Bruce Billson (Dunkley, Liberal Party, Minister for Small Business) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

I am delighted to be able to introduce this bill today, because it is an important part of our package of red tape reduction on this repeal day, contributing to a reduction in business compliance costs, especially for small- and medium-sized businesses.

The Export Finance and Insurance Corporation, or EFIC, plays an important role in maximising Australia's trade potential. It helps ensure that Australian small- and medium-sized businesses have access to the finance they need to grow their business overseas and in turn support our economy and jobs here in Australia.

In recognition of EFIC's valuable role and to restore funds removed by the previous government, the coalition government has provided EFIC with a capital injection of $200 million in the 2014-15 budget. At the same time, we have renewed EFIC's focus to the provision of support to SMEs, which combined with the capital injection will provide the flexibility to ensure EFIC's products and its operations can respond effectively and efficiently to the evolving needs of our economy.

The Abbott government recognises the importance of finance as the oxygen of enterprise to small business and is refocusing EFIC to increase its capacity to finance small- and medium-sized businesses seeking to capitalise on global trade opportunities. The vast majority of Australia's exporters are small- and medium-sized enterprises, but traditionally they find it more difficult to secure export finance through banks, particularly when exporting to emerging markets.

EFIC plays an important role in supplementing the provision of credit for exporters and we are repositioning it to best support exporters into the future. EFIC, under its new CEO, Andrew Hunter, is improving its own practices by simplifying its documentation and streamlining SME application processes. EFIC has also recruited additional staff to respond and support their SME work. Over the last 12 months EFIC's focus on small business has been demonstrated by a growth in the SME team to 30 people, including six new hires in June 2014 in Brisbane, Melbourne and Perth, the simplification of core SME product and loan documentation and more efficient end-to-end loan processes.

EFIC turned around a bond application for FFF Engineering in Western Australia this year, in just 21 days compared with similar transactions that in the past could take more than 200 days to process. These changes will help double EFIC's SME business over the next four years, and it is probable that the majority of these clients will be new to EFIC.

Australian Bureau of Statistics data shows that only five per cent of Australian goods exports are capital goods. And yet, under the current EFIC Act, EFIC can lend directly in support of capital goods but not all goods. This means EFIC cannot lend for exports of many of the products in which Australia excels, like pharmaceuticals, or consumer goods like food and wine. For example, this means EFIC can support the export of cows, but not milk.

The government has, therefore, decided to enhance EFIC's capacity to support small- and medium-sized businesses by allowing it to lend for the other 95 per cent of exports, thus improving the export potential of Australian small- and medium-sized businesses. To implement this measure, this EFIC Amendment Bill is required to delete the word 'capital' from the definition of an eligible export transaction in the EFIC Act.

This amendment will also support the government's deregulation agenda and benefit exporters by reducing the time and paperwork required to access EFIC support. The new direct lending arrangements will remove the need for exporters of non-capital goods to obtain a guarantee from EFIC before they can secure funds from a bank, which doubles the due diligence processing time and requires two sets of documentation and legal fees.

This has a real impact on business.

Bruce Scott (Maranoa, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The debate is interrupted in accordance with standing order 43. The minister will have leave to continue his remarks when the debate is resumed at a later hour.