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Monday, 9 November 2015
Page: 7918


Senator LUDWIG (Queensland) (12:31): I rise also to speak on the Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 and Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 for the enabling of the China-Australia Free Trade Agreement. The Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 amends the Customs Tariff Act 1995 to provide free and preferential rates of customs duty on most Chinese-originating goods.

The customs tariff bill will be amended by, firstly, giving free rates of customs duty for most goods that are Chinese-originating goods in accordance with the division under the Customs Act; amending schedule 4 the Customs Act to maintain customs duty rates for certain Chinese-originating goods in line with the applicable concessional items, and then phasing the preferential rates of customs duty for certain Chinese-originating goods to be free of customs by the fifth year of phasing. Ultimately, that will mean that, over time, those custom rates will be phased down. It will also insert a new schedule to accommodate the preferential and phasing rates of customs duties and maintain excise equivalent rates of duty on certain alcohol, tobacco and petroleum products. This is done to achieve parity with rates of duty that would be payable if those particular products were manufactured in Australia.

The Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 also amends the Customs Act 1901 to introduce new rules of origin for goods imported from China. In addition, all of this will allow these goods to enter Australia at preferential rates of customs duty. The bill imposes record-keeping obligations on Australian exporters and producers of goods being exported to China under preferential Chinese tariff rates. These record-keeping obligations are designed to allow Australia's customs officials to verify that goods qualify for preferential access to the Chinese market under the China free trade agreement rules of origin. All of these are the mechanics of how we implement a China free trade agreement—important pieces to the machine—but, ultimately, the goal here is to achieve the signing off of the China free trade agreement.

Labor has been a party of trade liberalisation and Asian engagement for decades, and continues to be so. China is already our No. 1 trading partner, accounting for one-third of Australia's merchandise exports. Under ChAFTA, China has made commitments to Australia to remove and reduce tariffs on imports of Australian goods and to improve access for Australian services. It will also mean closer engagement with the People's Republic of China, which presents great opportunities for Australia that will lead to more growth and more jobs for the people of Australia. Increasing exports will drive our economy's growth.

One of the potential benefits of the agreement for Australia is removing Chinese tariffs on 95 per cent of Australian exports, which is particularly important for boosting our farm exports to China and improving access for agricultural products into China. I know many in the agricultural community have been strong supporters of this agreement because of the benefits that it will bring for them to improve and increase the export into China of our wonderful agricultural products. Also, it will mean that they will get better access through lower tariffs over time. Access for our services industries is just as important to the Chinese market.

This agreement has been 10 years in the making and will deliver significant benefits to Australian exporters, Australian consumers and Australian workers. Despite the obvious economic benefits, there have been serious concerns raised by Australia about temporary skills migration through the two mechanisms of the investment facilitation arrangement and movement of natural persons. Both of these mechanisms are argued to erode one of the key safeguards in the 457 visa system, which is labour market testing. In relation to the investment facilitation arrangements, Labor has delivered on safeguarding Australian jobs through labour market testing by introducing a new legal requirement in the Migration Act regulations that require labour market testing for work agreements. This requires the Minister for Immigration and Border Protection, when deciding whether to enter work agreements, to have regard to whether the agreements will support or create jobs for Australian citizens or permanent residents. The minister will also have the power to impose that a minimum number of Australian workers be employed or a maximum on the number of overseas workers that may be employed.

In respect of the movement of natural persons, Labor has delivered on upholding Australian pay and conditions through a better wages system for 457 workers. Labor's amendments will increase the temporary skilled migration income threshold for 457 visa holders from its current level of $53,900 to $57,000. The coalition have abandoned this area. They have failed to index the temporary skilled migration income threshold to wages growth for the past two years. In failing to do this, the coalition have lowered the skills threshold for the 457 program and undermined protections for overseas workers. Under the China-Australia Free Trade Agreement the coalition agreed to remove the mandatory skills assessment for Chinese workers in 10 trade occupations. Labor had fought, and continues to fight, to maintain Australia's skills and safety standards in this area by ensuring foreign workers have the relevant licence under Australian law. Following Labor's amendments, there will be a requirement for 457 visa workers in trade occupations to obtain a licence within 90 days, not work without holding a licence, and notify the Department of Immigration and Border Protection if a licence is refused or revoked.

I participated in the inquiry by the Joint Standing Committee on Treaties which looked into the China-Australia Free Trade Agreement. We heard from many submitters about these particular issues. Many others also provided submissions about the benefits that would accrue to Australia as a consequence of the Australian government signing the free trade agreement. What I said then, which I will reiterate briefly now, in additional comments to the report on the China-Australia Free Trade Agreement, is:

Trade drives growth, creates jobs and improves living standards.

Labor has been the party of trade liberalisation - and Asian engagement - for decades. Closer engagement with the People's Republic of China is critical for Australia's future. China is set to become the world's biggest economy in coming years.

That growth presents great opportunities for Australia.

However, as I said during the inquiry, a number of serious concerns were raised by submitters, some of which have since been addressed by the government, agreeing to Labor's safeguards.

The memorandum of understanding, the MOU, on an investment facilitation agreement—more commonly referred to as an IFA—establishes arrangements between the Department of Immigration and Border Protection and an eligible Chinese project company. A project company is eligible to establish such arrangements either where a single Chinese enterprise owns 50 per cent or more of the project company or, if no single enterprise owns 50 per cent or more of the project company, where a Chinese enterprise holds a substantial interest in the project company. The project company then must be involved in a proposed infrastructure development project with expected capital expenditure of $150 million over the term of the project. That means the infrastructure development project must be within the food and agribusiness; resources and energy; transport; telecommunications; power supply and generation; environment or tourist sectors. It is about building our economy in this critical areas of need.

Evidence to the treaties committee indicated that the low threshold for IFA projects could capture the majority of infrastructure projects in a wide range of industries. One of the submitters, the Electrical Trade Union of Australia, identified large residential and commercial construction ventures, mining operations and tourist development as well as power supply companies as falling within this threshold. They said:

There are a number of Chinese companies considered likely buyers for the privatised New South Wales power transmission and distribution networks. The maintenance and upgrade contracts for these assets, as well as those in the Victorian energy sector that are already owned by Chinese companies, are well in excess of $150 million.

Although the government has compared the IFA arrangements with enterprise migration agreements, the Australian Council of Trade Unions pointed out that the threshold for the EMA is capital expenditure of $2 billion. It just does not hold water to make that comparison.

Additionally, the EMAs apply only to the resources sector and are available to projects with a peak workforce of more than 1,500 workers, while the IFAs themselves have no minimum workforce requirements. Finally, EMAs require labour market analysis to show detailed projected shortages to justify the need for 457 visa workers in semiskilled and skilled occupations. IFAs, on the other hand, have no requirement for labour market testing. This is why, on this side, we did want to examine this with a great more detail than the coalition's cursory look at it.

In addition to the labour market testing regime, the requirements for sponsors to undertake labour market testing—or, in short, LMT, if you forgive the acronyms—before employing temporary foreign workers under 457 visa arrangements ensure that Australian workers are given priority in the labour market. Chapter 10 of ChAFTA, on the movement of natural persons, specifically states that there will be no requirement for LMT or economic needs testing for temporary Chinese skilled workers, including contractual service suppliers and installers and servicers. Neither Australia nor China will impose any limits on the total number of visas granted under these provisions. This does raise concerns that unlimited numbers of Chinese workers could be brought into Australia to fill vacant positions without first checking if qualified local workers are available. These matters were raised during the treaties committee hearings, and I do not think the coalition adequately addressed these issues in the report. That is why I provided additional comments—to bring a little bit more scrutiny to these issues.

Under 457 temporary work visa arrangements, skill level 3, mostly trade-level, occupations have been subject to labour market testing since 2013. Skill levels 1 and 2 occupations have been exempted from labour market testing, except engineering and nursing occupations, by ministerial discretion. The provisions in chapter 10 of ChAFTA appear to remove ministerial discretion, suggesting that even engineering and nursing positions would no longer be subject to labour market testing. In addition to the provisions in chapter 10, the IFA arrangements will extend concessional 457 visas to semiskilled workers. The IFA states that there will be no requirement for LMT for these concessional 457 visas. The IFA is the first step in a three-step process to make these projects operational: the IFA, a project agreement and a labour agreement.

The government maintains that LMT will be applied at the second step in the process, the project agreement stage. The department says that 'labour market analysis would be required' to demonstrate a labour market shortage and labour market analysis is only a projection of possible market conditions at a future date. At stage three of the process, the labour agreement, the department says that 'labour market testing may be required'. But clause 8 of the IFA says that, under the labour agreement, direct employers will have to meet the 'sponsorship obligations associated with the labour agreement, including any requirements for labour market testing'. But we then go a little bit further and look at the footnote, which says that only 'where labour market testing is required' will employers need to demonstrate that there are no suitable Australian workers available. So, ultimately, the process depends on departmental guidelines, not legislation or regulation, and is therefore subject to change. There is no indication that LMT will be mandatory at any stage of the process.

The Migration Council of Australia, who otherwise support ChAFTA, have called for the government to clarify whether or not LMT can occur for an IFA or whether it is precluded by the provisions in chapter 10. The government has argued that the IFA 'does not form part of the formal treaty agreement' and therefore 'is not bound by international treaty law or the commitments made under the ChAFTA'. According to the government, the commitments under ChAFTA will be provided for through the 'standard' subclass 457 visa program while the IFA will be provided under the department agreement program and will be 'facilitated by the subclass 457, but it is not part of the 'standard' subclass 457 visa program'. That demonstrated to me during the treaties committee that the coalition government had taken their eye completely off the ball in this area and had not bothered to ensure that Australian jobs would continue to be protected as they have been. Labor has argued for and delivered a new legal requirement in the Migration Act regulations that requires labour market testing for all work agreements. Labor argued for that because, ultimately, what we want is the best of both worlds—and that is achievable here: a China free trade agreement that provides, economic growth and a potential for increased trade whilst maintaining a skilled workforce in Australia which we do not compromise through a trade agreement.

Witnesses at that treaties committee also voiced concerns over safety standards being compromised by the new arrangement, particularly with regard to the electrical trades area. Nobody wants to compromise safety in these areas. We want to continue to ensure that we have safety standards that are high and continue to remain high. Labor has ensured a new legal requirement for visa conditions and that 457 visa workers in trades occupations obtain licences within 90 days, do not work without holding licences and notify the department of immigration if licences are refused or revoked. All of this is important to ensure that the community and the public have confidence in this free trade agreement.

Senator Whish-Wilson interjecting

Senator LUDWIG: Of course, the Greens just oppose everything. So I am not surprised. They are also opposing economic growth and opportunity for Australia. I am distracted by their interjections.

Senator Whish-Wilson interjecting

Senator LUDWIG: Ultimately, I support free trade agreements. I know you are implacably opposed to them.

The ACTING DEPUTY PRESIDENT ( Senator Bernardi ): Address your comments through the chair, Senator Ludwig, and ignore the interjections.

Senator LUDWIG: I am sorry. I had been distracted—and I did say that. You do have to look at the record of the coalition, though. With the unemployment rate increasing under the coalition government, it is important to ensure that trade agreements support rather than replace local employment. This continues to be a fundamental premise of the Labor Party. We support Australian opportunities in Australia, we support skilled Australian workers and we support, and continue to support, programs that allow temporary skilled migration—but it is about filling skilled shortages, where employers cannot find local workers to fill vacancies.

Labor's safeguards are about ensuring that that is the system that we have in place and that the China free trade agreement, when it enters into force at the earliest opportunity, allows Australian exporters to realise the benefits of the agreement while also ensuring local jobs are supported. That is what Labor stands for. In short, Labor will support ChAFTA and Australia's economic engagement with China while making improvements to support local jobs, maintaining workplace skills and safety standards and deterring exploitation of overseas workers.