Kim Carr (Victoria, Australian Labor Party, Shadow Minister Assisting the Leader for Science) Share this | Hansard source

by leave—I move amendments (1) to (5) on sheet 8203 together:

(1) Schedule 1, item 1, page 3 (after line 11), after the definition of EFIC's Commonwealth entities functions in subsection 3(1), insert:

large business: see section 3A.

related party, for a business, has the meaning given by section 228 of the Corporations Act 2001.

substantial part of a business meansa part of a business that is substantial and not minor or insignificant.

(2) Schedule 1, page 3 (after line 21), after item 2, insert:

2A After section 3

Insert:

3A Meaning of large business

(1) A business is a large business at a particular time in a financial year (the current financial year) if:

(a) its revenue for the previous financial year is $150,000,000 or more; or

(b) if there was no time in the previous financial year when the business was carried on—its revenue for the current financial year is as at that time $150,000,000 or more.

(2) Revenue is to be calculated for the purposes of this section in accordance with accounting standards in force at the relevant time.

(3) Schedule 1, item 6A, page 4 (line 22), omit "requirement in subsection (4) is", substitute "requirements in subsection (4) are".

(4) Schedule 1, item 6A, page 4 (lines 23 to 27), omit subsection 16(4), substitute:

(4) For the purposes of subsection (3), the requirements are the following:

(a) 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 party of the business, during the term of the loan;

(b) at the completion of the loan, the person carrying on the business must certify to EFIC whether the loan has resulted in a net increase in the number of people employed in Australia by the business, or a related party of the business;

(c) if the business is a large business—the person who carries on the business must certify, by writing given to EFIC, that the loan will not be used to move the whole or asubstantial part of the business, or of a related party of the business, overseas; and

(d) EFIC must ensure that it publicly discloses copies of the certification it receives under subsection (4)(b).

(5) Schedule 1, item 6B, page 4 (line 30) to page 5 (line 7), omit subsections 23(3) and 23(4), substitute:

(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 by a person carrying on business in Australia unless the requirements in subsection (4) are satisfied.

(4) For the purposes of subsection (3), the requirements are the following:

(a) a 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 by the business, or a related party of the business, during the term of the loan;

(b) at the completion of the loan, the person carrying on the business must certify to EFIC whether the loan has resulted in a net increase in the number of people employed in Australia by the business, or a related party of the business;

(c) if the business is a large business—the person who carries on the business must certify, by writing given to EFIC, that the loan will not be used to move the whole or asubstantial part of the business, or of a related party of the business, overseas; and

(d) EFIC must ensure that it publicly discloses copies of the certification it receives under subsection (4)(b).

I will make some preliminary remarks in regard to some matters that were raised in the second reading debate. Efic, of course, has provided an extremely valuable service to this country since 1957. It's a very substantive role. I am unashamedly a supporter of public intervention when it comes to access to finance. I'm surprised the Greens are not. When it comes to manufacturers in the country today, when you talk to manufacturers, they will talk to you about two major problems they face, which are the price of energy and access to finance. We know that for exporters there is a particular difficulty when it comes to our financial institutions. Of course, by and large they have been privatised, have been deregulated, and as a consequence they're probably the most profitable in the world. But, when it comes to their social responsibilities, I think we have ample cause to see why we need a royal commission into our banks. We do have clear and unequivocal examples where, time after time, our banking system has failed to meet its social and economic obligations to the development of this country, whereas Efic, since 1957, has provided support to manufacturers and a range of enterprises—small, large and medium-sized enterprises—in accessing finance that quite often is simply not available through commercial means.

Senator Leyonhjelm says, 'If it's not available from the commercial sector, well, it's not good enough.' That's not the case. That's not the reality. That's not the economic reality of how businesses is actually done. I can talk directly of experiences I had with General Motors Holden, as an example. I don't normally discuss matters relating to Efic but the matter is now public. General Motors Holden, during the global economic crisis, had been banking with the Commonwealth Bank for 60 years in this country. But the banking system in this country said, 'Oh well, we're not interested in this area because the risks are too great,' and withdrew their financial support for one of the leading companies in this country at the time. There was no access to finance through commercial means, and it was Efic that filled that gap, met that market failure. It became public because of the extraordinarily unethical arrangements that had been entered into between the then Leader of the Opposition, Malcolm Turnbull, and Mr Godwin Grech. As a consequence of those arrangements, these matters became a matter of public record. In those circumstances General Motors Holden were obliged to enter into arrangements with Efic. The risk was taken on under the national account, which meant it was actually a cabinet decision. But it was properly evaluated by Efic, and the consequences were that, at a very high rate of interest, a premium rate of interest, General Motors were able to secure a line of credit that they couldn't get anywhere else. It turned out that they didn't need to use it. They had to have it; otherwise they could well have gone belly up. They didn't actually need to call upon it. That is an example of what an extraordinarily important service this agency has provided.

Of course, we see them in so many other areas. Whether it be in regard to companies that have operated in the area of engineering or companies that have developed new technologies for export, whether it be in manufacturing, whether it be in the resources sector, whether it be in construction—right across the economy—Efic have played an extraordinarily important role. Traditionally it was a role that was played by what used to be the publicly owned banks through the development agencies they had available. Private banks aren't much interested in this. Think about what's happened throughout regional Australia: you can't get access to finance under the present financial system for so many aspects of the economy.

When it comes to exports, I think the minister is quite correct to point to the fact that, by international standards, other competing economies provide these services to their enterprises. It is only fitting that we're able to do so. The circumstances that we now face are: what are the conditions under which these arrangements are made? That's why these bills are so important. What we have here in these amendments provides a means by which we are actually strengthening accountability. That's why we're moving these amendments. Efic has provided assistance to—I think one minister said there was $150 million in last year's accounts, 194 transactions valued at $390 million in total. It supported 149 export contracts worth $1.4 billion—a very substantial contribution.

So the question that concerns us is: how do we make sure that this resource is not made available to actually facilitate the offshoring of jobs and capabilities? My colleague Mr Jason Clare has been able to negotiate very strong improvements in this bill with Mr Ciobo. I congratulate both of them for undertaking that work. I acknowledge the government's work in this regard in acknowledging that the bill could in fact be strengthened as a consequence of these amendments that I am moving, which require Efic to provide additional measures of accountability from the companies that are seeking assistance.

Regarding questions raised by Senator Xenophon, perhaps I can deal with that now—I trust he's paying attention, because I don't intend to pursue this at any great length other than through this contribution now. I point out to Senator Xenophon that the principles underlying these amendments—and we don't have the resources of government to be able to say yes; we've got an empirical study to back these up., but the philosophical principles underpinning these amendments—are that applicants must provide a certification at the beginning and at the end of any particular project as to the net job increases as a result of the particular project that was the basis of the loan. This is information that must be made public. The essential proposition is that to grow jobs in Australia, and where there is a need to move some facilities offshore—and we acknowledge that this happens; there are those who suggest that if we say 'made in Australia' then every single component has to be made in Australia, but that's a nonsense—in a globalised world, you will have some elements and some capacities that will need to be undertaken in other parts of the world. But the net impact will be in firms with over $150 million per annum. The net impact will be positive and that will have to be demonstrated in terms of the intention of the project, both before and after.

Finally, in regard to the criticisms of Efic in regard to any particular project, fancy calling on the Productivity Commission as an example—exemplar!—of any assessment of manufacturing in this country. In my opinion, they should have been privatised a long time ago. That would've been the first thing that could've been done to assist manufacturing in this country. We could've cut out the middle man, taken the position straight out from the IPA, and, I think, saved the public a lot of money. But to suggest that the Productivity Commission would be the paragon of virtue when it comes to assessing public enterprise in this country—I find that highly amusing coming from those great left-wing advocates, the Greens. To suggest that somehow or other Efic is responsible for what has been undertaken by the project managers in another jurisdiction is really stretching credulity. They are the providers of finance. That does not make them responsible for the management of a particular project any more than the Commonwealth Bank became responsible for the management of my household when I took out a mortgage with them. It's a nonsense to suggest that there's a direct link between the management of a project and the provision of finance.