Commonwealth of Australia Explanatory Memoranda

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EXPORT FINANCE AND INSURANCE CORPORATION AMENDMENT BILL 2006

                            2004-2005-2006

    THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

                               SENATE




EXPORT FINANCE AND INSURANCE CORPORATION AMENDMENT BILL
                          2006


                EXPLANATORY MEMORANDUM




           (Circulated by authority of the Minister for Trade,
                    the Honourable Mark Vaile MP)
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EXPORT FINANCE AND INSURANCE CORPORATION AMENDMENT BILL
                          2006

                                     OUTLINE

The Export Finance and Insurance Corporation Amendment Bill 2006 (referred to in
this Explanatory Memorandum as the "Bill") implements changes to the board
management structure of Export Finance and Insurance Corporation.

The Export Finance and Insurance Corporation Act 1991 establishes the Export
Finance and Insurance Corporation and defines the management structure. This Bill
is required to enact revised governance arrangements in the enabling legislation.

The effect of the Bill will be to change the board management structure of Export
Finance and Insurance Corporation so that it reflects more closely the board corporate
governance model as per Mr John Uhrig's Review of Corporate Governance of
Statutory Authorities and Office Holders. The board corporate governance model is
appropriate for the reason that Export Finance and Insurance Corporation operates
primarily as a commercial organisation and (except in relation to national interest
account transactions) the board of the Export Finance and Insurance Corporation has
a high degree of power to act.

As a self-sustaining, primarily commercial organisation, it is also appropriate for the
Export Finance and Insurance Corporation to continue to operate as a Commonwealth
authority under the Commonwealth Authorities and Companies Act 1997.

These changes do not amend the functions or objectives of the Export Finance and
Insurance Corporation or service delivery to Australian exporters.

These amendments are part of the Government's response to the Review of the
Corporate Governance of Statutory Authorities and Office Holders, which examined
and reported on improving the structures and the governance practices of such
entities. The Government assessed the Export Finance and Insurance Corporation's
governance arrangements against the principles and recommendations of the report,
identifying that a board management structure and operation under the
Commonwealth Authorities and Companies Act 1997 would be consistent with Mr
Uhrig's findings.


                      FINANCIAL IMPACT STATEMENT

The Bill will have no financial impact.
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                               ABBREVIATIONS

The following abbreviations are used in this explanatory memorandum:

Act, unless the context indicates otherwise, means the Export Finance and Insurance
Corporation Act 1991;
Board means the board of the Export Finance and Insurance Corporation;
EFIC means the Export Finance and Insurance Corporation;
Uhrig Review means the Review of Corporate Governance of Statutory Authorities
and Office Holders as released by Mr John Uhrig AC.
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                                NOTES ON CLAUSES


Clause 1Short title

Clause 1 is a formal provision specifying the short title.

Clause 2Commencement

Clause 2(1) of the Bill provides that each provision of the Bill specified in column 1
of the table commences, or is taken to have commenced, in accordance with column 2
of the table. Any other statement in column 2 is taken to have effect according to its
terms.

Item 1 of the table provides that sections 1 to 3 and anything in the Act not elsewhere
mentioned in the table commence on the day on which the Act receives Royal Assent.

Item 2 of the table provides that Schedule 1 of the Bill commences on a single day to
be fixed by Proclamation (the reference to a "single day" means that all of the
provisions must be Proclaimed to commence at the same time).

Clause 3Schedule(s)

Clause 3 provides that each Act that is specified in a Schedule to this Act is amended
or repealed as set out in the applicable items in the Schedule concerned, and any other
item in the Schedule to this Act has effect according to its terms.

Schedule 1 relates to amendments to the Act that are required to enact the changes in
EFIC's governance arrangements.
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Schedule 1Amendment

Export Finance and Insurance Corporation Act 1991

Item 1Subsection 3(1) (definition of appointed member)

This item omits a reference to the Chief Executive Officer of the Australian Trade
Commission in the definition of appointed member. The Chief Executive Officer of
the Australian Trade Commission is being removed from EFIC's Board to ensure that
the EFIC Board reflects more closely the board corporate governance structure as per
the Uhrig Review.

Item 2Paragraph 34(1)(d)

This item repeals the requirement for the Chief Executive Officer of the Australian
Trade Commission to be a member of the Board of EFIC. This amendment to EFIC's
Board management structure is required to ensure that the EFIC Board structure
reflects more closely the board corporate governance structure as per the Uhrig
Review.

Item 3Paragraph 34(1)(f)

This item provides for the number of other members (that is, members other than the
Chairperson, the Deputy Chairperson, the Managing Director and the government
member) appointed to the EFIC Board to be reduced to a maximum of 5 and a
minimum of 2. This means that in addition to the Chairperson, the Deputy
Chairperson, the Managing Director and the government member, EFIC's Board will
consist of as many other members, being not less than 2 nor more than 5, as the
Minister determines in writing to be appropriate. As a result of this amendment the
total size of the EFIC Board is reduced from between 9 to 11 members to between 6
to 9 members. This reduction in the size of the EFIC Board is consistent with the
Uhrig Review which recommends a board of between 6 and 9 members.

Item 4Subsection 34(2)

This item omits a reference to the Chief Executive Officer of the Australian Trade
Commission and is consistent with the removal of the Chief Executive Officer of the
Australian Trade Commission from the Board of EFIC.

Item 5Subsection 34(4)

Section 34(4) of the Act includes a cross reference to paragraph 34(1)(f) and the
minimum number of appointed members referred to in that paragraph. This item
amends section 34(4) so that it refers to a minimum of 2 appointed members
consistent with amended paragraph 34(1)(f) (Item 3 of Schedule 1 refers).
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Item 6Subsection 34(5)

This item repeals subsection 34(5) which provides that the Chief Executive Officer of
the Australian Trade Commission may not be appointed as Chairperson or Deputy
Chairperson. The repeal of subsection 34(5) is consistent with the removal of the
Chief Executive Officer of the Australian Trade Commission from the Board of EFIC.

Item 7 ­ Subsection 35(1)

This item repeals subsection 35(1) and substitutes it with a provision requiring an
appointed member (other than the government member) to hold office for a period of
3 years. As a result of this amendment, the period for which an appointed member
(other than the government member) holds office is reduced from a period not
exceeding 5 years to a period of 3 years. This is consistent with the Uhrig Review
which recommends that periods of appointment to a board be limited to 3 years.

This item further provides that an appointed member (other than the government
member) is eligible for reappointment but must not hold office for a total of more
than two terms (being six years) or three terms (being nine years) where an appointed
member serves as the Chairperson during one or more of those terms. This
amendment is consistent with the Uhrig Review which recommends a limit of 2 terms
or 3 terms for board members who serve as chairperson.

Item 8 ­ Saving provisions

Item 8(1) provides that despite the amendments to section 35 (Item 7 of Schedule 1
refers), an appointed member whose appointment is in force immediately before the
amendments to the Act commence continues to hold office for the balance of the
period of appointment as if the amendments had not been made.

Item 8(2) clarifies that Item 8(1) does not prevent the Minister from exercising his
powers under sections 42 and 43 of the Act to terminate the appointment of appointed
members or from otherwise varying or revoking the appointment.

Item 9 ­ Subsection 38(6)

This item repeals subsection 38(6) which provides that the Chief Executive Officer of
the Australian Trade Commission may not be appointed to act as Deputy Chairperson.
The repeal of subsection 38(6) is consistent with the removal of the Chief Executive
Officer of the Australian Trade Commission form the Board of EFIC.

Item 10 ­ Subsection 44(7)

This item reduces the quorum for a meeting of the EFIC Board from 5 members to 3
members. This amendment is appropriate given the reduction in the size of the EFIC
Board (Item 3 of Schedule 1 refers).
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Item 11 ­ Subsections 71(2) and (3)

This item repeals subsection 71(2) and substitutes it with a provision requiring the
Managing Director of EFIC to be appointed by the Board after the Board has
consulted with the Minister in relation to the appointment. This amendment is
consistent with the Uhrig Review's board template which assumes that a board has
the power of appointing the managing director.

This item also repeals subsection 71(3) and substitutes it with a provision pursuant to
which a Deputy Managing Director of EFIC may be appointed by the Board after the
Board has consulted with the Minister. This amendment is consistent with the
amendment to subsection 71(2).

Item 12 ­ Saving provisions

Item 12(1) provides that despite the amendments to section 71 (Item 11 of Schedule 1
refers), a Managing Director whose appointment is in force immediately before the
amendments to the Act commence continues to hold office as if the amendments had
not been made.

Item 12(2) clarifies that Item 12(1) does not prevent the Board from terminating the
appointment of the Managing Director pursuant to section 72(b) of the Act.