Susan Templeman (Macquarie, Australian Labor Party) Share this | Link to 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.

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

I and my Labor colleagues have serious concerns about the Export Finance and Insurance Corporation Amendment (Support For Commonwealth Entities) Bill 2016—in particular, the aspect of the bill that broadens the definition of eligible export transactions to include funding for projects that are predominantly based overseas.

When Efic was established, its guidelines were very clear: to support Australian businesses to build and grow their export industries in other nations. That, of course, implies that jobs for Australians would be paramount and that supporting Australian businesses would be the reason for the establishment of the corporation. Through a series of amendments to the operation of the Export Finance and Insurance Corporation, we seem to be getting further and further away from that initial aim. This amendment bill appears to represent that. That is why Labor will move amendments in the Senate to this bill that will strengthen the provisions of the bill and ensure that the aim for which Efic was established—most notably, to support the growth of Australian businesses through exports in other countries—is paramount.

The purpose of the Export Finance and Insurance Corporation Amendment (Support For Commonwealth Entities) Bill is to amend the Export Finance and Insurance Corporation Act for two main purposes. Firstly, it is to permit the Export Finance and Insurance Corporation, or Efic, to provide specialist financial advice to Commonwealth government bodies, subject to ministerial approval. Secondly, it is to broaden the definition of eligible export transactions, such that a wider range of businesses will be able to receive a range of insurance and financial services and products from Efic, as the Australian connection required to access Efic's assistance will be relaxed under the amendments proposed under this bill. In practice, the second objective would allow Efic to more easily loan money to Australian companies to increase their international trading opportunities, which would bring benefits to the Australian economy. However, it would also allow Efic to loan money to Australian companies to increase their manufacturing capabilities overseas, or to a company to set up a call centre in another country. So there is a real concern that this bill will promote the shifting of Australian operations to other nations and ultimately result in a net loss of jobs for Australian workers.

Efic can provide a range of insurance and financial services and products under part 4 of the act. Specifically, Efic can provide: export payments insurance contracts; guarantees and subsidies in relation to loans to Australian suppliers; guarantees and subsidies in relation to loans to overseas buyers; guarantees to co-lenders in relation to export transactions; tender guarantees and performance guarantees; reinsurance of guarantees; and also loans to finance eligible export transactions. Whether a particular service or product can be provided depends on whether the transaction is an eligible export transaction or a transaction that involves the Australian export trade. Though not legislated, it is expected that Efic will operate on a commercial basis, and Efic must not provide financial services or products on its commercial account unless Efic is satisfied that the private sector providers are unable or unwilling to support financially viable business activities, and Efic should ensure its activities fill the market gap where private provider finance is not forthcoming.

As I mentioned earlier, I and my Labor colleagues hold some concerns about the objective of broadening the definition of 'eligible export transactions'. Despite the internal Efic policy stating that any loan cannot result in net Australian job losses, I feel that that is not strong enough to safeguard the protection of Australian workers and their interests. It is Labor's strong belief that Australian taxpayer money should be spent to benefit Australian taxpayers—in particular, to grow jobs in the domestic economy, be that through domestic operations or export operations. Any potential loophole that allows this basic principle to be circumvented should be firmly shut.

As a result of these concerns, Labor sent this bill to a parliamentary committee to investigate the potential effects of broadening the range of projects to benefit from Efic's financial support. This best-practice measure offered stakeholders an opportunity to weigh in and provide some insight into the measures' practical impacts.

In the evidence provided to that committee inquiry, the committee found that the Australian Fair Trade & Investment Network submitted that, in the absence of the requirement for firms to actually produce goods and services in Australia and employ Australians, there would be no incentive for firms receiving Efic loans to have any Australian content, leading to the perverse situation that an Australian government institution could be providing finance and support for firms that are offering no employment in Australia. That is a ridiculous situation, and no Australian taxpayer would believe that that is a fair situation or should be a basis upon which Efic should be lending money to or providing guarantees for finance to particular Australian businesses.

The Australia Institute expressed concern around the potential for further offshoring of Australian manufacturing, saying:

For example, a garment company based in Australia could move all production offshore, but still be eligible for Efic's services.

The ACTU simply stated:

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.

And it said that the removal of such provisions could potentially result in the loss of Australian jobs. Despite these concerns, Labor is not seeking to vote down this bill altogether. We are seeking to make it a better piece of legislation and to improve the operations of Efic so that it does meet its establishment obligations to provide support to increase exports and to grow jobs in the Australian economy.

We acknowledge the government's claim that this will save business $12,000 in red tape and time. Labor is committed to supporting Australian business and securing Australian jobs, and we support the bill, but with the amendments that have been outlined by the shadow minister in this debate. Those amendments, we feel, will serve to strengthen it against the undesirable consequences flagged, in committees, to the Australian parliament as being against the interests of workers and businesses.

So we will move those amendments in the Senate. The amendments will ensure that, prior to approval of a loan or guarantee for an overseas investment, Efic must be satisfied that: firstly, the investment will lead to jobs growth in Australia, which is a very, very important obligation and a principle for which Efic was originally established; secondly, the investment will not be used to replace a function currently being undertaken in Australia, the important notion here being that it should be a growth strategy, not a replacement strategy or a strategy to shift business to other parts of the world; and, thirdly, the investment will not have any negative commercial impact on a company engaged in the same business in Australia. Those are the three amendments to this bill that Labor will seek to move in the Senate, to strengthen the bill's provisions, make it a better use of Australian taxpayers' money and, importantly, support Australian workers' jobs. I commend all those senators involved in this debate to support those sensible Labor amendments.

Julie Owens (Parramatta, Australian Labor Party, Shadow Parliamentary Secretary for Small Business) Share this | Link to this | Hansard source

This is a really interesting area—and one particularly interesting for me, because I worked in an area, for many years, in the commercial sector where work just flowed freely across international borders. I remember giving a lecture to a forum about 30 years ago, talking about the ultimate effect of globalisation as not about imports and exports of total goods but the complete fracturing of the way things move across borders, including labour. As early as the late nineties, in the music sector, in which I worked, we already had firms in Australia providing the soundtracks for American daily programs overnight, using the difference in the time zone to effectively work a 24-hour shift, and that was back before the GST, because, when the GST came in, I remember thinking, 'I'm not quite sure we're in the right decade here—it is the wrong time for this.' So this is an area that I have watched for a long time.

In my community, where we have a lot of people who were born overseas who have expertise and knowledge of overseas markets, we have a lot of entrepreneurs who develop something in Australia and manufacture it in their country of birth. We have a Kenyan fashion designer who uses Kenyan fabrics and Kenyan manufacturers. We have a couple of Nepalese boys who do the same. We have a Fijian-Indian Australian, who recently got her citizenship just in time, who heads off to Kenya and works with the Masai women on her beaded designs which are kind of half Indian and half Kenyan. So we have these phenomenal young entrepreneurs in modern Australia who think in a profoundly different way. The world is actually theirs. They are connected in ways that Australia was not. When I talk to these young people, I quite often say to them, 'Look, if you're going to train those Kenyan women in how to make that for a Western body, you should invest in the factory—you should actually own part of it, so that you can sell those skills to other people around the world.' If you are working with women in remote villages, as one of my Indian designers does, there are ways to make sure that your work returns to you in ways other than just the manufacture of the product.

This is a great thing—this changing nature of Australia and the way that our population is so woven into the world. This is actually a good thing. As great as that activity is, the question is: to what extent should the taxpayer pay for it? That is the issue. To what extent should the taxpayer subsidise or assist that kind of activity? What are the rules, if you like, for what the Australian taxpayer does or does not pay for?

The Export Finance and Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2016 extends what the Export Finance and Insurance Corporation Amendment can do in terms of its support of Australian companies. It has two purposes, the first being to allow Commonwealth entities and companies to access the loan expertise of Efic for a fee, with the approval of the Minister for Trade, Tourism and Investment. That currently occurs with the Northern Australia Infrastructure Facility. It is non-controversial. Both sides of the House see benefit in that. I will state, though, that this is about Efic managing loans for other departments. It is a very effective way of using the expertise of one government entity and expanding it across a broader range of activities. It is a very good thing. The second purpose of the bill is to allow Efic to provide loans to Australian companies for overseas investments, and this is where it gets slightly more controversial—there is more to consider in this one.

On this side of the House, our concerns are the effect that this change will have on Australian jobs. We are concerned that we will see Australian jobs shifting offshore. We have heard the stories, as many have, following an article in The Guardian which claimed Efic was preparing to loan funds to a company listed on the Australian Stock Exchange to establish a mine in South Africa. Efic did confirm in the Senate estimates last month that they are no longer considering the loan at this stage as no formal proposal has been submitted, but it is still listed on their website as being considered, and Efic confirmed that the original application was consistent with the Efic Act.

We have, already, an interesting situation with Efic, and this bill extends that slightly. We had enough concern to refer this to a committee. The evidence given to that committee is worth sharing in this House. The Australian Fair Trade and Investment Network said:

It is a reasonable and in fact modest requirement that firms receiving support from Efic actually produce goods and/or services in Australia and employ Australians. It provides ample flexibility for firms to have offshore operations where required.

In the absence of such a requirement, there would be no incentive for firms receiving Efic loans to have any Australian content. This would lead to the perverse situation of an Australian government institution being able to provide support for firms providing no employment in Australia.

The Australia Institute said:

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.

The ACTU said:

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.

There are a range of voices out there that express what is quite a reasonable concern.

Of course, much of the way this works will take place through regulation, so the detail is still largely unknown, but, when money is limited and it goes to offshore activity rather than onshore, it does actually pull money out of onshore activity. I will be quite honest about this: it is such a complex issue when you live in an electorate like mine, with such incredible diversity, where the world is their market. I am looking forward to the process that we go through as these regulations are developed. I will be watching the government very closely to ensure that, where possible, they put a priority on the funding of projects which provide a tangible benefit in terms of jobs in Australia. I understand all of the reasons why a government would seek to expand the criteria in this way. There would be many in my community that would be very much in favour of this.

Again, I think it is a complex area that needs considerable consideration and a lot of consultation with the sector as we move forward. We on this side will not oppose it. I look forward to, I hope, a close working relationship with the government as the regulation unfolds so that we can all make sure that this serves the best interests of Australian industry going forward.

Julian Hill (Bruce, Australian Labor Party) Share this | Link to this | Hansard source

When working well, of course, Efic can play an important role in filling market gaps, which is a contested term, nevertheless, in facilitating jobs and growth. Jobs and growth—actually, I remember that. We lived through the never-ending election campaign when we heard a lot about jobs and growth. Here was I at the start of the campaign thinking it was in fact policy but, as the rest of Australia figured out, it turned out to be a website and a slogan—it was blue and yellow, with a banner and a lovely logo, but not a policy. In fact, since the budget the government has gone rather quiet on jobs and growth because, in fact, the budget cut the jobs forecast by 92,000 jobs and cut the growth forecast. So we have not heard so much about that. Any proposals to facilitate economic growth—more investment, more trade, more jobs—are welcome. We all in this parliament should approach it constructively to get the best possible outcome for Australian jobs and businesses.

As has been said, the Export Finance and Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2016 does two things. I will just make a couple of brief remarks on the first aspect which has been largely glossed over because it does have support. There are few issues here, as the Bills Digest touched on. The first objective is to expand Efic's function so it can provide specialist finance advice to Commonwealth entities and companies. Currently, it is only permitted to provide that to the NAIF—and isn't the NAIF a funny thing. All it has actually spent money on is its board and consultants; it has not actually spent any money developing northern Australia—but, you know, northern Australia lives in hope.

We support the amendment which will, hopefully, lower government service delivery costs as other Commonwealth entities can then access Efic's expertise. This touches on a couple of important issues from the point of public administration. Consultant and contractor spend by the Commonwealth for many years—and this is actually not particular to this government—has been a significant item; well over half a billion dollars on consultants alone across the Commonwealth Public Service in 2015-16, the most recent full year figures. Of course, there are legitimate circumstances where it is absolutely necessary for departments and agencies to procure in specialist expertise. Indeed, commercial advice and financial expertise is probably up the top of that list, where it is not reasonable to expect the plethora of agencies across the Commonwealth public sector to have that advice in-house. It is quite natural and, indeed, critical that they turn externally to procure advice, but it is not cheap advice. It makes eminent sense then to draw on existing expertise, such as that that resides in Efic to assist other agencies. It could lower costs.

The Bills Digest raises a few issues and a note of caution. The government has provided no indication or assessment that we can see of the likely frequency of this advice. This provides the potential for a very substantial draw on resources should this take off, and no additional funding is flagged. I would urge the government to make sure that in managing this new function there is a great degree of consciousness about the potential for displacement of resources because no-one would want to see resources in Efic diverted, if you like, to become an in-house consulting house to government and away from its core business, which is the provision of export credit to increase jobs growth and exports.

That leads then to the main concerns with this badly thought-through bill—it is a good objective but we do have a number of serious concerns about the drafting. The second aspect is to allow Efic to provide loans to Australian companies to expand or set up overseas operations. To give the government the benefit of the doubt, there are unintended negative consequences. But we have tried to be helpful as an opposition and we have put forward a number of sensible, proposed amendments which we would urge the Senate take up. The major concern is the potential impact on Australian jobs. The bill, as drafted, could allow loans to offshore manufacturing. The submissions to the Senate inquiry made that clear and 'the potential to reduce jobs that produce goods and services in Australia'.

I cannot imagine any member of this House would think it a good use of Commonwealth taxpayer funds to give loans or loan guarantees to a company that then takes jobs offshore. There was a comment in the Bills Digest that I do not think anyone would want to see a circumstance where the main criteria was the flow-back of profits onshore if we actually had job losses. That is perverse. As legislators I think it is incumbent on us to be careful and cautious and to examine the detail. Indeed, the Senate committee has done some of that already.

I will just summarise the three amendments without going into detail. First, the Australian jobs test, which is designed to make sure that before making a loan or guarantee spent overseas that Efic must be satisfied that a supported investment would lead to jobs and growth in Australia. It is not controversial—or it should not be—that we satisfy ourselves that this will actually grow domestic jobs and that the sole criterion should not be the earnings flow offshore under this new arrangement. Second is the amendment to prevent business using Efic loans or guarantees to offshore jobs. The third, as has been touched on by a number of members, is to make sure that disturbing reports we read in The Guardian of loans being given to finance coalmines in South Africa, which would hurt the Australian coal industry, on the way through with taxpayer money could not proceed and were clearly ruled out.

So in the spirit of bipartisanship we lend our support to this bill but will urge and encourage the government to take up our sensible proposals for amendments in the Senate.

Justine Keay (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

I welcome the opportunity to speak on the Export Finance and Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2016. As secretary of the Australian Jobs Taskforce I get to hear stories all around the country of people in our community that are looking for work. Those who were highly skilled and employed to work in mines, for example, are now out of work with the downturn. When we hear those stories we want to do everything we can to make sure that we have a policy setting in this country that can put those people into work. I hope that those sentiments will be supported by everyone in this place.

Assistance to Australian businesses and manufacturers to become exporters and explore overseas opportunities is always welcome. In my electorate I have a number of local manufacturers who already export overseas, and I am sure they would support access to a facility to create further opportunities for overseas markets. I would hate to think there would be legislation that could allow a competitor to set up in an overseas market that would have a direct impact on a local industry and, of course, local jobs. Labor supports the principles of this legislation, but as my colleague the member for Bruce and other speakers outlined, we do have some concerns, which is why we will be moving amendments to protect Australian jobs

Efic has a test of no net job losses. That should not be a minimum; there should be a high standard of net job growth in this country. That is what we should be aiming to achieve. Like many other places in Australia, Tasmania and my electorate have seen Australian manufacturing jobs go overseas, and that has huge implications for our community. Blundstone, for example, moved their operations off shore from Hobart, and 300 jobs were lost. More recently, in my electorate, Caterpillar moved the vast majority of their Burnie-based manufacturing jobs offshore, and 280 jobs were lost from a regional community. It has devastating implications. Community, government and the AMWU worked really hard to try to offset some of the damage, and they should be congratulated for their efforts there because we have become a very resilient community because of that.

The last thing my state and electorate would need is a system whereby a company could access Commonwealth finance to set up overseas and replace an existing local operation. It has been a fear up to this point that that could potentially happen in the coal industry. The principal focus of taxpayer money on this issue should be to support local jobs, not to run the risk of jobs simply being exported. I do not think anyone in this place would like to see that happen. Any potential for the offshoring of Australian jobs must be prevented, which is why Labor will be moving amendments.

I have spoken before about my local manufacturers in this place and how they have been resilient and bouncing back. Only yesterday the Australia Institute Centre for Future Work released a briefing paper titled Manufacturing: A moment of opportunity. The paper was released at the National Manufacturing Summit held in this place only this week. The summit brought together business, unions, universities, the financial sector and numerous other key stakeholders. Its purpose was to identify policies that could assist an Australian manufacturing industry turnaround. The paper makes the point that while the focus on Australian manufacturing tends to be on job losses, factory closures and redundancies, the sector is recovering. The paper highlights that a number of indicators suggest economic opportunities for Australian manufacturing have improved.

Manufacturing employment has increased over the last 12 months. The growth in manufacturing was the second-largest increase in jobs recorded over the period of any sector in the Australian economy—surpassed only by public administration and safety. And governments should not be patting themselves on the back for this job growth as it is coming off a very low base. The growth is being led by industries in my electorate such as Elphinstone and Direct Edge, not the government.

The average output of each worker in the manufacturing industry is also increasing, and the report stated output to hours worked in manufacturing is returning to its peak achieved under the former Labor government. That is interesting in itself, because manufacturing productivity in Australia was at its highest over the last 10 years under a Labor government and on the back of a global financial crisis. It just goes to show what can actually happen when government and the manufacturing unions, like the AMWU, work together. Perhaps that is a lesson the coalition could learn.

Labor has always been a proud supporter of our manufacturing industry, which is why we will be moving the amendments to prevent offshoring of Australian jobs, and supporting industry to invest overseas to create export opportunities for Australians and Australian jobs is a principle Labor supports. But we are concerned changes in this bill will make it easier for a company to establish an overseas operation that will directly compete against an existing Australian operation. I would hope no-one in this place would want to see that happen.

Labor is prepared to work with the minister and Efic to ensure this legislation achieves exactly what it is meant to do, but we want to avoid any unintended consequences that could stymie potential growth and opportunities in Australian industries. I know my local manufacturers, the manufacturing industry and unions, especially the AMWU, would welcome additional opportunities that this legislation could ultimately bring.

Steven Ciobo (Moncrieff, Liberal Party, Minister for Trade, Tourism and Investment) Share this | Link to this | Hansard source

I thank members for their contributions to the debate on the Export Finance and Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2016. In particular, I want to acknowledge a number of the contributions that were made. To my shadow minister, the member for Blaxland, as he outlined in his contribution to the chamber, we have got a good working relationship on this—it is a good working relationship full stop—but it has also been a productive discussion that we have been having with respect to this Efic legislation.

Those listening to this debate would have heard contributions from both sides of the chamber as to the way in which we can make sure that the legislation is crafted in the best way possible to ensure that we are giving the maximum opportunity to Australian businesses, Australian job opportunities and our exporters. That has been a guiding principle in the development of this legislation, and I will make some more remarks in more detail about that.

In terms of comments that were made, I have heard a number of contributions from members opposite, which I will go to in a moment, but I would like to reflect just for the moment on some of the contributions from government members—in particular, the member for Hughes and the member for Goldstein. Both recognised the important contribution of small and medium sized businesses in their electorates and the importance of being able to ensure that they can invest and grow their businesses.

In particular, the member for Hughes spoke about the significant role Efic will play as Australian small and medium businesses continue to expand and take advantage of the opportunities that the coalition government has been able to put in place, in particular, with respect to the three North Asian powerhouse economies of China, Korea and Japan. These are of course preferential market access opportunities that I continue to pursue now as trade minister and, in particular, the focus and emphasis that I put on them in terms of concluding, we hope, a comprehensive partnership agreement with Indonesia by the end of this year.

Discussions in that respect are going well, and I am driven by the knowledge that, if we conclude a very good deal—particularly with respect to Indonesia, given its geographic proximity to Australia and the size of the Indonesian economy—we will be in a very good position with respect to enabling Australian exporters to take advantage of what is a rapidly growing economy and what will, over the coming decade or two, become one of the most significant economies in the globe.

I also note the member for Hughes made comment about the importance of giving Australian businesses a level playing field to compete on. This is a principle that this legislation will help to put in place. The member for Goldstein made a number of comments about how businesses in his electorate are entrepreneurial and have access to finance, such as that provided by Efic and that this helps them to grow from small businesses to medium businesses and beyond.

In terms of the contributions by opposition members, I cannot help but think that perhaps a number of them—and I do not mean the this in an overly negative way—were speaking from old talking points. The reason I say that is because there were a number of concerns that opposition members raised which are addressed in the government's amendments that are on the table and that have been circulated. For example, in particular, we heard contributions made by the shadow minister and others, including the member for Shortland, about Labor's proposed second amendment. They gave the example about wanting to ensure that a business would not relocate a call centre from Australia to an offshore location. They said that by putting in place those changes it would not help to prevent that from taking place.

I will make further remarks about this in respect of the consideration in detail aspects of this bill, about the government's amendments and why we do not believe that some aspects of what Labor has put forward make sense. In fact, they would result in a poorer policy framework. The member for Macquarie made complaints about how the bill eliminates references to Australian manufacturing. Again, this is a case in point about the amendments that the government has put on the table and which have been circulated already making it clear that we will no longer eliminate references to Australian manufacturing. They will leave these in place. Instead, they will just add export of services, IT and software, as well as tourism services, to the bill. I think that many of the contributions that Labor members made were well intentioned, but that perhaps they were ignorant of the amendments that the government has already circulated and that they do not recognise the fact that their concerns have been addressed in the government amendments that we have put forward.

Let me make it clear: the government is absolutely committed to supporting Australian exporters in the 21st century, and this bill achieves our aim. This bill further strengthens Efic's focus on supporting Australian small-and medium-sized enterprises that cannot obtain private sector finance to expand their reach overseas. This focus is paying dividends. During the course of the last financial year, Efic provided over 110 SME exporters with over $155 million in funding. However, Efic could do more to help Australian SMEs.

This bill responds to the new ways in which our SMEs are growing Australian exports and expanding their reach overseas. Our legislation must change to enable Efic to lend directly to a wider range of Australian SMEs, including tourism operators, online businesses, exporters of intellectual property and other related rights and businesses engaged in overseas direct investment. The changes give these businesses the ability to benefit from an Efic loan. Previously, Efic could only provide a guarantee for a loan from another bank for these types of exporters of Australian goods and services. This change will save these businesses time and money by allowing them to borrow directly from Efic.

For example, consider the case of a small charter business running whale-watching tours out of Brisbane or the Gold Coast. The business wanted to increase its capacity to meet the needs of the growing number of international visitors. With its bank unable to help, they approached Efic. However, Efic could not assist under the existing legislation. The changes in this bill will enable Efic to loan to tourism operators like this one, which provide services directly to retail customers.

The changes also introduce a legislative stipulation to ensure there are more Australian jobs where Efic supports Australian businesses to expand overseas. I note that it is already Efic policy that applicants for its overseas direct investment financing product must not use it to fund the outsourcing of jobs. The changes will require businesses to certify in writing their reasonable belief that Efic's support for overseas direct investment will result in a net increase in the number of people employed in Australia by their business or an affiliate.

The government is committed to unlocking Efic's potential to support the operation and administration of government financing arrangements. Efic already provides fee-for-service support to the Northern Australia Infrastructure Facility, and the changes in this bill will enable Efic to provide its specialist financial services to a wider range of Commonwealth entities and companies. The changes will ensure that this is on a fee-for-service basis, subject to ministerial approval. Efic's provision of services will not impact on Efic's support for SMEs.

In summary, the changes contained in this bill will benefit a wider range of Australian SMEs, often family-owned, as they seek to export, innovate online, sell intellectual property, expand their reach overseas and grow jobs at home. This bill will ensure Efic remains agile to respond to their financing needs. It will also enable Commonwealth entities and companies to leverage Efic's financing expertise when required. These reforms will make it easier for Efic to support our exporters in their contribution to the growth of Australian jobs and the promotion of trade, tourism and investment.

I thank all those on both sides of the House who have contributed to this debate. I commend the bill to the House.

Tony Smith (Speaker) Share this | Link to this | Hansard source

The question is that this bill be now read a second time.

Question agreed to.

Bill read a second time.