Dorinda Cox (WA, Australian Greens) Share this | Hansard source

This is not my first speech. I rise today to speak on the Export Finance and Insurance Corporation Amendment (Equity Investments and Other Measures) Bill 2021. I would like to note that this bill makes changes that affect Export Finance Australia, also known as EFA. EFA is the government's export credit agency. It provides finance to support Australian exporting businesses and overseas infrastructure projects. This bill expands a range of transactions that EFA can finance. The bill allows EFA to make equity investments and offer standalone financial guarantees for overseas infrastructure transactions. Under these changes, EFA will be able to help exporting companies by providing a guarantee to private banks that, if the company fails to meet its borrowing obligations, EFA will take responsibility for the repayment of the loan.

The Greens have significant concern about the expansion of EFA's powers. EFA has a track record of investing billions in propping up the fossil fuel industry. This includes providing guarantees for financially risky projects like the Wiggins Island Coal Export Terminal and the Gladstone LNG project, which is along the Great Barrier Reef. In contrast, EFA has provided only $20 million in refinancing for renewables since 2009. As it currently stands, this bill imposes no restrictions on EFA making more investments into fossil fuels. This means even more public money could be used to prop up coal, oil and gas projects and accelerate the climate crisis.

As the global transition to net zero emissions gains pace, fossil fuel companies' banks and insurance institutions are finding it more difficult to access finance. Even if finance is secured, fossil fuel projects still face high risks of becoming stranded assets as global markets move to sustainable energy options. The Jubilee Australia Research Centre has found that export credit agencies providing guarantees or early-stage loans can give unwarranted confidence to private lenders by derisking large fossil fuel projects which they might otherwise have avoided.

This bill, like recent amendments in the Northern Australia Infrastructure Facility Act, will allow more public money to be used to prop up coal, oil and gas projects that the private sector deems to be too risky. As Jubilee noted, this could leave the government holding a stake in stranded fossil fuel assets long after the market has lost interest in investing in them. DFAT and EFA advised that the equity power in this bill would only be used sparingly and that the majority equity position would only be taken in exceptional circumstances. The ministerial statement of expectations will also be updated to prevent EFA from taking majority equity stakes unless there are compelling reasons otherwise. However, no detail has been provided as to what exceptional circumstances or compelling reasons would justify significant investment.

Given this government's stubborn, negligent attachment to coal and gas, we need to explicitly prohibit EFA financing fossil fuel projects. This is why the Greens will be moving an amendment, in Senator Waters's name, to stop EFA from investing in fossil fuels and fossil fuel based infrastructure. I'd like to come to the second reading amendment that has been circulated by the Greens in relation to this bill. EFA has been a critical player in the development of Australia's LNG export industry. A $254.7 million loan from EFA to Santos was part of setting up their Gladstone LNG project in 2011-12. Last year EFA contributed $164.12 million to refinancing the Ichthys LNG project in the Northern Territory. And let's make no mistake: gas is as dirty as coal. Direct emissions of methane, a gas more than 80 times more potent than CO2, are responsible for over 20 per cent of Australia's emissions and are growing at a rapid rate due to the boom in Australia's LNG projects. The world is beginning to act, with the European Union and the United States now leading the Global Methane Pledge, which would require member countries to reduce their methane emissions by at least 30 per cent on 2020 levels by 2030. Over 30 states have signed up, including nine of the world's 20 largest methane emitters. If we hope to keep global warming in check and limit global temperature rise to 1.5 degrees Celsius, then we must ensure that all parts of government, including our finance agencies like EFA and NAIF, are doing their part in reducing methane emissions. That's why we'll be moving a second reading amendment that calls for all investments by EFA to be in line with Australia also doing its fair share to reduce methane emissions according to the Global Methane Pledge.

When introducing this bill, the minister said this reform would align Australia with other countries, like the USA, China, Japan, Canada and South Korea, which are making equity investments to support development and commercial objectives. What the minister failed to note in his second reading speech is that many of these countries have taken steps to prohibit export finance agencies investing in fossil fuel. Earlier this year President Biden directed the US export credit agency to identify steps through which the United States could promote ending international financing of carbon-intensive fossil fuel based energy. The UK government has banned its export credit agency from funding any new coal and gas projects overseas. This was followed by UK Export Finance committing to net zero by 2050. South Korea has also committed to ending its public financing for overseas coal-fired power plants. While other countries do the heavy lifting on climate action, Australia continues to bury its head in the sand. If this government were serious about aligning Australia with other major economies, it would wake up and stop EFA from financing fossil fuel projects.

Alongside those climate risks, we also have concern around EFA's transparency and accountability. At the moment, EFA has a partial exemption from the freedom-of-information laws in relation to commercial and national interest account transactions. This makes it virtually impossible for taxpayers to find out where EFA directs its funds. Limited access to this information undermines the efforts to evaluate the effectiveness of the projects that have been funded or assess the return on investment of public money. The government has ultimate fiscal responsibility for the operation of EFA and is EFA's financial guarantor, as sole shareholder. Given this, taxpayers should be able to access this information about the purpose of projects being funded, instead of being kept in the dark. The Productivity Commission has previously recommended that the FOI exemption be removed, and noted that the FOI Act already includes protections for national security and commercially sensitive data. Other jurisdictions, including the UK and US, do not provide a blanket exemption from disclosure for their export credit agencies, and there's no justification for Australia to maintain this exemption. It's clear that EFA's current practice falls short of the transparency expected for the investment of public funds. This is why the Greens are moving an amendment today to repeal EFA's exemption from the Freedom of Information Act.

Finally, I would like to highlight the concerns raised by stakeholders around EFA's processes for assessing the environmental and social impacts of its projects. There are a number of weaknesses, including the fact that EFA's environmental and social review policy and procedure rely on relatively weak international standards and do not refer to climate change or require an assessment of the carbon emissions of proposed projects. It is also unclear how gender analysis is embedded across EFA's work. I understand that EFA's environmental and social review policy is being independently reviewed. It is critical that this review ensures EFA's policies align with international best practice regarding social and environmental issues.

As I've articulated, the Greens have significant concerns with this bill. Our support for this bill hinges on the government explicitly prohibiting EFA's investment in fossil fuel projects, as outlined in our amendment circulated in the chamber. The IPCC's latest warning on climate was our starkest warning yet: a code red for humanity. The world is heating fast, and we don't have any time to waste. In order to avoid catastrophic change, we must commit to no new coal, oil or gas. Australia cannot continue to ignore these stark warnings, and we must get out of fossil fuel projects at home and abroad.