Susan Templeman (Macquarie, Australian Labor Party) Share this | Hansard source

I am really conscious that Efic is one of those government agencies with a peculiar set of initials that most people would not bother to think much about. It is not as well-known as ASIC, and it is not as scary as the AFP. But it is a really important agency, and that is why I rise to speak on the Export Finance and Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2016. The Export Finance and Insurance Corporation has been operating since the fifties; in fact, this month is its 60th anniversary. The corporation provides finance solutions for export businesses when their bank, on its own, is not able to help. Efic partners with banks to help Australian small to medium enterprises export, to help companies expand their businesses overseas and to operate in emerging and frontier markets. For businesses in my electorate of Macquarie, where manufacturing and agriculture are two of our biggest areas of export, we look for any support in enhancing those opportunities.

It was a different world when Efic was born as the Export Payments Insurance Corporation. Back then, Australia was overwhelmingly an agricultural exporter. Wool accounted for a massive 49 per cent of Australia's total exports. The changed export environment means that there is a need to expand Efic's functions so it can provide specialist finance advice to Commonwealth entities and companies. That is one of the functions of this amendment, and we will support that. We also support the principle of the second amendment in this bill, and that is to allow Efic to provide loans to Australian companies to set up or expand operations overseas. I certainly want to see support for businesses to become exporters and to identify opportunities offshore and to take those opportunities.

My concern, however, lies in what the impacts might be back here in Australia. I do not want to see an Australian agency helping an Australian business set up offshore that takes existing jobs away from Australia. In the interests of working constructively with the government, we will be moving three amendments in the Senate. The first is an Australian jobs test, which will require Efic to be satisfied that the investment will lead to jobs growth in Australia. This needs to be assessed before approval of a loan or a guarantee that will be spent overseas. Efic, we know, already has an internal policy that stipulates any loan must not result in net Australian job losses, but this is not enough of a safeguard, particularly given the expansion of Efic's remit. If taxpayer funds are being used then it is important that there are benefits to the Australian economy.

The second amendment we will move in the Senate relates to offshoring. It is hard to see why you would want to have Efic lending money to Australian companies to move operations offshore, leading to the closure of their Australian operations—for instance, setting up a call centre overseas and then shutting down one in Australia at the same time. This issue was highlighted in the Australia Institute's evidence before the committee, which said that the government's change:

… seems to remove any focus on products that are produced in Australia. The effect of this could be the further offshoring of Australian manufacturing. For example, a garment company based in Australia could move all production offshore, but still be eligible for Efic's services.

This has the potential to not only deprive finance to companies that produce in Australia, but also to give advantage to their competition in other countries.

That is the insight from the Australia Institute.

Efic should not be financing offshoring of Australian jobs. It is worth remembering that Efic's role is to assist business where the regular banking system fails it. If companies want to offshore—and there are so many in the community who would rather not see that happen—they will obviously still have access to their banks to fund those sorts of expansions, but it is clearly not right that taxpayers and a government agency facilitate that transaction.

The third amendment is around the impact that an investment will have on a company engaged in the same business in Australia. Let me explain. A recent article in The Guardian reported that Efic was considering a loan to a company listed on the Australian Stock Exchange, Resource Generation Ltd. The loan was to develop a coalmine in South Africa. The company is based in South Africa and the company has not a single mining activity in Australia. This was reported as a multimillion-dollar loan—if it were to go ahead—to build a big coalmine, a coalmine so large, in fact, that it could have an impact on the Australian coal industry. When asked about this in Senate estimates, Efic said it was not considering the project at that time, but that technically it could have funded such a project.

The changes that we are making would prevent that from happening, because this bill, as proposed, would actually make it even easier for Australian taxpayer-funded support to take place through Efic for this sort of situation. Our amendments, which are to be moved in the Senate, will prevent that from happening by ensuring Efic is satisfied there will not be a negative commercial impact that could lead to job losses in companies involved in the same business within Australia. We think these are very sensible amendments, and they will be moved in the Senate. They are being moved in the interests of creating a more robust framework within which Efic operates and ensuring that there are no unintended consequences for Australian workers, because surely the purpose of a strong export market is actually about increasing the opportunities in Australia.

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