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Estimates: Foreign Affairs, Defence and Trade Legislation Committee (Export Finance and Insurance Corporation)

CHAIR: We will now move on to the Export Finance and Insurance Corporation.

Senator RHIANNON: Mr Hunter, in your letter to the Canberra Times on the ninth of this month you stated:

EFIC's independent directors have additional directorships within the finance community.
I am actually really tight for time; the chair is on my tail. So, if that is not a short answer, can you take this on notice? Can you state what those additional directorships are for your independent directors?

Mr Hunter : I can state them. Andrew Mohl, who was chairman of Efic, was also on the board and still is on the board of the Commonwealth Bank. Andrew Mohl's term as a director of Efic finished on 9 December this year.

Senator RHIANNON: That is the only one?

Mr Hunter : I believe so. I will take that on notice and confirm-

Senator RHIANNON: In your letter it was plural, so perhaps you could take that on notice.

Mr Hunter : I will.

Senator RHIANNON: Is it correct that the public mandate for Efic is to provide credit to small to medium enterprises to assist them to export?

Mr Hunter : Efic's mandate is to provide financial services to Australian exporters, both big and small, who have commercially viable export opportunities but are unable to secure finance in the private market.

Senator RHIANNON: And you give an emphasis, certainly on your website, to SMEs.

Mr Hunter : We do, absolutely. We do have a focus on SMEs. That is correct.

Senator RHIANNON: The letter I just referred to states that 206 of the 230 transactions that were financed by Efic were for SMEs. But is it correct that most of Efic's capital goes to assist multinational mining companies? Could you just say yes or no to that, so I can move on?

Mr Hunter : I cannot give that a yes-or-no answer. I am happy to give you a detailed response, but I cannot give you a yes-or-no answer to that.

Senator RHIANNON: Then I will go on to the next bit, and then you can answer both of them together. Is it correct that more than three-quarters of the $576 million worth of transactions signed by Efic last year went to just three parties: a Chilean company, the biggest copper mine in the world; a construction giant listed on the Johannesburg Stock Exchange; and the Belgian smelting group that shares trade on the Dutch market? So, three-quarters of the $576 million worth of transactions-and I go back to my original question: is it correct that most of Efic's capital goes to assist multinational mining companies?

Mr Hunter : Efic has an emphasis around SMEs. To give you some statistics which will also address your specific questions, we provided 230 transactions during the course of 2014, and 206 of those were towards SMEs-so, roughly 90 per cent.

Senator RHIANNON: Can you put that in financial terms as well as volume, because that is-

Mr Hunter : I will do that. I am getting to that part of the question. To give you a feel for the emphasis we place on SMEs as well, in our financial year to 31 January-our year-to-date numbers-we have done 130 transactions, and 120 were for SMEs. That is 92 per cent. By value, we have done $133 million worth of transactions, and $81 million were to SMEs. That is 61 per cent. It does vary from year to year, and one transaction can significantly distort the numbers. In 2013-14-

Senator RHIANNON: Sorry: they were really useful figures; you are saying that that figure of $576 million for your three transactions is incorrect, are you?

Mr Hunter : No, I am not. I will repeat it for clarity. In the financial year that we are currently in, year to date, 31 January, we have done 130 transactions, and 120 were for SMEs; that is 92 per cent. By value, we have done $133 million of transactions, and $81 million was for SMEs; that is, 61 per cent. Coming back to the financial year that you were referring to, one transaction can distort the numbers. We have done 230 transactions, and 206 were for SMEs; that is 90 per cent. By value, 13 per cent of the transactions were for SMEs. So, one transaction can distort the numbers.

Senator GALLACHER: [inaudible] Port Pirie?

Mr Hunter : Port Pirie, correct-$290 million.

Senator RHIANNON: If you took that one out, what would be the value?

Mr Hunter : I will take that on notice rather than trying to do the maths on the spot. Perhaps I can give you a little flavour, because I know that what you are asking is, do we have an emphasis on large business or do we have an emphasis on SMEs? We have adapted our processes considerably in the last 18 months to reduce the administrative burden on small businesses applying for export finance at Efic. So we have introduced an accelerated execution process around our two primary products, which are working capital guarantees and bonds. We have reduced execution time on those transactions by 40 per cent. We estimate that that has saved the average small business that applies for a loan to Efic $5,000. When you consider that the margins that these businesses operate on and the size of those businesses, that is a considerable saving.

There are two other things we have done. We have also simplified our documentation to make it easier for SMEs to deal with us. We have hired two additional people in each of Perth, Melbourne and Brisbane for the sole purpose of originating SME transactions and helping small businesses. Seventy per cent of our origination staff at Efic are solely focused on small business.

CHAIR: Thank you. Could you leave that there, Mr Hunter? And thank you, Senator Rhiannon.

 

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