Nickolas Varvaris (Barton, Liberal Party) Share this | Hansard source

I rise to speak on the Export Finance and Insurance Corporation Amendment (Direct Lending and Other Measures) Bill 2014 and thank the House for this opportunity. The bill will create amendments to the Export Finance and Insurance Corporation Act 1991 and by doing so will vastly improve the commercial opportunities of the many Australian export businesses right around the country. Today's bill is another piece of important legislation that has been analysed, reviewed and amended by this side of government. This legislation is crucial and an ongoing part of the coalition's plan to revive Australian's small- to medium-size enterprises, which employ the largest number of employees and make up the bulk of our economy.

The opportunity to speak on this bill today has coincided perfectly with the freshly inked trade agreements which have concluded with China, Korea and Japan. Existing tariffs on many popular exports such as agriculture, horticulture and seafood will phase out in the next few years, meaning billions of dollars can be added to our economy. In light of this historic agreement we must not let existing legislation hinder business opportunities and instead work in combination to achieve the optimum result for our export enterprises. Both the bill and the respective trade agreements will allow prospects of export trading with these countries to flourish. The timing could not have been better, and I am certain that many export businesses, from the traditional agriculture sector to retail goods, are breathing a sigh of relief knowing their future is viable under the coalition.

Today's bill enhances the capacity of the Export Finance and Insurance Corporation to back small- and medium-size businesses seeking to capitalise on opportunities for global trade. As our nation and our government supports and encourages entrepreneurs, we must do all that we can to ensure opportunities that are presented to businesses can be seized and accomplished without unnecessary obstacles.

Globalised and increasingly integrated trading means businesses often look beyond state borders to seek and relish new commercial opportunities. This could be a combination offering a niche product with domestic expertise that is best suited to other markets or a multinational cooperative with other communities that can benefit from our products or services. Whatever the reason may be, this government fully stands behind the plethora of aspiring entrepreneurs and businesses that want to create and compete. Furthermore, whenever prospects arise for such businesses to export their goods and services, our policies should allow for employment and growth opportunities, as these flow directly back into the Australian economy.

We are a small nation, but the goods and services that we provide are second to none, and these are not just limited to the resources sector. Australia's wide range of consumer goods, including pharmaceuticals, beef, sheep meat, livestock, horticulture products, wine, flour, fibre and cheese, coupled with increased international exposure from trade shows and tourism, means people are becoming increasingly aware of the exceptional quality and thus demand for these items. Statistics show that within the last two financial years there was an increase from 44,000 exports of goods and services to over 45,000. Whilst the biggest contributor of exported goods is still the mining sector, general use of service exporters is on the rise. It would be a real shame for Australian businesses to lose precious commercial opportunities to export our goods due to a lack of finance, excessive red tape and bureaucracy. The coalition has always been committed to strengthening the opportunities to support our small and medium-sized businesses, and this legislation today provides a vital pathway for that.

The Export Finance and Insurance Corporation plays a crucial role in assisting export business ventures, stepping in to provide insurance and financial backing where traditional lenders have declined assistance. Efic was established as Australia's credit agency and operates commercially, partnering with the banks to provide financial solutions to various Australian small and medium-sized exporters, and has been essential in helping exporters take advantage of potential contract opportunities that might otherwise have been impossible.

It is important not to underestimate how much Australian exporters contribute to our economy and to our GDP. Exports are worth approximately $1 out of every $5 in Australia's national income. The International Monetary Fund has previously stated in its World Economic Outlook that Australia's export volumes will continue to fuel our economy and potentially taper the negative effects of a downturn in mining investments. Since the global financial crisis, the general slump of economies and their interdependence means that we must allow policies to provide businesses the resilience to withstand change. While some industries are subject to cyclical change and subdued growth, others may experience growth and expansion. Nevertheless, none should have to suffer from unnecessary red tape and bureaucratic burden where none is needed. Enhanced efficiencies in various competitive export sectors can significantly increase sales potential and renew further investment in the Australian economy.

It is estimated that changes to the Export Finance and Insurance Corporation in terms of direct lending will help overcome some of the barriers exporters face. Currently, many Australian products that we excel in, such as those previously mentioned—pharmaceuticals, beef, sheep meat, livestock, horticultural products, wine, flour, fibres and cheese—are not considered capital goods, as they are classified as consumer goods. Yet the Export Finance and Insurance Corporation can only lend to exporters of capital goods. In reality, however, capital goods make up a mere five per cent of all Australian goods exported. So, whilst the Export Finance and Insurance Corporation can directly lend for exporting dairy cows, it cannot directly lend to those wishing to export milk.

In addition, exporters of non-capital goods have traditionally had to obtain a guarantee from the Export Finance and Insurance Corporation before securing funds from a bank, meaning additional time is spent on paperwork before any transaction actually occurs. In these scenarios, Efic provides a financial guarantee to the bank at the request of the exporter, and the bank then directly lends the finances. The application to Efic, as well as to the bank, means two separate lots of credit approvals, associated documentation, administration and legal fees.

The coalition is committed to ensuring new direct lending arrangements that will remove the current restrictions in place for Australian exporters and the excessive red tape. When business compliance costs amount to approximately $1 billion per annum, this measure is vital to restoring faith to our regional, rural and general exporting sector. Mr Deputy Speaker Porter, you can imagine the potential monetary loss to the economy and to businesses. Changes to the Efic legislation will ensure regional and rural economies can thrive, with demand from emerging and developed international markets.

Fundamentally, the measure contained in this legislation supports our election commitment to helping Australian businesses by a reduction in compliance costs. Time and again, small businesses right around Australia speak of the compliance costs which make and break their enterprises, and we owe it to them to provide the right framework that would cultivate ongoing opportunities. Enabling Efic to facilitate more financial options for Australian exporters is an important start. Expanding the scope and power of Efic is not targeted at marginalising private sector contributions; rather, it is about helping commercially viable exporters overcome financial obstacles that would otherwise prevent them from reaching overseas markets. The coalition have always been the party that stood for encouraging and nurturing current and future entrepreneurs, and we believe the change proposed today is essential to building a stronger and successful economy.

Today's positive reforms follow on from this government's earlier enhancement for SME exporters in the 2014-15 budget, where an injection of $200 million was granted to Efic. This injection was much needed after a prior raid by the opposition. Restoration of Efic's finances means it can focus on this objective of helping and supporting Australian exporters, especially the small- to medium-sized enterprises, which make up the engine room of our economy.

Today's bill is so important to Australian export businesses because its implementation will ultimately increase Australia's reputation and competitiveness on the international stage. A recent survey of Australian export businesses by the Export Council of Australia revealed that the majority of difficulties experienced by exporters were regulatory compliance and access to finance respectively. As smaller companies rely more on international revenue from developed and emerging markets, increased or difficult bureaucracies would simply render them unfeasible. The survey further revealed that the majority of businesses, regardless of size, engage in a variety of business operations not limited to outsourcing, foreign investment, production and research and development. Australian exports amounted to over $310 billion in recent years. This demonstrates the potential of Australian businesses and, more importantly, how much more potential there is with the right policies in place.

As global trends point to trade liberalisation, encouraging consumers, stakeholders and businesses working together, the government must ensure that export businesses have the right backing and support to enable them to reach their full potential. As I have discussed before, the rewards for businesses have a flow-on effect to our society, by employing Australians and contributing to our overall economy. With our two significant trade partnerships with Japan and China, we can now expect further growth and opportunities.

The coalition has always been at the forefront of backing entrepreneurs. Expanding Efic will allow businesses which need capital to tap into current and emerging markets and to do so without red tape and bureaucracy. This side of government fully believes in and supports our exporters whether they are rural, regional or metropolitan based businesses. Australia's range of consumer goods and services deserve international reach for its outstanding quality and a chance to present these on an international scale should be fostered.

Today's bill is one step to forging a supportive path for exporters and continuing to strengthen our economy. The Export Finance and Insurance Corporation is often the vital link between small- to medium-sized enterprises through the provision of insurance and finance. By previously having their support limited to only those with capital goods, which is a mere five per cent of all Australian exports, it has seen some of Australian businesses simply unable to gain momentum or a foothold in emerging markets.

Today's measure will ensure that all businesses can have the opportunity to expand into international markets by streamlining financial processes and alleviating unnecessary red tape. I commend the bill to the House.

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