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Thursday, 5 December 2013
Page: 923


Senator MADIGAN (Victoria) (10:41): I am very pleased to bring forth the first of a series of fair trade bills before the Senate for debate. As senators are probably aware, the second free trade bill, the Free Trade (Workers' Rights) Bill, is currently before the Defence, Foreign Affairs and Trade Committee. The Fair Trade (Intellectual Property and Patent Protection) Bill and the Fair Trade (Biosecurity and Food Standards) Bill will follow in the coming months.

The basic intention of each of these bills is to look at our trade arrangements and the trade agreements we sign up to from a different perspective. Instead of placing so much of the onus of responsibility on Australian industry, Australian organisations and already overworked and underresourced Australian departments, we need to look at the responsibilities that should be placed squarely on the shoulders of our trading partners. As a small example, the Fair Trade (Worker's Rights) Bill simply states that when making trade agreements with other countries Australia should insist that the products we are getting are manufactured or grown in those countries by workers who receive basic workers' rights. We should not be trading with people who make their money from the blood, sweat and lives of oppressed workers. It is a simple suggestion and one that any Australian would agree with but which trade negotiators seem to overlook on too many occasions. Supporting the rights of workers, whether here or overseas, is supporting basic human rights. In so doing we are helping to improve the lives of people overseas and acknowledging the contribution our own manufacturers make to Australian workers and the Australian economy. Of course we cannot expect poorer countries to provide the same hard-won benefits and rights that are enjoyed by Australian workers, but there are International Labour Standards that are set out at varying levels depending on the economic status of each country and we should do our best to uphold those standards whenever possible. And what better time than when we are negotiating a trade agreement.

In its own way this bill, the Fair Trade (Australian Standards) Bill, hopes to do something similar by putting the onus back onto overseas companies to be more vigilant about their exports and in a small way helping Australian manufacturers to be that little bit more competitive in our own market. None of these fair trade bills is the complete answer to our manufacturing woes or to the imbalance in our trade arrangements, but I hope they will each take a small step on the road to improvement.

As every person here knows, I am passionate about Australian manufacturing and farming and anything that harms our manufacturers' and our farmers' future. Anything that can be done to ensure our trade agreements are more like a level playing field and less like a ski slope with us at the bottom is a step in the right direction. I hope this bill, simple though it is, will make a small step towards that goal.

In my opinion, one of the most damaging influences on Australian manufacturing and farming is ever-growing, unfettered and uncontrolled free trade agreements. Despite the rhetoric from both sides of politics and the big end of town that FTAs are great for the economy, I doubt you would get too many average Australians who share that level of enthusiasm, at least not in the way these FTAs seem so often to be heavily weighted in the favour of our trade partners. Do not get me wrong; trade is good. On that score, Australians would agree that we need to trade to survive, just as the rest of the world does. But in saying that trade is good, we cannot automatically assume all trade is good, fair or beneficial to our economy and to the Australian people as a whole.

I have been told countless times that FTAs are sacrosanct, they are the domain of the executive and they are never to be sullied by the rough handling of lowly parliamentarians, despite us representing the concerns of our constituents. As many of you would know, I am not one to worry about a bit of rough handling and, quite frankly, I think most of the trade agreements we have signed up to could do with a little less political rhetoric and a bit more rough handling by people and parliamentarians alike.

This bill is aimed at the rapidly increasing level of imported products that do not conform to Australian standards. Australian standards exist for every Australian industry, and in every one of those industries I could give you countless examples of product imported into this country that consistently fails to meet Australian standards and yet is allowed to access the marketplace and the worksite. Unfortunately, we often hear about these products after devastating results to life and limb of workers, consumers and companies as well as to the viability of our local industry and the economy itself.

I could tell you about the Australian companies who are going to the wall simply because we do not adequately enforce Australian standards on imported products and materials. Companies like Molnar Hoists in South Australia, who produce a superior hoist, are struggling to survive against a flood of substandard Chinese car hoists that have a nasty habit of collapsing without warning. Lives are at risk, profit is at risk and standards are not met, but the hoists still come into our country.

But instead of telling you about one company after another or one industry after another, let us simply take a look at one industry. There is one industry that exists around the country in every community and involves countless numbers of Australians every day, whether directly or indirectly. Let us use that as a litmus test for enforcing Australian standards on imported goods. The Australian building and construction industry is well known to many senators. In fact, I believe there has been a considerable debate about that industry of late and I am sure there will be plenty more. But for now, we are not looking at that side of it; we are looking at Australian standards and how they are or are not enforced in the building industry. We are looking at the impact inadequate enforcement of standards has on the workers, builders, homeowners, investors and general consumers who are part of that industry.

In the last month, the Australian Industry Group released its comprehensive report entitled The quest for a level playing field: the non-conforming building product dilemma. The report revealed widespread use of nonconforming products across the building and construction sector. Ninety-two per cent of companies that responded to their nationwide survey reported nonconforming products in their supply chain. I will repeat that: 92 per cent of the responding building and construction sector companies reported the use of nonconforming products in the construction industry. That figure alone ought to send shivers down the spine of every occupational health and safety officer in this country.

The results of this report prompted Ai Group Chief Executive, Innes Willox, to comment that:

This raises important questions about quality and safety and it poses serious commercial challenges for the businesses that do play by the rules.

The report also found that almost 45 per cent of those companies surveyed in the steel, electrical, glass, aluminium and engineered wood sectors reported lost revenue, reduced margins and lower employment numbers due to nonconforming products. Most of these products do not meet regulatory Australian or industry standards. Others are not fit for their intended purposes, are not of acceptable quality, contain false or misleading claims or are straight-out counterfeit products.

The Ai Group report findings are backed up by a Customs and Border Protection report stating that in 2008 to 2009 the Australian industry suffered reduced revenue, reduced sales volume, price undercutting, price suppression, reduced profits and profitability, reduced production volume, reduced employment, deteriorating returns on investment and reduced attractiveness to reinvest, with imports from Chile, China, Brazil and Malaysia being a significant contributing factor.

Prior to the September election, the Australian Forest Products Association surveyed the ALP, the coalition and the Greens on matters of concern to the timber and forestry industry. While there were plenty of stock standard election made answers, a few stood out. The question was asked:

Do you support strengthening measures to avoid import of substandard quality forest products?

The coalition answered that they support:

… the enforcement of measures to avoid importation of sub-standard forest products. If necessary, we will also consider the strengthening of these measures. It is important that materials used in the Australian construction industry meet Australian Standards.

In October last year, the then opposition spokesperson Ms Sophie Mirabella stated in parliament that the coalition would:

…ensure that imported products better comply with the mandatory…standards imposed on locally made goods.

I am glad that the now government felt that way in opposition. I look forward to them doing all they can to fulfil those desires now that they are in government. I hope that supporting this bill and its small effort towards improving the situation related to nonconforming products is on their list of things to do, not only for the economic benefit it brings to Australian manufacturers and businesses but also because of the significant costs imposed on Australian workers and families due to injury and death caused by the widespread use of nonconforming products.

Naturally we would assume that any government, whether the current government or the previous ALP government, would want to guarantee that the appropriate bodies were given adequate powers and resources to ensure these measures were enforced. However, according to Mr Willox, Chief Executive of the Ai Group:

… there is significant confusion among companies about how to identify non-conforming products and who to report them to.

He states quite blatantly:

Non-conforming products are allowed onto the market due to inadequate surveillance, audit checks, testing, verification and enforcement.

This seems to be backed up by the Engineered Wood Products Association of Australasia, who in 2010 cautioned Australian timber importers against imported timber products. The association had completed laboratory tests on Chinese structural LVL beams entering our markets and found they failed the Australian standards on bond, grade type, formaldehyde emissions and preservative penetration. The government's own National Industrial Chemicals Notification and Assessment Scheme stipulated that only low-formaldehyde-emitting pressed wood products should be used, as required by the Australian standards for formaldehyde emission limits.

Recently, plywood and veneer wardrobe and joinery items imported from China and installed in a multi-unit building project in northern New South Wales were condemned after the department of housing found emission levels had, in their words 'soared through the roof' and that the health and safety of occupants was at risk.

The President of the Furnishing Industry Association of Australia, Mr Fred White, said he was not surprised at these outcomes if imported Chinese products were used. He said that he had advised project builders:

If they install imported materials that fail Australian Standards for emissions and safety then they have to cop it sweet if these products cause an illness or a death, and that this could go as high as a Royal Commission.

I would hope we could avoid anything like a royal commission by simply enforcing the standards now in place.

Mr Simon Dorries, General Manager of the Engineered Wood Products Association of Australasia, stated that:

… the bottom line is that this imported product is threatening the lives of builders and homeowners and we fear some has already been installed.

But of equal concern to Mr Dorries is that:

Standards Australia does not licence or police the use of Australian Standard numbers on products.

And in a statement I find to be utterly damning of our current controls, he stated:

Any manufacturer in any country can brand an Australian Standard without any testing or checks by anyone.

I know many of you will say; 'We have Customs, the ACCC or Standards Australia to oversee these problems. Surely they can handle it.' I have put a number of questions to the ACCC over successive Senate estimates and, quite frankly, the answers have raised serious concerns.

In late 2011 and early 2012, allegations were made to the ACCC that a specified trader had sold plywood of a certain grade which allegedly did not meet the requirements of that grade. Following approaches from the ACCC, the trader ceased the sale of the plywood in question and conducted an internal investigation. In the ACCC's own words, the trader under investigation was the one who investigated the allegations against themselves. Following this, the trader provided the ACCC with certification of the products, which indicated that the products met the grading requirements. Despite this, the trader withdrew the products from sale and regraded the plywood.

The outcome was that the trader who was selling the allegedly substandard products found, after self-investigation, that there was no problem with the product but that despite there being no problems they had withdrawn the products from sale and regraded the plywood. Self-regulation can be a wonderful thing if you are the beneficiary of it.

The ACCC said it was satisfied with this outcome in the circumstances and closed its 'investigation', if you could call it that. I would like to thank the ACCC for providing us with the solution to the increasing crime rate! Simply have the suspects investigate the allegations and before you know it we can close the jails and disband the police force! How much confidence can we have in the Australian standards of these or any other products entering this country if the agency charged with ensuring these standards are met simply hands all responsibility on to the allegedly irresponsible party?

However, it does not stop there. The ACCC has taken the word of the trader that the products are fine and accepts that, despite having no apparent reason to do so, he will withdraw the product from the market and do a regrade of the suspect plywood. But did the ACCC issue a public statement about the investigation, or about the regraded plywood, or about the withdrawal of a product from the market? No, they did not. So what happens to the product that is already out there? What happens to the product that was sold under an F14 stress grade that should actually have been, at best, an F8 stress grade? Basically, absolutely nothing.

And what happens to the builder or homeowner who purchased and used this product in good faith? We can only hope and pray that nothing happens. But for those of us who have worked in manufacturing, in the building industry, in metal fabrication industry and many others, we know what happens in far too many of these cases where a nonconforming product finds its way onto the job: workers are injured or killed, consumers are put at risk, production is lost, profits decrease and it all ends up in a law suit.

Before people think I am on an ACCC-bashing exercise, I must state that I do not believe the ACCC deliberately intend to let these products enter the marketplace. Frankly, no-one can examine everything that comes into this country; that would be a physical impossibility. In fact, I doubt the ACCC or Standards Australia have ever been adequately resourced. Nevertheless, even though I do understand how it comes about, that does not mean I approve of the way these investigations are handled.

In the end, though, the buck must stop with the government, whether this or the previous one. Consistently Australian governments have failed to ensure Australian standards are being met and Australian industry and consumers being are protected from substandard imported products that have taken everything from Australian jobs to Australian lives. This government has said it 'will consider the strengthening of these measures'. Now we have an opportunity to take a different approach to this and other problems associated with imports. The Prime Minister has already stated that he is giving top priority to the completion of a free trade agreement with China and with numerous other countries through the Trans-Pacific Partnership. So now is a good time to start toughening up our stance when it comes to Australian standards.

Simply put, every trade agreement signed between Australia and any other nation or nations should put the responsibility for conformity with Australian standards back on to the exporting company. While we cannot expect that every product exported to Australia will meet Australian standards, the exporter must ensure and guarantee that their product will not be used or onsold until it meets with the appropriate Australian standards.

At present any product brought in may be expected to meet Australian standards before being used but all the onus is on the importer and far too many times importers fail to bring these products up to standard. They fold up, move on and the consumer is left with no recourse to recover damages. In the meantime the original exporter simply supplies their product to another importer and the cycle continues.

By insisting the exporter guarantee their product meets Australian standards before sale or use they will be more inclined to verify that the importer is reputable and unlikely to cause them loss. As well, should an exporter fail to guarantee their product they would be in breach of our trade agreement and can be refused permission to trade until they comply with that requirement. Local manufacturers and suppliers, as well as reputable importers, would benefit from a decrease in the amount of non-conforming product on the market and an increase in the integrity of their competition.

As I said at the start, this bill is not the whole answer but I believe it goes a small way towards improving the situation. I urge senators to support it.