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2016-2017
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
EXPORT FINANCE AND INSURANCE CORPORATION AMENDMENT
(SUPPORT FOR COMMONWEALTH ENTITIES) BILL 2016
SUPPLEMENTARY EXPLANATORY MEMORANDUM
Amendments and New Clauses to be Moved on Behalf of the Government
(Circulated by authority of the Minister for Trade, Tourism and Investment,
the Honourable Steven Ciobo MP)
Export Finance and Insurance Corporation Amendment (Support for
Commonwealth Entities) Bill 2016
Government Amendments
OUTLINE
Purpose/Objective
The Government Amendments to the Export Finance and Insurance Corporation
Amendment (Support for Commonwealth Entities) Bill 2016 ("the Bill") clarify that
the purpose of the Bill is to enable Efic to support a wider range of Australian small
and medium-sized enterprises (SMEs) and to make available Efic's specialist
financial capabilities to Commonwealth entities and companies on a fee-for-service
basis.
Why the Bill is required
This Bill is required to give legislative effect to the elements of the Government
Decision that require legislative amendments. The Bill will create amendments to the
Export Finance and Insurance Corporation Act 1991 ("the Act"). The Government
Amendments address issues raised in the report of the Senate Foreign Affairs,
Defence and Trade Legislation Committee inquiry into the provisions of the Bill
tabled on 7 February 2017.
The Bill with Government Amendments will enable Efic to lend to a broader range of
SMEs; will ensure Efic's support for overseas direct investment results in more
Australian jobs; and will ensure the provision of Efic services to Commonwealth
entities is on a fee-for-service basis.
The first amendment keeps references in the Efic Act to support for manufacturing
and expands the definition of an "eligible export transaction" by adding references to
support for tourist operators, online businesses, exporters of intellectual property and
other related rights, and businesses engaged in overseas direct investment.
The second amendment relates to Efic's financing of overseas direct investment. It is
already Efic policy that applicants for its overseas direct investment financing product
must not use it to fund the outsourcing of jobs. The amendment stipulates that
businesses will have to certify in writing their reasonable belief that Efic's support for
overseas direct investment will result in a net increase in the number of people
employed in Australia.
The third amendment will mandate Efic to charge a compulsory fee for providing
services to Commonwealth entities and companies. The fee will not amount to
taxation, but will ensure Efic is compensated for providing its specialist financial
expertise.
FINANCIAL IMPACT STATEMENT
The Bill will have no direct financial impact.
NOTES ON CLAUSES
Clause 1:Short title
1. Clause 1 is a formal provision specifying the short title of the Bill.
Clause 2:Commencement
2. The Bill will commence on the day after the Bill receives royal assent.
Clause 3:Schedule(s)
3. Clause 3 provides that legislation that is specified in a Schedule to this Bill is
amended or repealed as set out in the applicable items in the Schedule concerned, and
any other item in the Schedule to this Bill has effect according to its terms.
Government amendments for the Export Finance and Insurance Corporation
Amendment (Support for Commonwealth Entities) Bill 2016
1. Eligible export transactions
Schedule 1, item 2, page 3 (lines 12 to 14), omit the item, substitute:
2 At the end of subsection 3(3)
Add:
; or (e) the supply to persons who are not ordinarily resident in Australia of
services relating to tourism; or
(f) the conduct of an online business with customers outside Australia; or
(g) the sale or licensing of intellectual property and related rights to
persons outside Australia; or
(h) direct investment outside Australia where a benefit flows back to
Australia (whether directly or indirectly).
2. Employment in Australia
Schedule 1, page 4 (after line 9), after item 6, insert:
6A At the end of section 16
Add:
(3) However, EFIC must not make a guarantee or enter into a contract
under this section in relation to a loan or a proposed loan that is to be used for the
dominant purpose of direct investment outside Australia unless the requirement in
subsection (4) is satisfied.
(4) The person who carries on the business must certify, by writing given
to EFIC, that the person reasonably believes that the loan will result in a net increase
in the number of people employed in Australia by the business or a related business
during the term of the loan.
6B At the end of section 23
Add:
(3) However, EFIC must not lend money under this section for the purpose
of financing a transaction whose dominant purpose is direct investment outside
Australia unless the requirement in subsection (4) is satisfied.
(4) The person to whom the money is lent must certify, by writing given to
EFIC, that the person reasonably believes that the loan will result in a net increase in
the number of people employed in Australia in the business concerned or a related
business during the term of the loan.
3. Fees for certain services
Schedule 1, items 7 and 8, page 4 (lines 10 to 17), omit the items, substitute:
7 Section 84A
Repeal the section, substitute:
84A EFIC must charge for certain services
(1) EFIC must charge fees for services it provides in performing the
following:
(a) EFIC's Northern Australia economic infrastructure functions;
(b) EFIC's Commonwealth entities function.
(2) The fees:
(a) must be sufficient to compensate EFIC for the services it provides in
relation to those functions; but
(b) must not be such as to amount to taxation.
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