House debates

Monday, 21 October 2019

Bills

Customs Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill 2019, Customs Tariff Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill 2019; Second Reading

12:00 pm

Photo of Madeleine KingMadeleine King (Brand, Australian Labor Party, Shadow Minister for Trade) Share this | Hansard source

Labor supports this legislation. I move:

That all words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading, the House:

(1) notes with concern potential temporary foreign labour arrangements concerning Contractual Service Suppliers;

(2) notes the importance of ensuring robust public interest safeguards, including on health and environmental law, relating to the new, modernised investor-state dispute settlement provisions;

(3) commends the outstanding work by civil society, the wider labour movement and the trade union movement in campaigning against antiquated investor-state dispute settlement provisions, for better, fairer free trade agreements;

(4) calls on the government to implement the recommendation made by the Joint Standing Committee on Treaties, to ensure that future proposed free trade agreements are accompanied by independent modelling and analysis;

(5) notes with concern the growth in worker exploitation under current temporary work visa arrangements; and

(6) calls on the Government to rigorously enforce anti-dumping measures to ensure Australian industry is not subject to anti-competitive and predatory trade practices".

This morning I received confirmation in writing from the minister for trade confirming this government's commitment to the issues I have raised. I welcome the commitment, but it must be followed by action. Labor will hold the government to account on the commitments it has made and will work constructively to make sure that this happens.

We support this legislation because we understand the enormous benefits that trade has brought to Australia. We do so because we recognise the importance for a trading nation like ours in building closer economic and people-to-people relationships with our neighbours. Trade creates jobs. According to the independent Centre for International Economics, one-in-five Australian jobs depends on trade. That's 2.5 million workers whose livelihoods are directly linked to our engagement with the world, especially the fast-growing Asia-Pacific region on our doorstep. If we continue to reduce trade barriers, if we as a nation continue to advocate for an open, rules based global trading system, we will create more jobs for Australian workers. The result will be more competitive industries with a higher skilled, better-paid workforce.

Many of our key industries rely on trade. Those with the highest percentage of export related jobs are in mining. Seventy-five per cent of mining jobs are export related, 43 per cent of agricultural jobs are export related, 38 per cent of metal product manufacturing jobs are export related, 28 per cent of jobs in food manufacturing are export related, and 31 per cent of transport and storage jobs are related to export trade. These are the people whom Labor represents: mineworkers, farm labourers, meatworkers, manufacturing workers, truck drivers, wharfies, airline industry workers, shop assistants, and storemen and packers. In addition, there are thousands of jobs in hospitality and transport that rely on tourism. As well, those in higher education and vocational education rely on the rapid growth in Australia's export of education services. Trade creates jobs for Australians. It also creates better jobs. A study by economists at the Department of Industry, Innovation and Science has found that Australian businesses that export will hire, on average, 23 per cent more staff, pay 11 per cent higher wages and have labour productivity 13 per cent higher than non-exporters. However, Labor also recognises that we live in an era of increased scepticism about the impacts of globalism and free trade. We live in an era in which some world leaders have demonised free trade for their own domestic political purposes. In the US, the 'America First' slogan from the 1940s has been revived and the US President has lambasted his country's global engagement in the postwar era and pulled the US out of the Trans-Pacific Partnership.

Here in Australia, the Greens and One Nation have also used international trade as a weapon for their own electoral gains. If these parties choose to weaponise these agreements for short-term political gain, I hope they have the courage to explain their decision to the steelworkers of Port Kembla, to the wheat producers of Western Australia, to dairy farmers in Victoria and to the beef and sugar industries of Queensland. And, if Centre Alliance also chooses to politicise these agreements, what will they tell the Australian grain and wine industries? What will they say to South Australian workers in the copper mining and refining industry who will benefit from the Indonesia-Australia Comprehensive Economic Partnership Agreement?

While we know that trade has raised overall living standards in Australia, we also recognise that it has harmed workers in some industries and some regions. The benefits of trade are not always evenly spread, and it is understandable that those who feel left behind often question whether trade deals are more advantageous for big companies than for ordinary workers. So we must listen to what the community is telling us, and that is what we have been doing. We have consulted with stakeholders in the union movement, in industry, in academia and in government. After careful consideration, Labor has come to the conclusion that these three agreements, with Indonesia, Hong Kong and Peru, are in the national interest. But that doesn't mean they are perfect—far from it.

When Labor is next in government, we will undoubtedly do things differently. I appreciate the concerns that have been raised by the ACTU and some of its affiliate unions with these agreements. I share these concerns. The federal parliamentary Labor Party shares these concerns. Labor wants to protect jobs and to improve working conditions for everyone. These are important aims, critical for the wellbeing and prosperity of Australian workers, especially at this time of slowing economic growth, record low wages growth and high youth unemployment. The Liberal-National government's appalling record of economic mismanagement has only exacerbated these problems for workers and their families.

The union movement has stood up for the rights of Australian workers and has also played a leading role in highlighting the exploitation of foreigners who come to Australia to work on a temporary visa. We should have better safeguards in place to protect these vulnerable workers. Unfortunately, this government does not share Labor's belief in the need for a stronger industrial relations systems that protects all Australian workers regardless of their country of origin.

Unions have long advocated for labour market testing when employers bring temporary skilled workers to Australia. I note, however, that there are no new labour market testing waivers in these trade agreements that go beyond the commitments Australia has already made to these three nations. All adhere to Australia's obligations under the World Trade Organization rules. But this was not the case when the coalition ratified the China-Australia free trade agreement in 2015. At that time, the trade union movement campaigned to protect labour market testing to ensure the safety and prosperity of Australian workers. This lobbying effort has resulted in a significant change. Australian government trade negotiators have maintained labour markets testing as a rule in all current and future arrangements.

Without the advocacy of the labour movement in ensuring free trade agreements are fair for workers and maintain high standards, we would not have the robust safeguards that we see in the deals before the parliament. That does not mean, however, that concerns about protecting Australian jobs have been fully or adequately addressed. Labor is concerned that the Indonesia-Australia Comprehensive Economic Partnership could, in future, allow workers from Indonesia to enter Australia without due consideration as to whether local workers are able to full those positions. Under the terms of the IA-CEPA, Australia and Indonesia can begin talks within three years of a new agreement to allow increased numbers of Indonesian temporary workers to enter this country.

I would like to acknowledge the efforts of the Labor members on the JSCOT committee that examined the IA-CEPA and other agreements—and I also acknowledge the chair of the JSCOT committee, who is in the chamber. These Labor MPs sought to include a recommendation in the final report that a future agreement with Indonesia on this issue should include a commitment to labour market testing. Such a commitment would ensure that Indonesian workers meet the same standards as local workers. However, the JSCOT committee in the end did not support this recommendation and it was not included in its report. Again, I note the government's letter today and its commitment that people who come to work in Australia are not exploited and that they are properly qualified for any work that they undertake.

Under the IA-CEPA, the number of working-holiday visas issued to young Indonesians will increase from the present level of 1,000 a year to 4,100—scaling up to 5,000 young Indonesians by the sixth year. Some stakeholders have expressed concerns that this could help to drive up unemployment in Australia. However, it is important to note that in 2017-18 a total of 210,456 working-holiday visas were issued in Australia and that Indonesia accounted for just 0.5 per cent of these. In contrast, there were almost 38,000 visa holders in this category from the United Kingdom. An additional 4,000 workers from Indonesia will equate to just 0.03 per cent of the national labour force. Nonetheless, there is a very real risk that these workers could be exploited, and the growth of the temporary workforce is fundamentally changing Australia as a nation.

Two million people live and work here with no path to permanency and fewer rights than Australians. This country is at risk of creating a migrant underclass, and that is not what Australians want. Many people blame free trade, but the problem is wider than that. It includes our domestic industrial laws and the inadequate enforcement of those laws. It includes a failure to address the worker exploitation that the trade union movement brings to our attention regularly. I recognise the commitment of trade unions that are at the coalface when fellow humans are discovered living in appalling conditions—held hostage, their passports taken and often not paid by unscrupulous employers. All nations, including Australia, should be striving to meet their commitment to implement agreed international standards on labour rights, including the International Labour Organization's conventions.

It was pleasing to see the treaties committee unanimously recommend that the government should conduct independent modelling of all proposed trade agreements to assess whether expected outcomes are being realised. This has long been Labor Party policy. This recommendation was supported during the JSCOT process by both the union movement and leading business groups, such as the Australian Chamber of Commerce and Industry. As the ACTU's Damian Kyloh told the committee:

We feel that for good policymaking it's very important that we conduct independent cost-benefit analysis, and not just of the economic effects—we'd also say environmental and, for us particularly, looking at the labour market. We want to understand what the effects on the labour market are in these agreements. We know that in the past some industries have benefited but some others have not and there have been job losses as a result. Without an independent economic assessment no-one knows what the effects are.

I call on the government to accept this recommendation and to implement a process through which independent economic modelling of proposed trade agreements can be undertaken, but I am far from confident this will occur, because the government has ignored all previous JSCOT recommendations on this issue. I note too that today's letter from the government does not have a commitment to economic modelling.

Labor calls on the government to ensure that any new free trade agreement is subject to an independent national interest assessment along with economic modelling before it is assigned. This assessment could examine the economic, strategic and social impacts of the agreement. It should be reviewed 10 years after ratification so the full impacts of a trade agreement are able to be assessed. In addition, we call on the government to ensure greater transparency in other areas, including updating the parliament and public after each round of negotiations, where that is possible. We'd also like to see a focused system of trade advisers, including from industry and unions, who will provide feedback and draft trade agreements during negotiations.

In its most recent review of the world trading system, the Productivity Commission noted that higher-quality consultation processes with the community would help to achieve better outcomes for our trade and investment agreements. It found that confidentiality agreements could be used to enable formal consultation on draft treaty text with stakeholder parties during the negotiation process. It recommended that, when a draft agreement is completed, it should be exposed to public scrutiny before it is assigned. This level of consultation would build a better appreciation of the choices and their respective pros and cons, combat perceptions that secrecy during negotiations leads to suboptimal outcomes for some members of the community and foster public confidence in open markets. More generally, the commission called for governments to better explain how and why the community benefits from trade liberalisation while recognising there sometimes will be members of the community who do lose out.

Labor believes in greater transparency because we believe the whole community should be cognisant of facts in the discussion on international trade. Facts are importance to all decision-making and policy development processes. Just as Labor and the Australian people have called on the government to acknowledge the science of climate change, we want the facts on trade to be out in the open. It was for this reason that the previous Labor government conducted a scoping study into the full economic partnership with Indonesia, in conjunction with the Indonesian government. This was followed by independent economic modelling by the Centre for International Economics that indicated a potential IA-CEPA would result in gains of $3.2 billion of GDP to Australia. This modelling can give Australians confidence that the agreement will be of significant benefit to Australia and Australian jobs.

It goes without saying that a more contemporary analysis would provide even greater confidence. But, in the absence of this, we turn to other reputable sources. The recent report of the Productivity Commission, the Australian government's independent advisory body, found that the benefits of free trade for this country are wide-ranging. For example, every Australian business that uses a car—from tradies to taxi operators and driving schools—has benefited from the large reduction in tariffs and quotas over the past decades. It's not just the price of cars that has fallen. Australian consumers see the benefits every day in terms of wider choices and lower prices. The prices of clothing, footwear and most electronic goods have also fallen in real terms over the past 30 years, boosting household purchasing power.

In many parts of the world, the effects of trade liberalisation have been even more profound. The World Bank estimates that, over the past quarter-century, more than one billion people have lifted themselves out of poverty, in many cases by seizing the opportunities that trade has created. The largest gains have been in Asia, including our key trading partners, such as Indonesia, Thailand and Vietnam.

Other experts have attempted to investigate the likely economic impacts in the event an Australian government chose to wind back decades of tariff cuts and even to renegotiate existing free trade agreements. The aforementioned report by the Centre for International Economics, commissioned by the Department of Foreign Affairs and Trade, did some valuable work on this topic. It found the short-term impact of tariff increases would cause job losses in Australia, and over the long term real wages for Australian workers would be lower, in turn cutting household consumption and Australian living standards. The modelling in the report showed that if tariffs on manufacturing imports were raised, causing a 10 per cent price increase across the world, real GDP in Australia would be 1.8 per cent lower, and global real GDP would be 3.5 per cent lower. If tariffs on all merchandise imports were increased to raise all import prices by 10 per cent, real GDP in Australia would be 2.2 per cent lower and global real GDP would be 4.1 per cent lower.

A key point of difference between Labor and the government on these three agreements relates to the inclusion of investor-state dispute settlement mechanisms. These agreements with Indonesia, Hong Kong and Peru all contain ISDS clauses which Labor does not support. Again, I recognise the excellent work of civil society and the trade union movement in campaigning against antiquated ISDS provisions. Importantly, however, the ISDS provisions in these agreements include newer safeguards that protect Australia from legal action against public interest laws, such as public health measures or environment law. For example, under these new ISDS clauses, tobacco giant Philip Morris would be unable to take legal action against the Australian government for its plain cigarette packaging legislation, as it unsuccessfully did several years ago.

If these agreements do not come into force, the bilateral investment treaties that currently govern Australia's relationships with these trading partners would remain in place. In other words, Australia would be worse off. In the cases of the Hong Kong and Peru agreements, separate agreements have been made to terminate these bilateral investment treaties upon entry into force of the new trade agreements. In the case of Indonesia, no agreement was reached to terminate the old treaty. It is of course baffling why the government signed IA-CEPA without ensuring that, contrary to usual practice, the previous investment treaty with Indonesia was not terminated. It means that, for now at least, the IA-CEPA will initially coexist alongside the antiquated investment treaty and two sets of ISDS provisions will be in force. This presents a risk for Australia and it must be addressed. I'm heartened by the government's commitment today, in response to Labor's demands, that the Minister for Trade, Tourism and Investment will pursue an agreement with Indonesia to terminate the old bilateral investment treaty. I also note that the JSCOT committee made this recommendation in the strongest possible terms.

I'll now address a number of concerns that have been raised by stakeholders in respect of these agreements. In relation to the privatisation of public services, none of the agreements include provisions that require the privatisation of any public services, and that is a good thing. However, some stakeholders remain concerned about this issue. I therefore call on the government to ensure there is no inference from the agreements that would require the privatisation of government owned services, nor restrict any future decision to acquire public assets.

In relation to the Pharmaceutical Benefits Scheme, none of the agreements include provisions that undermine our important PBS. On intellectual property, the Peru and Hong Kong agreements do not include pharmaceutical provisions, including in relation to biologics. IA-CEPA does not include a chapter on intellectual property. The investment chapters in the Peru, Hong Kong and the Indonesia agreements explicitly prevent anyone from bringing an ISDS claim against the Australian government in relation to measures comprising or relating to the PBS. The PBS is a critically important part of Australia's health system. It is the envy of the world and must be protected.

In regard to antidumping, all three agreements preserve Australia's WTO antidumping rights. However, Labor calls on the government to rigorously enforce antidumping measures in order to ensure Australian industry is not subjected to anticompetitive and predatory trade practices. The government should consider sensible reforms, such as transferring the emergency safeguard mechanism from the Productivity Commission to the Anti-Dumping Commission.

Labor supports trade between Australia and the rest of the world, because trade creates jobs, generates economic growth and improves living standards. Trade has lifted millions out of poverty around the world. It provides consumers in Australia and around the world with cheaper products. Despite absurd claims to the contrary by some Liberal MPs, Labor has a long record as an advocate for an open global trading system. Labor was the party that opened up Australia to competition and helped make our exports globally competitive. In fact, it was Labor Prime Minister Ben Chifley who took Australia into the world's new multilateral trading system that began after World War II. Chifley also led the foundations for close engagement with the emerging powers of Asia, boldly supporting independence for both Indonesia and India. He envisioned lucrative new export markets in our region. In the early 1970s Gough Whitlam cut tariffs by 25 per cent across the board. He also launched a new era of regional engagement when he visited China and established formal diplomatic relations with Beijing. These were brave moves, unprecedented for a political leader of that time. Whitlam viewed China as a huge potential economic opportunity for Australia. Of course, almost 50 years later, China is our biggest trading partner. The reforms of Bob Hawke and Paul Keating, who tore down Australia's tariff walls in the 1980s, laid the foundation for almost three decades of continuous economic growth. Hawke was the founding father of APEC, the Asia-Pacific Economic Cooperation group, a vehicle for free and open trade and investment in the Asia-Pacific region. Labor trade minister John Dawkins established the Cairns Group in order to make trade in agricultural products tariff free.

Labor's dedication to trade reform has not dimmed in the years since. When Labor was last in government we signed trade agreements with Chile and Malaysia, along with a landmark deal with the 10 countries of the Association of Southeast Asian Nations, and New Zealand. Labor trade minister Simon Crean was also heavily involved in the Doha round in the WTO and in commencing the FTAs with China, South Korea and Japan. The Gillard government's landmark Australia in the Asian century white paper identified the vast opportunities for Australia in the region. Another Labor trade minister, Craig Emerson, launched negotiations for what would become the Indonesia-Australia Comprehensive Economic Partnership Agreement, which we are discussing today. Unfortunately, this stalled for several years after Labor left office, and Australia's trading relationship with Indonesia has since gone backwards. The government eventually re-entered negotiations but these broke down in 2018 when, during the Wentworth by-election, the Prime Minister announced plans to relocate Australia's embassy in Israel to Jerusalem.

This economic partnership agreement between Australia and Indonesia will help to address a relationship that is very much underdone. Indonesia has a population of 260 million people and is one of Australia's closest neighbours, yet it accounts for only around two per cent of Australia's exports. In 2018, two-way trade in goods and services was worth $17.6 billion, making Indonesia only our 14th biggest trading partner. Labor believes the IA-CEPA agreement will help to address this. Indonesia is an emerging economic giant in our region. The Indonesian economy has expanded strongly over recent decades. It remains the third-fastest growing economy in the G20, behind India and China. Based on trends, by 2030 Indonesia will move from the 16th largest economy in the world to the ninth largest, and to the fourth largest by 2050. It will have a consumer class of 135 million people by 2030. Indonesia's urban population could reach 63 per cent in 2030, up from 51 per cent in 2012. As Indonesia's economic clout grows and more of its people enter the consumer class, business opportunities in Indonesia will continue to grow. We should not overlook its challenges, of course. To realise its potential, Indonesia will need to continue the structural reform of the economy undertaken by President Joko Widodo. It will have to improve its business and investment climate, cut red tape and tackle corruption.

Under IA-CEPA, Australia will eliminate all of its remaining tariffs on Indonesian goods imported. In return, Indonesia will provide duty-free or preferential access to 99.9 per cent of goods from Australia. This agreement locks in fresh trade opportunities for Australian steel manufacturers, as well as for our meat, grain, sugar, dairy and horticultural producers. The Australian steel industry and steelmakers will benefit as Indonesia reduces its existing tariff of 15 per cent on Australian steel to zero. It will also guarantee import permits for 250,000 tonnes of Australian steel per year. This is great news for Australian manufacturing, especially for companies like BlueScope Steel and its workers in Port Kembla. It will also ensure that BlueScope's Indonesian operations of 40-plus years, which employ more than 500 Indonesians, have access to a bigger range of high-quality, competitively-priced feedstock. It means that Australia will be well placed to contribute to the extraordinary development and infrastructure agenda of the Indonesian government.

With the President's recent announcement that he intends to build an entirely new capital city in East Kalimantan, the possibilities are endless. Australian farmers will be able to import 500,000 tonnes of grain, wheat, barley and sorghum a year into Indonesia tariff-free, with the quota increasing five per cent a year. Indonesia is Australia's largest wheat export market, but higher grain prices in Australia caused by the drought have hit our exports. The industry has said it wants to be in a position to rapidly recover market share in Indonesia when conditions in Australia improve, and it has said that the IA-CEPA will be critical in this regard.

More generally, the outlook for Australian agricultural exports to Indonesia is very promising. Over the next three decades Indonesia's economic growth is projected to result in a quadrupling in the value of food consumption. The five per cent tariff on Australian live cattle will be eliminated, and a quota will be established for 575,000 head of cattle grown to four per cent annually over five years to 700,000 head of cattle. Northern Australia will be a great beneficiary of this—that is, Queensland, the Northern Territory and Western Australia.

Indonesia will progressively eliminate tariffs on a wide range of other products, including frozen beef, sheep meat, dairy, honey, citrus fruit, vegetables, copper, plastic, automotive parts and machinery products. Australian vocational education and training providers will be able to establish ventures in Indonesia with up to 67 per cent Australian ownership. Our world-leading mining service firms will for the first time be able to partner with Indonesian businesses in developing the country's extensive mineral and energy resources. Under the agreement Australian businesses will also be able to invest up to 67 per cent in Indonesian companies.

While much of the focus has been on Indonesia, this bill will strengthen our ties with Hong Kong and Peru. The Hong Kong agreement codifies existing trade arrangements between the two nations, providing greater certainty for Australian business. Hong Kong is Australia's leading business base in Asia and serves as a gateway for mainland China and the North Asia region. Peru is a growing market for Australian goods and services exporters, with a GDP comparable to that of Vietnam. It has been one of the fastest-growing economies in the world over the past decade. The Peru agreement will help Australian businesses to deepen engagement with the dynamic markets of Latin America.

There is one final, very topical reason for these three agreements to be supported. The trade war between the US and China presents risks to Australia, which, as an export-driven economy, depends on a strong rules based trading order. We must therefore diversify our export markets lest we become a victim of the dispute between the two largest economies in the world. We must do whatever we can to encourage the survival of the multilateral trading system under the auspices of the World Trade Organization. In the meantime, Labor is moving second reading amendments. We will support the legislation before us. Most importantly, Labor will support openness. I thank the House.

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