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Thursday, 12 February 2015
Page: 553


Senator CANAVAN (Queensland) (09:47): I must be guilty! Apparently we are all beholden to corporate interests and corporations. I do not know if the strings are visible to people today, but I am just a puppet, apparently, for corporate interests. It is all based on conspiracies. It reminds me—there was a great movie, Team America, and one of the characters in that movie was asked to explain their claims about corporations. They said, 'Oh, yeah, well, corporations are out there, and they do corporationy things, and they go and make money.'

There is no evidence here at all. There is no evidence. And I have not just sat through and listened to Senator Ludlam's speech. I have read Senator Whish-Wilson's first contribution, his second reading speech, and also flicked through Senator Di Natale's speech, and there is no evidence. They have provided no evidence at all. They have only relied on base conspiracy theorists. That is where the Greens are ending up right now. They are relying on conspiracy theories rather than evidence. If these things were so bad, we would have some evidence of their ill effect. We would have some ill effect, because—

Senator Siewert interjecting

Senator CANAVAN: Well, you are putting this bill up. And the requirement is on people bringing a bill to this chamber to provide evidence of why we should put it in place. We should not put legislation in place where there is not an identifiable problem that needs to be fixed. I think we can all agree on that. That is why we should pass laws in this place: to fix a problem that exists. Now, where is the problem?

We have already four FTAs with ISDS provisions in them. We have 21 bilateral trade agreements, bilateral investment agreements, with ISDS provisions in them. Some of those agreements go back 25 years. If there were problems with these provisions they would have manifested themselves. We have agreements with Singapore, Thailand, ASEAN and New Zealand, all with these provisions, but there are no problems. I will not name the 21 countries.

Over those 25 years—and this is something none of the Greens senators have mentioned—how many cases do you think the Australian government has been subject to, under these provisions? Senator Whish-Wilson, you probably know. How many cases?

Senator Whish-Wilson: Why don't you ask the Productivity Commission?

Senator CANAVAN: One case. I will get to the Productivity Commission. And that case has not even been resolved yet. This is a well-known case brought by Philip Morris on plain-packaging regulations. I will get to the international evidence, too, Senator Whish-Wilson.

Senator CANAVAN: The Productivity Commission has been verballed a little. I note that some of the Greens senators have taken to quoting the Productivity Commission, saying that we should not include these provisions in ICS agreements. Let us read the whole quote of the Productivity Commission.

Senator Colbeck: Selective quotes!

Senator CANAVAN: I would not expect the Greens to do selective quoting, but there is a first time for everything. This is exactly what the Productivity Commission said:

Australian Governments should seek to avoid the inclusion of investor-state dispute settlement provisions in BRTAs that grant foreign investors in Australia substantive or procedural rights greater than those enjoyed by Australian investors.

I do not dispute that view. But the Greens always leave out that little bit—it is only those bits that provide substantively greater procedural rights. That has not happened in any of these agreements. If it had, we would have seen that evidence.

I listened to Senator Ludlam earnestly worrying about how this provision could stop us dealing with fracking, and I think uranium mining, and all these other things. If you read the Korean FTA that we have only just signed, chapter 18 deals with the environment and these issues that Senator Ludlam raised. The very first article, 18.1, in that chapter says:

Recognizing the right of each Party to establish its own levels of environmental protection and environmental development priorities, and to adopt or modify accordingly its environmental laws and policies, each Party shall ensure that its laws provide for and encourage high levels of environmental protection and shall strive to continue to improve their respective levels of environmental protection, including through such environmental laws and policies.

There are no restrictions against a country acting to protect its environment under the Korean FTA or under any of our other bilateral investment agreements. The Greens have quoted from none of these ISDS agreements to prove otherwise.

Senator Whish-Wilson also raised the point about international evidence. It is true, internationally there is much more experience associated with ISDS clauses. There are, across the world, 2,400 bilateral investment treaties in place. Of those bilateral investment treaties, 90 per cent have not had a single investor claim under them for a treaty breach. Fewer than 10 per cent of these 2,400 agreements have ever been triggered, even once. I did not hear Senator Ludlam say this, but sometimes people claim that there has been a surge in ICS claims.

There has been an increase. I do not have the numbers of the increase in claims here, but the key point to make is that these increases are proportional to the amount of outward foreign capital investment in the world. I am not sure if I am allowed to use props, but there is a graph from a report I read this morning that shows, very clearly, that the number of claims—sorry, I do have the figures here—have risen to about 600 a year now we are averaging in ISDS claims. But that is directly proportional to the increase in foreign direct investment across the world. It is a very good thing that we have more foreign direct investment. It has allowed economies, particularly developing economies, to increase their growth considerably over the past 50 years. When you think about—

Senator Whish-Wilson: Why did you leave out the US free trade agreement?

Senator CANAVAN: Why did we leave out the US free trade agreement? Because we did not need it with the US. We on this side believe we should evaluate these things on a case-by-case basis. Oils ain't oils, Senator Whish-Wilson; through you Mr Deputy President. We should evaluate these things as we see fit. We do not need it with the US because both Australia and the United States have very strong protections against property rights. There was no need for it. So let us look at it on a case-by-case basis. Before I was interrupted, I was talking about foreign direct investment. In 1959, the global stock of FDI was just US$60 billion—not a lot of money at all in the context of the world economy. But today it exceeds $25 trillion. That is a massive growth, and it is a very important growth because it has allowed, particularly, countries which are poorer and which lack capital to access capital from overseas countries. And one of the reasons it has been allowed to grow is thanks to these investment treaties, because they give investors—largely in developed countries, because that is where the capital is—the protection and the rights to make sure that it is—

Senator Fawcett: Mr Deputy President, I rise on a point of order under standing order 197.

The DEPUTY PRESIDENT: I can say that interjections which are not actually disrupting the debate are sometimes tolerated by the chair, particularly if they facilitate the exchange of views and arguments in a debate. However, if Senator Canavan does seek the protection of the chair, I will certainly provide him with that protection.

Senator CANAVAN: I am new to this, so perhaps I should. But look, I am quite enjoying it and I think that the Greens senators are enjoying it, so let us continue. I will let you know, Mr Deputy President, if my position changes in that regard.

As I was saying, these protections have been very important to facilitate that growth in investment. Prior to these protections coming into place, it was quite common for governments, particularly in developing countries, to expropriate property or to nationalise property, and to thereby take away the investments that foreign countries had made. Indeed, according to some evidence presented by the United Nations in a paper that I read this morning, in the 14 years prior to the entry into force of the first bilateral investment treaty, there were 875 government takings of foreign-investor property in 62 countries, for which there was no effective remedy. International law at the time provided very few protections for investors in those cases. It meant, of course, that there was a chilling effect on that foreign investment, and that many people would not invest.

I support foreign investment, particularly on the global scale. It is very important. And I do not understand why the Greens are, seemingly, so anti this—because, in other instances, the Greens are very cosmopolitan and very multicultural, and that is a fantastic thing. We should seek to have a world that shrinks, and becomes smaller, and in which we tighten our relationships with each other. Investment certainly does that. Trade helps to build relations; trade helps to make sure countries stay friendly with each other. But investment does it even more; when you buy something at the shop, you have a relationship with the shopkeeper, but when you invest in his business, you have a permanent relationship. We should seek to encourage that between countries. These treaties and agreements have also allowed us to move away from what was sometimes called gunboat diplomacy. That was a regrettable period in American history but, many times, the US government—in the 19th century in particular, and into the 20th century—used its military force to ensure that its investors were protected and that its trade rights were maintained. But I think we would all agree that that was not the right way to go about things. These new treaties have allowed investors—from the US, but actually more from Europe; the evidence is that European investors have been the biggest users of these clauses—protections, without the need to resort to governments offering military threats or, in the worst cases, military interventions. It is much better that we should jaw-jaw rather than war-war. Of course we are going to have disagreements through these agreements, and sometimes we might not get the best results we would like—although, as I said earlier, that has not happened to Australia yet. But it is much better that we resolve these disputes through a legal process rather than a more direct and violent one.

I also just want to go to some of the evidence in the international jurisprudence, and it goes to some of the points Senator Ludlam was making that somehow these provisions undermine the ability of governments to put in place environmental or health protections. In fact, that is not true at all when you actually look at the jurisprudence. Under the NAFTA—the North American Free Trade Agreement between Canada, the United States and Mexico, which includes an ISDS clause—there was a case brought by Chemtura, a chemical company. It brought the Canadian government to court. The investor challenged Canadian pesticide regulations, but the tribunal in this case ruled against Chemtura on all claims, and the panel expressly recognised Canada's right to make scientific and environmental regulatory decisions. There was another NAFTA case, called Methanex v United States. Again, the tribunal dismissed all of Methanex's claims of discriminatory treatment and expropriation, noting:

… as a matter of general international law, a non-discriminatory regulation for a public purpose, which is enacted in accordance with due process and, which affects … a foreign investor or investment is not deemed expropriatory and compensable unless specific commitments had been given by the regulating government to the then putative foreign investor contemplating investment that the government would refrain from such regulation.

Again, there are well-known protections both in ISDS agreements and in general trade law that allow governments to regulate for the public good.

But that is not to say that these agreements have been without effect. They are not completely timid. These agreements do offer protection, and they have in fact offered protection to Australian investors, because what is often lost here is that it is a two-way street. While these agreements do, of course, protect overseas investors in Australia, they also protect Australian investors overseas. Recently there have been two cases of Australian companies making use of ISDS clauses. In November 2011, a tribunal awarded White Industries Australia Limited, which is an Australian mining company, compensation from the Indian government for violating the India-Australia agreements. There was another case in 2011 where an Australian copper company, Tethyan Copper Company, formally commenced ISDS provisions against the government of Pakistan. In December 2012 Planet Mining, another Australian company, requested that the government of Indonesia consider a claim under a clause in that international agreement. So it is important that our investors and our companies have the protection of these agreements.

I think that property rights should be something that we try to uphold and protect. I am not necessarily surprised that the Greens do not put as high a price on the protection of property rights as other members in this chamber, but we do have international agreements that cover human rights, providing protection against torture and covering other internationally recognised rights issues. Property rights are extremely important as well, and the protection of property rights goes back right to the start of the Enlightenment and the Declaration of Independence in the United States. It is enshrined in our Constitution as well: the government must give just compensation where it acquires property. But we should make sure it is enshrined in these agreements as well, because sometimes courts can look more fondly on domestic investors than they do on foreign investors. We should seek that the same kinds of protections that we think are right and proper in our Constitution and that exist in other constitutions, such as the American government's, be similarly recognised in this agreement.

One reason I think the Greens are promoting something like this is that they do not really believe in that. They do not really believe that property rights should always and everywhere be protected, that property rights are on a par with other types of rights and that governments should not be given licence to simply take property from people without due compensation.

There is a particular issue in Queensland that has been longstanding Greens policy, and it will be detrimental to regional areas and the farming community. If the new Labor government in Queensland seeks to reintroduce tree-clearing laws into that state—as they have promised to do—I bet you they will not offer a cent of compensation to farmers. Farmers previously had the right to clear property on their land to develop it, to make it have value, and that value was embodied in the price they paid for the property. The price they paid for a property included a right to clear the trees on their land, to develop the land, to put irrigation in, to put better pastures in, to put more head of cattle on it and to make more money.

That was changed almost 15 years ago in Queensland by the former Labor government. It introduced these laws that stripped all of those rights away from farmers. Perhaps some greater protection did need to be put in place, but compensation should have been given. Compensation should be given, in this place, with the powers that we have, because sometimes these debates are presented as though governments are weak, timid and vulnerable institutions that are beholden to corporations, when that is not the truth. We are very powerful. When we use those powers to take things from people, particularly from small businesses and farmers, we should have the guts to stump up with the cash to compensate for that taking of rights.

If we in this chamber had tried to pass the kinds of laws that Queensland had, there possibly would have been a claim under section 51 of the Constitution for farmers. But the Queensland government is not bound by those provisions in our Constitution, unfortunately. In the United States they are. It is the fifth amendment, I think, where due process must be followed for the taking of property. That does bind American state governments, but it does not here in this country, unfortunately. These provisions are something that go to the heart of what we on this side of the chamber believe. Property rights should be protected; we as governments should not abuse our powers by taking from those who are weaker and more vulnerable than us.

As I said to an interjection earlier, we on this side of the chamber do not insist that all trade agreements have an ISDS clause. As was noted by Senator Whish-Wilson, in the US free trade agreement we did not put that in place. In the Korean free trade agreement we put many more additional protections than have previously existed in ISDS clauses, to ensure that governments do have the power to regulate for the general public good and for order.

There is some limitation or shortcoming in the way this bill has been drafted. As it has been drafted, it will stop us from entering into all agreements that have an ISDS clause, even if that agreement exempted us from those clauses. There could clearly be a case—even in the TPP—where we would be exempted from some obligations. That would fall foul of this particular bill, if it were passed. So I do not think it is drafted in a way that we should pass it in this chamber. It would unreasonably restrict the role of the executive government in negotiating and signing agreements that promote trade for Australians and protect their investment rights.