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Foreign Affairs, Defence and Trade Legislation Committee
24/10/2019
Estimates
FOREIGN AFFAIRS AND TRADE PORTFOLIO
Export Finance Australia

Export Finance Australia

[20:45]

CHAIR: We now move to examination of Export Finance Australia. I welcome Ms Swati Dave, Managing Director and Chief Executive Officer, and officers. Ms Dave, do you have an opening statement?

Ms Dave : No, I don't.

CHAIR: We'll move straight to questions. Senator Ayres.

Senator AYRES: Ms Dave, I just have a short series of questions for you and for the minister. There's been an expansion to the mandate of Efic, hasn't there?

Ms Dave : Yes, that's correct.

Senator AYRES: What lending or other financial support has Efic provided for Indo-Pacific infrastructure as a result of the legislative changes? I'm aware that they're fresh changes.

Ms Dave : They're very fresh. The changes came into effect on 1 April. While it's fair to say that we have done quite a lot of work around meeting people in the region—we have visited PNG, we've visited Indonesia to talk to people in the market, we've spoken to the private sector, to banks, to potential equity providers and contractors—with the view of actually building a reasonable pipeline of transactions, we haven't delivered any yet. It's a very short time frame, and infrastructure projects, even in the Australian context, take quite a bit of time to deliver. So whilst we have built a reasonable pipeline, it's a little bit early for us to say at what time we'll be able to deliver them, because we're reliant on working with people in other jurisdictions that may have a different time frame.

Senator AYRES: Is there anything that you can tell me about the pipeline that's been developed so far?

Ms Dave : Some of the things we're focusing on will include things like water treatment. It may include telecommunications. When the mandate was announced, the brief was that it's around improving connectivity. Telecommunications falls into that. We'll be looking at different forms of power. There's electrification, potentially, in the pipeline, and there'll be transport infrastructure. So it's quite a broad range, and we're looking for opportunities across that broad range.

Senator AYRES: I appreciate it's early in the piece. Are there any projects that you can speak to at this stage?

Ms Dave : It's very early for us to speak to them, because they're not really developed as projects.

Senator AYRES: Do you expect the level of financial support for those infrastructure projects to increase? What's the impact of the change in the mandate?

Ms Dave : There are a couple of things. The change in mandate also gave us an extra $1 billion in callable capital. The reason that's significant is it allows us to potentially provide a higher level of support in a particular project. That's important particularly when we're dealing with other partners in the region because it helps us to be more relevant in whatever financing that we're supporting. Having more capital also allows us to look at a broader range of projects.

Senator AYRES: I don't have any more questions, Chair. I look forward to seeing you in future estimates and hearing more about it. It is very late in the night. I was going to talk about pipelines, but I'll give it away at this stage.

CHAIR: I just have a question. In relation to the work that you are doing in the Pacific, how is that for which facility $1 million has been made available to Efic going?

Ms Dave : We were just talking about that. We are looking at potential pipeline opportunities.

CHAIR: What I mean is: do you already have it and you have started work?

Ms Dave : Absolutely. As I mentioned earlier, we have been doing a lot of work around identifying opportunities in those markets. We had a visit to PNG with our trilateral partners and we spoke to a range of potential project proponents in those regions. Some of the sector, as I mentioned before, is going to apply in the Pacific as well. So we will be looking at water, electrification, energy, telecommunications, connectivity—

CHAIR: Airports?

Ms Dave : We haven't got airports in particular in mind, but it will be a range. Again, it depends on where the need is greatest and how commercial that financing is likely to be. Our mandate is to look at doing financing on a commercial basis, so that is very much the lens that we are applying to it.

CHAIR: Interesting. The reason I raise the airport aspect is that at one stage I had a situation where there was a Pacific country that was offered, if I can put it that way, by another country the opportunity that, if they took out a particular loan with that country, they could effectively then get an airport delivered. There was interest from an Australian company that was probably going to do it for a fifth of the price on terms which could have potentially included a leasing of the building afterwards so that, after a lengthy period of time, the ownership would revert to the country in question. My point is that that is a very innovative way of doing it. Potentially Efic, through your facility, could have supported that company in that arrangement. That is why I raised airports, because of that sort of thing. Whether it's airports or any other infrastructure, the pattern has traditionally been particular countries or their banks come along and say, 'Take out a loan of $100 million and we'll give you this,' and then, before you know it, the alternatives haven't been explored. Part of your expertise, I think, is the ability to put those deals together. So I think that would be a very useful thing for you to be able to do, because that expertise is lacking and you do have that expertise and, I think, have the opportunity to help countries to put those deals together.

Ms Dave : We are very focused on finding innovative ways to make use of our broader mandate. It is a great opportunity. So thank you very much for your comments. We will focus on that.

Senator Birmingham: It is about the viability of the project as well, as you rightly identified in that example. I suspect the 'no' to airports is not because we are closed to airports but just because of the early-stage discussions that have been—

CHAIR: I only raised that because, in that instance, ultimately, it would have been Efic's backing. The private company would have built it and ultimately it was really only the guarantee component of it that was the exposure of it—

Senator Birmingham: That helped to get it over the line.

CHAIR: It helped to get it over the line. That was the point I was making. As there are no other questions, thank you to Export Finance Australia for your attendance. That concludes our examination of the Foreign Affairs and Trade portfolio and agencies. I thank the ministers and officers for their attendance and I thank Hansard and Broadcasting.

Committee adjourned at 20:54