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senate vote 2017-09-06#2
Edited by
mackay staff
on
2023-10-27 11:42:49
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Title
Bills — Export Finance and Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2017; in Committee- Export Finance and Insurance Corporation Amendment (Support for Commonwealth Entities) Bill 2017 - in Committee - Fossil fuels
Description
<p class="speaker">Sarah Hanson-Young</p><p>I have some questions for the minister. Minister, I referred in my second reading contribution to the appointment of Annabelle Chaplain to the Efic board. I want to go to the specifics in relation to her appointment. She's now resigned, of course. Was the minister aware of Ms Chaplain's roles with Downer EDI and Queensland Airports Limited when considering her term on the Efic board, prior to her shock resignation?</p>-
- The majority voted against [amendments](https://www.openaustralia.org.au/senate/?gid=2017-09-06.43.1) introduced by South Australian Senator [Sarah Hanson-Young](https://theyvoteforyou.org.au/people/senate/sa/sarah_hanson-young) (Greens), which means they failed.
- ### What did this amendment do?
- Senator Hanson-Young [explained that](https://www.openaustralia.org.au/senate/?gid=2017-09-06.43.1) these amendments would be:
- > *... putting a restriction on Efic's [i.e., the Export Finance and Insurance Corporation's] ability to use its expertise and to fund further subsidies for the fossil fuel industry. We are, of course, very concerned that, despite a number of issues that Efic could and should be spending its time on in relation to other types of export projects, and advancing ability for Australian industry, the last thing we should have is more Australian taxpayer money being spent on propping up the fossil fuel industry in this country.*
- ### Amendment text
- > *(1) Schedule 1, page 4 (after line 3), after item 4, insert:*
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- >> *4A At the end of subsection 8(2)*
- >>
- >> *Add:*
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- >> *(c) ensure it is not funding transactions that, directly or indirectly, support the extraction of fossil fuels (including in relation to EFIC's Northern Australia economic infrastructure functions).*
- >
- > *(2) Schedule 1, item 6A, page 4 (after line 27), at the end of section 16, add:*
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- >> *(5) In addition, EFIC must not make a guarantee or enter into a contract under this section in relation to a loan or a proposed loan if the loan or the proposed loan is to be used, directly or indirectly, for the purpose of extracting fossil fuels.*
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- > *(3) Schedule 1, item 6B, page 5 (after line 7), at the end of section 23, add:*
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- >> *(5) In addition, EFIC must not lend money under this section for the purpose of financing a transaction if the purpose of the transaction is to extract fossil fuels.*
<p class="speaker">Arthur Sinodinos</p><p>I'd have to seek further information. But I would make the point that, in relation to the person concerned, if you're talking about a possible conflict between Efic and NAIF in this regard, please understand that Efic is a service provider to the NAIF and provides no sort of decision-making role and does not in any way dictate what the NAIF should or should not do.</p> <p class="speaker">Sarah Hanson-Young</p><p>Efic was advising NAIF from its inception in July 2017, despite one of its board members, Annabelle Chaplain, having clear conflicts of interest. She was, Minister, just for your information, responsible for overseeing NAIF's project assessment under Efic, as well as on the board of companies that would benefit from NAIF projects, such as the Adani rail line. Is the minister aware of the roles that Ms Chaplain held besides being on the board of Efic?</p> <p class="speaker">Arthur Sinodinos</p><p>My understanding is based on what information was publicly available at the time—that there were some reports about various roles this particular person occupied. But I believe in all circumstances the matter's been well handled, and the person involved is no longer there.</p> <p class="speaker">Sarah Hanson-Young</p><p>When did Efic executives become aware that there might be a personal conflict of interest between Ms Chaplain in the assessment of projects applying for NAIF funds, such as Adani?</p> <p class="speaker">Arthur Sinodinos</p><p>You're now asking me a more detailed series of questions on a matter which is not directly relevant to the bill here. I'm happy to take a series of questions on notice and have them answered for you, but I believe it would be in the interests of all of us to focus on the substance of what is in this bill.</p> <p class="speaker">Sarah Hanson-Young</p><p>One of the reasons this is important is the lack of transparency within Efic—the fact that it is exempt from FOI and it operates in a very secretive manner. There have been conflicts of interest for Efic board members. Ms Chaplain's appointment was ended abruptly. I believe it is relevant to this bill, because you are asking the parliament to accept an expansion of powers and roles for Efic, despite the fact that currently there is a cloud over the way the organisation runs and how it handles potential conflicts of interest for board members. That's why.</p><p>I'm happy to put each of these questions to you, and, if you can answer, that would be great; if you need to take them on notice, that is your right, of course. But, just to be clear, I think these questions are directly related to this issue, because you are asking the parliament to accept an expanded role for this organisation, but what we have here is one example of a woman who has been on the board of Efic who had conflicts of interest, and I'd like to know how Efic managed this conflict of interest from the word go.</p><p>If you could take on notice, Minister, when Efic executives first become aware of a potential conflict of interest for Ms Chaplain in the assessment of projects applying for NAIF funds, that would be helpful. I'd also like to know, Minister, what actions were taken by Efic to avoid this conflict, or the perception of it. And I hope that is something that you could provide to us today because, going forward, we need to know that Efic has proper processes in place to deal with potential or perceived conflicts of interest.</p> <p class="speaker">Arthur Sinodinos</p><p>The first point is this: Efic has a policy to manage conflicts, and that policy would have been applied in this particular case. The other point to make is that this organisation is subject, I believe, to a higher degree of public scrutiny than any so-called private bank, because of budget estimates, for example, and other processes of government. So I am satisfied that, subject to things like commercial-in-confidence requirements and the rest, this is an organisation that meets appropriate levels of transparency and openness. I'll have more to say about particular amendments that the senator wants to run in relation to FOI exemption in a second, when that matter is raised, but I'll leave it there for now.</p> <p class="speaker">Sarah Hanson-Young</p><p>Could the minister please give an explanation as to why Ms Chaplain resigned from the board and why her tenure on the board expired much earlier than originally planned? She was meant to be on the board until 2019. Why was her tenure short-lived?</p> <p class="speaker">Arthur Sinodinos</p><p>In the interests of natural justice for the person you've named, I will find out the exact circumstances in which she resigned and provide that to you. Again, I make the point that we're here today to deal with a forward-looking set of propositions to help Efic do its job even better in the future. The reality is that Efic has policies in place to manage these conflicts. Efic needs to exist because overseas bodies exist in this space—export credit agencies. We often hear complaints from Australian companies that they want assistance from the Australian government to be able to compete against overseas suppliers, who get the support of their governments on major contracts. The main benefit would come back to Australia in terms of contracts and orders.</p> <p class="speaker">Sarah Hanson-Young</p><p>Could the minister please table for the Senate the policies of Efic in relation to dealing with conflicts of interest?</p> <p class="speaker">Arthur Sinodinos</p><p>I'm happy to do that in due course, when I get a copy.</p> <p class="speaker">Richard Di Natale</p><p>Following the same line of questioning as Senator Hanson-Young, we know that Efic has a very flawed track record when it comes to supporting large resource projects. We know that it supported the Wiggins Island Coal Export Terminal, which has performed really poorly. I understand that Senator Hanson-Young has mentioned other projects. The Productivity Commission review in 2012 found a wide range of concerns. Can you just outline to me why we shouldn't address those concerns first, before we grant additional powers to Efic to assist more agencies?</p> <p class="speaker">Arthur Sinodinos</p><p>The point I would make is this: Efic is a learning organisation. When it has done things in the past, it's gone back to review them to work out what has worked and what hasn't worked, and we go from there. This particular bill, and what it does here, in part reflects those sorts of lessons from previous experience. Some of the examples you throw up are examples where the evidence may well be contested and the conclusions may be contested. It's important for us to understand that you or I may have a particular view about the role of Efic in a particular resource project, because we may have a view about that particular resource, but that should not cloud whether we therefore have a positive view about whether Efic is operating in an appropriate way in dealing with the matter.</p> <p class="speaker">Richard Di Natale</p><p>I suppose I'm not talking specifically about the investments. I'm now talking specifically about the Productivity Commission's review, which did express a wide range of concerns. So it's not a question of whether we support the areas that Efic is investing in. On that, has the Productivity Commission looked at Efic's governance since it responded to the 2012 review? Has there been another look by the Productivity Commission at what Efic is doing? Or, if they haven't, has the Auditor-General, for example?</p> <p class="speaker">Arthur Sinodinos</p><p>In relation to the Productivity Commission, I don't believe they have. In relation to the Auditor-General, they have an ongoing brief. The Auditor-General can, at any time, decide to examine an organisation or a particular set of projects or proposals. That's a matter for the Auditor-General.</p> <p class="speaker">Richard Di Natale</p><p>Is the government contemplating opening up Efic to FOI requests, so that we can get a better understanding? It's a black box at the moment. There are claims and counter claims, as you say, but that is in large part because of the secrecy under which Efic operates. Is any consideration being given to opening up FOI requests, so that we get a better understanding of how Efic is governed and how decisions are made?</p> <p class="speaker">Arthur Sinodinos</p><p>Efic does have an exemption from FOI. It is limited. It relates essentially to transactional matters under parts 4 and 5 of the Efic Act. The reason for the exemption is to protect commercial-in-confidence information provided by the client. Clearly exporters will not want to provide commercially sensitive information to a financial institution that could be made public through FOI. Efic's long-held view is that the current Efic-specific exemption provides administrative certainty to Efic regarding its obligations and greater certainty to clients about its ability to maintain confidential information without which the quality of information provided to Efic may be prejudiced and Efic's ability to make informed decisions on the risks of transactions it considered supporting impaired. In turn, that would increase the risks and potentially the costs to taxpayers.</p><p>Efic's current FOI exemption is consistent with the banker's common law duty of confidentiality to clients and has been established for nearly 100 years. I would add, though, that on top of that Efic is subject to estimates and other processes of government. So there are a number of ways in which we can examine the structure and governance of the organisation. But in relation to information about particular transactions, as I indicated here, the FOI exemption is an extension of the common law doctrine of protecting financial privacy, and it is consistent with and is followed in every common law jurisdiction, including Australia.</p> <p class="speaker">Richard Di Natale</p><p>Have you got any advice from the Productivity Commission or the Auditor-General on this specific legislation?</p> <p class="speaker">Arthur Sinodinos</p><p>No.</p> <p class="speaker">Richard Di Natale</p><p>Given the expanded powers for Efic under this bill, could you perhaps give me an outline of what specific government agencies the government wants Efic to support and how it is going to manage that support? Are there going to be more staff employed? Is there a move to decentralise where necessary? The example I give is that Efic is providing significant support to the NAIF and yet it hasn't located one staff member to northern Australia. So can you give me a sense of how you plan to operationalise Efic's increased role?</p> <p class="speaker">Arthur Sinodinos</p><p>Efic has a certain set of expertise and, as the NAIF example indicates, it would provide that expertise to other governments, programs and services seeking to do analogous things. But it would do so on the basis that it would recover the cost of those services so that they would not be at the expense of Efic's clients, particularly the small- and medium-sized enterprises.</p> <p class="speaker">Richard Di Natale</p><p>Thank you. I want to move on to an area that Senator Hanson-Young touched on, and that is Efic's support of the NAIF. I suppose today more than any other day we should be particularly concerned about the role of the government in subsidising bad fossil fuel projects. My question is whether Efic has a team working within the NAIF on project evaluation for the Adani coalmine.</p> <p class="speaker">Arthur Sinodinos</p><p>I'd have to check and get back to you on that.</p> <p class="speaker">Richard Di Natale</p><p>Can you tell me whether Efic is working on the Adani project? Is that something you can tell us?</p> <p class="speaker">Arthur Sinodinos</p><p>To be properly helpful, I'd have to check. I will take it on notice.</p> <p class="speaker">Richard Di Natale</p><p>Is Efic currently contemplating the evaluation of finance options for the Carmichael mine, the Adani project? If so, does that include ensuring and guaranteeing commercial bank loans?</p> <p class="speaker">Arthur Sinodinos</p><p>I will have to check.</p> <p class="speaker">Richard Di Natale</p><p>Finally, can the minister definitively rule out whether Efic will provide loan insurance or loan guarantees to a commercial banking operation for that project?</p> <p class="speaker">Arthur Sinodinos</p><p>What happens in relation to NAIF's decisions in relation to Adani is a matter for NAIF. Efic's role is to provide services. It would not be the financier.</p> <p class='motion-notice motion-notice-truncated'>Long debate text truncated.</p>-
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