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Thursday, 16 May 2013
Page: 3597

Mr CRAIG KELLY (Hughes) (11:02): I am pleased to speak on the Export Finance and Insurance Corporation Amendment (New Mandate and Other Measures) Bill 2013. EFIC is a very important part of our economy assisting small businesses in their efforts to export to the world market. I agree with the principles of this bill. However, I am concerned by some of the detail. I do not oppose the bill, but some of the detail will need to be looked at very closely in practice to see how it works and to ensure that it does benefit small business. I have experience in this area as I have worked with EFIC to look for export finance and insurance for overseas projects and overseas contracts.

The government in the explanatory memorandum sets out the purpose of this bill as giving 'new powers to the Export Finance and Insurance Corporation to better support Australian small and medium-sized businesses participating in global and regional value chains'. And don't small businesses need that assistance at the moment! The only way our small businesses can compete on the international playing field is if they have some type of competitive advantage. This government, with all its policies, seems to want to take away that competitive advantage. We have seen with the implementation of the carbon tax that the government is simply putting Australian exporters at a competitive disadvantage and making it harder for them to export to overseas markets.

We have heard the government try and pretend that all other nations are having a carbon tax and that many other nations are putting on a carbon tax. The facts are that Australian exporters have to pay the world's highest carbon tax, which simply puts them at a competitive disadvantage. We are putting lead in our exporters' saddlebags, forcing them to compete on export markets overseas but placing them at a competitive disadvantage. That is the background. That is why anything we can do to assist our small and medium sized exporters is very important.

The specific concern I have about this bill is changing what is known as the market gap test to the market failure test. In the explanatory memorandum it notes that the government accepts that competitive neutrality principles should apply to EFIC to ensure that it does not have a net competitive advantage over other business or potential competitors. What that means for small business is that EFIC does not have a competitive advantage over our four major banks, because the reality is that when our small businesses want to seek finance to assist them with their exports, here in Australia they only have a choice of the four big banks.

When we talk about market failure and failure in markets, one thing that is often thrown up about small business when they ask for improvements in competition laws or they suggest that competition is not working is that competition harms competitors. If that is true, how is it possible that all four of our big banks are at the moment substantially increasing their profits at the same time? It simply defies the logic that competition harms competitors. So what we see is the Reserve Bank interest rates, the decline we have seen in the Reserve Bank cash rate, simply not being passed on to the interest rates that small business is paying. Why is that? Why are small businesses in Australia being denied those interest rate decreases that the RBA has mandated? Why are they not being passed on to small business? Again that places Australian small business at a competitive disadvantage. If a small business in Australia is working on a tender in the Middle East, in America, in Europe or somewhere in Asia and they are competing against firms from those countries, those companies have access to finance from their banking systems at much lower rates than Australian exporters do from our banking system here. Why is that? I suggest there are three reasons. Firstly, under this government there has been such a blowout in the risk and such a deterioration in the conditions for small business that the banks are factoring that in and charging small business high rates. The alternative is that the banks are simply gouging small businesses with higher interest rates. The third explanation is a combination of the above. Therefore I have great concern over the wording of this bill when it talks about a market failure test for small businesses seeking finance, especially for their export activities. There is already a very strong case that market failure exists at the moment for a small business seeking finance.

When it comes to the principles of competitive neutrality, they are principles we should support, providing those markets are competitive. However, we have seen hypocrisy from the government in this respect, especially with what is known as the Community Energy Efficiency Program, because that program does not follow the principles of competitive neutrality. It is a program that is only available to local councils but it is not available to the small business community. One example of that is in the area of private swimming pools and swimming lessons. If a council owns a swimming pool at which it teaches kids to swim, it is entitled to seek to offset some of the higher electricity costs caused through the carbon tax by seeking a grant through the Community Energy Efficiency Program, but a small business competing against that locally run government institute cannot obtain that same grant. So here we have the government in this bill talking about the importance of competitive neutrality principles but doing the opposite in other directions.

As I said previously, the coalition does not oppose this bill, but we must see how these changes affect it in principle. We must keep a very close eye on them because we do not want to see situations arise in this country where this government does a single thing more to place Australian small businesses at a greater competitive disadvantage than they already are with all the government's mistaken policies.