Export credit scheme could guarantee a bright future

By DANIEL RIORDAN

Exporters are increasingly confident that the Government will introduce an export credit and guarantee scheme, possibly under the auspices of Jim Anderton's Industry New Zealand.

Treasurer Michael Cullen told the House a month ago that a paper on the export scheme would soon go to the cabinet, and it is understood that has since happened.

Bob Fenwick, president of the Auckland branch of the Export Institute, is confident the scheme will go ahead after a period following the election when it seemed to be off the Government's agenda.

"We made it clear that would be a bad oversight, but we're now satisfied things are moving in the right direction."

While Trade NZ has been consulting business on the scheme, Mr Fenwick expects some of the assistance exporters are looking for to come from Industry NZ.

As well as export credit schemes, they include pre-export finance and country risk insurance.

"Industry NZ is the only portfolio left which can encompass these particular items, which were a Labour Party promise before the election."

Export credit insurance allows firms to cover the risk of sending their products offshore.

Policies cover a percentage of the losses resulting from the buyer overseas going broke, failing to pay or refusing to accept goods. The cost of the insurance is typically 50c for every $100 of the landed value of the exported goods. However, small firms - the likely target of Government assistance - pay more.

The insurance also allows firms to "discount" - take a bank loan against the value of an export consignment while it is in transit. That allows small firms with one large export order to pay salaries and keep afloat until the bill is paid.

No one disputes the importance of exporters having access to such coverage. But private sector insurers say the gap is not as big as the Government believes.

Exporters argue that they are missing out on hundreds of millions of dollars to competitors from countries with Government-funded insurance - just about everyone in the developed world.