The Export Finance and Insurance Corporation (EFIC) Amendment (Direct Lending and Other Measures) Bill 2014 was introduced into Parliament yesterday.
This Bill enhances the capacity of the Export Finance and Insurance Corporation (EFIC) to support small- and medium-sized businesses seeking to capitalise on global trade opportunities.
This means real economic benefits delivered for small- and medium-sized businesses, the engine room of our economy.
Every day small- and medium-sized Australian businesses are losing opportunities to showcase their world class products.
Currently, EFIC can only lend for capital goods, however the Australian Bureau of Statistics data shows that only five per cent of Australian goods exported are capital goods.
This means EFIC cannot support the export of many of the Australian products we excel in, including many from regional Australia, such as consumer goods like pharmaceuticals, beef, sheep meat, livestock, horticultural products, wine, flour, fibres and cheese.
With this in mind, the Commonwealth Government has decided to allow EFIC to lend for the other 95 per cent of goods exports.
This will immediately and significantly improve the export potential of Australian small- and medium-sized businesses and will be an important mechanism to advance rural and regional economies.
We are helping Australian exporters by reducing the time and paperwork required to access EFIC support.
The new direct lending arrangements will remove the need for exporters of non capital goods to obtain a guarantee from EFIC before they can secure funds from a bank.
In the past this has doubled the due diligence processing time and required two sets of documentation and legal fees.
This measure also supports our election commitment to reduce business compliance costs by $1 billion per annum.
The Government will also apply competitive neutrality principles to EFIC’s operations as a way of ensuring these changes we have announced today do not bring EFIC into direct competition with private sector financiers.
This will allow EFIC to help commercially viable exporters overcome financial barriers without discouraging private sector participation in the market.
We are about energising enterprise, and these changes are a further contribution to building a strong and prosperous economy for a safe and secure future.