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Thursday, 28 November 1974
Page: 2975

Senator WRIEDT (Tasmania) (Minister for Agriculture) - I would open on the note on which Senator Durack closed. He described this legislation as enlightened or as legislation that he supports^ He said that he wished that other legislation and actions of the Government were equally enlightened. It may be that eventually he will realise that the other aspects of our policy and the matters that he discussed concerning trade generally will prove to be as enlightened as is the legislation that he is prepared to support, tonight. The whole purpose of the legislation of course is to expand what was originally the Export Payments Insurance Corporation, to expand certain facilities in the insurance sector of that legislation and, more importantly, to include export finance arrangements whereby Australian exporters, particularly of manufacturing machinery, can be assisted to develop new markets in particular countries mainly and to give general assistance to the export trade of this country.

Senator Durackdwelt on 2 principal points. I shall take the time of the Senate very briefly to refer to them. He referred to the relationship of the new corporation to the private trading bank system. I believe it should be pointed out that clause 38 of the Bill states:

The Board shall take such steps as it considers appropriate to encourage banks, and other financial institutions, carrying on business in Australia, to finance or to assist in the financing of, transactions that are eligible export transactions.

It was made quite clear in the second reading speech that the new corporation is designed to take its place alongside and to supplement the existing facilities that are currently provided by the banking system. It is not intended that it will engage in the wide range of activities that are traditionally carried out by the trading banks. There was considerable discussion between the Government and the representatives of the private banking system before this legislation was finalised. The Corporation's role will be limited to filling the gap that currently exists in these facilities, and to matching the special assistance provided by government supported institutions in competitor countries in the field of machinery and capital equipment. As has been pointed out, Australia has lagged in this area over the years and this no doubt is one of the most important features of the legislation.

The new Corporation will make finance available only when it considers that it is desirable and that the finance would not otherwise be available on reasonable and suitable terms and conditions. In setting its lending terms and conditions the new Corporation will seek to match, but not to lead, competition from overseas institutions. I believe this has been done in previous legislation concerning foreign institutions and foreign corporations in which there was very detailed co-operation between the private sector of the Australian community and the Government. This was also the case with the Australian Industry Development Corporation legislation. The Government has consistently talked to, and had extensive discussions with, private industry on all these major matters because it is important that the initiatives that have been taken by the Government are complementary to those that are taken by the private sector.

Senator Durackalso raised the question of sources of finance and pointed out that the current appropriation of $5m does not appear to be very significant especially, as the second reading speech has pointed out, when an amount of $50m may be required over the next 3 years. It is true, although it is difficult to make this judgment, that an amount of $50m may be required over a 3-year period. But it is currently estimated that in one year of operation about $16m would be required, and that makes it about $8m in the half year. As the Corporation in this area of export financing is only beginning, obviously it will be a comparatively slow start, but it does mean that those funds will be adequate and it is anticipated that no additional capital would be required to enable EPIC to function as an export bank. The new Corporation could use EPIC's existing capital and reserves within limits to assist in financing exports. Borrowings from the Budget should be the primary source of finance for the bank.

I believe the legislation currently before the Senate is probably one of the most important pieces of legislation to come before the Senate in this session, because it is involved with that critically important factor of our trade balance. Senator Durack did touch on this question, but it should be pointed out that our trade figures and our export earnings at present are running at record levels.

Senator Durack - There is a deficit.

Senator WRIEDT -Yes. Of course our imports are also running at record levels. It is true that our overseas balance of payments naturally is affected by the imports. They were at a very high level 12 or 18 months ago. I think the figure was in excess of $5 billion. It has been brought back to a more realistic figure of something in excess of $3 billion at present. I think events are proving that the Government's intention and the action that it has taken to improve and expand the imports into this country, despite the fact that they have brought about some difficulties in certain areas of the economy, nevertheless are providing the goods which an economy that is booming along needs; and the demand in the Australian economy still remains very strong. If the Government had not taken action to increase our imports we almost certainly would have had much greater difficulties than some that we are experiencing at present. At the same time, when the Government took those actions it realised that certain structural changes would come about. We did not wait for the effects of those changes to be felt. Machinery has been established, such as the Structural Adjusment Board, for the purpose of helping the industries affected by those decisions.

I appreciate the contribution that Senator Durack made to this debate. I believe he was very balanced in his approach to it. Nonetheless there are those one or two points on which the Government seeks to differ from his view. It is obvious that the Senate as a whole accepts this legislation. We know that it can only be of benefit to the Australian economy, particularly to our trading position.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

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