SPEECH: BILLS – Export Finance and Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2016 – Second Reading

Jun 22, 2017

Mr CONROY (Shortland) (13:08): Unlike the previous speaker, the member for Hughes, I will actually talk about the bill we are debating in this place rather than delivering the fifth repeat of the speech he has given on five bills in the last few days. I think I could do a good impersonation of it; I have heard it enough. Unfortunately, the facts still do not support the member for Hughes’s case—but I digress. It is my genuine pleasure to come to that dispatch box and talk about the Export Finance and Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2016. This legislation has two separate amendments that go to two separate issues. The first one is around empowering the Export Finance and Insurance Corporation, Efic, to provide its expertise to other organisations. It already provides its expertise to NAIF, and NAIF well and truly needs its expertise given the conflict of interest many of its directors have already. It will allow NAIF to provide that expertise to other agencies, and that is a good thing. Labor supports that, and I applaud the government for bringing the amendment to the parliament.

The second amendment is trickier. The second amendment allows Efic to provide loans to Australian companies to set up or expand operations overseas. Before I go into that specific debate I want to take a step back and talk about the noble work of the Export Finance and Insurance Corporation. It does good work in providing guarantees to Australian companies and providing loans, often concessional loans, to Australian companies that are trying to export overseas. When it was originally set up it was mainly aimed at manufacturers, and that is where it is currently predominantly being used. It has done some great work under governments of both persuasions.

I had a close connection with Efic when the last Labor government used an Efic facility to drive Australian content into the joint strike fighter, one of the largest procurements in the defence arena, not just in Australia but across the entire world. The Labor government established an Efic facility to drive Australians into the supply chain of the joint strike fighter through the primes, such as Lockheed Martin, BAE and Northrop Grumman. That is great. That is a classic example of how Efic works.

This amendment effectively allows Efic to provide loans to Australian companies to set up or expand operations overseas that do not lead to any local content in Australia. The minister used the examples of an Australian company setting up a call centre in the Philippines and an Australian fashion designer setting up a manufacturing facility in China. Both of those examples are two-edged swords to some extent. On the one hand, it may increase the viability of that business and mean that the fashion designer can keep producing great designs in Australia and add to the sustainability of their product and, in the call centre example, it may mean that that Australian company provides greater customer service and can expand in this country, but the concern of the Labor Party is, and has to be if we are going to honour the noble cause of the Labor Party, the impact of this amendment on Australian jobs.

I join the shadow minister for trade in his belief that the government does not intend for this to be the outcome. I could be generous in that assumption, but I do not think that it intends to have this loan facility enable Australian jobs to be offshored. But there is a danger in that because the only test that will be applied, in terms of the economic impact on Australia, is no net job losses. That sounds fine and dandy and that sounds like it means that there will not be job losses, but let me give you a scenario of where a truck could be driven through that hole.

If a company, Bank X, has two separate expansion plans and they access an Efic loan to set up a call centre in the Philippines, which is actually transferring a call centre that currently exists in Australia, they could satisfy the no net job losses by having another economic activity being established at that time or expanded at that time that produces roughly a similar amount of jobs. They could get an Efic loan to offshore Australian jobs as long as they were starting or expanding another economic activity at the same time. They would potentially satisfy that test, but we would have Australian taxpayer resources being used to offshore Australian jobs.

That is why the Australian Labor Party, the opposition, has a concern about the potential unintended consequences of the second amendment, especially when you look at the definition of ‘Australian export trade’. ‘Australian export trade’, to qualify for the soft loan in these purposes, is defined as ‘any transaction involving a benefit flowing directly or indirectly from overseas to a person carrying on a business or other activities in Australia’. So something as obscure as an indirect benefit to an Australian entity is enough to qualify for a loan. That is, I would submit, quite wishy-washy, and that is why the opposition is proposing three direct amendments that improve the bill, which on the whole is trying to add to the operational effectiveness of Efic.

The first one is around an Australian jobs test. The Australian jobs test that we would submit—and we will move an amendment along these lines in the Senate—is that the investment must lead to jobs growth in Australia. It cannot just result in no job losses; it must actually increase the number of jobs in this country. That is incredibly important. When I go back to my electorate of Shortland in the Lake Macquarie region on the Central Coast and I talk to people on low incomes who pay tax, they say to me that they do not mind paying tax as long as the money is used appropriately and effectively to advance our national interest.

Mr Tim Wilson: That is why they vote Liberal.

Mr CONROY: They do not vote Liberal in my area, mate. I do not think you would fit into Windale in my area, member for Goldstein, but I would love you to go up there and see what Australians are really facing. This is really important.

Mr Tim Wilson: I would love to come up. I don’t like the snobbery coming from the other side.

Mr CONROY: The snobbery is on your side, mate. I represent real Australia, not the wealthy parts of the country. The Australian jobs test means that taxpayers’ money will only be used if the entity and Efic can demonstrate that it will increase the number of jobs in Australia. To me, that is a commonsense amendment that would improve the bill.

The second amendment goes to preventing companies using a loan to offshore Australian jobs, so that they cannot use a loan to replace what they currently do here or contract a third party to do here. That is very important in the example I highlighted earlier. Bank X cannot use an Efic loan to outsource a call centre that they have already established in this country and, importantly, given the complex web that corporations often use in terms of structuring businesses, they cannot use an Efic loan to offshore work they currently subcontract to an Australian based activity. That is very important, and, again, I would submit that is common sense.

The third amendment goes to dealing with a case that we saw recently: a South African coalmine, where Efic were actively considering providing a very generous loan to Resgen, a South African based coalmining company, to set up a coalmine in South Africa which would be the very significant size of Adani’s Carmichael coalmine. To me, it is incredible that we would be considering using taxpayers’ money to establish a mine in South Africa with some very vague assurances that some Australian mining supplier might benefit by supplying a bit of equipment to the mine at a time when global coal consumption is declining. So we have global coal consumption declining, we have Australian coal exports under pressure and the Australian government will be actively considering financing a direct competitor in South Africa. That is a huge concern. I am relieved that at estimates a few weeks ago, Efic stated that they would not be going ahead with that proposal. Hopefully they maintain that commitment and do not go ahead with that proposal. Our third amendment would prevent that. Our third amendment would prohibit Efic from providing a loan to an overseas based activity unless they can demonstrate that there will be no negative commercial impact to an Australian based activity. That is incredibly important.

Let me summarise. Labor’s amendments are threefold. Firstly, it must grow jobs in Australia. Secondly, it must prevent a company offshoring existing Australian operations through the loan. And, thirdly, it must not lead to the establishment of an overseas based activity that will compete with an Australian inactivity. That is only fair and reasonable. This is not saying to Australian companies, ‘You can’t do any of those things.’ They are in their rights to offshore jobs. We will object at times, as will other political parties in this place—no-one likes to see Australian jobs going offshore—but companies do have a right to establish operations around the globe, and good luck to them, but they should not be using taxpayers resources to do that. They should not be using taxpayers’ resources to offshore jobs or set up activities overseas in direct competition with Australian operations.

That is the essence of Labor’s amendments. They go to the nub of some of the concerns we have seen in some of the submissions to the Senate inquiry, particularly the submissions from the Australia Institute, the Australian Fair Trade Investment Network and the Australian Council of Trade Unions. It is really important to return to the true goal of Efic, which is to advance Australian commercial interests overseas. We have moved a long way from that—being purely related to Australian manufactured goods. I would like them to keep concentrating on that activity because Australian manufacturing needs all the help that it can get. I would urge Efic to keep concentrating on promoting Australian manufactured goods overseas, but we need to recognise that services are, increasingly, a dominant part of our economy. We need to make sure that we can assist Australian service operations to expand overseas, as long as it is not at the expense of existing operations in Australia.

I am going to use the time remaining to refute some of the ridiculous claims from the member for Hughes, since the Deputy Speaker is allowing a free-flowing debate—in his wisdom. Let me place on the record again that the member for Hughes occupies a parallel dimension where black is white and right is wrong. He keeps talking about expensive electricity in this country. He is absolutely right—wholesale energy prices—

Government members interjecting

Mr CONROY: No. He is right on one thing. Even a broken clock is right twice a day, and this is one of your two, member for Hughes. He is absolutely right that wholesale energy prices have doubled in the last four years under his government. And why have they doubled? According to the Australian Energy Council—so the generators themselves, not the Labor Party or some mad conservation group—have identified the single most important driver of the doubling of wholesale energy prices. And it is uncertainty around climate change and energy policy. They have said that that uncertainty is equivalent to a $50 megawatt charge increase. So wholesale energy prices have increased from $60 a megawatt hour to about $130 a megawatt hour. Fifty dollars of that $60 to $70 increase is because of policy uncertainty, driven by the fossils in the Liberal party room, including the member for Hughes. It has been driven by the real minister for climate change and energy, the honourable member for Hughes. So that is the first issue that I have to rebut—what is driving wholesale energy prices.

Secondly, what is the salvation? We need more investment in the electricity sector. But I have news for the member for Hughes and all the dinosaurs in the Liberal party room. Unfortunately, it will not be coal-fired power stations unless they are massively subsidised. That is because of not environmental policies but base economics. The cost of building a brand-new coal-fired power station in this country is around $130 to $150 a megawatt hour. The cost of new renewables—

Mr Craig Kelly: With storage.

Mr CONROY: I am going to get to that, Sunshine.

Mr Craig Kelly: And how much storage?

Mr CONROY: ARENA, a government agency, estimates that you add $20 for adequate storage—$20 a megawatt for storage. So new wind power with adequate storage, according to the government’s own figures, is $75 a megawatt hour. That is half the cost of new coal-fired power. Yet again it shows that the member for Hughes occupies a parallel dimension and needs to come back to reality if he is going to be part of a serious economic debate in this country.

In summary: let’s get on with the job of reforming Efic so that we can support Australian businesses.

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