The Australian Greens oppose the Export Finance and Insurance Corporation Amendment (Support for Infrastructure Financing) Bill 2019 [Provisions] on several grounds. Firstly, we do not agree that this is the right way to support our Pacific neighbours and play our role in the region. Secondly, we hold deep concerns about the role of EFIC in using taxpayer dollars to fund fossil fuel projects in an era of climate breakdown. Thirdly the passage of this Bill has been rushed – not allowing for appropriate consultation. Prime Minister Morrison first announced the policy in November 2018 with it passing through the House of Representatives in February this year before coming to the Senate. The speed at which this Bill is being propelled leaves little time to consider some of the real concerns over its appropriateness.
As Stephen Howes pointed out in his submission on behalf of the Development Policy Centre at the Australian National University:
There is a risk that that the Efic reforms will undermine governance in the Pacific by encouraging a supply-side, project-proponent-led, non-competitive approach to infrastructure. This is widely perceived to be a problem with Chinese export credit to the Pacific.
Efic projects, even if commercially viable, may be against the national interest of the recipient country in a poor policy environment. But Efic lacks both the capacity to make policy assessments and the mandate to promote policy dialogue and reform.
Efic will be mandated to pursue infrastructure projects that are in Australia’s interests, and to maximise Australian participation. In other words, it is required to put Australia first, which is bad for the Pacific, and inconsistent with our official position of backing openness and competition.
These risks should be thoroughly explored before it is allowed to be brought to the Senate as should the specific concerns outlined below.
Australia in the Pacific
The Greens believe that Australia should be stepping up our engagement with the Pacific and doing far more to support our Pacific neighbours. The best way of doing this is by boosting our aid budget from its lowest ever levels as a proportion of Gross National Income (GNI), to put us on a trajectory to reaching 0.7% of GNI by 2030. The Pacific region would reap the benefits of a decent Australian aid budget, alongside an increase in Australia’s contribution to climate finance and Australian Government policies to wean Australia off dangerous fossil fuels.
The Greens fully support the submissions made by a number of development sector stakeholders, who overwhelmingly expressed serious concerns regarding the substance of the bill, as well as the lack of consultation and scrutiny surrounding it.
As Oxfam notes in its submission:
In line with the Boe Declaration, and with best practice globally in providing development loans as well as Australia’s obligations under both the Paris Declaration and global human rights standards, any loan facility increasing Australian funding for infrastructure to developing countries must:
have Pacific Island nations’ views, needs and interests at its heart;
operate with a high level of transparency and accountability;
apply best practice standards, due diligence and safeguards, including in relation to gender, human rights, climate change and community consultation and consent;
be sustainable, both from an environmental and social perspective, especially with regard to climate change being “the single greatest threat to the livelihoods, security and wellbeing of the peoples of the Pacific” as outlined in the Boe Declaration; and
be actively inclusive of small and medium scale infrastructure, particularly in the areas of agricultural and water infrastructure, which are proven to be pro-poor.
At present, EFIC does not have the mandate, operational framework or expertise that would enable it to accommodate these core elements. The draft legislation does not include provisions that would change EFIC’s governance, structures or processes to ensure that any of these core elements are taken into account in the future.
Furthermore, the Australian Council for International Development (ACFID) notes in its submission:
There is insufficient evidence that Efic’s standards of governance; capability; risk management; environmental and social safeguarding; and transparency and accountability can effectively deliver on its proposed expanded mandate constituted in this Bill and will be commensurate and aligned with the high development standards and principles employed in Australia’s development cooperation program by the Department of Foreign Affairs and Trade (DFAT).
EFIC has a mandate to put Australia first, not the Pacific. The Australian Greens are deeply concerned that this bill does not put Pacific needs first and may lead to outcomes against the national interest of the recipient countries.
Fossil Fuels
We also hold deep concerns about the possibility for this funding to finance fossil fuels. This government has repeatedly shown they will attempt to use every cog in the machinery of government to spend taxpayer money on coal.
As The Australia Institute pointed out in their submission:
The Government has made it explicit that Efic could fund projects to promote Australian fossil fuel exports:
''In the energy sector, Efic's new power would enable it to finance the
construction of LNG receivable terminals, leading to increased energy
exports or engineering services''.
While the minister’s quote refers only to gas, this could equally apply to coal infrastructure. Efic has a long history of funding fossil fuels, and has claimed that Australia’s commitments adopted by parliament under the Paris Agreement do not apply to its activities.
New FOI documents show numerous coal companies have lobbied Efic for funding. With these changes, Efic could have taxpayers fund new coal power stations, then fund coal mines to fuel them, all against our broader climate change commitments.
Efic is ill-suited for development work and has a poor track record on large overseas infrastructure. The largest fossil fuel project it has funded has sparked civil conflict bordering on civil war.
The Greens attempted to move an amendment to this bill in the House of Representatives on the 20th of February, 2019. This amendment would prevent EFIC from facilitating and funding the mining and export of thermal coal. This amendment was voted down by both Labor and the Coalition Government. Despite Labor’s insistence that it does not support taxpayer funding for the Adani Carmichael project - despite their Queensland Labor colleagues promoting it - federal Labor MPs sided with the Coalition to keep the door open to fund new coal projects using public money.
There is a real danger that prior to the upcoming Federal election the government attempts, through EFIC or another means, to provide taxpayer funding to Adani or other fossil fuel projects will be successful. This Bill provides one such avenue.
The Greens have a number of material concerns with this bill. However, the proposition that EFIC could spend taxpayer dollars on thermal coal mining is particularly reprehensible both for the planet and the Pacific neighbours it purports to ‘help’ who will be first and worst affected by climate breakdown.
If, as it currently appears, the ALP and the government have come to an agreement to pass this bill, it is critical that at the very least the Labor Party works with the Greens to ensure our amendment passes. The amendment does not remove any sections from the bill, it simply limits the ability of EFIC finance to be directed toward thermal coal, and thus should be unobjectionable to Labor.
Recommendation
That this Bill not be passed.
Recommendation
In the event the Bill proceeds to pass, it should be amended to include the following:
Schedule 1, page 4 (after line 10), after item 4, insert:
4A At the end of section 7
Add:
(4) EFIC must not perform a function, or exercise a power, to the extent that the performance of the function or the exercise of the power relates to a project that involves, or would facilitate, the mining and export of thermal coal on a commercial scale.
(5) Without limiting subsection (4), EFIC must not perform a function, or exercise a power, to the extent that the performance of the function or the exercise of the power relates to:
(a) providing insurance or financial services or products in relation to a project that involves, or would facilitate, the mining and export of thermal coal on a commercial scale; or
(b) encouraging banks, or other financial institutions, carrying on business in Australia to finance, or assist in financing, export contracts or eligible export transactions in relation to a project that involves, or would facilitate, the mining and export of thermal coal on a commercial scale; or
(c) providing information or advice to any person regarding insurance or financial arrangements available to support the export of thermal coal on a commercial scale.
[EFIC’s functions]
Senator Sarah Hanson-Young