BILLS;Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015, Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015;Second Reading – 09 Nov 2015

I rise to speak on the Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 and the Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015. Passage of these bills by parliament will implement commitments that the Australian government has made to the government of the People’s Republic of China under the China-Australia Free Trade Agreement, commonly known as ChAFTA.

Labor knows that there are tremendous opportunities for Australia as global economic activity shifts to the Asia-Pacific region. That is why Labor, under Prime Minister Gillard, developed the Australia in the Asian century white paper, a comprehensive strategy to ensure that Australia taps into the growth of our Asian neighbours. We understand that the 21st century will see a massive growth in the economic power of our Asian neighbours, like China and India.

Australia’s trading relationship with China will be central to our economic future. China is already our No. 1 trading partner. It accounts for a third of Australia’s merchandise exports. Trade with China has been critical to our economic past. It helped Australia to keep growing through the global financial crisis. China is already the world’s second largest economy. It is set to become the world’s biggest economy during our lifetimes. Labor believes in a confident, open, competitive Australian economy that is engaged with the world. That is why Australian Labor governments have pursued trade liberalisation for over 40 years: from Whitlam’s across-the-board tariff cut to Hawke and Keating’s dismantling of protectionism to Rudd and Gillard’s pursuit of free trade agreements in our region.

Increasing exports will drive our economy’s growth, boost living standards and create new business opportunities and new jobs for the future. As the Labor Party’s national platform states, more ‘Trade is a pathway to a high-skill, high-wage future’ for Australians. Analysis by the Centre for International Economics shows that one in every seven Australian jobs depends on exports—around 1.5 million jobs. Industries with the largest shares of export related jobs are mining, agriculture, metal-product manufacturing, food manufacturing, and transport and storage. The analysis shows another one in 10 jobs is involved in imports. That means around one million jobs are linked to imports in industries, like transport, storage and distribution, and wholesale and retail trade. This means that trade benefits working Australian people by giving consumers lower prices and wider choices and by driving economic growth, which creates jobs.

Exports and imports account for around 40 per cent of Australia’s GDP. That means trade is inextricably linked to jobs. Our proximity to China represents a tremendous opportunity for Australia—a tremendous opportunity for the jobs, growth and prosperity of future generations of Australians. There is a major new market with hundreds of millions of increasingly affluent consumers demanding new goods and services and a source of valuable investment funds, which Australia will need to create and grow new businesses and jobs. Asia’s middle class is now around 500 million. It is expected to increase more than six-fold in the next 15 years. That is 3.2 billion middle-class consumers in Asia—or 66 per cent of the world’s middle class—by 2030. And a large slice of those middle-class consumers will be in China. This will translate into rising demand from China for a range of products and services, including those that Australia does well: food, education, tourism, health, aged care, and financial and professional services.

Growing, deepening and diversifying the trade relationship with China will be critical for our future prosperity. We need to export more Australian agricultural goods and food products to China. We need to export more sophisticated services to China like education, health care, aged care, financial services, business and professional services, and tourism. We need to see advanced Australian manufacturing playing its part in the global and regional supply chains which are increasingly centred on China, and we need to see more investment flows between Australia and China. This will mean new opportunities for Australian businesses, stronger growth for Australia’s economy, better living standards for Australian families, and more and better jobs for Australian workers.

We are already in a strong and mutually beneficial economic relationship with China. As a senator for Tasmania, I am greatly aware of the opportunities that forming a closer relationship with China will have for Tasmania, and I am well aware of the importance of China as a destination for our wonderful fresh and manufactured foods. There was a strong push to grow the Chinese market under former Labor Premier of Tasmania Lara Giddings. Under Premier Giddings, Tasmania became the first state in Australia to have its own trade and investment representative embedded in Austrade on mainland China. Tasmania is also increasingly benefiting from Chinese tourism, with Chinese visitation to Tasmania increasing by 300 per cent in the last three years. I must say here that I am extremely disappointed that the government still has not delivered the extension to the runway at Hobart airport, which is needed for direct long-haul flights from China, and I am also still quite frustrated that this government cut the Australian Federal Police from the Hobart airport, which obviously Tasmania will need for the return of international flights.

Labor acknowledges that ChAFTA will deliver significant benefits to Australian exporters, Australian consumers and Australian workers. ChAFTA will give Australian businesses greater access to the Chinese market. Under ChAFTA, immediately 85 per cent of Australian exports by value will enter China with no tariffs, and this will rise to 95 per cent when the agreement is fully implemented. China will remove or significantly reduce tariffs on Australian beef, sheep, sheepmeat, dairy products, horticultural products, wine, barley, seafood and processed foods. These sectors employ more than 200,000 workers. This improved market access will be critical in ensuring that Australian farmers and food processors can tap into the opportunities that will come. Those opportunities will arise, as an increasingly affluent Chinese population means higher food consumption and changing patterns of consumption towards higher value food products. The National Farmers’ Federation has said the agreement could see a tripling in agricultural exports to China over the next decade, but agriculture is not the only sector that will benefit.

ChAFTA removes Chinese tariffs on Australian resources and energy commodities, transformed resources products like copper, alumina and aluminium, nickel and zinc, and pharmaceuticals and other manufactured products. Once again, my home state of Tasmania can seek to profit in particular from the export of minerals and agricultural products but also engineering expertise in the energy sector, as ChAFTA will also open up access to the Chinese market for Australian services businesses. It is expected to deliver improved access for financial services for providers such as banks, insurers and fund managers. More education and training providers will be able to market their services in China. Australian hotel, hospitality and tourism operators will be able to invest in China. Australian health and aged-care facilities will be able to be established in China. Australian law firms will be able to service the Chinese market. Australian construction and engineering companies will be able to undertake joint construction projects. It will also deliver improved access for Australian telecommunications, manufacturing services, mining services, architects, software implementation and environmental services.

As China develops and modernises, services will become a much larger part of its economy. ChAFTA will give Australian services businesses opportunities to take advantage of this growth. ChAFTA has gained support from business groups and major companies, including the BCA, ACCI, the Australian Industry Group, the Minerals Council, the National Farmers’ Federation, the Commonwealth Bank, ANZ, BHP Billiton and Qantas.

This agreement has been nearly 10 years in the making. Both coalition and Labor governments played their parts in the negotiations. I particularly want to pay tribute to former Labor trade ministers Simon Crean, Craig Emerson and Richard Marles for their roles in progressing the negotiations. I also acknowledge the role of Minister Robb in bringing the negotiations to a conclusion, along with the staff in the departments that have been involved. But Labor does believe that the coalition government could and should have secured a better deal. It is disappointing that the government left some agricultural goods out of the deal. They failed to win further market access for Australian rice, wheat, cotton, sugar, canola or vegetable oils. These agricultural goods represent a significant part of Australia’s agriculture sector, and the government should have fought harder to have them included.

There has been some significant concern within the Australian community about the investor-state dispute settlement, ISDS, provisions in this deal. We on this side do not believe the government should have included ISDS provisions in this agreement. There are legitimate public concerns over the impact of ISDS provisions on Australia’s public policies in areas such as health care, public services and environmental protection. The concerns come from mainstream economic and legal experts. These include the Productivity Commission; the pro-trade magazine The Economist; the Chief Justice of the High Court of Australia, Justice Robert French; former head of the Australian Industry Group and Reserve Bank of Australia board member, Heather Ridout; and numerous academics. The concerns also come from across the political spectrum, ranging from the union movement and the Australian Fair Trade & Investment Network on the Left to the libertarian Cato Institute on the Right. Even former Liberal Prime Minister John Howard refused to include an ISDS in the Australia-United States Free Trade Agreement, despite pressure to do so from the United States.

Labor have led the way in arguing against ISDS provisions. In government, we adopted the policy of not including ISDS provisions in trade agreements. In opposition, Labor continue to oppose ISDS provisions in trade deals, including in ChAFTA. If we are returned to government, we will seek to review all of Australia’s existing ISDS provisions in trade and investment agreements with our trading partners. We will work with the international community to reform ISDS tribunals so they remove perceived conflicts of interest by temporary appointed judges, adhere to precedents and include appeal mechanisms.

Labor is also concerned about the impact of ChAFTA on safeguards in Australia’s temporary migration system. We want to ensure that ChAFTA supports, rather than reduces, jobs for Australians. That is why Labor has been vocal in raising concerns about the impact of the ChAFTA on jobs, wages and skills. It is why Labor has negotiated with the government to achieve a comprehensive package of complementary safeguards for ChAFTA’s temporary migration provisions. Importantly, we have secured those safeguards, which is an important outcome for Australian working people. Our safeguards will support local job opportunities, maintain work skills and safety standards and deter exploitation of overseas workers. This of course is important in safeguarding Australian jobs. Our safeguards will ensure that temporary migrants coming to Australia are used for jobs where there are skills shortages, not as a way of bypassing local workers.

We have designed our safeguards according to two key principles. Firstly, that they are consistent with ChAFTA and do not require changing the agreement, and, secondly, that they do not discriminate against China. They do not discriminate against Chinese companies and they do not discriminate against Chinese workers seeking to come to Australia under our temporary skilled migration system. Despite what those on the other side of the chamber have said, defending Australian jobs is not anti-China and it is not anti-free trade.

ChAFTA allows temporary skilled migration from China through a new mechanism known as investment facilitation arrangements. This will allow Chinese workers to be engaged on Chinese-funded infrastructure projects worth more than $150 million. The government intends to implement the ChAFTA IFA arrangements through what are known as work agreements. These are agreements between employers and the Minister for Immigration and Border Protection, allowing employers to bring in workers on 457 visas. Labor’s safeguards will require employers entering work agreements with the Minister for Immigration and Border Protection to conduct labour market testing before turning to overseas workers. Labour market testing requires employers to show that local workers are not available before they turn to 457 workers, by providing evidence showing that they have advertised the jobs. The government has agreed to entrench labour market testing for work agreements in the migration regulations so this will be a legally binding safeguard, not just another coalition promise waiting to be broken.

Labor has also secured the government’s agreement to a series of additional safeguards for work agreements. These safeguards include requirements for employers to demonstrate that there is a labour market need to use 457 visa workers; adopt training plans showing how they will train local workers to address skills shortages; and adopt overseas worker support plans, showing how they will support 457 visa holders, including by providing information about workplace entitlements and rights. These requirements will be included in immigration department guidelines for work agreements and these guidelines will be underpinned by a new migration regulation. They will also allow the minister for immigration to impose additional conditions on work agreements, such as specifying that a minimum number of Australian workers be employed or placing a ceiling on the number of overseas workers that may be employed.

Labor has secured a major improvement in market salary rate requirements for 457 visa workers. The market salary rate requirement is a key safeguard designed to ensure that 457 visa workers are treated fairly and that temporary skilled migration does not undercut Australian wages and conditions. It requires 457 visa workers to be employed on market salary rates, with wages and conditions no less than those for a local worker performing the same job in the same location. Under our agreement with the government, the migration regulations will be amended so that wage rates under relevant enterprise agreements will be the benchmark when assessing whether 457 visa workers are being paid market salaries. This is a significant strengthening of the market salary rate requirement, and it responds to concerns that the existing arrangements do not reflect market wage rates under enterprise agreements. It will apply to all 457 visa workers under the standard business sponsor stream. For 457 visa workers under the work agreement stream, the government has agreed to include a comparable requirement in departmental guidelines. The government has also agreed to consider Labor’s proposal to increase and index the temporary skilled migration income threshold as part of a review.

An area of significant community concern with ChAFTA is its removal of mandatory skills assessments for Chinese workers. The coalition government has agreed to remove mandatory skills assessments as part of the 457 application process for Chinese workers in 10 trade occupations, including electricians, mechanics, carpenters and joiners. Chinese 457 workers will still be required to obtain the relevant occupational licenses from state and territory regulators. But scrapping mandatory skills assessments from the immigration process has raised very legitimate concerns about workplace skills and safety standards. The Electrical Trades Union is concerned that state and territory occupational licensing requirements may not be adequately enforced. The concerns do not only come from the ETU. The National Electrical and Communications Association, which represents electrical contractors, has said it was not consulted by the government before it made this significant change. Master Builders Australia has said the removal of mandatory skills assessments means the immigration department will need to take alternative steps to ensure all applicants possess the requisite skills and experience. The Business Council of Australia has said there will need to be greater coordination with state and territory regulators to ensure all visa holders in categories exempted from automatic skills testing meet all licensing requirements before working in Australia.

Labor has secured agreement from the government to add new visa conditions for 457 workers in occupations where holding a licence is mandatory under state and territory workplace skills and safety laws. The new conditions will require 457 visa holders in these occupations not to perform the occupation without holding the relevant licence; to obtain the licence within 90 days of arriving in Australia; to comply with any conditions imposed on the licence; not to engage in any work or duties that are inconsistent with the licence; and to notify the department in writing if they have been refused a licence or if their licence has been revoked or cancelled. These are strict requirements. Breaching them would expose visa holders and employers to significant sanctions. A 457 worker breaching these conditions will be liable to have their visa, their right to stay in Australia, cancelled, and an employer of a 457 worker breaching these conditions will face sanctions, including having their approval to sponsor 457 visa workers cancelled. These requirements for 457 visa holders in trades occupations will mean that immigration authorities will be better able to monitor and enforce compliance with workplace skills and safety standards. They will more effectively link the migration system and visa conditions with the state and territory trades licensing systems.

Labor has worked hard to ensure that ChAFTA works for the benefit of Australian workers, not to their detriment, and we recognise that an agreement as big and complex as this is a generational decision. We as an opposition have a duty to apply rigorous scrutiny to the flaws, risks and weaknesses that we have identified. This package demonstrates that Labor has been able to achieve significant concessions from the government to improve the ChAFTA. I therefore commend the bills to the Senate.