Inquiry launches into financial services practices impacting exports

Following a referral from Minister for Resources, Water and Northern Australia, Keith Pitt MP, the joint standing committee on trade and investment growth is set to inquire into (and report on) the prudential regulation of investment in Australia’s export industries.

The inquiry will look into domestic and foreign investment opportunities and challenges for Australia’s export industries and their associated businesses that may arise from changes in prudential standards and practices across banking, insurance and superannuation institutions, in addition to publicly listed companies.

The committee has been asked to look into:

• the existing and future contribution of Australia’s export industries;
• investment guidance and advice provided by Australia’s financial regulators, including the Australian Prudential and Regulatory Authority (APRA), the Reserve Bank of Australia (RBA) and the Australian Securities and Investment Commission (ASIC), to banking, insurance and superannuation institutions, and also to publicly listed companies, in relation to investment in Australia’s export industries;
• the “approach and motivations” of financial institutions, including banks, insurers and superannuation funds, as well as publicly listed companies, to their investment in Australia’s export industries;
• the consequential impacts of the regulatory guidance and financial institution approaches to investment in Australia’s export industries on “legitimate, law-abiding businesses connected to Australia’s export industries”, regional and rural economies that are reliant on Australia’s export industries and the national economy, particularly in light of the COVID-19 recession.

The chair of the committee, George Christensen MP, said the inquiry would seek to understand the barriers and challenges to investment opportunities for Australian exporters, which could have “significant ramifications for the country’s economic recovery from COVID-19 and beyond” given the “importance of exports to Australia’s economy”. 

“Exports from sectors such as agriculture, resources and defence manufacturing generate billions of dollars for the Australian economy and attract a significant amount of investment.

“If there are changes in the financial services sector which impact on Australia’s exporting industries, particularly those in regional areas, the Parliament must take an interest,” Mr Christensen said.

The committee’s deputy chair, Ged Kearney MP, added that the inquiry will “consider the possible opportunities and challenges that could arise for Australian exporters from any changes in financial services sector practices”.

Submissions from interested individuals, businesses and organisations will be accepted until Wednesday, 31 March 2021.

The inquiry builds on a range of support measures brought about to support Australian exports during COVID-19, including a $50-million increase in funding for the Export Market Development Grants (EMDG) scheme. The scheme enables exporters and tourism businesses to get additional reimbursements for costs incurred in marketing their products and services around the world.

The EMDG scheme received $207.7 million in funding for the 2019-20 financial year, the highest level in more than 20 years.  

In addition to increased EMDG program funding, the EMDG export performance requirements were also waived for the current financial year (2020-21) to help ensure that businesses would not have their EMDG reimbursement reduced should their export income fall due to COVID-19.

The government also increased the Initial Payment Ceiling Amount (IPCA) from $40,000 to $100,000 – the highest IPCA since the scheme’s budget was capped in 1997-98 – in a move to help support exporters further.

[Related: Victorian government launches swathe of grant packages]