Labor Senators support the role of the Export Finance and Insurance
Corporation (Efic) and the importance of providing financial support to
Australian businesses in their endeavour to export their goods and services.
While the Export and Insurance Corporation Amendment (Support for
Commonwealth Entities) Bill 2016 (the bill) seeks to provide greater assistance
to Australian businesses, certain changes to the second amendment have raised
major concerns of negative consequences.
These changes are specific to the definition of an 'eligible export
transaction', in particular removing the local content requirement clause.
The chair's report highlights a number of the negative consequences
addressed by the submitters and these include:
offshoring of Australian jobs;
removal of incentives to produce or manufacture in Australia;
deprive companies who produce in Australia of financial
provide advantages to overseas competitors of Australian
allow companies that are only nominally Australian to access
financial assistance from the Australian Government.
However the Chair's report ignores this evidence and does not offer any
solutions to the problems identified.
Given the below evidence submitted to the Committee, Labor Senators do
not agree with the recommendation contained within the report.
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. It provides ample flexibility for firms to have
offshore operations where required.
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.
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:
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.
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.
Any company wishing to access a loan or guarantee from Efic for an
overseas project must demonstrate that the loan or guarantee will result in a
growth of jobs in Australia. Such a test should be legislated in the Act.
Senator Alex Gallacher Senator
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