The Greens welcome the government's recognition of these concerns, but we are yet to see what true action will come from fixing it up in relation to that part of the bill.

Despite the possibility of some of these safeguards in relation to offshoring of jobs, the Greens will not and cannot support this bill as it stands. We have major concerns that the government has missed the opportunity to reform the accountability mechanisms and issues related to Efic. They've missed the ball. This was the bill to do that. We cannot continue to see and we will not support the continuation of such a secret organisation operating with huge amounts of taxpayer funds in the dark without the information being available to the parliament or, indeed, the taxpayer. We don't want to see further taxpayer funds spent on subsidising the fossil fuel industry.

For all of these reasons the Greens will not be supporting this bill.


No comments