Export Finance and Insurance Corporation Amendment (Direct Lending and Other Measures) Act 2015
No. 18, 2015
An Act to amend the Export Finance and Insurance Corporation Act 1991, and for related purposes
Contents
1 Short title
2 Commencement
3 Schedules
Schedule 1—Direct Lending
Export Finance and Insurance Corporation Act 1991
Schedule 2—Competitive neutrality
Export Finance and Insurance Corporation Act 1991
Export Finance and Insurance Corporation Amendment (Direct Lending and Other Measures) Act 2015
No. 18, 2015
An Act to amend the Export Finance and Insurance Corporation Act 1991, and for related purposes
[Assented to 19 March 2015]
The Parliament of Australia enacts:
1 Short title
This Act may be cited as the Export Finance and Insurance Corporation Amendment (Direct Lending and Other Measures) Act 2015.
2 Commencement
This Act commences on the day after this Act receives the Royal Assent.
3 Schedules
Legislation that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.
Schedule 1—Direct Lending
Export Finance and Insurance Corporation Act 1991
1 Before subsection 3(2)
Insert:
Loans and lending of money
2 Before subsection 3(3)
Insert:
Eligible export transactions
3 Paragraphs 3(3)(a), (b), (c) and (d)
Omit “capital goods” (wherever occurring), substitute “goods”.
4 Subsection 3(4)
Repeal the subsection.
5 Before subsection 3(5)
Insert:
Australian export trade
6 Application provision
The amendments made by items 3 and 4 of this Schedule apply in relation to a transaction entered into, or proposed to be entered into, on or after the commencement of this Schedule.
7 Transitional provision
The amendments made by this Schedule do not affect the continuity of any of the following that were in force immediately before the commencement of this Schedule:
(a) directions given under subsection 9(2), 26(1), or section 29, of the Export Finance and Insurance Corporation Act 1991;
(b) approvals (with or without conditions) given under section 27 of that Act;
(c) principles determined under subsection 67(1) of that Act.
Schedule 2—Competitive neutrality
Export Finance and Insurance Corporation Act 1991
1 Subsections 61A(1) and 62A(1)
Omit “in respect of short‑term insurance contracts entered into by EFIC”.
2 Subsection 63A(2)
Omit “over other insurers because of the operation of section 63 in relation to its short‑term insurance contracts”, substitute “, because of the operation of section 63, over other persons or bodies who provide insurance or financial services or products that EFIC may provide”.
3 Subsection 63A(3)
Omit “in relation to its short‑term insurance contracts”.
4 Application provision
The amendments made by items 2 and 3 of this Schedule apply in respect of the tax‑equivalent payment to be made in respect of each financial year starting on or after the commencement of this Schedule.
5 Transitional provision
The amendments made by this Schedule do not affect the continuity of any of the following that were in force immediately before the commencement of this Schedule:
(a) arrangements under section 61A or 62A of the Export Finance and Insurance Corporation Act 1991;
(b) determinations under subsection 63A(2) of that Act.
[Minister’s second reading speech made in—
House of Representatives on 22 October 2014
Senate on 27 November 2014]
Overview
The Export Finance and Insurance Corporation Amendment (Direct Lending and Other Measures) Act 2015, enacted by the Parliament of Australia, aims to address gaps in the Export Finance and Insurance Corporation Act 1991. This Act is intended to enhance the financial support available to Australian exporters by allowing the Export Finance and Insurance Corporation (EFIC) to engage in direct lending activities, thus broadening the scope of its financial services. It also makes amendments to ensure competitive neutrality in the provision of insurance and financial services, thereby preventing any unfair advantages that EFIC might have over other entities in the market. The legislative changes include the introduction of direct lending provisions and adjustments to the competitive neutrality framework to align with broader market practices.
Scope and Application
The Export Finance and Insurance Corporation Amendment (Direct Lending and Other Measures) Act 2015 amends the Export Finance and Insurance Corporation Act 1991 by expanding the scope of direct lending activities that the Export Finance and Insurance Corporation (EFIC) can undertake. This Act applies to the EFIC as an entity and to the conduct and transactions it engages in for export-related financing. The amendments extend to any eligible export transactions that the EFIC is involved in, regardless of whether they pertain to capital goods or other goods, and apply to transactions entered into on or after the commencement of the Act. However, it is important to note that the amendments do not affect the continuity of certain pre-existing directions, approvals, or determinations under the original Act that were in force before the commencement of this legislation. The jurisdictional reach of this Act is primarily within the Commonwealth, as it pertains to the operations of a Commonwealth entity, the EFIC, and its activities in facilitating export financing.
Key Provisions
The Export Finance and Insurance Corporation Amendment (Direct Lending and Other Measures) Act 2015 amends the Export Finance and Insurance Corporation Act 1991 in several key ways. Section 1 of the Act inserts a new subsection into the Export Finance and Insurance Corporation Act 1991 to allow the Corporation to make loans and provide lending of money (subsection 3(2)). This amendment allows the Corporation to engage in direct lending, expanding its capacity to support Australian export trade. Furthermore, the Act modifies the definition of eligible export transactions by replacing the term "capital goods" with "goods" in subsections 3(3)(a), (b), (c), and (d) of the 1991 Act. This change broadens the scope of transactions that can be supported by the Corporation, allowing for more flexibility in its operations.
The Act imposes specific obligations on the Export Finance and Insurance Corporation. The Corporation must adhere to the newly defined scope of eligible export transactions and ensure that any loans or lending activities align with the expanded definition of goods. Additionally, the Corporation must ensure that its direct lending activities are in accordance with the legislative amendments, which include the ability to lend for Australian export trade (subsection 3(5)). The Corporation must also ensure that its lending practices are consistent with the competitive neutrality provisions, which prevent it from gaining unfair advantages over other insurers and financial service providers (subsections 61A(1), 62A(1), and 63A(2) of the 1991 Act).
Failure to comply with the provisions of the Act can result in various legal consequences. The Act does not explicitly state penalties for breaches, but non-compliance with the Export Finance and Insurance Corporation Act 1991 could lead to enforcement actions by regulatory authorities. The Act’s amendments aim to ensure the Corporation operates within the legislative framework, thereby maintaining its role in supporting Australian export trade without unfair competitive advantages. Ensuring adherence to these provisions is crucial to avoid legal repercussions and to maintain the Corporation’s standing and effectiveness in supporting Australian businesses.