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

I present a supplementary explanatory memorandum to the bill and seek leave of the House to move government amendments (1) to (3), as circulated, together.

Leave granted.

I move government amendments (1) to (3), as circulated, together:

(1) Schedule 1, item 2, page 3 (lines 12 to 14), omit the item, substitute:

2 At the end of subsection 3(3)

Add:

; or (e) the supply to persons who are not ordinarily resident in Australia of services relating to tourism; or

(f) the conduct of an online business with customers outside Australia; or

(g) the sale or licensing of intellectual property and related rights to persons outside Australia; or

(h) direct investment outside Australia where a benefit flows back to Australia (whether directly or indirectly).

(2) Schedule 1, page 4 (after line 9), after item 6, insert:

6A At the end of section 16

Add:

(3) However, EFIC must not make a guarantee or enter into a contract under this section in relation to a loan or a proposed loan that is to be used for the dominant purpose of direct investment outside Australia unless the requirement in subsection (4) is satisfied.

(4) The person who carries on the business must certify, by writing given to EFIC, that the person reasonably believes that the loan will result in a net increase in the number of people employed in Australia by the business or a related business during the term of the loan.

6B At the end of section 23

Add:

(3) However, EFIC must not lend money under this section for the purpose of financing a transaction whose dominant purpose is direct investment outside Australia unless the requirement in subsection (4) is satisfied.

(4) The person to whom the money is lent must certify, by writing given to EFIC, that the person reasonably believes that the loan will result in a net increase in the number of people employed in Australia in the business concerned or a related business during the term of the loan.

(3) Schedule 1, items 7 and 8, page 4 (lines 10 to 17), omit the items, substitute:

7 Section 84A

Repeal the section, substitute:

84A EFIC must charge for certain services

(1) EFIC must charge fees for services it provides in performing the following:

(a) EFIC's Northern Australia economic infrastructure functions;

(b) EFIC's Commonwealth entities function.

(2) The fees:

(a) must be sufficient to compensate EFIC for the services it provides in relation to those functions; but

(b) must not be such as to amount to taxation.

I rise to move three amendments to the Export Finance and Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2016. The government has responded to the 7 February report of the Senate Foreign Affairs, Defence and Trade Legislation Committee inquiry into the provisions of the bill. The amendments address issues raised in the report and clarify the purpose of the bill to enable Efic to support a broader range of small and medium sized enterprises, ensure Efic's support for overseas direct investment results in more Australian jobs and ensure Efic charges a fee for providing its services to Commonwealth entities and companies.

The first amendment maintains the EFIC Act's support for manufacturing and expands the definition of an eligible export transaction to include support for tourism operators, online businesses, exporters of intellectual property and other related rights, and businesses engaged in overseas direct investment. The second amendment will ensure Efic's support for businesses engaged in overseas direct investment will result in more Australian jobs. It is already Efic policy that applicants for its overseas direct investment financing product must not use it to fund the outsourcing of jobs. This amendment stipulates that businesses will have to certify in writing their reasonable belief that Efic support for overseas direct investment will result in a net increase in the number of people employed by the business concerned or related business in Australia. The third amendment will mandate that Efic charge a compulsory fee for providing services to Commonwealth entities and companies. This fee will not amount to taxation, but will ensure Efic is compensated for providing its specialist financial expertise. The amended bill will unlock Efic's potential to respond to the needs of complex government financing arrangements, subject to ministerial approval. The amendments also clearly enable Efic to support a wider range of innovative Australian small and medium sized enterprises to succeed in the global marketplace. I certainly commend these amendments to the House.

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

I thank the minister for bringing forward these amendments. They do arise from a lot of the evidence that came forward in that committee, but not its recommendations. To be fair, they arise from conversations that the minister and myself have had and that our respective offices have had about the need for an Australian jobs test to make sure that, where Efic is providing a loan to a company that is spent overseas, it provides an assurance that it will deliver additional jobs to Australia. The minister made the point that, where Efic provides loans at the moment, it already has an internal process to make sure that there is no net loss of jobs. What the minister is proposing in this amendment is that the company that would be provided with the loan would provide an assurance to Efic that this would provide additional jobs. We reserve the right to tinker with this amendment in the Senate if we think it might be stronger if that responsibility should rest with Efic rather than the business. The current responsibility that Efic has in its internal policy is that it makes that determination itself, I understand. So we will consider this amendment and see whether it might benefit from some minor changes to it in the Senate. But we support this amendment here.

As I foreshadowed in the substantive debate, I also outlined two further amendments that Labor intends to move in the Senate. With the benefit of the winter break, I am hopeful that the minister and I might have further conversations about the benefits of those amendments and, potentially, a briefing from Efic on how they might work in practice. Subject to those conversations proceeding well, we might find other ways to strengthen this bill further so that it provides support for Australian businesses seeking to export and expand overseas, so that it makes sure there are no unintended consequences from this legislation and so that it creates more jobs here in Australia.

Bob Katter (Kennedy, Independent) Share this | Link to this | Hansard source

In speaking to the bill, there is a gap to which attention has been drawn to by the leader of the Xenophon party in the Senate. There are holes that enable money to be given by the government to foreign corporations. If I went home and told my electorate that an Australian government would give assistance to foreign corporations, they would think that I had taken a few too many hits without a helmet on in rugby league. They would not believe it. The decision was taken here not to intervene in the gas sales of all of our gas reserves overseas. It was a decision taken in this parliament by both sides of the parliament that we are quite happy for foreigners to own all of our gas reserves. There are people negotiating to buy Australian gas from Japan because it is cheaper to buy Australian gas from Japan than to buy it here in Australia.

This would all be very funny except we have major industrial operations in Australia that are placed in the gravest of jeopardy. We are talking here about allowing the government to provide assistance to these foreign corporations. If you think that is outrageous and extremist, well, who would have thought that the governments of Australia would have given all of their gas reserves away? Who would think that there is a government on earth that could be so stupid—and both governments; I am not singling out the LNP, I can assure you; the ALP, as well—to be quite happy that we have no petrol in Australia? In sharp contrast—whatever you say about the Americans—according to the reports I have read, 10 or 15 per cent of America's petrol needs are being met from oil shales, 12 per cent is being met by ethanol, about seven per cent is being met by gas and about two per cent is being met by electric cars. If necessary, 30 per cent of their oil requirements can be met by uncapping the oil wells that they have capped.

Just a short history lesson for the people in this place: for the last big war that we were in, Japan was forced into the war because America cut off their oil supply. The European war was simply about Hitler trying to get to the oilfields. He tried through Stalingrad and he tried through North Africa. The world is prepared to go to massive wars over the supply of oil, yet this place decides that there is no problem in getting all of our oil from the Middle East when we are a country that is gifted in such a way that, like Brazil, we can provide 60 per cent of our oil requirements from ethanol. A cavalier attitude at best and a traitorous attitude at worst allows this to happen.

In the minute left to me, what country on earth has the national flags that it hands out made in China? What country on earth has all of its ordnance owned by the French? What country on earth get the boots for its army from China—and the soles fall off? And I cannot help but tell an anecdotal story that illustrates that point. I said, 'Did 2,000 soldiers really have the soles fall off their boots last Anzac Day?' and the head of the catafalque party, a sergeant major, lifted up his foot and he was marching along in just the uppers and his socks. This was the next year. What sort of a country continues on like this? When will we learn that we are Australians, we are not some foreign corporation? When will we act in the interests of our own people and not in the interests of foreign corporations? (Time expired)

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

I will pick up on some of the points that have been made with respect to this debate. I understand the legitimacy of the concerns of the member for Kennedy, but there are reasons why Efic does provide finance to foreign corporations. I will give you but one example. Efic provided finance to a Norwegian business because that Norwegian business was buying an Australian ferry. One way to think of it is that it is effectively a form of vendor financing. It ensures that foreign companies are generating jobs in Australia. They are generating jobs in Australia because of the requirement that there be a linkage between the finance that Efic provides and the ability to export a product.

I do understand what the member for Kennedy is saying, but it is not that black and white. The fact is that there are foreign businesses that Efic, by providing that finance, will ensure purchase Australian manufactured goods and Australia services. These are Australia goods that provide employment opportunities for Aussies all around this country, including, for example, Incat in Tasmania, who are able to provide employment opportunities and help boost the Tasmanian economy as a direct result of that finance going to a foreign entity, which, in turn, buys Australian manufactured goods. That is part of the reason why we have that requirement ensuring that there is that direct link. I want to assure the member for Kennedy that there is always the requirement for a direct link back to Australian exports, and that is a crucial part of what we are doing here.

The other aspects that I will quickly raise before this debate concludes are in respect of the amendments that have been foreshadowed, which these amendments within the chamber currently address. As a consequence of the amendments that the government is putting forward, we are currently putting in place a net positive jobs test. It is the coalition that is making sure that there must be an improvement in the jobs outcomes—not a neutral jobs impact but, in fact, a net positive jobs impact—as a consequence of providing finance to a foreign entity.

Labor has outlined two amendments. One is to prohibit finance being provided to a business overseas that may possibly impact on an operation in Australia, and they cited the example of a call centre. We cannot support that because what that amendment will effectively seek to do is freeze in time the composition of the business. If a business were evolving and, for example, moved a function of that business abroad in order to generate more employment, more profits and a more efficient business in Australia, then, in net terms, that would be a positive, and my concern with that amendment is that that would not be the case.

The final point with respect to Labor's foreshadowed amendment is with respect to prohibiting overseas investment where it would have a negative commercial impact on a company engaged in the same business in Australia. I have heard a number of Labor members and, indeed, the shadow minister make reference to the recent Guardian article. I think it is important that we understand that there is another side to that. For example, I have a letter from Glenn Jobling, the engineering director of Adelaide Control Engineering. He wrote: 'Without the support of Efic, we would not have been able to meet all of the contract provisions, which would have resulted in the client cancelling the approximately $11 million Australian order, the bulk of which involved equipment manufactured in Australia, resulting in significant benefits in terms of employment both in my company and those of my suppliers. Perhaps even more importantly, the success in winning this contract has opened the door for further similar orders both within Australia and overseas. Your'—that is, Efic's—'assistance has thus enabled us to invest in the development of new technology for the mineral, mining and processing industries which, in turn, is providing opportunities in the Australian manufacturing sector.'

I just cite these couple of quick examples. I want to work constructively with the Labor Party and I want to ensure that we can improve Efic's function. But these are not black-and-white issues, and there must always remain a tie back to improving the job opportunities for Australians.

Question agreed to.

Bill, as amended, agreed to.