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2016
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
EXPORT FINANCE AND INSURANCE CORPORATION AMENDMENT
(SUPPORT FOR COMMONWEALTH ENTITIES) BILL 2016
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Trade, Tourism and Investment,
the Honourable Steven Ciobo MP)
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Export Finance and Insurance Corporation Amendment (Support for
Commonwealth Entities) Bill 2016
OUTLINE
Purpose/Objective
The Export Finance and Insurance Corporation Amendment (Support for
Commonwealth Entities) Bill 2016 ("the Bill") expands Efic's functions to include
the provision of services to Commonwealth entities and companies, subject to
Ministerial approval.
The Bill also expands the powers of the Export Finance and Insurance Corporation
("Efic") to allow direct lending to a wider range of small to medium sized enterprises
(SMEs).
Why the Bill is required
This Bill is required to give legislative effect to the elements of the Government
Decision that require legislative amendments. The Bill will create amendments to the
Export Finance and Insurance Corporation Act 1991 ("the Act").
The policy objective of the first amendment is to allow Efic to offer its specialist
financial capabilities in the operation and administration of Commonwealth financing
programs, where there is no connection to exports. Following Efic's provision of
services to the Northern Australia Infrastructure Facility ("the NAIF"),
Commonwealth departments have expressed interest in leveraging Efic's expertise.
Efic's functions in the Act do not include the provision of Commonwealth services,
and the NAIF arrangement required a consequential amendment to the Act. This
second amendment would ensure future arrangements are permissible under the Act
and would be subject to the approval of the Minister for Trade, Tourism and
Investment.
Efic may charge a fee for any assistance it provides, which must not be such as to
amount to taxation. This amendment should lower government service delivery costs
by leveraging existing resources and is consistent with the Government's Smaller
Government agenda. Efic would not provide loans or guarantees to support
Commonwealth financing programmes. For example, Efic can advise on the
appropriate structure of a loan and manage the loan on behalf of the Commonwealth
entity. However, Efic cannot provide the loan in its own name.
The policy objective of the second amendment is to enable the Government to better
support access by innovative Australian SMEs to global markets. This amendment
will align the current definition of an 'eligible export transaction' for loans (section 3)
to the broader definition of 'Australian export trade' for guarantees (section 16). The
latter definition more appropriately focuses on the actual benefits flowing back to
Australia from the export trade, rather than the place of manufacture or purchase. This
would allow Efic to more effectively support a wider range of SME exporters, in
particular those in global supply chains, or those looking to provide services to
overseas customers directly. The amendment is consistent with the value of exports
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for Australia being increasingly derived from innovation, design or intellectual
property, rather than traditional assembly.
The amendment does not change Efic's purpose of operating only in the market gap
where banks are unable to help, and any support must still be attached to exports. For
SME exporters, this proposed amendment is estimated to save up to $12,000 per
application by providing Efic the ability to provide a direct loan rather than just a
guarantee.
FINANCIAL IMPACT STATEMENT
The Bill will have no direct financial impact.
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NOTES ON CLAUSES
Clause 1:Short title
1. Clause 1 is a formal provision specifying the short title of the Bill.
Clause 2:Commencement
2. The Bill will commence on the day after the Bill receives royal assent.
Clause 3:Schedule(s)
3. Clause 3 provides that legislation that is specified in a Schedule to this Bill is
amended or repealed as set out in the applicable items in the Schedule concerned, and
any other item in the Schedule to this Bill has effect according to its terms.
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Schedule 1--Amendments
Export Finance and Insurance Corporation Act 1991
Item 1 - Subsection 3(1)
Insert:
Commonwealth company has the same meaning as in the Public Governance,
Performance and Accountability Act 2013.
Commonwealth entity has the same meaning as in the Public Governance,
Performance and Accountability Act 2013.
EFIC's Commonwealth entities function means the function set out in
paragraph 7(1)(dc).
Item 2 - Subsection 3(3)
Omit all the words after "incidental or related", substitute "to Australian export
trade".
This item now provides the revised definition of an 'eligible export transaction'.
Item 3 - Section 7
After subsection 7(1)(db), insert the following:
(dc) as directed by the Minister, to assist Commonwealth entities and
Commonwealth companies in performing their functions or achieving their
purposes by providing services in relation to financial arrangements and
agreements;
Item 4 - Section 7
At the end of section 7, add the following:
(3) The reference in paragraph (1)(dc) to providing services in relation to financial
arrangements and agreements does not include the provision of loans, insurance or
guarantees.
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Item 5 - Subsection 8(3)
Repeal the subsection, substitute:
(3) Subsection (1) and subparagraphs (2)(b)(i) and (iii) do not apply in relation to:
(a) EFIC's Northern Australia economic infrastructure functions;
or
(b) EFIC's Commonwealth entities function.
Item 6 - Subsection 9(6)
Omit all the words after "does not apply", substitute:
in relation to:
(a) EFIC's Northern Australia economic infrastructure functions;
or
(b) EFIC's Commonwealth entities function.
Item 7 - Section 84A(heading)
Repeal the heading, substitute:
84A Fees for certain services
Item 8 - Subsection 84A(1)
Omit all the words after "it provides", substitute:
in performing the following:
(a) EFIC's Northern Australia economic infrastructure functions;
(b) EFIC's Commonwealth entities function.
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Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary
Scrutiny) Act 2011
Export Finance and Insurance Corporation Amendment (Support for
Commonwealth Entities) Bill 2016
This Bill is compatible with the human rights and freedoms recognised or declared in
the international instruments listed in section 3 of the Human Rights (Parliamentary
Scrutiny) Act 2011.
Overview of the Bill
The Export Finance and Insurance Corporation Amendment (Support for
Commonwealth Entities) Bill 2016 (referred to in this Explanatory Memorandum as
'Bill') gives legislative effect to enable other Commonwealth entities and companies
access to Efic's services, and to ensure Efic can effectively support a wider range of
innovative small to medium sized Australian exporters.
Human rights implications
This Bill does not engage any of the applicable rights or freedoms, as it relates to
changes in the mandate of Efic (the Government's export credit agency).
Conclusion
This Bill is compatible with human rights as it does not raise any human rights issues.
Circulated by authority of the Minister for Trade, Tourism and Investment,
the Honourable Steven Ciobo MP
Sensitive:Legal