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    Jubilee Submission - EFIC Social & Environment Policy Update

    Friday, October 08, 2010

    To: Export Finance and Insurance Corporation
    Re: EFIC Social & Environment Policy Update

    October 1, 2010

    Jubilee Australia thanks the Export Finance and Insurance Corporation (EFIC) for the opportunity to provide feedback to the draft Social and Environment Policy and Procedure documents published on the EFIC website, as of 6 August, 2010.

    Jubilee Australia is an anti-poverty NGO based in Sydney, founded in 2001. As part of Jubilee Australia’s broader mission, to expose and challenge the economic policies and structures that hinder the alleviation of poverty, particularly in the Asia-Pacific (including advocating for improved lending practices to address the accumulation of unpayable sovereign debt by less-developed country governments), Jubilee has in recent years been focusing much of its work on increasing the transparency and accountability of EFIC. This work has included making submissions on Category A projects disclosed by EFIC, initiating freedom of information applications, and publishing an investigative report, Risky Business, detailing two case studies of EFIC support provided to Category A projects in the Pacific region.

    It is in the national interest for the Australian Government to promote business abroad, and EFIC is a key enabler of this. EFIC is mandated, under the function outlined in Part 7 of the Export Finance and Insurance Corporation Act 1991 to facilitate and encourage Australian export trade by providing insurance and financial services and products to persons involved directly or indirectly in such trade, and to encourage banks, and other financial institutions carrying on business in Australia to finance, or assist in financing, export contracts or eligible export transactions. 

    Importantly, however, this export promotion function of EFIC, as with all export credit agencies (ECA), is being fulfilled in the context of a fall-out in corporate responsibility occuring around the world. Projects undertaken by foreign corporations in developing countries have, in many reported cases, had unacceptable consequences, including social unrest, irreversible environmental damage, and the infringement of individual and community human rights. While it is not reasonable to expect export credit agencies to solve these issues, we do expect ECAs, including EFIC, to not make them worse. 

    EFIC, either directly or indirectly, uses public funds to operate its business. The agency operates on a statutory basis, fulfilling a public policy function. EFIC should not be using public funds nor public authority to contribute to social unrest, environmental damage or human rights abuses in developing countries. Jubilee Australia is of the opinion that while EFIC may take great care to assess and manage its financial risks, it does not take the same level of care, nor does the agency as a whole attribute the same importance, to the social and environmental risks associated with the transactions it facilitates.

    To this end, the Environmental Policy of EFIC should be more formally recognised within the Export Finance and Insurance Corporation Act 1991. Export Development Canada (EDC) has an Environmental Review Directive that has legislative recognition under Section 10.1 of the Export Development Act 1985 (E-20). The aim of legislative recognition of EDC’s Environmental Review Directive is to secure consistent procedural compliance with the project assessment process. Jubilee Australia advocates that EFIC adopts the same approach to its draft Environmental Policy and its Anti-Bribery Policy. EFIC should request the Federal Government amend the Export Finance and Insurance Corporation Act to establish formal statutory recognition of EFIC’s Environmental Policy. The Minister retains an ability to create Regulations under Section 91 of the Act and it would be appropriate for the Minister pursuant to Section 8(2)(b)(iii) to publish a Regulation to acknowledges EFIC's Environmental and Anti-Bribery Policies.

    Furthermore, the Environmental Review Directive and its application to EDC’s work is reviewed by the Canadian Office of the Auditor General at least every 5 years and the Auditor General’s findings are tabled in Parliament under Section 21 (2) of the Export Development Act. The recent 2009 Audit Report of EDC provided the organisation with important recommendations.  Jubilee Australia is of the opinion that statutory recognition of EFIC’s Environmental Policy and an Auditor General review of EFIC compliance with the policy every 5 years would create greater confidence in EFIC’s due diligence processes and provide greater reassurance that EFIC is acting consistently with its Environmental Policy.  

    Jubilee Australia considers that the current review of EFIC’s social and environmental assessment policy and processes is a critical opportunity to submit comments on the existing framework. Given the importance of this review, Jubilee is disappointed that EFIC has not disclosed its process or timeline for review, nor has EFIC widely publicised the review to give other Australian stakeholders the opportunity to respond. The review process undertaken in other countries, including Canada and Japan, is much more thorough. Jubilee would strongly urge EFIC to hold off Board approval of the Policy until at least one public consultation/workshop has been held. Jubilee Australia would be willing to assist EFIC in publicising such a consultation to a broader group of civil society organisations and other stakeholders.

    In making a formal submission to EFIC’s Environment Policy update, Jubilee Australia has undertaken to provide a comprehensive response to the current draft documents disclosed on the EFIC website as of 6 August, 2010, which we found to have serious shortcomings and a concerning lack detail and clarity.

    We provide below our comments on the current draft along with a revised version of the EFIC Social and Environment Policy, which is an attempt to resolve the issues identified. We would also note that, with very few exceptions, the policies and practices proposed in our draft version are consistent with those of other export credit agencies, most notably EDC (Canada), JBIC (Japan) and Ex-Im (USA).

    Jubilee Australia is committed to continuing its leading work on export credit into the near future, including leading a network of civil society organisations, both in Australia and internationally, who would like to see reform of EFIC policies and practices in relation to high-risk projects. To this end we value the ability to hold discussions with EFIC representatives on a regular basis and we are committed to sustaining a respectful and meaningful dialogue and engagement with EFIC. 


    Adele Webb
    National Coordinator, Jubilee Australia

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