Referral of inquiry
On 9 November 2016, the Export Finance and Insurance Corporation
Amendment (Support for Commonwealth Entities) Bill 2016 (the bill) was
introduced in the House of Representatives by the Minister for Trade, Tourism
and Investment, the Hon Steven Ciobo MP.
On 24 November 2016, the Senate referred the provisions of the bill to the
Senate Foreign Affairs, Defence and Trade Legislation Committee for inquiry and
report by 7 February 2017.
The reasons for the referral, as cited by the Selection of Bills Committee,
investigate whether there are unintended negative consequences of
allowing the Export Finance and Insurance Corporation (Efic) to provide loans
to projects which are not located in Australia; and
establish whether accompanying checks and balances should be
Conduct of inquiry
The committee advertised the inquiry on its website, calling for
submissions to be lodged by 13 January 2017. The committee also wrote directly
to a range of individuals and organisations likely to have an interest in the
bill, drew their attention to the inquiry and invited them to make written
The committee received 12 submissions to the inquiry. These submissions
are listed at Appendix A and are published on the committee's website.
Scrutiny by other committees
The Scrutiny of Bills Committee considered the bill according to its
usual scrutiny process and did not have any comments in relation to the
scrutiny principles outlined in Senate Standing Order 24.
The Parliamentary Joint Committee on Human Rights examined the bill and
considered that the bill does not raise any human rights concerns.
Purpose of the bill
The bill gives effect to two main amendments. The first amendment
will allow Efic, subject to ministerial approval, to offer its financial
capabilities in the operation and administration of Commonwealth financing
programs where there is no connection to exports. Efic will not be able to
provide loans or guarantees to support Commonwealth financing programs, however
it will be able to provide advice on the structure of a loan and manage the
loan on behalf of the Commonwealth entity or company. The amendment is expected
to lower government service delivery costs by leveraging existing resources.
The second amendment will enable Efic to better support Australian small
to medium-sized enterprises (SMEs) access global markets. The amendment will align
the current definition of an 'eligible export transaction' for loans to the
broader definition of 'Australian export trade' for guarantees. The
amendment does not change Efic’s restriction of operating only in the market
gap where banks are unable to help, and any support must still be attached to
exports. As the value of Australian exports is being increasingly
derived from innovation, design and intellectual property, rather than
traditional assembly, this would allow Efic to support a wider range of SME
While the Explanatory Memorandum states that the bill 'will have no
direct financial impact', it may have
indirect implications for the Commonwealth. The Commonwealth Government funds
Efic directly through providing capital and guaranteeing its borrowings. Changes to Efic's operations may impact on Efic’s
costs or profits, in turn impacting on the costs or benefits it provides to the
Structure of report
Chapter 2 of this report provides an overview of the matters raised in
evidence and contains the committee's view and recommendation.
The committee acknowledges the short period of time available for those
who made submissions. The committee thanks all those who assisted with the
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