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Wednesday, 13 March 2013
Page: 2018

Ms JULIE BISHOP (CurtinDeputy Leader of the Opposition) (10:03): I rise to debate the Export Finance and Insurance Corporation Amendment (Finance) Bill 2013. According to its official website, EFIC:

… provides finance and insurance solutions to help Australian exporters overcome the financial barriers they face when growing their business overseas.

It is, in fact, the Australian government's export credit agency, and assists export trade, or overseas investments, where the private market is unable to do so. Specifically, EFIC works:

… directly with exporters or with their banks to provide loans, guarantees, bonds and insurance products…

which are otherwise not provided by the private sector. The bill will amend the financial arrangements of EFIC to provide for the payment of a special dividend of $200 million and any adjustments to EFIC's callable capital that may be necessary in the future. The coalition does not oppose this bill.

According to the government, the bill follows recommendations and findings of the 2012 Productivity Commission inquiry report into EFIC's operations. The Productivity Commission found that, where EFIC retains capital above its minimum requirements, this surplus capital has an opportunity cost that is borne by the taxpayer. The commission recommended that legislation be amended to allow the minister to direct EFIC to return surplus capital to the government. Of course, the Productivity Commission report is just a thin excuse. It is a smokescreen for what is actually going on here in terms of this government's real agenda. In fact, this bill essentially has nothing to do with EFIC as such but everything to do with $200 million that is being extracted from it.

The reality is that, despite 100 or more promises from the Prime Minister and the Treasurer that this Labor government would deliver a surplus in 2012-13 and subsequent budgets, they have reneged on those solemn promises. The Prime Minister said that failure was not an option in terms of delivering a surplus in 2012-13. There were no ifs or buts. They would return to a surplus in 2012-13. So the government is desperately casting around for every dollar it can find and EFIC is one of its convenient cash cows. Labor has seriously mislead Australians on its management of the budget and the economy. This represents a massive breach of faith with the Australian community. After four of Australia's biggest surpluses under the previous coalition government, Labor has given Australia the four worst deficits in our history. Now Labor is heading for yet another substantial deficit after promising until it was blue in the face that this would be the year the budget would return to surplus.

The Business Council of Australia warns of a $60 billion budget black hole over the forward estimates alone, while beyond this period the Australian Financial Review estimates a Labor black hole of $120 billion as a result of unfunded spending promises. The Business Council analysis also found that around $15 billion in so-called government savings were in fact timing shifts—in other words, money shuffles. This comes after macroeconomics analysis for the Minerals Council of Australia put the budget structural deficit at an alarming $66 billion in 2011-12, with the problem enduring as far as the eye can see until at least 2025-26. Every hollow log, including EFIC, is being raided. Nonetheless, front-line services are also being struck down. The Mid-Year Economic and Fiscal Outlook in October last year slashed $1.6 billion out of health funding. In the same MYEFO, education was cut by $3.9 billion. In fact, after five years of Labor's so-called 'education revolution' and billions of dollars wasted on overpriced school halls, Australian literacy and numeracy results are actually going backwards. Labor's mining tax adds to the black hole with $15 billion of expenditure linked to it that is not covered in offsetting revenue. Analysis by Deloitte Access Economics shows that Labor added almost $50 billion to the budget in new spending programs just as its massive stimulus splurge was being unwound.

It must be remembered that this is on top of a total stimulus spend amounting to a staggering $87 billion as confirmed by Treasury. The Gillard government is now spending over $90 billion—or about 35 per cent—more compared to the last year of the Howard government, despite inflation of just 14 per cent over the entire period. Over the past four budgets the government has effectively spent $172 billion more than has come in as revenue. Despite the government's spin about spending restraint, real expenditure is set to grow again next year at 4.4 per cent while the terms of trade decline.

The coalition has been sounding the alarm about the structural deficit for several years now. It is the key indicator of a government living way beyond its means. No wonder the government is raiding every nook and cranny of the Public Service. I am surprised that EFIC has been untouched by this government up until now. Labor's budget surplus promise is a fraud. Labor's spending priorities are a mess. Labor's plans for more and new taxing are disastrous. The Labor government is a mess.

The coalition has real plans and real solutions to ensure that we can impose fiscal restraint and proper budget management after five disastrous years of Labor. We will build a stronger, more productive and diverse economy with lower taxes, more efficient government and more productive businesses that will deliver more jobs, higher real incomes and better services for Australians and their families. I point out again, we do not oppose this bill. However EFIC and its clients in the business community have to deal with an incompetent Labor government and have them to thank for this raid on their finances.