Export Finance and Insurance Corporation Section 67(1) Determination 2022

Overview

The Export Finance and Insurance Corporation Section 67(1) Determination 2022 was introduced to clarify the circumstances under which the Commonwealth will provide a subsidy to Export Finance Australia, trading as Export Finance Australia, for losses incurred from transactions on the National Interest Account. Enacted under the authority of the Export Finance and Insurance Corporation Act 1991, the instrument was prepared by the Minister for Trade, Tourism and Investment and aims to ensure that Export Finance Australia can continue to support eligible export transactions and overseas infrastructure development without bearing undue financial risk. The determination ensures that the Commonwealth will provide a subsidy to cover losses that Export Finance Australia may incur, provided that the Corporation has notified the Minister of potential losses prior to transaction approval and has not otherwise assumed responsibility for the loss under section 64 of the Act. Public consultation was deemed unnecessary due to the internal nature of the financial arrangement, and a Regulatory Impact Statement was not required. The instrument is compatible with human rights as outlined in the Human Rights (Parliamentary Scrutiny) Act 2011.

Scope and Application

The Export Finance and Insurance Corporation Section 67(1) Determination 2022 is a legislative instrument under the Export Finance and Insurance Corporation Act 1991, which specifies the conditions under which the Commonwealth will provide a subsidy to Export Finance Australia (trading as Export Finance Australia) for losses incurred from transactions on the National Interest Account. This applies to Export Finance Australia when it enters into transactions that may result in shortfalls or losses, provided that these losses are not covered by sections 65 or 66 of the Act and that the Minister for Trade, Tourism and Investment has been advised of the potential for such losses prior to approving the transaction. The subsidy does not apply if Export Finance Australia has previously notified the Minister of its intention to bear the liability or risk from a transaction. The instrument has a Commonwealth jurisdictional reach and does not require public consultation or a Regulation Impact Statement as it pertains to internal government financial arrangements. Additionally, the instrument has been assessed for compatibility with human rights under the Human Rights (Parliamentary Scrutiny) Act 2011 and has been found not to engage any applicable rights or freedoms.

Key Provisions

The Export Finance and Insurance Corporation Section 67(1) Determination 2022 sets out the principles according to which the Commonwealth will provide a subsidy to Export Finance Australia, trading as Export Finance Australia, in relation to specific transactions. Under Section 67(1) of the Export Finance and Insurance Corporation Act 1991, the Minister for Trade, Tourism and Investment has the authority to determine these principles in writing. The primary provision of this Determination is that if Export Finance Australia enters into a transaction on the National Interest Account and suffers losses that are not covered by sections 65 or 66 of the Act, the Commonwealth will provide a subsidy equal to the amount of such losses in a financial year (Section 67(1)). This subsidy applies provided that Export Finance Australia has notified the Minister of the potential for losses before the transaction is approved. The Act imposes several obligations on the parties involved. Export Finance Australia must notify the Minister of any potential losses prior to the Minister approving a transaction under Part 5 of the Act (Section 67(1)). The Commonwealth, through the responsible Minister, is required to determine the principles for providing subsidies in writing and ensure that these principles are applied consistently. The Minister must also ensure that Export Finance Australia complies with the notification requirements before approving transactions. Furthermore, the Determination stipulates that it will not apply if Export Finance Australia has notified the Minister that it will bear the whole, or a proportion, of the liability or risk arising from a transaction (Section 64). Breaching the requirements of this Determination can have significant consequences. While the Determination itself does not explicitly outline specific offences or penalties, the underlying Act, the Export Finance and Insurance Corporation Act 1991, may impose penalties for non-compliance. For instance, under Section 68 of the Act, if Export Finance Australia fails to notify the Minister of potential losses as required, this could be considered a breach of the terms of the Determination. Such breaches might lead to civil or criminal consequences, depending on the nature and severity of the non-compliance. However, the specific penalties for such breaches are not detailed in the Determination but are likely to be addressed within the broader framework of the Export Finance and Insurance Corporation Act 1991.