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Australia's trade and investment relations with Asia, the Pacific and Latin America

ACTING CHAIR —I welcome our final witnesses today. We very much appreciate your coming along this morning.

Mr Carey —I am representing state public sector employees. But I am also a member of the Public Services International (PSI) executive board and a representative of the Asia-Pacific regional body of PSI.

ACTING CHAIR —I know you are aware of the procedures of parliamentary committees, particularly that we prefer the evidence to be given in public. However, if there are any matters that need to be discussed in private or that you would prefer to deal with in private, please make that request at the time. While evidence is not required to be given on oath, these hearings have the same status as the legal proceedings of the two chambers of Parliament. Thank you for your written submission, which has been received by the committee and made public. I invite you both to make some opening comments and then we will proceed to questions.

Mr Slape —I will make some brief opening comments, and then I will hand over to David. As he said, he is the PSI representative in this region. This is a submission on behalf of three unions. The CEPU representative could not be here today. Its submission is from the Electrical Division, obviously dealing with power generation et cetera. They are affiliated to the PSI.

ACTING CHAIR —That is the Communications, Electrical and Plumbing Union.

Mr Slape —Yes.

ACTING CHAIR —This committee deals with a lot of acronyms.

Mr Slape —We all do. We all presume everybody understands what we are talking about, but I appreciate that that is not the case.

We are affiliated to a global union federation called Public Services International, which covers people who provide public services in their various countries. We have affiliated member unions in all of the countries I think you are dealing with. However, this submission has not been lodged on behalf of the Public Services International. It has been lodged by three unions that happen to be affiliated to the PSI.

I think you will gather from our submission that we are not against free trade—we are all for free trade and fair trade. The way we approach it is that if it is going to be successful in each of the countries that we are dealing with there needs to be a properly functioning public service sector that can provide the whole range of services that the public sector provides to its people. To assist in that process there should be free and democratic trade unions and the encouragement of the formation of free and democratic trade unions that can assist in that process. Unions give ordinary workers and people a voice and they can interact with their governments and be involved in negotiations that occur around the question of how countries trade with each other.

We think it is important that with any aid we give and any trade that we have there is some connection to ensure there is a properly functioning public sector. Often states fail when the government of the day breaks down and cannot provide those services. Then you get a range of corrupt activities, criminal elements moving in and the potential for terrorism. One of the big issues of the day for us is, I suppose, the question of migration. People have to leave those countries and they come looking for stable countries where they can live a decent life.

With those opening comments, I will hand over to David. I used to be the PSI regional representative and after 10 years I handed over to David. He is now our regional representative in this country.

Mr Carey —We have appeared before a similar committee and I imagine that if you were to look at our submission concerning relations with ASEAN to an inquiry last year—

ACTING CHAIR —That was the Foreign Affairs one.

Mr Carey —Yes. We made similar points. I should point out that we are not cutting and pasting. We make similar points before this committee because we believe that these are essential. Whether it be our foreign relations or our trading relations, they are all about the relationship of the Australian people with the peoples of other countries. They are essentially social relations.

We think that all the trade agreements should exclude the trade in services or, if they do have that right in a positive sense, that governments should regulate those services because they are usually provided by government. We have some very big problems with the North American sort of free trade agreement, which has a negative list for services. A government like Australia’s would have to positively and specifically reserve certain services. Those are things like investment controls, provision of services such as water, education, health and so forth. We believe that if they are not reserved to be regulated and publicly provided, there would be an inequitable social outcome.

We have examples of that in the scope of this committee in terms of Latin America. There is at the moment an extreme situation in Columbia. There is a move in Columbia to change the constitution to give as a constitutional right access to potable water for all citizens. That means defining what is private water and what is publicly available water. I think two million people in Columbia have signed a petition to ensure that the Columbian constitution is changed to provide that pure and safe water is every Columbian citizen’s right. There has now been an attack upon that by three major water service companies—Vivendi, Suez, Agua Barcelona. They are pressing the Columbian government to prohibit or forestall the passage of that legislation to give trading rights and to define the right to water in a way that would be advantageous to those private water companies as suppliers.

It is the issue of publicly available services and the ability of the government to regulate how those services are traded, if they are to be traded at all. That is central to a lot of those trade agreements. We say that Australia should insist upon governments being able to retain those services and to dictate and regulate the way that they are operated. It is essential.

ACTING CHAIR —You mentioned Columbia. Did you say that they are private companies?

Mr Carey —They are private companies involved in the provision of water services.

ACTING CHAIR —But the resource is still owned by the public.

Mr Carey —In many cases they have been privatised. Different municipalities have privatised them. A law is being passed by the national government, which would be signatory to any free trade agreement. Attempts are being made to pass legislation to give the government the ultimate right and for the constitution to guarantee access to water for each citizen. But those companies are now sponsoring legislation within Columbia to head that off and to make it tradable and to give them private rights to trade that water to those companies.

For argument’s sake, only last week the Puerto Rican government threaten to sack 45,000 public sector workers who are demanding bargaining rights. It is going to suspend their collective bargaining rights as a trade union and dismiss those employees because of their demands upon the government. We should say that a condition of any agreement involving Puerto Rico or any other Latin American countries must be that they guarantee that they will recognise trade unions and allow trade unions to operate.

These are public sector employees; they are not just private sector employees. They should have the right to form a union and to have it collectively bargain on their behalf and not be subjected to repressive legislation. Guatemala has ratified all of the eight core labour standards. But the World Trade Organisation itself and the International Trade Union Congress have repeatedly criticised Guatemala’s repression of trade unionists. In addition to demanding that core labour standards and rights be a condition in trade agreements, Australia must also actively take the next step—that is, to ensure that those countries implement those standards and not just simply take their word for it as a sign off.

Closer to home, Indonesia has the same problem. Indonesian public sector workers took industrial action against the government about plans to privatise the national airline services company and the airport workers. The Indonesian government then dismissed all those workers who were protesting against the privatisation and refused to recognise their union. The Indonesian government did the same thing to public sector workers who were protesting against the sale, again to private companies, of the electricity generation and supply system. Those workers were again stood down or dismissed for organising a protest.

There are examples very close to home where unions who are undertaking significant and important social activities—that is, protesting against the sale of services and what they see as the diminution of services—being dismissed by a government. These are governments with which we have close relations. The same thing happened in Thailand. Public sector employees have protested over the last couple of years about the sale of electricity generation, water and all those sorts of publicly available services, and they have been brutally repressed. Many of them have been dismissed and not rehired.

Trade agreements that include provisions that deal with access to services—which means in many cases to countries in Asia, Latin America and the Pacific the introduction of privatisation and the sale of those public services—have direct consequences for the people who work in them. They are often dismissed, laid off or imprisoned if they protest against the impact of those trade and services agreements. I think that when the Australian government enters into those agreements it has a responsibility to ensure that as a consequence labour rights, core labour standards and the right to organise and collectively bargain are not diminished.

We have a particular problem at the moment in the Pacific. The two biggest problems in our area that we have direct knowledge of are the difficulties arising as a result of the PACER Plus arrangements and the political situation in Fiji. They are two things that directly impact upon the employees that we represent in the public sector. PACER is the Pacific Agreement on Closer Economic Relations, and PACER Plus embraces Australia and New Zealand in that agreement.

All studies—those undertaken by the WTO and international organisations such as the International Monetary Fund—have shown that agreements such as this mean that the government losses its ability to raise revenue via import duties and so forth. In the Pacific it is estimated at minimum there will be a fall in government revenue of about 10 per cent, and it could be up to about 15 per cent to 20 per cent in some Pacific countries if duties, import taxes, luxury taxes and so forth are removed by the introduction of a freer trading arrangement.

Vanuatu has had experience of that recently. It had a free trade agreement imposed on it by Europe. It took something like 10 years for Vanuatu to recover the revenue lost. It never really got back to where it was in replacing the revenue lost because of the inability to charge duties. We fear that this will happen and that unfortunately Australia will be pushing these trade agreements in the Pacific and that they will have a direct impact upon the ability of those governments to provide services that are already under the hammer because of the general poor trading environment within those countries because they do not have many options. They have limited exports, limited ability to diversify and so on. We believe that Australia should not be forcing free trade or the PACER or PACER Plus arrangements on the Pacific Island nations and that they should be given an opportunity to reserve social and other public services from those agreements. Trade in services should not be part of those agreements.

We have another problem at the moment that is very difficult. I do not know whether it is appropriate for this committee to deal with it, but there is a significant attack upon the ability of the largest public sector provider outside Australia and New Zealand in the Pacific because of the political decisions taken by the current government. Only two weeks ago, 2,500 public sector workers were dismissed by the Fiji government because they had reached the age of 55. This has resulted in a layer. If you think about it, 2,500 is a small sounding number in Australian terms. You should multiply it by 30 and you would appreciate what the effect would be on the standard of services in Australia.

Senior nurses, people managing health services, people managing legal services, people managing all sorts of government services, accounting and so forth have all just been dismissed and marched out the door. We now have a very poor situation in Fiji. Public servants have also had their salaries compulsorily reduced. The government has abrogated pre-negotiated pay rises and people are leaving the country in droves. These are people who are usually in the middle level of the public sector. The whole of the public sector services in Fiji are being taken over or run by junior people with limited experience. We think that will have a very dramatic effect on the people of Fiji.

Australia has a role to play in trying to deal with this problem. The Fijians have lost $US32 million from their budget because the European Union has removed its sugar industry adjustment program. Fiji’s income has been slashed completely. The largest economy in the Pacific, which would have been part of the PACER agreement, is now in serious trouble. Australia should be very careful about trying to push PACER Plus and forcing the pace—pardon the pun—on PACER Plus while this difficult situation exists in Fiji.

Senator O’BRIEN —Fiji is going to be the subject of other actions that will have an impact on it because of the effective military coup and control by military and non-democratic forces.

Mr Carey —That is true.

ACTING CHAIR —I do not think this committee would be seeking to justify withdrawing those sanctions.

Mr Carey —It is a very difficult situation. It is likely to be—and probably has been by now—thrown out of the South Pacific Forum. It is probably going to be thrown out of the Commonwealth or suspended from the Commonwealth. There are all sorts of dramas. The Fijian government has been forced into seeking less scrupulous assistance from other governments in the world, notably North Asia or East Asia. Investment and loans are being sought by the Fiji government through China and so forth to prop up its income.

ACTING CHAIR —Thank you. Since you have lodged your submission, the Australian and New Zealand free trade agreement has been finalised. Do you have any comments about that agreement in the context of the issues and the concerns you have raised? I do not have it in front of me, so I am not sure how far it goes into the services area.

Mr Carey —Not extensively. But we would be disappointed that it did not include conditionality on observation of the core labour standards and the enforcement of those labour standards and so forth, the ILO conventions et cetera, as a condition of the trade agreement. I think we may well be a voice in the wilderness in saying this about free trade agreements or the trade agreements, whether it be in ASEAN or anywhere else. But we think it is an important position. I think the ACTU—with which we are also affiliated—would make exactly the same comment.

Mr MURPHY —I suppose I should declare a potential conflict of interest up front. I am a card-carrying member of the CPSU and have been since the days of the ACOA going back to 1973. I hope that does not disqualify me.

ACTING CHAIR —That is not a conflict.

Mr MURPHY —I might be seen to be a bit one-sided in my views.

Mr Carey —That is a qualification for membership.

Mr MURPHY —You can live with that I am sure. Senator Forshaw, Senator O’Brien and I have a keen interest in Latin America. I would like to move away from the Pacific for a moment. I would like your thoughts about the potential investment and trade opportunities in Latin America, and particularly in Columbia and Brazil, which are emerging so strongly in that region. Would you like to give us your views?

Mr Slape —Columbia is a very dangerous place for trade union activity. I think it has the highest murder rate of union officials in the entire world. It is all tied up with the cartels, drugs and so on. The trade unions try to stand up against some of those things.

Mr MURPHY —The president is, too. They have had a big improvement over the last four or five years. I think crime might be down by about 80 per cent. They have improved a lot, I know that.

Mr Slape —I am not sure if the attrition rate of trade union officials has dropped any. Hopefully it has.

Mr MURPHY —We would hope so.

Mr Carey —There are probably good opportunities for Australian investment and trade with those countries. I personally have always been surprised that there has been as little as there has, except for perhaps some large mining activities and so forth over the last couple of decades. They are a natural partner for Australia. As we have said before, up until now they have been very poor on their social obligations and their obligations to support international conventions dealing with the protection of the rights of employees to organise themselves.

Mr MURPHY —I note reference in your submission in the context of the WTO negotiations. I was going to ask you about that, but now you have referred to it, please expand.

Mr Carey —The PSI has an organisation based in South America. The simplest and worst examples of abuse of the right to organise et cetera are found in Latin America. It is just the most appalling place to operate. Daily there are massacres, people being arrested, mass sackings and so forth for opposing liberalisation of the economy, the sale of services and privatisation. It is essential that Australia makes the point that those sorts of behaviours are unacceptable to anyone with whom we want to expand our trading relations. I do not know whether I have answered the question.

Mr MURPHY —Are you suggesting that current trade ministers and previous trade ministers have not said anything about that? I notice that you make the point that there should be a high level of support for the freedom and opportunity of workers to participate in trade unions. We certainly have an energetic trade minister at the moment. I know how hard he works. Given his pedigree, he should be the perfect envoy and advocate.

Mr Carey —Precisely.

Mr Slape —I suppose we are trying to reinforce that. I think the tenor of our submission is not that we are trying to identify where Australia can trade and where the opportunities are. It is more that regardless of who we trade with we must ensure there is an effective public service in place to provide at least basic services to the population. If that happens, it prevents the breakdown of society that can happen in some of these countries.

On page four of our submission we note that a lot of our companies that do trade with various countries in Latin America—bearing in mind that this was written last August or September prior to the global financial crisis—


Mr Slape —I am not sure how we are going currently. We have not updated this submission.

ACTING CHAIR —We understand.

Mr Slape —We are saying that free trade is good, but there are some reservations about the things that David mentioned. As one of the advanced economies and democracies of the world, Australia should be trying to promote our values, taking into account local indigenous customs and things like that. But we need to put in place a good public service, non-government organisations and a free trade union movement that can be best placed to help ensure that the country moves forward.

ACTING CHAIR —I would like to pick up on Mr Murphy’s comments. Fascinating is probably not the best description of some aspects of Latin America and there is no shortage of political parties of the left and the right—

Mr Slape —And very passionate.

ACTING CHAIR —Very passionate. Without singling out any particular country, we know that the policies of some governments in the past—and even today—are not what they do in practice, irrespective of whether they say they are standing up for workers’ rights or that they are strongly pro-capital and business. The way in which trade union organisations are treated leaves a lot to be desired. You mentioned improvements in the last couple of decades. An interesting feature is that 20 or 30 years ago they were all essentially military, despotic governments. The continent has come a long way—just as Indonesia has—in moving quickly to government based upon democracy and elections.

However, there are all sorts of interesting features, such as what is happening in Columbia, Venezuela et cetera. That probably demonstrates the difficulties. What interests me is what opportunities an organisation like PSI has to be involved at the cutting edge in talking to governments and the political parties and political leaders, which you have always been able to do as internationals have done in Europe, Australia or the US regardless of whether they have a conservative government.

Mr Carey —Latin America is probably one of our fastest growing areas for PSI affiliates. There are more organisations being formed there and joining the PSI grouping. That has occurred as a result of the activity of the PSI in the region. It has focused on joining collective bargaining with service provision, particularly in the health sector. We have organised lots of health workers. For example, we have used things like retractable needles and one-use syringes and so forth. The PSI has organised their supply through the World Health Organisation on a sufficient scale. The PSI goes to the government, which previously hated unions and did not recognise them, and put a claim that said, ‘In our collective agreement all our nurses, health workers and so forth will be guaranteed retractable needles and reusable syringes to prevent the transmission of AIDS and so forth.’ They have made agreements with the government on the basis that the PSI sources the retractable needles cheaply, supplies them to the government, or gets the WHO to do it, and then the government ties up a collective agreement on that and other things with the union.

The union gets recognition, a collective agreement is reached, and the government gets the benefit because it gets the needles for free or cheaply because of the scale. The government starts to see that it gets a benefit from having a collective organisation that can represent workers and speak with one voice because there is actually a health outcome for it. That sort of thing is happening and that is the sort of work we are doing. That is happening in South America and South Africa, where AIDS is a big problem. The other thing that has happened since this was written is, of course, the stepping up of the size of the international commitment to funds organisations such as the Asian Development Bank (ADB), the International Monetary Fund and so forth.

ACTING CHAIR —I want to ask you about the ADB in particular because I am aware that you have quite an interaction with the bank.

Mr Carey —The Asian Development Bank has now tripled its source of funds. That figure may be even larger. It used to loan $11 billion a year to various countries. It has moved from giving direct country aid now to investment in more private sector projects. The PSI has been getting the ADB to adopt a policy to introduce core labour standards as part of conditions for grants and funds or project funding that it supports. We have inched along, but it has become better and better.

We have dealt with Senator Sherry, who represented the Australian government before the governors of the bank in Madrid and in Bali just recently. The ADB is now getting closer to establishing a formal structure to work out and to implement core labour standards among its recipient companies or governments. We appreciate some of the work that Senator Sherry has done in supporting that and also the work of the executive director, who is based in Manila. I cannot remember that gentleman’s name at the moment. It would be a valuable activity for Australia to support that with the board of governors. We are the fourth biggest donor to the ADB.

ACTING CHAIR —I was aware of the recent conferences that Senator Sherry has attended. I thought it would be handy to get that on the record. What is your union’s relationship with major corporations that are involved in Latin America and also in Asia in terms of talking to them about seeking to invest and to build their trade in the region? Are they prepared to talk to you about labour standards and these issues?

Mr Slape —Our interaction with multinational companies is more with those companies that provide a service to the public sector that might have been contracted out.

ACTING CHAIR —My old union now has companies that are heavily involved in Asia in construction. In your sector in electricity, water and so on—

Mr Slape —We do that through the PSI and other global union federations. It depends where they are coming from. We perhaps have more sway with the European companies because of the European Union and its social democratic nature. There are works councils and more interaction between the company and workforce. We talk to our unions through the PSI and others and their workers say to their companies, ‘You are doing public sector work or contracting out work in this country and we expect certain labour standards to apply.’ We do have some success in that.

ACTING CHAIR —Which major Australian companies might contract for this sort of work?

Mr Slape —Vivendi, Veolia—

ACTING CHAIR —That is transport.

Mr Slape —And Thames Water. It is also now coming into Australia, or is in Australia. It is obviously involved in water. We try to build up those sorts of links.

ACTING CHAIR —With Thames Water?

Mr Carey —Not the water but the company.

ACTING CHAIR —Exactly. Let’s not import water from the Thames, although it might be cleaner than the Yarra. Are there any further comments you wish to make?

Mr Slape —While we are asking you and the government to play a role in building up public services, one of the things about the PSI is that it collects 70 per cent of its affiliation fees from unions in first world countries and spends 70 per cent in third world countries. There is that transfer of our own funding, if you like. It is designed to build up trade unions, but it is also designed to try to help them with AIDS and other health issues and things like that.

ACTING CHAIR —It is about good corporate governance and democracy.

Mr Slape —Yes. Trade unions are not always just about wages and conditions.

ACTING CHAIR —Presumably you would be involved in education and electoral support programs.

Mr Slape —That is a big thing.

Mr Carey —Some of the Australian members of our union have been part of government delegations to run elections Timor and so forth.

ACTING CHAIR —I am aware of that. Columbia is not on our current list of countries to visit.

Mr Carey —We leave that to our North American affiliates.

ACTING CHAIR —Thank you very much for your attendance today. You will receive a copy of the transcript, which you can check and send back with any corrections. I thank the Hansard staff and the committee staff—Tas Luttrell and Samantha—for their assistance.

Resolved (on motion by Senator O’Brien):

That, pursuant to the power conferred by paragraph 16 of the committee’s resolution of appointment, this subcommittee authorises publication of the evidence given before it at public hearing this day.

Subcommittee adjourned at 1.21 pm