Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

I rise to support my colleague, Senator Rhiannon, in her comments about the Export Finance and Insurance Corporation Amendment (Direct Lending and Other Measures) Bill 2014 and the related bill—and, I suppose in the spirit of this debate, also Senator Leyonhjelm's comments on Efic.

Interestingly, having sat through estimates last week and heard Senator Cormann talk about corporate welfare and crowding out of finance by the Clean Energy Finance Corporation, I find it odd—with the principle we discussed about long-term finance and high-risk finance—that the government is happy to discuss getting rid of the Clean Energy Finance Corporation loans. On the one hand this is because of an ideological position but on the other hand they are prepared to do the same thing for Australian export companies, be it for capital or noncapital purposes.

The Greens have made our point very clear: we would actually like to see Efic abolished. We do not believe that it can be reformed. We do not believe that this legislation properly reforms Efic. You could draw the conclusion that perhaps by extending competitive neutrality you are effectively abolishing corporate welfare, because everyone has to compete on the same terms with private capital. But it begs the question: why would you even have it in the first place if that is the case?

And then, when you delve even further into the detail, you start coming up with what potentially could be weasel words—that is, the minister has discretion, potentially on a case-by-case basis, as to whether finance will apply and whether a market failure is evident. 'Market failure' is a very important concept, and perhaps Senator Leyonhjelm and I may not agree on the philosophy of market failure, because I do believe that markets fail, but it needs to be very clearly spelt out: what externality is being caused; what information is available; and why a government would need to step in and provide finance or even co-finance on a risky investment offshore.

We have a situation at the moment. The point I make here is that we have a track record in history of providing inappropriate loans. Senator Rhiannon has talked about large loans to mining companies over a long period of time. These are capital loans in high-risk countries and potentially high-risk projects—and even for a subsidiary of a foreign company, which has accessed finance under our Efic system. Why is the Australian government stepping in and providing finance for mining companies in Third World countries?

Risk-reward ratios exist for a reason. Corporations can assess the risks. They can assess the returns and the rewards in relation to those risks and make those decisions accordingly. They then operate, and of course the system in place is that shareholders will monitor the risk return and hold the boards to account. Why is it that the government needs to step in here and lower their risk?

We believe that that is the case and it is necessary in relation to climate change because climate change is an externality and it is a very clear market failure. Some would argue that it is the textbook case of market failure and possibly the biggest one we have seen in our short history. It is a necessary requirement for the government to help close that externality gap.

This is going back to basic economics, but we do not see that same situation applying in terms of export markets, and now we are changing the goalposts to include non-capital items, goods and services. What does that mean exactly? That is also a very grey area.

On small and medium enterprises, Senator Rhiannon has talked about what guarantees we have and what controls there will be on them having access to this. If you include the competitive neutrality component of the bill, they are going to get access to finance on the same terms that they would if they went to the National Australia Bank export division and said, 'I need a loan to set up a factory or an office or a distribution business in Singapore.' They are going to get those loans on the same terms. Why have we even got Efic, if this is what this bill is trying to do? Why not just abolish it, let the market set the rates for export companies and let them assess the risk return, as they should do, and build their businesses on the back of that?

The Greens would like to see Efic abolished. In this situation, we are not comfortable that it is possible to reform it using the guidelines that are set out in the bill in front of us, so we will be voting against this.