Zoe McKenzie (Flinders, Liberal Party) Share this | Hansard source

The bills we are debating here today—the Future Made in Australia Bill 2024 and the Future Made in Australia (Omnibus Amendments No. 1) Bill 2024—really do send a message to the Australian public and our key trading partners that this Albanese government is turning its back on being an open and efficient trading nation. Australia's enduring economic success has been dependent on our openness to global markets, and successive governments have had a light touch, enhancing our competitive advantage in both goods and services. The legislation before us today goes back to that tired, old catchcry that sustains the Labor movement: government good, private sector bad. It picks winners and inserts public ownership into our industrial ecosystem all while solidifying the union movement's centrality and censorship in terms of what gets done in this country and what does not get done. In that, as in so many other respects, it is yet another CFMEU payday.

I want to start with what I consider to be some of the most egregious parts of this legislation, hidden amongst the froth and bubble and self-congratulatory backslapping of those on the other side, who claim to be backing in Australia's strengths. There are substantive changes to the Export Finance Australia body, which has been an essential part of Australia's success as an export and trading nation, whose expert advice and judicious investment have created countless success stories in Australian know-how, goods and services being exported to the world for more than 30 years.

Back then, the Export Finance and Insurance Corporation, or EFIC as it was known, was created expressly to support Australian businesses in their export trade and overseas infrastructure development. It did this by offering loans, guarantees and insurance to help businesses manage the financial risks associated with exporting; by financing infrastructure projects abroad that involved Australian companies; and by working with private-sector banks and other financial institutions to encourage them to finance exports and overseas projects. More often than not, if EFIC, later known as the EFA, agreed to invest in a good or service, it gave the market a strong indication that the project had substance and credibility and was likely to succeed in its target market. In doing so, EFIC did not replace private-sector investment, but its astute decision-making led others to take a risk knowing it had passed EFIC's rigorous assessment.

I'd like to give you some examples of the critical difference EFIC made to Australia's exporting success, ranging from the big to the small. In 2014, through the National Interest Account, it supported PNG's liquefied natural gas project, developing a major LNG project with Australian know-how and investment and ultimately making a huge contribution to the economy of Papua New Guinea and strengthening trade ties between Australia and PNG. But EFIC was equally if not more impactful in the small-business end of the market. By way of example, in 2014, EFIC provided a modest $600,000 to Astec Paints in South Australia to increase its presence in China, Korea, Japan and Middle Eastern markets. But it needed help to meet demand from Japanese clients for its elastomeric coatings, which met Japan's strict building codes at the time. The commercial bank was supportive of plans to increase production, but it just needed additional security, which EFIC was able to provide by way of an export working capital guarantee.

The following is another example. In 2016 an EFIC small-business export loan helped Frankland Islands Cruises increase its Japanese exports, entering into a charter program with a Japanese travel provider bringing people to Australia to enjoy the Great Barrier Reef. The expansion would have meant 30 per cent of their revenue, but they needed new equipment to ensure contract delivery. EFIC's modest loan of just $190,000 under its small-business export loan program allowed Frankland Islands Cruises to tailor the repayment term to meet their needs. This is one of so very many small businesses which EFIC was able to help.

Between 2013 and 2016, concurrently with the Abbott government signing world-leading free trade agreements with Japan, South Korea and China, it provided millions of dollars to small and medium-sized enterprises, enabling them to make early gains under these FTAs, which were best in class at the time of their signing. The special small-business export loan was created in 2014, and between 2013 and 2016 more than $100 million was directed towards the sector. Operating at arm's length from government, the EFA, and before it EFIC, only had occasional recourse to the trade minister. It obviously operated by taking into account the Australian government's trade priorities, ensuring that Australian businesses were able to make the most of new market opportunities that were opened by government secured trade deals.

By golly, the coalition government kept EFIC busy. Between 2013 and 2022, there had been the most rapid negotiation, conclusion and ratification of high-quality FTAs. In 2014 alone, there was a deal done with China, Japan and South Korea and subsequent deal closures were not far off with Hong Kong, Indonesia, India, the UK and finally the CPTPP. I remember it all well because at the time I was the trade minister's chief of staff and we worked at breakneck speed to meet the Prime Minister's demand at the time of getting three deals done within just 12 months. EFIC's work was essential in reaping the benefits of those FTAs, and its focus was singular: build new and stronger markets for Australia's exports, make sure the world has access to the stuff we are good at on our own, without government handouts and interference in picking winners. To enable it to do its work, the former coalition increased EFIC's funding in 2014 by $200 million and then later again in 2019, when it expanded its callable capital to $1.2 billion.

When you look beneath the hood of the industry minister's 'back to the 1970s' industrial policy encapsulated in these bills, you find meaningful, enduring and, may I say, mission-crushing changes to the EFA, giving it the power to make:

… domestically focused investments under the National Interest Account (NIA), following referral to Government and commercial assessment, to fund domestic projects where support is not available through existing funds and programs.

Basically, its remit is now that of a domestic bank, backing government picked projects. The EFA, or EFIC, will now have a somewhat Orwellian termed national economy function, which is to encourage and facilitate eligible activities that support Australia's economic resilience and security. Possibly even more economy shackling is EFIC's net zero function, which should leave us all wondering whether this government values net zero above our achievements as a dynamic, vibrant, successful and enduring trading nation.

The Albanese government does not hide the fact that it's turning its back on boosting our exports through free trade. In section 2.10 of the explanatory memorandum to these bills, it states:

Schedule 1 to the Omnibus Bill allows EFA to disregard two of its primary duties for the purposes of enabling EFA to perform its new national economy and net zero functions. These primary duties—

which are now to be disregarded—

are that it performs its functions in such a manner as will best assist the development of Australian export trade—

remember, that's the part that's to be disregarded—

and that it has regard to the desirability of improving and extending the range of insurance and other financial services and products available (whether from EFIC or otherwise) to persons involved, or likely to be involved, directly or indirectly, in Australian export trade.

That's no longer core business for the EFA.

In making these changes to the EFA, Labor has effectively transformed the EFA's role from an independently managed, outward-facing, export-driving investment vehicle to a domestic bank for domestic projects or to bankroll big-ticket items for reportedly good mates of the government like PsiQuantum. At the same time, Labor has extended the fingers of the government's hand into the decision-making of the EFC.

In a recent podcast by Australian trade experts Dr Pru Gordon, executive director of the Australian Centre for International Trade and Investment, and Professor Peter Draper, executive director of the Institute for International Trade at the University of Adelaide, Dr Gordon said: 'Export Finance Australia has two accounts. One is the commercial account and one is the national interest account. And all of the Future Made in Australia programs will fall under the national interest account. Now, decisions as to whether EFA even considers a project for funding will be a decision made by the minister. It's not a decision made by Export Finance Australia. The amending legislation that comes with the Future Made in Australia legislation in relation to EFA clearly says they have to take a project to the minister for the minister's decision, even if it doesn't meet with any of EFA's criteria as to whether it should be funded or not. So that's the national interest account. EFA, they are not experts on the projects that they fund. They are experts on financing projects but not on the projects that they fund.'

Dr Gordon went on: 'And I know for projects that they've funded on the national interest account in the past they have relied on private sector advisers as to whether the project warrants funding and is going to be a good investment or not.' For those who are curious, I commend this podcast to listeners at home: Trade Policy Decoded Episode 15: the re-emergence of industry policy and a Future Made in Australia. It's dated 7 August. When you take these changes to the EFA and you hold them up to the contributions to this debate from those on the other side, you would be right to ask yourself whether the Albanese Labor government is turning its back on global trade, trade agreements and, indeed, the network of trade agreements, which has made Australia such a strong global economy despite her relative size. It's worth looking at Labor's record in this space as a backdrop to these bills. The Albanese government implemented the UK FTA, concluded by the previous coalition government, and the Indian FTA, equally concluded by the previous coalition government. The only one they really had to achieve for themselves on their own scorecard was the EU FTA, for which—yet again—much of the work had already been done by the previous coalition government and the previous trade minister, who's just come into the chamber.

They started well on the EU FTA, and then progress came to a sudden stop in October of last year. Subsequent opportunities for revival of negotiations such as at the WTO ministerial in Abu Dhabi in February were not seized. The agreement at this point is effectively dead. It is worth taking stock of what this government has lost by deserting well-advanced free trade negotiations with like-minded partners in favour of the picking-winners, Made-in-Australia, protectionist industry policy encapsulated in these bills.

Made up of over 450 million consumers, the EU has a combined GDP of some US$17 trillion. The EU is a vital partner for Australian manufacturing, automotive business, science and research as well as the digital economy and financial services. Last October, there were high and reasonably founded expectations that a deal would be done. The EU had sent its vice-president and agricultural commissioner to run down any final skirmishes in Australia in the very non-European setting of Osaka. Negotiators, business and industry representatives, and our exporters had all turned up in significant numbers to see the Australian FTA flag thrown over the last missing megamarket in Australia's FTA net. In the lead-up, progress had been made in relation to key priorities for Australia—certainly in relation to red meat and sugar. It was of course not as much as our agricultural industries wanted, because it is never enough for what they want and they are right to be ambitious when they produce the best beef and lamb and finest sugar in the world.

However, the EU had found a way to expand their earlier offers two- or threefold, depending on the quota and the cut of meat. The EU's market access offer would have been worth more than $1 billion a year in new agricultural market access and reduced the cost of environmental technology such as wind turbines, which currently attract a five per cent tariff, resulting in Chinese turbines being the cheapest choice in Australia. Tariffs on minerals, metals, wood, paper and chemicals would also have been removed. The deal would have expanded trade in energy raw materials, ensuring Australia was sharing her precious critical minerals and resources with like-minded nations. The EU had given ground on those pesky geographic indicators, agreeing that Australian companies already established in the market will be able to continue using these terms, often reflecting their original European heritage or establishment. But back in October the final negotiations were over before they began, with the trade minister abruptly informing the Europeans on negotiation eve that there was nothing to discuss the next day. The Europeans were stumped. They hadn't seen the about-turn coming. They had been given every indication to the contrary. It was a betrayal of years of progress and, at the time, the Europeans didn't just think they had been deceived by the sudden turnaround; they knew they had been. It was obvious someone had pulled the leash on the Australian side.

One outstanding issue, relating to importing talent, bringing European professionals with discrete skills to Australia, is what most people believe was the sticking point. The abolition of labour market testing in discrete technical industries, so despised by the Australian union movement, had precipitated the Albanese government's turnaround. Few here would remember the vicious campaign run by the union movement against the China free trade agreement, which equally abolished labour market testing for some specialised skills. At the time, the CFMEU and ETU ran full-page ads in the paper, online and television ads and even went as far as robocalls. At the time, those CFMEU-sponsored ads said: 'Do you know what Tony Abbott's free trade deal with China means? Chinese companies can fly people into work without ever having to look around for local staff.' It was a blunt, racist fear campaign which in the end amounted to nothing. The deal was done and there was no flood of workers.

(Quorum formed)

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