Australia’s export credit agency, the Export Finance and Insurance Corporation (Efic), could end up financing manufacturers that have moved offshore looking for cheaper labour and manufacturing costs, according to The Guardian.
The Australia Institute has warned in a Senate submission that a new bill to scrap the requirement on Efic to only support manufacturers that “manufacture substantially or wholly” in Australia could encourage it to fund offshore manufacturing.
The Australian minister for trade, Steve Ciobo said in November last year that the new bill would augment Efic’s ability to support small and medium-sized manufacturers who export overseas.
The change would allow Efic to finance businesses that manufacture mostly overseas rather than just provide loan guarantees.
“[The change] rightly focuses on the benefit flowing back to Australia from the export activity – like export earnings – rather than details of where the goods are assembled, where investments are made, or who the buyer is,” Ciobo said.
However, the Australia Institute said it its submission to the Senate inquiry that a garment company based in Australia could move all production offshore but still be eligible for Efic’s services”.
“This has the potential to not only deprive finance to companies that produce in Australia but also to give advantage to their competition in other countries.”
A spokeswoman for Efic said the agency was not prepared to comment.