Extract from The Guardian
Exclusive: Proposed changes to Export Finance and
Insurance Corporation could reward companies that axe local jobs,
Australia Institute warns
Australia’s export credit agency could end up financing companies
that have axed their domestic workforces to manufacture more cheaply
overseas, a Senate inquiry has been told.
The Export Finance and Insurance Corporation could become instrumental in the “further offshoring of Australian manufacturing” under draft laws proposed by the Coalition that would scrap the requirement to fund only exporters that manufacture “substantially or wholly in Australia”, the Australia Institute has warned in a submission seen by Guardian Australia.
And a new arm of the progressive thinktank, Jubilee Australia, warned in its published submission that the government’s proposed reforms fell short of what was needed to make a secretive agency accountable in light of its chequered record financing overseas mining projects linked to civil strife and environmental degradation.
Jubilee called for changes to the bill, including to remove Efic’s exemptions from environmental protection and freedom-of-information laws.
Jubilee, which has studied in-depth Efic’s role in funding problematic projects in Papua New Guinea, also said legislation should force the trade minister to disclose how decisions to fund risky projects in the “national interest” were assessed and the reasons for approval.
And Efic’s governing act should ensure it carried out “adequate assessment and disclosure of human rights impacts and environmental damage” of projects it finances, Jubilee said.
Its submissions were backed by submissions from Oxfam Australia, AidWatch, Greenpeace, CAER (Corporate Analysis, Enhance Responsibility), the Human Rights Law Centre and Australian Lawyers for Human Rights.
Efic in its own submission said its act already recognised “international obligations with regard to environmental, social and human rights”.
The agency also pointed to the public release of independent audit reports every two years as existing way of raising “confidence in EFIC’s environmental and social assessment of transactions”.
The minister for trade, Steven Ciobo, told parliament in November that the export finance and insurance corporation amendment (support for commonwealth entities) bill 2016 would “enhance Efic’s capacity to provide loans” to small and medium-sized Australian exporters.
It would allow Efic to directly finance businesses that substantially manufactured overseas, rather than just provide guarantees for private finance.
Ciobo said the change “rightly focuses on the benefit flowing back to Australia from the export activity – like export earnings – rather than details of where the goods are assembled, where investments are made, or who the buyer is”.
But the Australia Institute said this seemed to “remove any focus” on the export of Australian-made goods, which the original Efic Act was intended to help.
“Contrary to the minister [Ciobo’s] claim … that this would mean ‘more job opportunities and a better standard of living for all Australians’, it has the potential to reduce jobs that produce goods and services in Australia,” it said.
It said “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.”
However, a submission by the Department of Foreign Affairs and Trade noted there were “caveats” in the bill limiting Efic’s proposed new powers to give guarantees to foreign subsidiaries of Australian-based parent companies.
“Specifically, Efic’s ability to provide a guarantee to a foreign subsidiary is only possible if the [small to medium enterprise] parent in Australia certifies that the guarantee will not result in a net reduction in the number of employees of the SME in Australia,” Dfat said.
Ciobo in November said “following Efic’s provision of services to the Northern Australia Infrastructure Fund [NAIF], we know there is latent demand within the commonwealth public service to leverage Efic’s specialist expertise around financing”.
The bill would override current laws that stop Efic sharing “its expertise within the Australian government”, Ciobo said, adding access to the agency would be “subject to ministerial approval”.
But the Australia Institute said Efic’s work with NAIF – which is considering a $1b loan to Adani - was particularly “concerning” given its record of “due diligence failures” around overseas mines.
Efic’s largest loan to date was to the ExxonMobil-led Papua New Guinea LNG project in 2009. That project has since been linked to a PNG government financial crisis and civil conflict that risks escalating into serious violence.
“Efic was grossly incompetent at assessing social, economic and political risks related to this project and must bear some responsibility for a downturn in the PNG economy and the current conflict in Hela province,” the Australia Institute said. It was one of a “litany of examples where Efic has been unable to assess risks associated with large scale resource projects.”
Efic finance helped with the Rio Tinto-controlled Panguna mine expansion in the 1980s, with exploitation related to that mine leading to the Bougainville civil war, “the largest and most destructive war in the South Pacific region since world war two”.
It also backed development of BHP’s Ok Tedi mine, where waste dumping resulted in environmental destruction of the Fly river.
The Australia Institute cited Efic’s current proposal to fund the Boikarabelo coal project in South Africa, which would “directly compete with Australian mines” in selling thermal coal to markets like India.
The South African mine’s proponent, Resource Generation or ResGen, is listed on the Australian stock exchange but had no office or employees in Australia, it said.
Efic had “conducted no public analysis of how Boikarabelo and Waterberg mines would affect potential exports of Australian coal to India”, the institute said.
If the governments bill passed unchanged, Efic’s resources would be more easily available to producers who like ResGen were “nominally Australian” but performed all the key work overseas, it said.
A spokeswoman for Efic said the agency was not prepared to comment on the Australia Institute submission as it had not yet been published by the Senate inquiry.
The Export Finance and Insurance Corporation could become instrumental in the “further offshoring of Australian manufacturing” under draft laws proposed by the Coalition that would scrap the requirement to fund only exporters that manufacture “substantially or wholly in Australia”, the Australia Institute has warned in a submission seen by Guardian Australia.
And a new arm of the progressive thinktank, Jubilee Australia, warned in its published submission that the government’s proposed reforms fell short of what was needed to make a secretive agency accountable in light of its chequered record financing overseas mining projects linked to civil strife and environmental degradation.
Jubilee called for changes to the bill, including to remove Efic’s exemptions from environmental protection and freedom-of-information laws.
Jubilee, which has studied in-depth Efic’s role in funding problematic projects in Papua New Guinea, also said legislation should force the trade minister to disclose how decisions to fund risky projects in the “national interest” were assessed and the reasons for approval.
And Efic’s governing act should ensure it carried out “adequate assessment and disclosure of human rights impacts and environmental damage” of projects it finances, Jubilee said.
Its submissions were backed by submissions from Oxfam Australia, AidWatch, Greenpeace, CAER (Corporate Analysis, Enhance Responsibility), the Human Rights Law Centre and Australian Lawyers for Human Rights.
Efic in its own submission said its act already recognised “international obligations with regard to environmental, social and human rights”.
The agency also pointed to the public release of independent audit reports every two years as existing way of raising “confidence in EFIC’s environmental and social assessment of transactions”.
The minister for trade, Steven Ciobo, told parliament in November that the export finance and insurance corporation amendment (support for commonwealth entities) bill 2016 would “enhance Efic’s capacity to provide loans” to small and medium-sized Australian exporters.
It would allow Efic to directly finance businesses that substantially manufactured overseas, rather than just provide guarantees for private finance.
Ciobo said the change “rightly focuses on the benefit flowing back to Australia from the export activity – like export earnings – rather than details of where the goods are assembled, where investments are made, or who the buyer is”.
But the Australia Institute said this seemed to “remove any focus” on the export of Australian-made goods, which the original Efic Act was intended to help.
“Contrary to the minister [Ciobo’s] claim … that this would mean ‘more job opportunities and a better standard of living for all Australians’, it has the potential to reduce jobs that produce goods and services in Australia,” it said.
It said “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.”
However, a submission by the Department of Foreign Affairs and Trade noted there were “caveats” in the bill limiting Efic’s proposed new powers to give guarantees to foreign subsidiaries of Australian-based parent companies.
“Specifically, Efic’s ability to provide a guarantee to a foreign subsidiary is only possible if the [small to medium enterprise] parent in Australia certifies that the guarantee will not result in a net reduction in the number of employees of the SME in Australia,” Dfat said.
Ciobo in November said “following Efic’s provision of services to the Northern Australia Infrastructure Fund [NAIF], we know there is latent demand within the commonwealth public service to leverage Efic’s specialist expertise around financing”.
The bill would override current laws that stop Efic sharing “its expertise within the Australian government”, Ciobo said, adding access to the agency would be “subject to ministerial approval”.
But the Australia Institute said Efic’s work with NAIF – which is considering a $1b loan to Adani - was particularly “concerning” given its record of “due diligence failures” around overseas mines.
Efic’s largest loan to date was to the ExxonMobil-led Papua New Guinea LNG project in 2009. That project has since been linked to a PNG government financial crisis and civil conflict that risks escalating into serious violence.
“Efic was grossly incompetent at assessing social, economic and political risks related to this project and must bear some responsibility for a downturn in the PNG economy and the current conflict in Hela province,” the Australia Institute said. It was one of a “litany of examples where Efic has been unable to assess risks associated with large scale resource projects.”
Efic finance helped with the Rio Tinto-controlled Panguna mine expansion in the 1980s, with exploitation related to that mine leading to the Bougainville civil war, “the largest and most destructive war in the South Pacific region since world war two”.
It also backed development of BHP’s Ok Tedi mine, where waste dumping resulted in environmental destruction of the Fly river.
The Australia Institute cited Efic’s current proposal to fund the Boikarabelo coal project in South Africa, which would “directly compete with Australian mines” in selling thermal coal to markets like India.
The South African mine’s proponent, Resource Generation or ResGen, is listed on the Australian stock exchange but had no office or employees in Australia, it said.
Efic had “conducted no public analysis of how Boikarabelo and Waterberg mines would affect potential exports of Australian coal to India”, the institute said.
If the governments bill passed unchanged, Efic’s resources would be more easily available to producers who like ResGen were “nominally Australian” but performed all the key work overseas, it said.
A spokeswoman for Efic said the agency was not prepared to comment on the Australia Institute submission as it had not yet been published by the Senate inquiry.
No comments:
Post a Comment