Craig Kelly (Hughes, Liberal Party) Share this | Hansard source

I am pleased to speak on the Export Finance and Insurance Corporation Amendment (Direct Lending and Other Measures) Bill 2014. At its heart this bill goes to what we in the coalition see as the role of government. It is about freeing the hands of our entrepreneurs—encouraging them to take risks, encouraging them to experiment with new products, and encouraging them to experiment and strive for new markets—because that is what creates the wealth in our nation. In contrast, those on the other side of the chamber are more fixated on central planning where you have a lot of bureaucrats handling the levers of the economy.

The other thing this goes to is our understanding that you have to create the wealth of this country through hard work and through entrepreneurial activity. The welfare of our nation is not a fixed pie, as so many members of the opposition seem to think, so that the size is fixed and you just argue about how to cut it to redistribute the pie. The coalition believe it is about growing the size of the pie. We also need to remember that if we engage in policies that harm our small business community especially, put red tape in their way, burn them with mandating the use of inefficient forms of electricity generation that costs them more, those things can cause the size of the pie to shrink. So we need to make sure that we are doing everything possible to increase the size of the economic pie.

Two hundred years of economic history have shown that the best way to do this is to encourage risk and to provide opportunity because it is the provision of opportunity that creates the innovation that we need to create new goods and services, to create new forms of communication and new methods of transport, to create new medicines. These all help to increase our prosperity.

A fortnight ago we had the 25th anniversary of the fall of the Berlin Wall. One of the reasons the Berlin Wall came down was the failure of central planning, where bureaucrats trying to run the economy took away hope, reward and opportunity. Countries locked behind the Iron Curtain simply did not create the new goods and the new markets to build prosperity. Their economies collapsed, as did their societies, and eventually the Berlin Wall came down.

This bill is all about encouraging our entrepreneurs in export markets. Ultimately, 98 per cent of the world's GDP occurs beyond our shores. When we talk about hope, reward and opportunity, it is not just within the Australian landscape; we need opportunities for Australian exporters to sell their goods to the world. Exporters can do that. In Australia, we produce good products. This bill is part of a suite of measures to encourage people to take the risk in overseas markets. We scrapped the carbon tax at the start because it acted as a reverse tariff. So if you were doing any type of manufacturing work in Australia you would pay the carbon tax, but if you were producing those same goods offshore, you did not pay the tax. That put our manufacturers, our own people, at a competitive disadvantage in the export market field.

The other thing we are doing is free trade agreements. We have seen them with South Korea, with Japan and with China. These absolutely remarkable achievements will create so more opportunities for Australian entrepreneurs to sell goods to those markets, creating wealth and prosperity in this nation. Recently, we had a visit from the Indian Prime Minister. Our free trade agreement with India is a work in progress, another market which our entrepreneurs can target, to find just a little niche to market to more than 1.2 billion Indian people.

One of the issues exporters often have is how they to finance exports. It is great to bring an export order back home in your pocket but often the thing is how you are going to finance it. This is something I can speak about from practical experience. Before I came to this place, I was working in a small family business and I was responsible for a lot of the export orders. I travelled to places like Singapore and Thailand. I did work in Indonesia. I travelled extensively through the Middle East. I did work in the United Arab Emirates, Egypt, Saudi, Oman, Kuwait, Lebanon and even the USA and Canada. You would bundle your samples up under your arm, you would take them on the plane and go to sit in a boardroom to try to get export orders.

As an Australian company, everywhere I went I found that representing an Australian company I was given a great deal of respect. Often the hardest part of the job was not getting the order. It was coming back and organising the production and the finance for that production. That is what Efic does. It helps those small businesses by providing extra opportunity for them to get the finance that they need.

We have an overly concentrated banking sector here in Australia. That is great for bank profits; it is great for people that have shares in the banks. But for those small businesses that pay all of those high fees and charges, it is not so great. So Efic comes in to provide that export finance, where our banks are unable to provide it. It also provides insurance, because when you export there are always the questions of: how you are going to get paid? What guarantee of payment do you have? What are the risks of not getting paid? You often do not have access to Australian court systems when you are dealing overseas. Yes, you can negotiate to obtain a letter of credit, but the questions are: what is the strength of the bank that provides that letter of credit? What are the terms of that letter of credit? What documents do you need to provide? There are many risks in our exporters not getting paid.

Another thing Efic provides is insurance premiums. You can actually go to Efic and say, 'I've got this risk; it's a commercial risk. What's the premium given that I will not get paid?' For a small premium, you take that risk, so if something goes wrong—if there is a political risk or an insolvency risk—you can actually insure against that through Efic. That, again, encourages our entrepreneurs.

An important thing to note is that our financing of Efic through government is not a leg-up, handout or subsidy to our business community; Efic actually returns a profit. Last year it returned a profit of $22 million; it is actually funding itself and returning a profit to the taxpayer for the money that is invested as well as providing these valuable services to our exporters.

In the last budget, this government put another $200 million equity injection into Efic. That will help Efic loan more, provide more funds and become a stronger organisation to get out there and help promote and educate businesses in Australia to have a go at those markets.

Moving on to what this bill does: previously Efic could only fund the export of capital goods. If a business that produced non-capital goods and had an export order and went to Efic, Efic would say, 'Sorry, we can't help you.' This bill changes that. We are opening it up where it can be all goods—capital or non-capital. If you are an Australian business that can go offshore, get an export order, produce the goods in the country and have difficulty with financing the production—as often some things can take 12 months to produce, and it can be 12 months or longer until you actually get paid for the goods you produce—Efic will now give you that working capital. That service is now available, because of the changes that we are making to both capital and non-capital goods.

This is one of the things that we need to do. We went into the last election with the words: hope, reward and opportunity. We want to extend that; we want to encourage the entrepreneurs in our country, we want to encourage those small business people to get out there and have a crack in those export markets. Yes, there are risks. We know a lot of the time companies might have to change their product, or their product may not fit in certain markets. But with 98 per cent of the world's economy beyond our shores, that is the message we want to give to the exporters—those wealth creators that create the wealth for this nation and help expand the size of the pie.

Why are things like this important? We hear a lot of whingeing from the other side about cuts to this and cuts to that, and how unfair it is. Ultimately, the wealth that we create is driven by the entrepreneurs of this country. The more opportunity we can give to them, the greater we free up their hands to get out there and have a go. The more wealth we can create, the more money will flow into the government coffers, which means the more we can spend on many of those much-needed social programs. That is what this is all about.

We can never forget the current financial situation that we are in. Often we talk about debt, deficit, surpluses and balanced budgets, but I think perhaps an easier way to talk about it is that for the last six years the previous government were running this country at a loss. Every year, as the government, they were losing money.

In the last budget—2013-14—where all the parameters were set by the previous Labor government, we actually lost $48½ billion. This was the sixth loss in a year. For every single year they were simply running the country at a loss. What that 'running the country at a loss' means is we have had to borrow the money to cover the loss. There is no problem borrowing money—we are a wealthy country and we can borrow that money. But what it creates is an obligation to pay the interest.

Because the country has been running at a loss for six years, the obligation we have to pay that interest is now $13.5 billion every year. That is just the interest. It is not paying one cent of the principal. It is over $1 billion every single month we as the Commonwealth government now have to find. We have to take that money and pay about 70 per cent of it overseas—out of the country—to pay the debt on the six years of loss. That is why bills like this are so important.

If we are going to dig ourselves out of the hole that the previous Labor government got us into, if we are going to afford the things we need to do in the future—things such as the National Disability Insurance Scheme, and everyone in this parliament talks about how wonderful it is but no one has thought about how we will pay for it all, in full—we need to encourage the entrepreneurs of this nation. We need to encourage them to get out there and take those risks, to expand and to experiment. We want them to get out there and have a crack at those export markets.

That is exactly what this bill does. It opens up the Export Financial Insurance Corporation to enable it to loan for both capital and non-capital goods. Although it is only a small step, it is part of a suite of measures we are making to provide that hopeful and rewarding opportunity to the business people of Australia. They are the ones who create the wealth of this nation and that is what enables us to provide all those valuable social programs. I commend this bill to the House.

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