Monday, 18 October 2021
Export Finance and Insurance Corporation Amendment (Equity Investments and Other Measures) Bill 2021; In Committee
I move Australian Greens amendment (1) on sheet 1406:
(1) Page 7 (after line 16), at the end of the Bill, add:
Schedule 3 — Fossil fuels
Export Finance and Insurance Corporation Act 1991
1 Subsection 3(1)
fossil fuel-based infrastructure:
(a) subject to paragraph (b), includes infrastructure for:
(i) the extraction or transportation of fossil fuels; or
(ii) fossil fuel-based electricity generation; and
(b) does not include electricity transmission infrastructure.
fossil fuels includes any of the following:
(b) oil and other petroleum-based products;
(c) natural gas;
(d) products, by-products and wastes from extracting or processing fossil fuels to which paragraphs (a) to (c) apply.
2 Subsection 3(1) (definition of Northern Australia economic infrastructure )
Repeal the definition, substitute:
Northern Australia economic infrastructure:
(a) subject to paragraph (b), has the same meaning as in the Northern Australia Infrastructure Facility Act 2016; and
(b) does not include fossil fuel-based infrastructure.
3 Subsection 3(1) (definition of overseas infrastructure development )
After "of infrastructure", insert "(other than fossil fuel-based infrastructure)".
4 Before section 81
80A Prohibition on assistance for fossil fuel-based infrastructure
(1) Assistance must not be provided under this Act if the assistance is for purposes relating to, or is expected to result in, the development of fossil fuel-based infrastructure.
(2) It must be a condition of any assistance provided under this Act that the assistance not be used (whether directly or indirectly) for the development of fossil fuel-based infrastructure.
(3) Assistance includes a guarantee, indemnity, loan, insurance, reinsurance, financial service, financial product, subsidy or investment.
This amendment seeks to prohibit Export Finance Australia from investing in fossil fuel projects and fossil fuel based infrastructure. Since 2009 EFA has invested at least $1.57 billion in fossil fuel projects, and we can't afford to be propping up fossil fuel projects anymore. It's bad for the climate and it doesn't make any economic sense. In order to respond to the global climate crisis we need to ensure export finance is not being used to invest in fossil fuels. There is a very real possibility that the government will want EFA to fund gas import terminals throughout South-East Asia in a desperate attempt to find more customers for our gas. We cannot let this happen if we want to stay below the 1.5 degrees of warming. The International Energy Agency has said that to meet the Paris objectives, not one new coal or gas infrastructure project can proceed. By voting against this amendment both parties are abandoning a chance of a safe climate.
I might take a few moments to respond to some of the matters raised in the contribution just made by Senator Cox, who I welcome to the chamber, having seen her sworn in today. EFA's equity powers will be focused on overseas infrastructure development and export linked Australian businesses and sectors of economic significance. That includes, for instance, critical minerals. EFA assesses requests for its financing support on a case-by-case basis consistent with its mandate to support Australian export related businesses and overseas infrastructure development that delivers benefits for Australia. As a key export industry for Australia, EFA offers support to the fossil fuel sector, including small and medium-sized enterprises that are involved in supply chains.
EFA investments are carefully screened. There are robust due diligence processes in place that assess any financial, social, environmental or other risks. There's a range of policies, rules and guidance that impact upon EFA's ability to finance fossil fuels. They are in various places, including in the statement of expectations that is issued by the Minister for Trade, Tourism and Investment, the OECD rules and the Equator Principles.
The minister's statement of expectations for EFA sets out criteria that all resource related projects, including fossil fuels, must meet to qualify for financing, and those are: (1) there is a demonstrated market gap in the availability of finance; (2) the transaction doesn't come at the expense of SME transactions; (3) the project has significant Australian content, including through SME supply chain participation and/or benefit; and (4) that the project is commercially viable.
The government also requires EFA to align its environmental policies with several internationally recognised environmental and social standards, including the International Finance Corporation's performance standards, which set out a process for assessing project related greenhouse gas emissions; and the Equator Principles, a risk management framework adopted by financial institutions for determining, assessing and managing environmental and social risk in projects. And these policies and practices will also apply to the EFA's use of its equity power.
In closing, it's also worth noting that EFA is increasing its investments in the renewable energy sector. For example, EFA recently provided a $41 million loan to facilitate the development of three onshore wind farms in Vietnam. I think all of those matters go really to the essence of the concern that is expressed in this amendment and demonstrate substantially why it's not required.
Can I just clarify that subsection 4 is being moved separately. Is that correct?
The TEMPORARY CHAIR: That would be the case. It's up to the Greens to formally move it. We're dealing with amendment (1) on sheet 1406.
Thank you. I'll, therefore, use this opportunity to outline Labor's response to those issues. It is our approach to be informed by scientific evidence rather than by ideology, including in regard to the financing of fossil fuels and associated infrastructure. We recognise that there will continue to be international demand for fossil fuels for some decades, even in the context of reducing global emissions. I come from Western Australia, where we see a large proportion of national income and exports being derived currently from these exports. We need to work with industry to bring down and manage those emissions so that we can meet a net zero target.
In that context, we don't believe that Australia, as a resources trading nation, should be pulling up the ladder from beneath it while emerging economies are trying their hand at producing energy and trading resource commodities. We can't leave them behind when we've had so much economic benefit from this already. Labor stands by the Paris Agreement principles, which encourage developed economies to assist emerging economies on their slower journey to decarbonisation rather than starving them of fair financing. If nations like this do not get this pivotal investment from ethical countries like Australia, then they will risk falling into debt diplomacy traps from unethical actors in the region.
We see here unintended consequences of the proposed amendment if we were to exclude Export Finance Australia from supporting developing economies to transition to cleaner fuels. For example, under its overseas infrastructure powers Export Finance Australia can provide finance to assist developing economies to build energy projects that support transition to cleaner fuels. Export Finance Australia can then monitor the implementation of these projects through the life of the loan, including through the use of independent environmental and social consultants where appropriate. We are concerned that, had the Greens party's proposed prohibition been in place, Export Finance Australia could not have funded an Australian electrical firm's work on an LNG power station in PNG—the POM power station near Port Moresby that has replaced diesel electricity with LNG and significantly reduced PNG's carbon footprint. So we're concerned that other critical infrastructure could fall foul of the prohibition that's been put forward in this amendment—for example, airports or marine ports that require construction of fuel infrastructure for ships or aircraft or critical minerals and rare earth projects. On that note, Labor does not support this amendment.
I beg the indulgence of the chamber and ask that the position of the Australian Greens on the second reading amendment, for which a division was not held, be recorded: that we support our own amendment. I'm not sure if our colleagues were popping that on the record at that time, because we've left them in a pickle on the first day, and our apologies to them for that.
I'd like speak on amendment (1) on sheet 1406. I'll speak briefly to it, in addition to any comments that my colleague Senator Cox would like to make. This is an amendment that's been circulated in my name that says that Efic, or EFA, the subject of this bill, should not be giving money to fossil fuel infrastructure. It's somewhat reminiscent of the discussion that we had when we were debating the northern Australia infrastructure bill, the NAIF bill, where, likewise, this government sought to allow equity investment to be made by that investment vehicle. This is a similar bill. It wants Efic to be able to take an equity stake in projects but, also, there's no prohibition on such investment being made in fossil fuel infrastructure. We are concerned that this bill will facilitate yet another body simply investing public dollars and taking an equity stake in fossil fuel projects.
This is five seconds before Glasgow. This is when we are in a climate emergency, and it is somewhat distressing, but perhaps not surprising, to hear the opposition say they're worried that this will stop the Commonwealth from funding airports. That is not, in fact, the case. The drafting of the amendment is very clear. This would apply to the Export Finance Insurance Corporation. As we previously said when the NAIF bill was up for debate, we do not think governments should be taking an equity stake in fossil fuel infrastructure, and we do not think taxpayer dollars should be used to fund fossil fuel infrastructure. So the intent of this first amendment, amendment (1) on sheet 1406, is to do just that: it would cover coal, oil, petroleum, natural gas and by-products related to that.
It's a very simple choice for the chamber to make. Do you want public money to prop up fossil fuels and government to be taking an equity stake in fossil fuel projects or don't you? I'm looking forward very much to the vote on this one, because this is a crucial point of distinction. I think the Australian public expects that the opposition—but perhaps not this government—would not be supporting public money and an equity stake being taken by a government in fossil fuel projects. I commend this amendment to the House.
I move Australian Greens amendment No. 2 on sheet 1406:
(2) Page 7, at the end of the Bill (after proposed Schedule 3), add:
Schedule 4 — Freedom of Information Act 1982
Freedom of Information Act 1982
Omit "4 or".
2 Application of amendments
The amendment made this Schedule does not apply to documents brought into existence before the commencement of this item.
This amendment seeks to remove the EFA's partial FOI exemption. This will increase the transparency and accountability, ensuring that the public can understand what projects are being funded by EFA. Just as the government seeks to hide the investments of the Future Fund, which poured money into Adani and the Myanmar military, it wants to hide where our public money is being invested overseas. The government is also seeking to exempt all national cabinet discussions from FOI. This is yet another move designed to hide decision-making from the public. This is a government addicted to secrecy, and this has to stop.
I want to put Labor's position in relation to this further amendment. We have been engaging with stakeholders in this area, particularly about increasing transparency, and we note that the FOI Act provides partial exemptions for Commonwealth agencies. The government has argued that the existing exemption is important, providing certainty to Export Finance Australia customers and financial institutions so that they're assured their sensitive financial information, even including the fact that they might be seeking finance, is confidential. We have the view that we need to look more closely at this area. We will continue to work with stakeholders regarding the impact of the current FOI laws and exemptions on Export Finance Australia's financing practices and we are open to developing genuine standalone policy in this regard.
However, we also note that Australian exporters are facing significant difficulties at the moment because of the inability of the Prime Minister, Mr Morrison, to manage the relationship of Australia with China. Therefore, we don't believe the Senate should be put in a position where we hastily tack on an amendment in this area that risks significant unintended consequences for this critical export agency and the businesses it works with. We therefore oppose the amendment.
Far from it being hastily tacked on, this is an amendment that would make sure that the investment decisions that are made by Efic are not exempt from freedom of information. This is just classic form from the government that want to hide anything, mostly because they're up to their necks in it and it's dodgy stuff that they want to hide. But it's not just us who have recommended this. The Productivity Commission have previously recommended that the FOI exemptions for Efic be removed. They noted, rightly so, that the FOI Act already has protections for national security and commercially sensitive data. There's no good reason for this additional shroud of secrecy to be applied to Efic, and that's exactly what this well-considered and succinctly drafted amendment would achieve. We need more transparency about government spending of public money in this place, not less. It's shocking that the opposition is once again siding with the government to let the government give money to and take an equity stake in fossil fuel projects, and is happy to let that continue to be concealed from freedom of information. I'm incredulous, sometimes, at the lack of opposition from this opposition.
I want to point out that the submission from Jubilee Australia Research Centre, ACF and ActionAid—a joint submission—to the Senate inquiry into this bill also objected to the lack of transparency around the investment activities of EFIC and called for the removal of EFIC's exemption. They made the valid point that limiting access to this information undermines efforts to audit the effectiveness of the fund or the projects it funds, or to even assess the return on investment for public money. It's like putting this money into a black box, and then no-one can ask any questions about it. And this government now wants an even bigger blank cheque to say, 'We want to be able to take equity stakes now, but, no, you can't ask anything under freedom of information about whether it's good value for money or whether there was any environmental or social assessment undertaken in a decision to fund this project.' It is a complete black-box process. It's an absolute farce, and that is exactly why we are moving to say: do as the Productivity Commission recommended and remove this FOI exemption. This is public money being spent. It should be made public. It's not a difficult concept.
I object to the notion that this was hastily tacked on. This is a fundamental principle. The expenditure of public money should be made public, and the deliberations of an agency which has been given a massively expanded jurisdiction should be subject to scrutiny by the public, considering it's their money. With that, I commend the amendment.
In my contribution on this amendment, I think it's important that I put on the record the answer to this question, which really goes to the heart of why the Greens have put this forward: why does EFA need a freedom-of-information exemption? I think that if I can answer that, members of this chamber will feel comfortable to not support this amendment.
The exemption that exists for EFA from freedom-of-information laws provides certainty to EFA's customers and other financial institutions that the sensitive information they provide as part of those deals will remain confidential. The exemption is partial and only applies to transactions EFA is handling. It doesn't apply in a broader sense to, for instance, its accountability to government. Removing this targeted exemption in the way that is proposed by this amendment would have an impact on EFA's ability to safeguard the legitimate interests in the financial or business sense of its customers, which would, in turn, have a negative impact on those businesses' ability to work with EFA. It becomes a bit of a self-defeating proposition.
I should also put on the record that it's not correct to assert that EFA doesn't provide transparency on transactions. EFA is required to disclose its participation in all transactions, no matter what industry that transaction touches upon, within eight weeks of the finalisation of that transaction. Those details include: the name of the client; the sector in which they operate; the goods or services involved; the overseas infrastructure involved; the country; the type of facility; and the value of the facility of the export or overseas infrastructure support.
EFA discloses its proposed involvement in transactions with the potential for significant environmental and/or social impacts, in addition to all the things I've set out, on its website prior to making a decision on the provision of finance, giving that extra layer of transparency should it be anything that might be a matter of a sensitive nature. I'd suggest that senators can feel assured that the exemption is limited only to what is necessary to give commercial efficacy to the transactions involved, and otherwise provides that there needs to be disclosure within eight weeks of finalisation of key information here in Australia.
I rise to contribute to the discussion on the amendment. I will point out that I do a lot of FOIs, so I understand this space quite well. Everyone must understand that FOI has the unique characteristic of being the only tool that citizens have to directly engage in oversight and access information to be able to participate in debate. We in this chamber can ask questions on notice, seek orders for the production of documents and do Senate inquiries. We also have other institutions that conduct oversight, like the Auditor-General, who does a fantastic job. But the only method for citizens to be able to engage is through the use of FOI. They directly control that.
The FOI Act has a number of exemptions already in place. Section 45 is one of the business ones. There is also section 47, relating to commercial activities and so forth. There's a certain reality about FOI. If I were to make an FOI request of EFA right now, in the middle of a transaction, I can assure you I'd get a redacted return. I would probably go to the Information Commissioner, and it would be likely to take two years to come out the other side of that and then perhaps get to appeal to the AAT—a very lengthy process. So it's not as if FOI requests would generally seek to interfere with commercially sensitive transactions that are on foot, because of the way in which our system is quite broken.
Another point to make, just so senators understand this, is that you can make an FOI request and have it knocked back because of some sensitivity. Five years later, you can make the same FOI request and you might find that it doesn't get knocked back, because of the time that has passed since the original application was made. There's a requirement in law that FOI decisions be made on the basis of the circumstances at the time the decision is made, and often you will see, in FOI decisions that are published by the Information Commissioner or the AAT, that they've given consideration to the time that has elapsed since the information was first brought into existence, and often that gives rise to access to the documents.
So I just say that it's very difficult under the current regime to get access to information that is truly sensitive from a business perspective, but, even in circumstances where you might normally seek access to it, because of the time it takes to get through the FOI challenge, it's unlikely to be sensitive by the time you get to the point of getting it. At that point, you are dealing with a very experienced Information Commissioner or with the AAT, whose examination of any claims of commercial sensitivity is very deep and precise. For that reason, I don't think there is a requirement for additional exemptions or class exemptions to be put in place, and that's the basis upon which I will be supporting this amendment.