Signup to receive our newsletter
I rise to speak on the Export Finance and Insurance Corporation (EFIC) Amendment (Direct Lending and Other Measures) Bill 2014 and I thank the house for this opportunity.
The Bill will create amendments to the Export Finance and Insurance Corporation Act 1991 (“the Act”) and by doing so, will vastly improve the commercial opportunities of the many Australian export businesses right around the country.
Today’s bill is another piece of important legislation that has been analysed, reviewed and amended by this side of Government. This legislation is crucial and an ongoing part of the Coalition’s plan to revive Australia’s small to medium sized enterprises, which employs the largest number of employees and make up the bulk of our economy.
The opportunity to speak on this Bill today has coincided perfectly with the freshly inked trade agreements that we have concluded with China and India.
Existing tariffs on many popular exports such as agriculture, horticulture and seafood will phase out within the next few years meaning billions of dollars can be added to our economy.
In light of this historic agreement, we must not let existing legislation hinder business opportunities, and instead work in combination to achieve the optimum results for our export enterprises.
Both the Bill and the respective trade agreements will allow prospects of export trading with these countries to flourish. The timing could not have been better and I am certain that the many export businesses, from the traditional agricultural sector to consumer retail goods are breathing a sigh of relief knowing their future is viable under the Coalition.
Today’s Bill enhances the capacity of the Export Finance and Insurance Corporation (EFIC) to back small and medium-sized businesses seeking to capitalise on opportunities for global trade.
As a nation and a government that supports and encourages entrepreneurs, we must do all that we can to ensure that opportunities that are presented to businesses can be seized and accomplished without unnecessary obstacles.
Madam/Deputy Speaker, our globalised and increasingly integrated trading means businesses often look beyond state borders to seek and relish new commercial opportunities.
This could be a combination of offering a niche product with domestic expertise that are best suited to other markets, or a cooperative with other international communities that benefit mutual parties or perhaps, seeking a larger market. Whatever the reason may be, this government fully stands behind the plethora of aspiring entrepreneurs and businesses that want to create and compete.
Furthermore, whenever prospects arise for such businesses to export their goods and services, our policies should allow for employment and growth opportunities as these flow directly back into the Australian economy.
We are a smaller nation than some, but the goods and services that we provide are second to none and these are not just limited to the resources sector.
Australia’s wide range of consumer goods include pharmaceuticals, beef, sheep meat, livestock, horticultural products, wine, flour, fibres and cheese coupled with increased international exposure amongst trade shows and tourism means increasingly people are becoming aware of our exceptional quality and thus, demand for these items.
Statistics show that within the last 2 financial years, there was an increase from forty four thousand exports of goods and services to over forty five thousand.
Whilst the biggest contributor of exported goods still belong to the mining sector, general use of service exporters are on the rise.
It would be a real shame for Australian businesses to lose precious commercial opportunities to export our goods due to lack of finance, excessive red tape and bureaucracy.
The Coalition has always been committed to strengthening the opportunities and supporting our small and medium sized businesses and this legislation today provides a vital pathway for this.
The Export Finance and Insurance Corporation plays a crucial role in assisting export business ventures, stepping in to provide insurance and finance backing where traditional lenders have declined assistance.
The EFIC was established as Australia’s credit agency and operate commercially, partnering with banks to provide financial solutions to various Australian small and medium sized exporters.
The EFIC has been essential in helping exporters take advantage of potential contract opportunities that might otherwise have been impossible.
Madam/Deputy Speaker, it is important not to underestimate how much Australian exporters contribute to our economy and to our GDP. Exports are worth approximately one out of every 5 dollars in Australia’s national income.
The International Monetary Fund has previously stated in its World Economic Outlook that Australia’s export volumes will continue to fuel our economy and potentially tapering the negative effects of a downturn in mining investments.
Since the global financial crisis, world downturn of economic strength and interdependent health of economies mean that we must allow policies to provide businesses the resilience to withstand change.
As some industries are subject to cyclical change and subdued growth and others experience growth and expansion, we must ensure the latter do not suffer from unnecessary red tape and bureaucratic burden where there needs none.
Enhanced efficiencies in various competitive export sectors can significantly increase sales potential and renew further investment in the Australian economy.
It is estimated that changes to the Export Finance and Insurance Corporation in terms of direct lending will help overcome some of the barriers exporters face.
Currently, many Australian products that we excel in such as previously mentioned, pharmaceuticals, beef, sheep meat, livestock, horticultural products, wine, flour, fibres and cheese are not considered capital goods as they are classified as consumer goods.
Yet the EFIC can only lend to exporters of capital goods. In reality however, capital goods make up a mere 5% of all Australian goods exported.
So whilst the EFIC can directly lend for exporting dairy cows, it cannot directly lend for those wishing to export milk.
In addition, exporters of non-capital goods have traditionally had to obtain a guarantee from the EFIC before securing funds from a bank meaning additional time is spent on paperwork before any transaction actually occurs.
In these scenarios, the EFIC provides a financial guarantee to the bank, at the request of the exporter and the bank then directly lends the finances.
The application to the EFIC and subsequently, the bank mean 2 lots of credit approvals, associated documentation, administration and legal fees.
The Coalition is committed to ensuring new direct lending arrangements will remove the current restrictions in place for Australian exporters and the excessive red tape.
When business compliance costs amount to approximately $1b per annum, this measure is vital to restoring faith to our regional, rural and general exporting sector.
Madam/Deputy Speaker, you can imagine the potential monetary loss the economy, the businesses and business owners are losing out on.
Changes to the EFIC legislation will ensure regional and rural economies can thrive with demand from emerging and developed international markets.
Fundamentally, the measure contained in this legislation supports our election commitment to helping Australian businesses by a reduction of compliance costs.
Time and again, small businesses right around Australia speak of the compliance costs which are make and break for their businesses and we owe it to them to provide the right framework that would cultivate ongoing opportunities. These would clearly start with the EFIC facilitating more financial options for Australian exporters.
Expanding the scope of power in the EFIC is not targeted at marginalising private sector contribution; rather it is about helping commercially viable exporters overcome financial obstacles that would have otherwise prevented them from reaching overseas markets.
The Coalition has always been the party that stood for enterprising and nurturing current and future entrepreneurs, and we believe the change proposed today is essential to building a stronger and successful economy.
Today’s positive reform follows from this government’s earlier enhancement for SME exporters in the 2014-15 budget where an injection of $200million was granted to the EFIC.
This injection was much needed after a prior raid by the Opposition.
Restoration of EFIC’s finances mean it can focus on its objective of helping and supporting Australian exporters, especially the small to medium sized enterprises which make up the engine room of our economy.
Madam/Deputy Speaker, today’s bill is so important to Australian export businesses that ultimately increase Australia’s reputation and competitiveness on the international stage.
A recent survey of Australian export businesses by the Export Council of Australia revealed that the majority of difficulties experienced by exporters were regulatory compliance and access to finance respectively.
As smaller companies rely more on international revenue from developed and emerging markets, increased or difficult bureaucracies would make the make or break situation for them.
The survey further revealed that the majority of businesses, regardless of size, engage in a variety of business operations not limited to outsourcing, foreign investment, production and research and development.
Australian exporters amounted to over $310 billion in the recent years. This demonstrates the potential of Australian businesses and more importantly, how much more potential there is to with the right policies in place.
As global trends point to trade liberalisation, encouraging consumers, stakeholders and businesses coming together, as a government, we must ensure that export businesses have the right backing and support to enable them to reach their potential.
As I discussed before, the rewards for businesses have a flow on effect to our society, employing Australians, and contributing to our economy. Further contribution will now be expected with the signing of 2 major trade agreements.
The Coalition has always been at the forefront of backing entrepreneurs and expanding the EFIC to allow businesses which need capital to tap into current and emerging markets and to do so without red tape and bureaucracy.
This side of government fully believe in and supports our exporters, whether they are rural, regional or metropolitan. Australia’s range of consumer goods and services deserve international reputation for its outstanding quality and the opportunity to present these on an international commercial scale should be fostered.
Today’s Bill is one step to forging a supportive path for exporters and to continue to strengthen our economy.
The Export Finance and Insurance Corporation is often the vital link between small to medium sized enterprises through the provision of insurance and finance.
By previously having their support limited to only those of capital goods, which is only 5% of all Australian exports, it has seen some Australian businesses struggle unnecessarily to gain momentum or foothold in emerging markets.
Today’s measure will ensure that all businesses can have the opportunity to expand into international markets and help our export businesses showcase Australia’s fantastic range of goods.
I commend the Bill to the house.