EFIC Reform Puts Pacific ‘Step-Up' at Risk

14 Feb, 2019

The Australian Council for International Development (ACFID) has raised concerns about reform to Australia’s export credit agency - EFIC - as part of the Australian Government’s Pacific ‘step-up’ and is calling for the legislation to be referred to a parliamentary committee for scrutiny. 

The Export Finance and Insurance Corporation Amendment (Support for Infrastructure Financing) Bill 2019 introduced to the House of Representatives proposes reform to EFIC so it can administer $1.2bn in callable capital to finance Australian businesses to build infrastructure overseas. 

ACFID CEO, Marc Purcell said:

“The spirit of this legislation and the Minister’s statement is concerning. It is stridently putting Australian commercial and self-interest first with little reference to the interests of Pacific communities. Our Pacific neighbours are seeking partnerships for development, not Australian profit-making.

“We recognise that how the Government implements this legislation will matter most and that Government departments including the Department of Foreign and Trade will instruct EFIC, but there is little indication of how it will complement other areas of Australian development cooperation. 

“The direction the Government is setting with this legislation jeopardises its pursuit of relationships in the region. We are already struggling to be the partner of choice. Setting out infrastructure financing primarily for Australian return looks like boomerang aid."

The increase for EFIC from $200m to $1.2bn in callable capital and the Minister’s statement that EFIC will assist in administering loans for the Australian Infrastructure Financing Facility (AIFFP) is also cause for concern. A financial scale-up without the relevant capabilities and expertise within EFIC, and the lack of transparency over how EFIC will interact with other Government departments, there remains very serious concerns in the aid sector over the suitability of EFIC in holding such a central role in administering new loan-finance. 

ACFID stressed that it is untenable to have $1.2bn of taxpayers’ funding being used for Australian businesses without transparency in its delivery and reporting.  

"The Bill gives little indication of how EFIC, the new AIFFP and other Government departments, like DFAT, will operate and whether any development advice or consideration will be given to the loan schemes. Any new loan financing facility requires finance, foreign policy and sustainable development expertise – it is clear this does not sit with EFIC alone. 

“The Government should share its statement of expectations alongside this Bill with immediate effect. Parliament and the public should be able to scrutinise what the Government is proposing with $1.2bn of funding.

“Given the risks, we are calling for this legislation to be referred to a parliamentary committee, open to public submissions, so it can be clearly determined how it will operate.”

Speaking last week, Secretary General of the Pacific Islands Forum, Dame Meg Taylor, said that ‘conversations and settlements must be driven by the well-being of our Blue Pacific continent and its people, not by the goals and ambitions of others.’

Marc Purcell concluded:

“Australia must heed Dame Meg’s words and recognise that Pacific partnership is working together for the benefit of the region.”

Media Contact

Please contact Tim Watkin on 0401 721 064 or at [email protected]

Authorised by Marc Purcell, Deakin.