Mark Coulton (Parkes, Deputy-Speaker) Share this | Link to this | Hansard source

I move:

That this House:

(1) acknowledges the important contribution that the Export Finance and Insurance Corporation (Efic) makes to supporting Australian exporters;

(2) notes the recent passage of the Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2016 through the Parliament with bipartisan support, helping Efic keep pace with Australia’s changing exports; and

(3) commends the Government for issuing a new Statement of Expectations for Efic, re-enabling it to support onshore resource projects, and related infrastructure.

Efic is focused on the export finance needs of Australian exporters, especially the needs of small and medium-size exporters. This focus is paying dividends. Efic has provided around 260 small to medium enterprises with over $350 million of financial support in the last three years. Total exports supported from these projects had a value exceeding $1.8 billion. Efic's mandate is to operate in the market gap when the private sector is either unwilling or unable to finance otherwise commercially viable export transactions, and it is quite often the newer, emerging businesses that struggle to find that finance when they need it.

We all know this happens a lot in the small to medium enterprise sector. But SMEs are not the only group that sometimes suffers from a market gap in the availability of finance. In September 2017, Minister Ciobo announced changes to the mandate of the Export Finance and Insurance Corporation, Efic, to permit Efic, Australia's official export credit agency, to support a wider range of Australian exporters. Now, subject to careful consideration, Efic is able to once again support onshore resource projects and related infrastructure where there is a demonstrated market gap in the availability of private sector finance. This is a reversal of a ban applied in the previous statement of expectations issued in 2014, which prevented Efic from funding onshore resource projects. Back then the decision was to rule out resource-related onshore lending by Efic, a decision which was taken in the context of the time, when bank lending for resources was strong. There was a risk of Efic competing with and crowding out private sector banks in projects that the market would fund anyway.

But times have changed, and there is an increasing number of resource projects in some market segments facing difficulties obtaining private market finance for otherwise viable projects. Quite often, when thought goes to what sorts of projects, the Carmichael coal mine in Central Queensland is the one that comes to the fore, largely due to the promotion of the issue by the extremist groups and others. But I would like to draw the House's attention to a project in my electorate at Dubbo, which is the Alkane Resources project. It's a rare earth project that will provide products that are very, very useful in modern industries—in renewable energy, IT and defence. The project is around the minerals zirconium, hafnium, niobium and other rare earths. This project, which has a 70-year life span, will have between 300 and 400 jobs in construction for 18 to 24 months. It creates 250 permanent jobs, most of them locally sourced. That is approximately $50 million per annum in salaries and wages. There will be royalties to the state of $9.5 million per annum plus a payroll to the state of $34 million per annum and corporate tax to the Commonwealth of $70 million per annum, as well as local council rates and community payments of around $2 million per annum. There is a lot of flow-on to other industries as well. The changes to the guidelines for Efic will mean that projects like the Alkane Resources Toongi project near Dubbo and others will be able to get that funding to get them up off the ground and, ultimately, lead to quite significant contributions to our economy. (Time expired)

Sharon Bird (Cunningham, Australian Labor Party) Share this | Link to this | Hansard source

Is the motion seconded?

Tim Wilson (Goldstein, Liberal Party) Share this | Link to this | Hansard source

I second the motion and reserve my right to speak.

Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

It's interesting to be rising today to speak on this motion, given the likely origins of this new statement of expectations and its likely trajectory. Here we are, just a day after the member for McPherson, in her role as the government's Assistant Minister for Vocational Education and Skills, confirmed that the federal government won't provide funds to help Adani build infrastructure for its proposed coalmine in Queensland's Galilee Basin. This comes on the heels of recent disturbing reports that pollution samples relating to the environmental impact of the mine may well have been doctored. As the Leader of the Opposition has said, Labor is growing increasingly sceptical over this project.

It's clear, at the very least, that the project should not be reliant on the Turnbull government handing a billion dollars worth of taxpayer money to a mining billionaire. So it's fitting, then, that today, a day after one line of funding was shut off, a government that's fought so hard for millionaires and multinationals should ask the House to give it a pat on the back for opening up an alternative source of taxpayer dollars for a project like Adani's. The Export Finance and Insurance Corporation usually provides funds to help Australian exporters expand, but with the stroke of a pen the minister has made it possible for Efic to fund the kinds of projects it was not intended to fund.

Let's look at the timing of this decision. On 29 August last year, Australia's Minister for Trade, Tourism and Investment, Steven Ciobo, met with Gautam Adani in India. A week or so later, on 7 September, Minister Ciobo changed the Efic investment mandate and its statement of expectations to allow investment in onshore resources projects. The next day, 8 September, Minister Ciobo and Deputy Prime Minister Joyce wrote to top Chinese officials to vouch for Indian giant Adani and its proposed megamine in Central Queensland—that was because Adani had turned to Chinese state owned banks to seek financing for its $16.5 billion project. Australian banks have said that they won't fund the Adani coalmine. They recognise that world coal demand is falling. They recognise, too, that the impact of Adani could well be, as the member for Shortland has pointed out, to cost mining jobs in the Hunter region. So, to assist, Minister Joyce and Minister Ciobo sent a letter to the chairman of China's National Development and Reform Commission, saying they welcomed, 'foreign lending to support the development of major projects in Australia'.

Now we skip forward six weeks and we have Efic during an estimates hearing on 26 October denying it had any such contact with Adani. Five days later, Minister Ciobo confirmed on Sky that he'd changed Efic's statement of expectations, allowing the body to provide federal money to onshore resource projects. By late December, when we were all ready for a quiet summer of books and beaches, questions on notice came back from the Senate and confirmed that Efic had in fact spoken with Adani and had informed the minister's office of that contact. This contradicts the evidence given by Efic at the estimates hearing.

So that's what we know, but we don't know when Adani first contacted Efic or whether the minister's office asked Efic to communicate with Adani. What it looks like is that last year, when the chances of dollars flowing from the Northern Australia Infrastructure Facility were growing slimmer and slimmer, the Turnbull government was working on a second option to fund that project.

Tim Wilson (Goldstein, Liberal Party) Share this | Link to this | Hansard source

Efic is focused on the export finance Australian exporters need, not just to, obviously, export goods and services to the world but to particularly help those mighty giants of our nation, the foundation of our enterprise, small- and medium-sized exporters, to be able to build their capacity to sell the benefits, the wealth and the opportunity of this nation to the world. Of course, that focus pays dividends. Efic has provided around 260 SMEs with over $350 million of financial support in the last three years. The total exports supported were valued at $1.8 billion—not just $1.8 billion of goods sent around the world, but $1.8 billion that delivered jobs to Australians and built this nation's future.

In the wonderful electorate of Goldstein, many businesses have also benefited. For instance, SOS Hydration received a loan of $100,000 in July of last year—a company that I have met with in the past. Their wonderful entrepreneurs are providing an innovative Australian product and are taking it to the globe under Andrew Shaw and his team. Grande Exhibitions in Black Rock, with the innovation effort of Bruce Peterson, also received $100,000 a few years ago, and the Australian Pacific Touring company received a million-dollar loan in 2011 under Geoff McGeary.

Efic is already doing a good job in helping our exporters. 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 exporters. Among other things, the change in the legislation being provided gives more businesses the ability to secure Efic financing. Previously, Efic could only provide a guarantee for a loan from another bank for certain types of exporters of Australian goods and services. This change saves these businesses time and money by allowing them to borrow directly from Efic. But, more critically, it is also part of the drive of recognising not just the past and the present but also the future of the Australian economy. It particularly embraces the opportunity to give exporters in the services sector the chance to be able to realise their opportunity is part of our region.

Just consider the case of a WA geosciences company which exports innovative Australian geology and geophysics services and software. Following on from its international success, the company needed additional working capital to expand its offices in the UK, US and Malaysia. Expansion of its offices was important for driving more sales, its business growth and, of course, creating jobs for Australians overseas. The company's bank was unwilling to provide the finance so it contacted Efic for support. Efic was able to provide guarantees for bank loans, but this process could have been simpler, quicker and more efficient. The changes in this bill mean that this company would have been eligible for a loan from Efic.

Importantly, the legislative changes included a legislative stipulation to ensure there are more Australian jobs where Efic supports Australian businesses to expand overseas. It was already Efic policy that applicants for its overseas direct investment financing product must not use it to fund the outsourcing of jobs. The changes required businesses to certify in writing their reasonable belief that Efic's support for overseas direct investment will actually grow and result in an increase in the number of people employed in Australia by their business or affiliates. That is not a straightforward task because Australia is not an island continent producing finished goods. We are part of a global supply chain exporting goods and services to the world. But 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. The changes in this bill enable Efic to provide its specialist financial services to a wider range of Commonwealth entities and companies on a fee-for-service basis—subject, of course, to ministerial approval. But what it actually means is that Efic now sits at the heart and potential of Australia's future export interests. and the physical development of this great island continent.

In summary, the changes in the bill, combined with the change in the Statement of Expectations, benefit a wide range of Australian exporters, including SMEs, as they seek to export innovative online products, sell intellectual property and the wealth of this nation in our mines, expand their reach overseas and grow jobs at home. They make it easier for Efic to support our exporters and their contribution to the growth of Australian jobs and the promotion of trade, tourism and investment interests in the Goldstein electorate in the great state of Victoria, and covering the whole of this Commonwealth of Australia as part of building its future for future generations.

Sharon Bird (Cunningham, Australian Labor Party) Share this | Link to this | Hansard source

There being no further speakers, the debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.

Sitting suspended from 12:49 to 16:00