Nick Xenophon (SA, Nick Xenophon Team) Share this | Hansard source

I support the second reading stages of the Export Finance and Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2017, but I have real reservations about it. I believe it will be improved by the amendments that will be moved by the crossbench—by Senator Hanson-Young, particularly, in relation to FOI—and by the opposition in relation to the issue of Australian jobs. But it is important to make this point: at a point in time when manufacturing in Australia as a percentage of GDP has plunged by half in the last decade, and more than 200,000 local manufacturing jobs have been lost, this bill in its current form would introduce provisions that would see Efic being able to support Australian companies to set up manufacturing facilities offshore in preference to here at home. That is something that seriously concerns me. My understanding is that the government will agree to the opposition's amendments, and that is obviously welcome.

Whilst the committee report on this fairly drew out both the pros and cons of the impact this legislation would have, I believe it grossly underestimated the risks of this legislation in the context of an economic sector in a perilous condition. We know energy prices in this country are putting manufacturing at enormous risk. I will have more to say outside this chamber about AEMO later. I think AEMO have been abysmal in terms of their forecasting and in terms of their leadership in the energy sector because that impacts on manufacturing. In a sense, it does draw us back to this particular bill.

There are two key amendments. The first amendment seeks, in the words contained in the explanatory memorandum:

… to allow Efic to offer its specialist financial capabilities in the operation and administration of Commonwealth financing programs, where there is no connection to exports. Following Efic's provision of services to the Northern Australia Infrastructure Facility ("the NAIF"), Commonwealth departments have expressed interest in leveraging Efic's expertise.

On the face of it, this seems sensible. These are matters I've raised in estimates with Efic. It is taking a lot of resources in terms of the NAIF. There have been points raised by Jubilee Australia and the Australia Institute, particularly in relation to the dilution of focus. I think if we could get some assurances from the industry minister in relation to this, that would be very useful. Efic's annual report states:

Efic's primary purpose is to facilitate and encourage Australian export trade on a commercial basis. We provide financial support to Australian-based companies that are exporting, integral to a global supply chain or seeking to grow internationally.

The report also points out that the organisation compromises about 100 people. Any diversion of resource and function in such a small and focused organisation could only reasonably be expected to distract and prevent the organisation in respect of encouraging export trade. Exports are our lifeblood. The more we export, the better it is for the economy. I am a bit nervous that the Australian dollar is hovering just below 80 cents. I would prefer it to be way below that; around 70 or 75 cents seems to be a sweet spot for our exporters. So I want to be assured that Efic should and needs to remain tightly focused in facilitating export trade, and that is why I have been concerned about the first amendment. There are some transparency measures there. The FOI amendments by the Greens, I think, are good amendments and they ought to be supported to improve the legislation.

Now to the second amendment which I am concerned about. Under the current legislation, for a company to receive financial support from Efic, it needs to demonstrate there is some element of labour, goods and materials of Australian content. The level of Australian content in an export contract is an important factor in determining the amount of financial support that Efic provides. In essence, the higher the level of Australian content, the more financial support Efic can provide. The proposed unamended changes to the legislation seek to remove the local content requirement that invokes Efic's support and replace it with the need 'only for the benefit flowing back to Australia' to be present. That is incredibly imprecise, incredibly vague, and open to abuse. This creates a situation where Efic funding could be used to offshore a new manufacturing capability at the cost of Australian jobs.

The opposition's amendments are welcome, but I would put this question on notice—short notice—to the shadow industry minister, Senator Carr: what analysis has been done of these amendments in terms of preventing a bleeding of Australian jobs overseas in relation to that? I note the amendment. It is welcome, but I am still nervous about the fact that it could be rorted and that we could see money that Efic is providing—Australian taxpayers' money—go towards seeing jobs offshored, albeit with the stricter requirements in the amendments moved by the opposition.

Let's put this in context. This is not some esoteric argument I am raising. Australia's manufacturing sector has been in broad decline since 2008, with real output having contracted at every quarter since September 2011. Over 200,000 manufacturing jobs have disappeared since 2008, and the rate of job losses is accelerating. Employment in manufacturing fell six per cent in 2015 alone, and it's going to get much, much worse unless we deal with the energy crisis in this country. The fact that gas prices are double the price of Australian gas being sold in Japan, notwithstanding the liquefaction, the regasification and the transport of gas to Japan, means there is something seriously awry with our gas market in this country.

The impact it has had on manufacturers that rely on gas has been devastating. When new contracts come up, a lot of manufacturers will put their hands up and say, 'Do we want to do business in Australia?' That concerns me. I know there have been some measures, which I welcome, from the government, but this is an existential crisis for manufacturing in this country, so I don't want to make it worse with what this bill is proposing. These amendments from the opposition, which I understand the government is supporting, will at least help to ameliorate that concern. That is my concern, and that is something that should be explored in the committee stages of this bill.

Some of the submitters made the point that the loosening of the Efic reins may assist companies to set up marketing promotions offshore. While these sort of initiatives must be encouraged and supported by government, there are other programs better suited to marketing such as the Export Market Development Grants Scheme. To pull the Efic lever to facilitate promotion is to pull the wrong lever, and that is why I still have serious concerns about this bill. The amendments moved and the concessions by the government are welcome. But I will still reserve my position in the third reading stages of this bill, because I would not want to see Efic, an arm of government funded by taxpayers that is meant to encourage Australian exports and, by extension, Australian jobs and the growth of our economy, to be used as a Trojan Horse to fund the expansion of manufacturing overseas. That, to me, is a bridge too far and should not be supported. With those words, I support the second reading stage of this bill. I believe the bill can be improved in the committee stage, but I still have serious reservations about it.