Division Description Changes — Bills — Export Finance and Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2017; Second Reading — 6th Sep 2017

Change	Division
senate vote 2017-09-06#1 Edited by mackay staff on 2023-10-27 11:51:31	Title Bills — Export Finance and Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2017; Second Reading Export Finance and Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2017 - Second Reading - Agree with the bill's main idea Description ~~<p class="speaker">Kim Carr</p>~~ <p>The Export Finance and Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2016 contains two main changes to the act. The first change is an administrative one. It allows the government's agency to use Efic expertise on the basis of a fee-for-service arrangement. This is not controversial and the opposition supports it. The second makes it easier for Efic to lend money to companies wanting to expand their offshore operations. Ideally, this would allow Australian companies to take advantage of trading opportunities, therefore benefiting the Australian economy. However, an earlier version of this bill would have also made it easier for Efic to lend money to a company wanting to relocate its manufacturing operations offshore or to set up a call centre overseas. I can assure you, given my recent experience with Telstra's call centres in the Philippines and in India, no-one could possibly want to have that happen. It was truly an appalling experience to see how those facilities, which were moved from Australia to the Philippines and India, have left an appalling level of service for Australian customers of Telstra. I'm glad to see the government moved amendments in the other place that reduced that risk. I see the government has indicated it will accept further amendments, which the Labor Party will be proposing, to further reduce that risk.</p> The majority voted in favour of agreeing with the bill's main idea. In parliamentary jargon, they voted to read the bill for a second time. This means that they can now consider it in greater detail. ### What is the bill's main idea? According to the [bills digest](https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/bd/bd1617a/17bd089) (a document that is prepared by the parliamentary library): *> The purpose of the Export Finance and Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2016 (Cth) (the Bill) is to amend the Export Finance and Insurance Corporation Act 1991 (Cth) (the Act). The Bill h*as two main purposes: > *> to permit* the Export Finance and Insurance Corporation (EFIC) to assist government bodies by providing services in relation to financial arrangements and agreements* > > * to amend the definition of ‘eligible export transactions’. <p>Efic's internal policy stipulates that any loan that a corporation provides must not result in a net loss of jobs in Australia. Labor does not believe this in itself is a sufficient safeguard. We believe that taxes paid by Australians should be used for the benefit of Australians. It's a fundamental Labor value that Australian jobs should be put first, and that's why we moved to refer this bill to a committee of inquiry. It was necessary to check whether the changes in Efic's role would have had unintended damaging consequences.</p> <p>The committee heard evidence from a range of community groups that share Labor's concerns about this bill. In its submission, for instance, the Australian Fair Trade and Investment Network said:</p> <p class="italic">It is a reasonable and in fact modest requirement that firms receiving support from Efic actually produce goods and/or services in Australia and employ Australians … In the absence of such a requirement, there would be no incentive for firms receiving Efic loans to have any Australian content. This would lead to the perverse situation of an Australian government institution being able to provide support for firms providing no employment in Australia.</p> ~~<p>It said:</p>~~ <p class="italic">The removal of local content requirements from the legislation would enable firms based in Australia but providing no local employment to have access to Efic support. It would provide no incentive for firms to continue to conduct operations in Australia and provide local employment.</p> ~~<p>The Australia Institute commented:</p>~~ <p class="italic">While the change to specifically recognise service exports may be desirable, the current proposed amendment seems to remove any focus on products that are produced in Australia. The effect of this could be the further offshoring of Australian manufacturing. For example, a garment company based in Australia could move all production offshore, but still be eligible for Efic's services.</p> ~~<p class="italic">This has the potential to not only deprive finance to companies that produce in Australia, but also to give advantage to their competition in other countries.</p>~~ ~~<p>The Australian Council of Trade Unions submission declared:</p>~~ <p class="italic">It is in the national interest that companies which receive government loans are required to use that money in a way which benefits Australian employment. The removal of these provisions will be yet another blow to the Australian manufacturing and services sectors. It could potentially lead to jobs being offshored.</p> <p>So we see those various submissions producing comments on the same theme. They gave a warning which I think was justified and should have been heeded, and that's why Labor did not accept the recommendations of the government majority on the committee that the bill should be passed without amendment. We acknowledged that when the bill was considered in the House of Representatives, and we are moving amendments that go some way towards allaying the concerns. The most important of these amendments stipulates that an applicant for a loan or guarantee:</p> <p class="italic">… 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 business during the term of the loan.</p> <p>Nonetheless Labor believes that this is insufficient, so we are moving two further amendments, and we're pleased that the government has indicated that it's prepared to accept those amendments. I understand, Minister, that that remains the case. These amendments provide that, at the completion of any loan or guarantee that it is to be used for the dominant purpose of direct investment outside Australia, the applicant must provide Efic with a certification stating whether a net job increase occurred as a result of Efic's financing and that this information must be publicly released by Efic. Further, for businesses with a turnover of more than $150 million in a financial year, the company must certify that any loan or guarantee to be used for the dominant purpose of direct investment outside Australia will not be used to offshore substantial parts of the business. These amendments will allow closer scrutiny of the use of taxpayers' money for direct foreign investment. This will help ensure that Efic's finance will result in net job growth in Australia.</p> <p>These are outcomes that I think are positive. They reflect Labor's resolve to put Australian firms and their workers first. Far too often the Abbott-Turnbull government has done nothing while Australian jobs have been sent offshore. On this occasion we thank the government for its willingness to negotiate around these amendments, and it's a much better bill as a result than it was when it was first introduced. We hope that this government will continue to be willing to agree to measures that actually reduce the risks of jobs being lost in this country.</p> ~~<p class='motion-notice motion-notice-truncated'>Long debate text truncated.</p>~~

~~Kim Carr~~
The Export Finance and Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2016 contains two main changes to the act. The first change is an administrative one. It allows the government's agency to use Efic expertise on the basis of a fee-for-service arrangement. This is not controversial and the opposition supports it. The second makes it easier for Efic to lend money to companies wanting to expand their offshore operations. Ideally, this would allow Australian companies to take advantage of trading opportunities, therefore benefiting the Australian economy. However, an earlier version of this bill would have also made it easier for Efic to lend money to a company wanting to relocate its manufacturing operations offshore or to set up a call centre overseas. I can assure you, given my recent experience with Telstra's call centres in the Philippines and in India, no-one could possibly want to have that happen. It was truly an appalling experience to see how those facilities, which were moved from Australia to the Philippines and India, have left an appalling level of service for Australian customers of Telstra. I'm glad to see the government moved amendments in the other place that reduced that risk. I see the government has indicated it will accept further amendments, which the Labor Party will be proposing, to further reduce that risk.
The majority voted in favour of agreeing with the bill's main idea. In parliamentary jargon, they voted to read the bill for a second time. This means that they can now consider it in greater detail.
### What is the bill's main idea?
According to the [bills digest](https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/bd/bd1617a/17bd089) (a document that is prepared by the parliamentary library):
> *The purpose of the Export Finance and Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2016 (Cth) (the Bill) is to amend the Export Finance and Insurance Corporation Act 1991 (Cth) (the Act). The Bill has two main purposes:*
>
> * *to permit the Export Finance and Insurance Corporation (EFIC) to assist government bodies by providing services in relation to financial arrangements and agreements*
>
> * *to amend the definition of ‘eligible export transactions’.*
Efic's internal policy stipulates that any loan that a corporation provides must not result in a net loss of jobs in Australia. Labor does not believe this in itself is a sufficient safeguard. We believe that taxes paid by Australians should be used for the benefit of Australians. It's a fundamental Labor value that Australian jobs should be put first, and that's why we moved to refer this bill to a committee of inquiry. It was necessary to check whether the changes in Efic's role would have had unintended damaging consequences.
The committee heard evidence from a range of community groups that share Labor's concerns about this bill. In its submission, for instance, the Australian Fair Trade and Investment Network said:
It is a reasonable and in fact modest requirement that firms receiving support from Efic actually produce goods and/or services in Australia and employ Australians … In the absence of such a requirement, there would be no incentive for firms receiving Efic loans to have any Australian content. This would lead to the perverse situation of an Australian government institution being able to provide support for firms providing no employment in Australia.
~~It said:~~
The removal of local content requirements from the legislation would enable firms based in Australia but providing no local employment to have access to Efic support. It would provide no incentive for firms to continue to conduct operations in Australia and provide local employment.
~~The Australia Institute commented:~~
While the change to specifically recognise service exports may be desirable, the current proposed amendment seems to remove any focus on products that are produced in Australia. The effect of this could be the further offshoring of Australian manufacturing. For example, a garment company based in Australia could move all production offshore, but still be eligible for Efic's services.
~~This has the potential to not only deprive finance to companies that produce in Australia, but also to give advantage to their competition in other countries.~~
~~The Australian Council of Trade Unions submission declared:~~
It is in the national interest that companies which receive government loans are required to use that money in a way which benefits Australian employment. The removal of these provisions will be yet another blow to the Australian manufacturing and services sectors. It could potentially lead to jobs being offshored.
So we see those various submissions producing comments on the same theme. They gave a warning which I think was justified and should have been heeded, and that's why Labor did not accept the recommendations of the government majority on the committee that the bill should be passed without amendment. We acknowledged that when the bill was considered in the House of Representatives, and we are moving amendments that go some way towards allaying the concerns. The most important of these amendments stipulates that an applicant for a loan or guarantee:
… 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 business during the term of the loan.
Nonetheless Labor believes that this is insufficient, so we are moving two further amendments, and we're pleased that the government has indicated that it's prepared to accept those amendments. I understand, Minister, that that remains the case. These amendments provide that, at the completion of any loan or guarantee that it is to be used for the dominant purpose of direct investment outside Australia, the applicant must provide Efic with a certification stating whether a net job increase occurred as a result of Efic's financing and that this information must be publicly released by Efic. Further, for businesses with a turnover of more than $150 million in a financial year, the company must certify that any loan or guarantee to be used for the dominant purpose of direct investment outside Australia will not be used to offshore substantial parts of the business. These amendments will allow closer scrutiny of the use of taxpayers' money for direct foreign investment. This will help ensure that Efic's finance will result in net job growth in Australia.
These are outcomes that I think are positive. They reflect Labor's resolve to put Australian firms and their workers first. Far too often the Abbott-Turnbull government has done nothing while Australian jobs have been sent offshore. On this occasion we thank the government for its willingness to negotiate around these amendments, and it's a much better bill as a result than it was when it was first introduced. We hope that this government will continue to be willing to agree to measures that actually reduce the risks of jobs being lost in this country.
~~Long debate text truncated.~~