Labor members of the Committee note with concern the submissions and witness evidence to the Committee from businesses who have been left high and dry by the Morrison Government’s lack of a coherent approach to shifts in global markets.
The Committee received extensive evidence from organisations and firms in export supply chains – particularly mining engineering firms in Queensland – who are experiencing firsthand the consequences of the Government’s neglect. Their evidence underscores the fact that working-class communities need a federal government that is committed to reindustrialising the regions, and to fighting for good jobs with credible economic and industry policies.
While Australian exports of coal remain strong, the global shift to low carbon sources of energy will over time impact upon price and volume for coal exports. These shifts are being anticipated by the finance sector and incorporated into assessments of risk by lenders and providers of financial services. Similarly, the real prudential risks of climate change itself were widely recognised by witnesses from the financial sector and are being factored into decisions on the provision of services to export industries. The Morrison Government’s failure to develop serious policy responses beyond slogans and marketing has provided no support for export firms and the workers they employ.
In the view of Labor members of the Committee, adoption of the recommendations would:
1
impose a substantial material risk to the Australian economy including, but not limited to, capital flight from Australian debt and capital institutions;
2
increase cost of business finance; and
3
increase home mortgage interest rates, business finance costs and increase insurance costs for Australian households and businesses, including in regional Australia.
Adoption of the recommendations may also see Australia breach many of its obligations under international agreements relating to prudential regulation of the financial system. These are critical to the effective functioning of the Australian finance industry, its stability and its relationship with global capital markets.
Labor members of the Committee acknowledge some firms have faced significant barriers in securing finance and insurance. This is particularly in the light of some financial institutions taking an industry wide approach to determinations of climate risk.
The terms of reference for this inquiry explicitly encompass the impact of insurance availability for the regional tourism sector and other trade exposed small and medium businesses.
Since its election in 2013, this Government has known that many regional communities have struggled to access affordable insurance for flood and storm events. These challenges have been particularly problematic in Far North Queensland, where they have impacted many small and medium businesses in the tourism sector.
In May 2021, to much fanfare, the Morrison Government announced the establishment a reinsurance pool, backed by a $10bn government guarantee. The insurance industry indicated that it would work with the government to develop a pool that would improve access and affordability issues. Since then, we’ve seen next to no progress. In another example of announcement trumping delivery, the Morrison Government’s continued failure to implement the reinsurance pool is leaving these businesses exposed to considerable business risk.
The Morrison Government’s failure to progress insurance reform also compounds its failure to invest in Australian communities through the Emergency Response Fund, which was established in April 2019. This fund was supposed to provide assistance of up to $200m for communities affected by natural disasters. Instead, this Government has only spent $17m out of the fund, while the fund itself has now grown to some $4.7bn – small consolation to members of regional communities who aren’t receiving the support that they need.
Further, Labor members of the Committee note that Australian export industries (including Australian mining and mining engineering) across the full range of Australian industry sectors have a strong future and would be the focus of strong government support and investment under a future Labor government. Labor’s National Reconstruction Fund would be a critical instrument for an Albanese Labor Government re-industrialising our regions to create good jobs.
Ms Ged Kearney MPSenator Tim Ayres
Deputy Chair
Dr Daniel Mulino MPSenator Raff Ciccone