Jason Clare (Blaxland, Australian Labor Party, Shadow Minister for Communications) Share this | Hansard source

The Export Finance and Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2016 proposes to do two things. The first part of the bill expands the functions of the Export Finance and Insurance Corporation, otherwise known as Efic, so that it can provide specialist financial advice to Commonwealth entities and companies. It is currently only allowed to provide these services to the Northern Australia Infrastructure Facility. Legislation to do that was passed last year. The opposition supports this amendment, which will, hopefully, lower government service delivery costs and enable other Commonwealth entities to access Efic's financial expertise.

The second amendment in this bill will allow Efic to provide loans to Australian companies to set up or expand operations overseas. In practical terms, it will allow a company to spend the loan overseas, rather than here in Australia. Currently, Efic is only able to provide guarantees to businesses that want to do this. The bill before us was examined by a Senate committee earlier this year. The committee received a number of submissions supporting this amendment. It is supported by industry groups like the Australian Advanced Manufacturing Council, the Advanced Manufacturing Growth Centre, the Export Council of Australia and the Australian Grape and Wine Authority on the basis that it will help Australian small and medium-sized businesses break into new markets. DFAT's submission also makes the point that this change to Efic's rules has the potential to reduce the administrative costs of funding applications by up to $12,000.

The Senate committee also received a number of submissions expressing some concern about the potential unintended consequences of this legislation. In particular, concern was raised about the potential impact it could have on Australian jobs. The Australia Institute and the Jubilee Australia's Resource Centre, in their joint submission, expressed concern that:

While the change to specifically recognise service exports may be desirable, the current proposed amendment seems to remove any focus on products that are produced in Australia. The effect of this could be the further offshoring of Australian manufacturing.

Their submission concludes that this:

…has the potential to reduce jobs that produce goods and services in Australia.

In addition to potentially offshoring Australian production, this change could move production into jurisdictions with lower environmental and labour standards. This reduces transparency and standards in supply chains.

The ACTU raised similar concerns in their submission to the inquiry. On page 3 of their submission, they say:

It is in the national interest that companies which receive government loans are required to use that money in a way which benefits Australian employment. The removal of these provisions will be yet another blow to the Australian manufacturing and services sectors. It could potentially lead to jobs being offshored.

The opposition supports what the government is trying to do with this bill. Australian businesses should be encouraged to become exporters and to look for opportunities overseas, but we also agree that we should avoid doing anything in this legislation that could lead to job losses in Australia.

To make sure that this does not happen, we are proposing to move three amendments to this bill when it is debated in the Senate. The first of those amendments will be to introduce an Australian jobs test. This test will require Efic to be satisfied before approval of a loan or a guarantee that would be spent overseas that the investment would lead to jobs growth in Australia. Efic already has a test that it applies. It is a test of no net job losses in Australia for all of the loans which are spent in Australia. We believe that there should be a higher standard for loans to companies when they want to spend those funds overseas.

The second amendment we will move will prevent companies from using a loan or a guarantee from Efic to, effectively, offshore Australian jobs. It will prevent a company from using a loan or a guarantee from Efic to set up something overseas that would, effectively, replace what the company currently does in Australia or what they contract another company in Australia to do for them. Let me give you a very practical example of what I mean and what this amendment is intended to ensure does not occur. A company uses an Efic loan to set up a call centre overseas and then shuts its call centre that does the same thing here in Australia. We do not think that taxpayers' money should be used to facilitate that. All that would be doing would be providing taxpayers money to offshore what are currently Australian jobs. I do not think anyone in this chamber or anyone listening to this debate would think that that is a good idea. I am sure it is not what the government is intending would happen with this legislation. This amendment would help to ensure that does not happen. Companies can use their own funds or they could get a loan from the bank if they want to offshore work that they currently do here in Australia—and they do do that, sometimes quite controversially. But our point is: taxpayers money should not be used to do that.

The third amendment that we will propose in the Senate deals with a situation that was highlighted in the media a few weeks ago. On 20 May, there was a story in The Guardian that said that Efic was considering a multi-million dollar loan to a company called Resource Generation Ltd—Resgen—to develop a coalmine in South Africa. The company is based in South Africa but is listed on the Australian stock exchange. It has no mining activities here in Australia. The coalmine that they are developing in South Africa is quite large. They have approval to extract 32 million tonnes of coal a year. It is the sort of project which could have an impact on the Australia coal industry. We asked some questions about this in estimates a couple of weeks ago and we were advised by Efic that they were not currently considering providing finance to this project but that it could currently be financed under their act.

It is correct to say that Efic can fund overseas resource projects, and they have done so in the past, under both coalition governments and Labor governments, but it is hard to see how this project could comply with the current part 1(3) of the Efic Act. This includes a requirement that loans can only be provided to companies for:

… any services in or in connection with the supply, installation, erection, operation, maintenance or repair of goods produced or manufactured wholly or substantially in Australia and exported from Australia …

The bill we are debating here today would remove that section of the act and therefore allow the whole loan to be spent overseas, making the financing of a project like this easier. In principle, we do not think it is a good use of taxpayers' money to give a company a loan that is spent overseas, to set up anything from a mine to a factory to any other business, if that is going to severely damage other businesses here in Australia and lead to the loss of jobs in Australia. It is not certain that a project like this would, but, in principle, we do not think it is a good idea to provide a loan to a company that is spent overseas that would severely damage other businesses here in Australia and lead to the loss of Australian jobs.

We are not opposed to what the government is trying to do with this bill, but, when an Efic loan is spent wholly overseas rather than here in Australia, we think a higher standard needs to apply. That is why we have proposed the Australian jobs test—our first amendment—that says that, when a company is getting a loan that is spent overseas, Efic needs to be satisfied that it will also create jobs here in Australia. That is why we have also proposed a second amendment, to prevent a loan like this facilitating the offshoring of work that is currently done here in Australia. And that is why we will also propose a third amendment in the Senate that would require Efic, when it provides a loan to a company that is going to be spent overseas, to be satisfied that the loan is not going to damage other businesses here in Australia and lead to job losses here at home.

The opposition supports efforts for businesses to expand overseas and enter new markets. We believe our amendments will help strengthen this bill and put Australian jobs first. I have been consulting with the minister about our amendments, and my office has been working with the minister's office. I think that consultation, that work, has been very constructive to date, and I thank him for his assistance with that consultation. Let me state on the record that I am happy to work with him and with Efic on our amendments over the winter break before they are considered by the Senate. The purpose of our proposed amendments is simple. We want to avoid any unintended consequences that come with this change to Efic's rules, and we want to make sure it creates more jobs here in Australia, not less—a very, very simple principle that I hope all members of the House and all members of the Senate can agree with. I look forward to those negotiations with the government in the coming weeks.

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