Wednesday, 6 September 2017
Export Finance and Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2017; Second Reading
I rise to make a contribution in respect of the Export Finance and Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2017. I want to start off by saying that Labor does support the good work of Efic, but it's important to note that that's not without some concerns as to some aspects of its operation and with regard to proper scrutiny of the work of Efic. It's right and proper that the government plays a role to support our exporters by providing financial services where the private sector cannot, and Efic has played its part in supporting Australian jobs and growing our economy. It is to be commended for that.
It would appear that the government's been on a bit of a journey in respect of this issue. I note that in 2014 or thereabouts the government released a report of the National Commission of Audit that made a number of recommendations. At that point of time it was the view of the National Commission of Audit that Efic should cease to exist. That's a quite extraordinary recommendation from the National Commission of Audit, which generally is seen as reflecting fairly extreme right-wing views, but it's good to see that we still have Efic performing a function. But, as I say, it's not without the need for scrutiny.
And EFIC isn't without its flaws, as I indicated. I'm mindful that its processes in the past have let Australians down. So it's important that, when we look at legislation that amends Efic, we ensure that Efic does really deliver for everyday Australians. The Labor Party is committed to the objectives of growing our economy and creating more well-paying jobs here at home.
The bill seeks to amend the Efic Act in two ways. Labor support one of those amendments and will seek our own amendments to address concerns with the other ground of the Efic bill. The first part of the bill—the support for Commonwealth entities—expands Efic's function to include the provision of services to Commonwealth entities and companies, subject to the approval of the Minister for Trade, Tourism and Investment. This would allow Efic to offer its specialist financial capabilities in the operation and administration of Commonwealth financing programs where there is no connection to exports.
As it currently stands, there is only one other body that Efic can currently provide services to, and that is the Northern Australia Infrastructure Facility. I am the chair of the Senate Economics References Committee, and we are inquiring into the governance of the Northern Australia Infrastructure Facility. Some submissions have noted concerns in relation to the arrangements between Efic and NAIF, particularly that there is little public information provided about how Efic serves NAIF and that the processes governing this arrangement are robust. In the course of the proceedings of that inquiry we heard evidence from Professor Thomas Clarke, professor of corporate governance at the University of Technology Sydney. Professor Clarke talked about the fact that there was no effective transparency in the NAIF's governance framework, including in its project assessment and approval processes. He commented that it is unheard of for a publicly funded body to work in these conditions of absolute secrecy. He said all meetings, information and decisions are kept secret until they are approved, and the public is denied any knowledge of specific projects and who is proposing the projects. He said that this is not compatible with accountability and probity in public office, and neglects all established principles and protocols in public service in Australia and internationally.
We generally support the work of Efic. Of course, the issue of NAIF governance and operations is a question for the board of NAIF. One doesn't know the full extent of the advice given by Efic to NAIF in some of these issues, particularly in relation to due diligence arrangements. But there is a question mark as to what is happening with NAIF and the processes that are there to deal with applications that are coming before the NAIF. I must say that NAIF is certainly not a model of transparency that we would like to hold up for others to follow. This all goes to say that, while Efic does do good work, we know it is not perfect. We can't necessarily blame Efic for the decisions of the NAIF board, but there are some concerns that NAIF is not operating in a manner that Australians would like to see.
Generally, the first part of the bill is quite sensible and the Labor Party supports that. Enabling the government to deliver services in a more productive way makes a lot of sense. However, the second part of the bill has raised quite a few concerns. The Senate Foreign Affairs, Defence and Trade Legislation Committee looked into this bill. It heard the concerns of the Australian Fair Trade and Investment Network and the ACTU that the bill might lead to Efic providing financing to companies that might offshore Australian jobs and remove incentives to produce or manufacture in Australia. So Labor has taken a constructive approach to improving the legislation so that not only are no Australian jobs lost in this process but there are assurances that Efic's finance is leading to net job increases here at home. I would like to thank the shadow minister for his work in tightening the amendments to ensure this happens. I also appreciate the minister working with Labor to improve this legislation. This is something that does not happen often enough in this place.
I note that the minister already has moved amendments to the original bill in the House of Representatives, which stipulated that, when applying for a loan or guarantee for the purpose of direct investment overseas, the person who carries on the business must certify in writing given to Efic that the person reasonably believes that the loan will result in a net increase in the number of people employed in Australia by the business or a related party of the business during the term of the loan. Labor supports this amendment, but it doesn't go far enough. There should be higher standards to make sure that a company has used an Efic loan or guarantee for its intended purpose and met all the requirements. We also know that what is promised and what is delivered do not always line up. When taxpayer funds are being used to assist companies, there is a responsibility for government and the parliament to make sure that Australian jobs are being created.
I now turn to the first amendment that Labor has proposed in respect of the Australian jobs test. Labor will move amendments to ensure that an Australian based business, if they are successful in receiving a loan or guarantee to be used for the dominant purpose of direct investment outside Australia, must provide Efic with certification as to whether a net job increase did occur in Australia as a result of Efic's financing at the completion of the loan or guarantee. This certification must also be publicly released by Efic. It makes a lot of sense for good governance that these results are made public. We do know that Efic has fallen short in the past, and measures like this help to tighten the governance framework. I also understand that the government will support this amendment and I want to thank the government for working with Labor to make this legislation stronger.
In relation to the second amendment that we propose, Labor is also concerned that an Efic loan or guarantee to an Australian based business for the purpose of direct investment overseas may be used to offshore existing parts of the Australian business. This may leave large numbers of Australians unemployed. Companies do this, but they shouldn't use taxpayer funds to do this. This is why Labor believes that an Efic loan or guarantee that is to be used by an Australian based company for the dominant purpose of direct investment outside Australia should not be used to offshore substantial parts of the business.
This was the position the shadow minister took to the minister: that an Efic loan or guarantee that is used for the dominant purpose of direct investment outside Australia should not be used to offshore substantial parts of the business. I understand the shadow minister met with Efic over the break and discussed the exact wording of the amendment, and it has been agreed that, for smaller businesses, there was a legitimate reason as to why some facilities may need to be sent overseas to help grow the business back here in Australia. Efic already defines a large business as one with a turnover of more than $150 million per annum. To ensure proper operation of Efic, Labor agreed that the proposed amendment should apply to businesses with more than $150 million turnover per annum. This is a sensible amendment, which will help to ensure taxpayers' funds are not used to offshore Australian jobs, while allowing for the growth of small and medium businesses.
So, in summary, these Labor amendments are completely consistent with the policy positions we have taken in a number of areas recently. It is important that creating good, secure, well-paying Australian jobs is foremost in the minds of elected officials here in Canberra. Whether it is a policy on apprentices, steel production, Labor's proposed Australian skills authority, the skill-up training fund, saying no to labour loopholes in trade deals or protecting penalty rates, Labor is leading the way on putting well-paid Australian jobs first.
However, when you look at the current government, it seems to be more based on a free market, de-regulated, 'You're on your own' ideology, rather than on sound policy. Whether it's on shipbuilding, 457s, Work for the Dole, the Youth Jobs PaTH intern program, slashing funding to TAFEs and universities, the slow rollout of the regional jobs packages or cutting penalty rates, you see a picture: the government isn't taking these issues seriously and the government isn't taking Australians seriously. And that is unacceptable. However, as long as the government adopts Labor's sensible amendments, which will put Australian jobs first, I will support this bill.