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Wednesday, 21 October 2015
Page: 12108

Mr WATTS (Gellibrand) (20:59): On the first anniversary of the passing of the great man Gough Whitlam, we remember that in 1971 he, then Leader of the Opposition, headed a Labor delegation to China, where he met with Premier Zhou Enlai. In 1973 the then Prime Minister returned to China, becoming the first Australian Prime Minister to ever visit China. When he returned he addressed the National Press Club. He said:

The hopes of that region rest upon not only a better understanding with China but a better understanding of China. … China, Australia and all the countries in our region will be the beneficiaries of a better mutual understanding.

It is fitting that on the one-year anniversary of Gough Whitlam's death Australia is following his leadership and actively engaging with China in our region and taking another step on this journey. The Labor Party has a strong history of embracing trade liberalisation and engagement with our region. Labor governments have opened Australia up to the world, often unilaterally and often despite protestations from those opposite. We did this through Whitlam's across-the-board tariff cut, Hawke and Keating's dismantling of protectionism and the Rudd and Gillard government's pursuit of free trade agreements and, later, the Asian century white paper, a comprehensive platform for engagement with our region and a plan for an open, confident and engaged Australia.

We are a free-trading party because trade benefits working people by giving consumers more choice and lower prices and driving economic growth that creates jobs. This is why trade with our region is so important and today approximately one in every seven Australian jobs depends on exports. Currently, trade with our region is at its highest point in Australia's history. Of that trade, China is our largest trading partner. Last year our two-way trade in goods and services was worth over $150 billion. Our exports to China have also grown in recent years, from 8.5 per cent in 2003-14 to 32.5 per cent in 2013-14.

Trade and investment with China is central to the wealth and prosperity of all Australians, and the China-Australia Free Trade Agreement builds on this remarkable economic boom between our two countries. Once this agreement comes into force, more than 85 per cent of Australia's trade with China will be tariff-free. At full implementation of this agreement, 95 per cent of our trade with China will be tariff free. Many of the current tariffs will be phased out immediately. China is Australia's largest resources market, with Australian exports to China worth over $77 billion in 2014 alone.

China will remove or significantly reduce tariffs on Australian beef, sheepmeat, dairy products, horticultural products, wine, barley, seafood and processed foods. Agriculture is not the only sector that will benefit. ChAFTA removes Chinese tariffs on Australian resources and energy commodities, pharmaceuticals and other manufactured products. ChAFTA will also open up access to the Chinese market for Australian services businesses. It will deliver improved access for financial-services providers, such as banks, insurers and funds' 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; and there will be improved access for Australian telecommunications, manufacturing services, mining services, architects, software implementation and environmental services.

China is already the second-largest economy in the world, by some metrics, and will become the biggest in our lifetime. The China-Australia Free Trade Agreement enables Australian businesses to make the most of this growth, and it will be important for Australia's future. Australia's and China's economies do not compete, they are complementary, in many respects. This trade agreement should seek to strengthen our economic ties, but it will also, inevitably, strengthen our cultural ties. This is an opportunity to deepen our relationship.

Regardless of the benefits of this free trade agreement, we in Labor have said many times that the coalition could and should have secured a better deal, particularly regarding the inclusion of an investor-state dispute settlement provision. I have spoken in this chamber a number of times about the ChAFTA agreement and other free trade agreements that Australia has entered into and how invidious these provisions are. There are legitimate public concerns about the potential impact of investor-state dispute settlement provisions on public policies for health care. We have seen this with plain-packaging legislation and environmental protections. Labor has argued strongly against these provisions and adopted a policy of refusing to include them in trade agreements when we were in government.

It is true that some of these provisions already exist in other trade agreements, exposing us already to this kind of litigation, but this is no reason to unnecessarily further expose ourselves to this kind of risk. Labor is also concerned about the effect ChAFTA will have on the Australian labour market and, consequently, our temporary migration system. We want Australians to benefit from free trade's proven record of creating more jobs, not simply replacing them with temporary migrant labour. Labor has negotiated with the government and achieved a package that ensures proper safeguards are put in place to protect Australian jobs.

I am very pleased that good faith has been shown on both sides of this process and that there has been genuine bipartisan commitment to overcoming differences of values and perspective to agree on a way forward for this important agreement. Here is how these concessions will work: ChAFTA will allow for Chinese workers to work on Chinese funded infrastructure projects in Australia that are worth more than $150 million. Labor's safeguards will require those companies to conduct labour-market testing to ensure there are no local workers are available before being allowed to import labour from abroad.

Labor has also secured arrangements on the broader temporary migration system. They require employers to demonstrate a labour-market need for 457 visas, adopt training plans showing how they will train local workers to address these skill shortages and implement overseas worker-support plans to ensure migrant workers understand their rights in the workplace. This follows an increase in the salary rate for 457 workers, both to ensure migrant workers are treated fairly and that employers are not circumventing the system and using overseas workers for financial gain. This will not discriminate against Chinese workers, but will apply across the board.

Labor has also secured a deal to strengthen skills assessments that were removed by the government in the original agreement. Labor's safeguards will ensure that the Chinese free trade agreement will be a far better agreement for Australian jobs. While there remain issues in this agreement Labor would not have accepted if it had signed the agreement, the amendments that have been negotiated do ensure that the effects of those issues are minimalised and the benefits can be enjoyed by all Australians.

In the debate about this bill, a great many silly things have been said about this agreement and the other free trade agreements that have been negotiated by the current government. Here are some job-creation claims made in the name of ChAFTA by members opposite, in this chamber, and in the other place. Senator Abetz said:

These trade deals will create almost 9,000 jobs per year.

Senator Ronaldson said that in the absence of ChAFTA:

… there will be $4 billion lost to the Australian financial services sector alone by 2030, at a cost of 10,000 jobs.

Senator Payne quoted the sector as saying that without signing up to ChAFTA we would lose:

… 'some 10,000 jobs in financial services alone by 2030.'

Senator Birmingham said:

When it is fully implemented there will be some 178,000 additional job opportunities for Australians under ChAFTA, including skilled Australian workers.

The member for Hindmarsh, in this place, said:

This agreement will provide tens of thousands of new jobs …

The member for Banks said:

We have an agreement here that is going to create 178,000 jobs.

The member for Corangamite said:

It is estimated that over the next 20 years the ChAFTA will deliver some 178,000 new jobs.

And of course the trade minister said:

This is the future and these free trade agreements will lead to tens of thousands of new jobs …

Indeed, he even told the ABC that these free trade agreements would deliver 'literally' many hundreds of thousands of jobs.

His claims are notable because on the government's own figures, and according to the modelling by the Centre for International Economics, the KAFTA, the Korean Free Trade Agreement, the Japanese Free Trade Agreement and ChAFTA agreements combined will produce a total of 5,434—bizarrely specific economic modelling—additional jobs by 2035. As Fairfax economics correspondent Peter Martin points out, by 2035 the total Australian workforce will be over 15 million, so the cumulative employment impact of these agreements, on the government's own figures, will be less than one-half of one-tenth of one per cent of the total workforce. That is not nothing, to be sure, but it is certainly not 'literally many hundreds of thousands of jobs'.

I highlight these facts not because I am sceptical of free trade; I am unambiguously pro-free trade. And I am pro-free trade not for political or ideological reasons, but because I believe that it is in the interests of my constituents. It means cheaper goods and services, better choice and variety, and more jobs overall. In respect of cheaper goods and services, it is notable—given the rhetoric we heard in question time today, that this agreement is an export agreement—that the government's own modelling suggests that while Australian exports to China will grow under this agreement by 0.5 per cent, imports will grow by 2.5 per cent.

As discussed at length in the Productivity Commission's Report into bilateral and regional trade agreements, the benefits of preferential trade agreements like ChAFTA are much lower than multilateral trade agreements negotiated through the WTO. Of course there is little prospect of another successful global trade round in the foreseeable future, so we make do with what we can. But we should not let hyperbole cloud our view of the evidence. In the face of these smaller benefits from these trade agreements with a much narrower scope, we should not kid ourselves that as additional non-trade provisions are hung off the creaking framework of these treaties that the costs of these non-trade provisions could exceed the benefits we realise from free trade. You do not have to be a protectionist to believe this. The labour market and labour movement provisions in ChAFTA, as well as ISDS and intellectual property provisions are well known, and the concessions negotiated by the shadow minister for trade and investment, Senator Penny Wong, and other members of the Labor Party go a great way to remedying these issues.

Australia still has a long way to go when it comes to realising the potential of Chinese growth. Asia's middle class sits at around 500 million, and is expected to grow to substantially over the next 15 years. But merely pulling down trade barriers alone will not cause this opportunity to fall into our laps. We will all need to work for it; we will all need to work for it today, tomorrow and every day. This agreement is no silver bullet; it really just puts Australia at the starting line.

That said, it is certainly worthwhile supporting it, and I am very pleased with the bipartisan solution that we were able to reach on this agreement. I thank the House.