Monday, 21 October 2019
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
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.
The original question was that this bill be now read a second time. To this the honourable member for Brand has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. The question now is that the amendment be agreed to.
Let me thank the member for Brand for her comments in support of the Customs Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill and the Customs Tariff Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill. At a time of growing global economic uncertainty and mounting trade tensions, countries like Australia need to stand up for the principle of free trade and shore up the foundations of the global trading system.
Trade and economic growth go hand in hand. Since the end of World War II, it has been the growth in global trade that has driven increased living standards around the world. In 1945, exports were a mere five per cent of total GDP. Today, they are 25 per cent. As the IMF updated in its World Economic Outlook last week, it's the slowdown in global trade growth that is very much driving the slowdown in the global economy. Global trade growth is now down to one per cent, its lowest level in seven years, and this is leading, in the IMF's words, to a 'synchronised slowdown' in the growth of the global economy.
Countries that have embraced the opportunities of global trade and opened their economies have seen the most dramatic improvement in their fortunes. China's embrace of trade and openness from the late 1970s onwards propelled China's development and lifted literally hundreds of millions of people out of poverty. But the proposition that links growing trade with rising prosperity is, unfortunately, under threat from protectionist sentiments, from increasing trade tensions and from growing deadlock within the World Trade Organization.
Australia has been a huge beneficiary from the liberalisation of the global economy. The ability to trade freely around the world on the basis of transparent and predictable rules has delivered us improved living standards, better jobs, higher wages and greater choice. That is why it is important for Australia to stand up for the global trading system, to stand up for free trade and to play our part to maintain and improve the liberal and open character of the global trading system. On average, Australian businesses that export hire 23 per cent more staff, pay 11 per cent higher wages and have labour productivity 13 per cent higher than non-exporters. That is why trade contributes to our economy, creates more jobs and higher-paying jobs and adds to our capacity to pay for the essential services, health and education that Australians rely on. This government's ambitious trade agenda has already resulted in more Australian businesses exporting—more than 53,000 exporting in 2017-18, which is up 18 per cent since 2013-14—and more jobs, with one in five Australians employed in trade related employment. It's estimated that more than 240,000 trade related jobs have been created in the last five years.
Australia has concluded three important free trade agreements since 2018—with Indonesia, with Peru and with Hong Kong. The bills before this House today will amend our legislation to allow ratifications of these agreements, to allow these agreements to enter into force and for Australians to reap the benefits of these agreements. Each of these agreements will open new markets, provide greater opportunities and protections for Australian exporters and Australian investors. They will help protect the Australian economy from growing global economic headwinds by diversifying and growing our export markets.
Coverage of exports by free trade agreements in Australia has gone from 26 per cent to 70 per cent over the past six years, and these three agreements will take this further. This government's goal is to ensure that around 90 per cent of Australia's trade is covered by FTAs by 2022, including by implementing these agreements signed with Indonesia, Peru and Hong Kong and pursuing strong export agreements with the European Union; the Pacific Alliance, consisting of Mexico, Chile, Peru and Colombia; the Regional Comprehensive Economic Partnership Agreement, or the RCEP; and, when they're ready, the United Kingdom.
Each of the agreements with Indonesia, Peru and Hong Kong will also strengthen relations with important partners, and each of these agreements will help buttress the global trading system and underwrite free trade at a time when it is under threat. Our agreement with Indonesia, the Indonesia-Australia Comprehensive Economic Partnership Agreement, has the potential to transform our economic relationship and lift it to a level that better reflects the strategic importance of our two countries to one another. Beneficiaries include Australian grain and citrus growers, cattle producers, mining-equipment providers, mining-services providers, vocational education suppliers—all these groups stand to benefit from improved market access.
Under IA-CEPA, once implemented, over 99 per cent of Australia's goods exports will enter Indonesia duty-free or under preferential arrangements. Key market access gains include: frozen beef and sheepmeat exports, which will have their tariff halved from five per cent to 2.5 per cent upon entering into force and eliminated entirely after five years; removing all remaining tariffs on dairy exports to support Australian dairy producers; and improving market access outcomes on services and investment, which will give Australian businesses increased certainty and confidence in the Indonesian market, including in areas such as vocational education, mining and related services, and tourism.
The Indonesia-Australia Comprehensive Economic Partnership Agreement also lays the foundations for a comprehensive economic partnership with our largest and most significant northern neighbour. It will tackle emerging issues in trade such as non-tariff barriers, the digital economy, connectivity, competition policy and regulatory transparency. It will improve the business and investment environment, including through modernised investor-state dispute settlement provisions. It will support Indonesia's own growth by supporting Indonesian capacity in key areas and by positioning Australia as the supplier of first choice. Indonesia is one of Australia's highest priority relationships, and this agreement with Indonesia will help grow our ties in a part of the relationship that has been historically under-done.
The agreement with Peru has concluded with one of the fastest growing economies in Latin America over the past decade, an economy comparable in size to Vietnam. It builds on the liberalisation we have already achieved in the comprehensive and progressive Trans-Pacific Partnership or CPTTP. Our trade with Peru has been growing in the order of 20 per cent annually, and Peru is an increasingly attractive investment destination for Australia. From 10 Australian companies investing in Peru in 2003, there are now over 90 companies in Peru, especially in the mining and mining equipment sectors. The Peru-Australia Free Trade Agreement will ultimately eliminate over 99 per cent of tariffs on Australian goods to Peru, expanding on the TPP 11 agreement. It will also include the elimination of tariffs on beef cuts after five years, the instant elimination of tariffs on sheepmeat and wheat, instant duty-free access on 7,000 tonnes of dairy products and immediate elimination of duties on all pharmaceutical tariffs. It will also include the recognition of Australian degrees in Peru. I would like here to thank the work of the embassy in Peru and our ambassador at the time, Mr Nicholas McCaffrey, for all he did to help conclude this agreement.
Our agreement with Hong Kong, the Australia-Hong Kong Free Trade Agreement, provides a comprehensive and ambitious agreement to govern the trade and investment relationship. Our economic and trading relationship with Hong Kong, one of Asia's most advanced economies, is already well established and advanced. This agreement largely codifies existing trade and market access arrangements, providing certainty for investors and exporters into the future. It modernises the treatment regime for foreign investors, making investor-state dispute settlement mechanisms more transparent and more constrained, improving safeguards for governments wishing to adopt legitimate public policy measures in areas such as tobacco control. The modern e-commerce rules governing free data flows across borders are included in the agreement as well as guaranteed access for service supplies into key sectors including: financial services, education, transport, tourism and professional services, and guaranteeing that tariffs will remain bound at zero per cent.
This is a good agreement on its merits with Hong Kong, but we must also be mindful of the political situation in Hong Kong, something that we in this House and the government continue to watch closely. It is certainly my view that the maintenance of the one country, two systems formulation which has governed Hong Kong since the handover in 1994, under the basic law, is important, and this agreement helps shore up the status. We've concluded this agreement with the authorities of Hong Kong, and this agreement helps re-affirm the unique status under the one country, two systems formulation.
The Joint Committee on Treaties found that IA-CEPA, the Indonesia-Australia Comprehensive Economic Partnership Agreement, and the Australia-Hong Kong FTA represent substantial gains for Australian industry, agriculture and business and, therefore, for the Australian economy. JSCOT recommended that we proceed to rapid ratification of both agreements. I thank fellow members of the Joint Standing Committee on Treaties, as well as the deputy chair, for their work in enabling our productive deliberations on these issues.
I want to touch upon some issues that the member for Brand raised in her comments regarding these agreements. The first is investor-state dispute settlement. These three agreements, with Indonesia, with Hong Kong and with Peru, strengthen our existing ISDS provisions with all three countries. The ISDS provisions in all three agreements allow the government to regulate on issues of national importance, including public health and the environment. Australia has pre-existing ISDS mechanisms in force with all three countries. Those with Peru and Hong Kong will be terminated upon entry into force of these agreements. I note that the trade minister has advised that Australia will now be pursuing termination of the Australia-Indonesia bilateral investment treaty, something the Joint Standing on Treaties recommended, and I welcome that announcement.
There are no new waivers of labour market testing under these three agreements. It's important to emphasise that point: there are no new waivers of labour market testing. Nothing in these agreements changes Australia's workplace laws, nor do the agreements allow for the exploitation of working holidaymakers. All workers in Australia, whether they are Australian nationals or foreign workers, are treated equally under Australian workplace laws. This is exactly as it should be. Nothing in these agreements allows for foreign workers to work without the necessary licensing or registration or qualifications, and the government will continue to take steps to ensure that working holidaymakers are not exploited and, if required, are qualified for any work they undertake. The government has confirmed that it will not use the provisions of article 12.9 in the Indonesia agreement, or any other provisions in that agreement, to propose, create or extend any additional labour market testing waivers for Indonesian contractual service suppliers.
Finally, I go to privatisation. As the member for Brand said, these agreements do not create an obligation to privatise any Australian public services, nor do they restrict any future decision to acquire public assets, and nor do they imperil schemes such as the Pharmaceutical Benefits Scheme, or Medicare for that matter.
In conclusion, these agreements serve Australian interests. Securing better access to export markets for Australian producers is one of our best forms of protection against global economic headwinds. These free trade agreements do just that, so I commend this enabling legislation to the House.
I rise to speak in favour of the amendment and strongly urge the government, in relation to these bills before us, to consider what's being asked. It's been at least 30 years since there's been a focus in this country on some free trade agreements. Increasingly in the community, in industry and amongst workers, people are asking: but are they really worth it? We hear a lot of rhetoric about how they create jobs, but where's the economic analysis to prove that the claims made when striking an agreement, when legislation is passed through this House, have actually been achieved? That is why one of the amendments, which focuses on independent economic modelling, is so critical—before, during and after. Whilst we are still waiting to learn whether the commitments made for the South Korea, Japan and China agreement have been achieved, we don't know the full impact or the cost of free trade agreements. That is where the government has a lot of work to do: to reassure people in our community that the agreements in the legislation before us will actually be good for Australian workers and Australian industry.
The single most important objective of trade policy should be to deliver benefits to the Australian economy and the community—to ensure that working people have access to good jobs, secure jobs and the creation of local jobs—yet with all of the rhetoric that we hear that these agreements will do so, have they previously delivered and will they deliver in the future?
These are questions that people are asking. In the thirty years since we've liberalised when it comes to free trade, whilst growth has been up, living standards and wages have been flatlining and, in some cases, are going backwards. Free trade agreements have been signed, yet we are losing industry and losing good, secure jobs. We are losing industry, and creating industry in areas which may not economically benefit everybody.
As to the agreements we have before us, I would just highlight some of the claims that have been made and ask some questions. There has been a lot of focus on how the agreements will create jobs and secure investment for our farmers. The problem is: we're in drought—a severe drought, a drought that's not ending. Do we have the supply to satisfy the new quotas? When it comes to grain, for example, with the grain quotas that have been achieved in all the free trade agreements, will we produce the crop this year, next year or the year after? The supply issue is not just in grain. If we look at sheepmeat, beef or any meat in our red meat sector, again the question has to be asked: what will be the impact of drought on producing the supply to satisfy these great new trade agreements? There's all this talk about how great the current and previous agreements are, but do we actually have the supply and the capacity to achieve them?
Then we ask the question: what are we losing on the other side? Let's talk about dairy. Dairy is a really vexed question, given that we don't know if we're even going to have a viable dairy industry going forward, particularly in areas like northern Victoria. Dairy farmers are leaving in droves. This government is confused. The Australian rhetoric is confused. The economy is confused. On the one hand, we're saying that these agreements are great and are going to create industry, and then, on the other hand, we're saying that the industry is collapsing because of factors not enabling us to secure it locally.
Then we could talk about the jobs in these industries and what they will create. They say that in the dairy industry the agreements could create up to 20 jobs—20 jobs—in an industry which is struggling to deal with drought, with a shortage of water, and which has its own recruitment problems. Agricultural jobs tend to be a big focus, yet we hear time and time again from farmers that they can't employ Australians to do the jobs. I guess that's why we need to increase the number of backpackers coming in from Indonesia, to do the jobs. Meat processing, which you would think would be staffed by Australians, is increasingly being staffed by working holidaymakers, backpackers and international students—overseas temporary workers.
We're being told that the agreements being put before us are good for jobs. But they're not Australian jobs. We have to then import the workers to work in these industries. This government has no plan for how to increase employment in these industries for Australians or how they're going to ensure that Australians get access to these jobs first. They've not implemented one of the recommendations that has come from the Migrant Workers Taskforce that was set up to investigate exploitation. All the agricultural industries that, they say, these agreements will benefit are the most exposed and the most at risk of worker exploitation, and people are competing against each other for temporary workers to come in from overseas and work. So when the government rants about how great these agreements are for jobs, I ask again: whose jobs? Which workers and which Australians will benefit?
There's talk as to these agreements about how they are great for vocational education and training. Again, we already have significant numbers of international students coming from these countries, before these agreements have been struck. There are about 10,000 coming from Hong Kong and 9,000 from Indonesia, already—international students coming to Australia to study and to work. Also, there is a question mark—you just have to ask any academic—about the quality of our higher education in this country and whether the education that international students are paying for is actually of good quality. That's a separate review and a separate process that's ongoing.
My concern is how they're treated as workers in this country. There are over 900,000 international students in this country that have work rights and they are an exploited underclass of worker. Report after report has exposed how they are treated in this country. They're classed by this government, by many economists and by that broad rhetoric as being a top export industry, but what they really are is an underclass of workers. A UNSW report recently found that a significant number of these workers were paid less than $12 an hour, and 43 per cent of these workers were paid less than $15 an hour, well below the minimum wage. When you start to talk about those kinds of figures—of 900,000 workers in this country being treated that way—you have to ask yourself: is this a good trade industry, when really what you're doing is creating an underclass of workers in this country? That's why the amendment that Labor's put forward that talks about the exploitation of temporary workers is really trying to push the government to sort that issue out. The government is asking Australians to believe in these free trade agreements when it's done very little to ensure that workers who come here to work in these industries that will benefit from these agreements, or who come here as an industry themselves in relation to international students, are not being treated properly here in this country and are victims of exploitation.
The Peru agreement talks about increased market access to sugar. It's really hard to take the government seriously when it talks about sugar market access when you talk to sugar farmers in Queensland who are still baffled about the sugar code and baffled about the future of their industry and who cite the same problems that other industries have in agriculture: we don't have the workforce, we don't have the water, we don't have the support that's required. Again it talks about how great it is for wine, sheep meat, horticulture and wheat products. Will we have the supply? Will we have the supply to satisfy these agreements? We talk about how great this is for jobs and industry, yet not really having the independent economic analysis to say if we have the industry to sell under these agreements.
Then we come to the impact of the growing problem that trade agreements are starting to focus on, like social aspects and the movement of people when it comes to these trade agreements—the movement of natural persons. We need to start to question: is it really the role of free trade agreements to be looking at the trading and movement of people? There are some concerns that have been raised in relation to who comes in under what visas. I'm not going to take the government at its word when it says that there will be no weakening of labour market testing when it comes to these agreements. The report that was put forward by the Joint Standing Committee on Treaties said that Australia will waive labour market testing for business visitors, intracorporate transfers and independent executives. My question is: does this include the 400 visa? What safeguards are in place to ensure there is not manipulation of these visas to ensure it doesn't become a back door for big numbers of people to come in? The 400 visa, as some may or may not know, is the visa on which lots of trade assistants have come in to build the solar industry, because apparently we don't have the skills to build solar farms in this country. It has become a bit of a manipulation of this visa, and we are seeing very little effort by the government to close those loopholes down.
When it comes to these agreements, our community is concerned. They express their concerns daily. It's the secrecy in which these agreements have been struck that people are raising their concerns about. There have been concerns raised by nurses about the potential for foreign labour workers to come in under contractual services. We need to take this seriously and rule out that these agreements will be used to see more temporary workers come in and work as PSAs, work as nurses, or work in industries where the real issue and barrier is our lack of dealing with skills and lack of dealing with pay. We need to look at what contractual service could mean when it comes to other industries like housekeeping and hospitality. We've seen report after report exposing how temporary workers who come into this country in these industries are quite often exploited and underpaid. The government needs to rule out that this will occur. This creates, again, further tension.
The government also needs to take on board the request for independent economic modelling. We hear a lot of ranting and rhetoric about what's good about free trade agreements, but what are we losing? If you take what happened recently in the manufacturing sector, are we going to ensure that our industries are protected going forward and that we do have growth in industries? What's this government doing about the non-tariff barriers? If you talk to manufacturers, if you talk to businesses, if you talk to industry, if you talk to workers, they go, 'The agreement's there, but it's the non-tariff barriers that are really preventing us from being able to grow our industry.' It's the biggest complaint that you get about the China free trade agreement. When you talk to winemakers, they go, 'It doesn't mean anything for me because I can't actually get my wine off the port.' There's more and more red tape, yet, despite the calls from industry, despite the calls from businesses, there's been very little effort by this government to tackle the non-tariff barriers—the red tape, as it's been called.
There's a failure by this government to really implement any decent legislation when it comes to stopping dumping. Dumping is costing us jobs in this country. There's also a real failure by this government to address, as I've said, the concerns about worker exploitation under temporary work visa arrangements. All of this feeds into the challenges about why the government is putting all its eggs into this free trade agreement basket and calling them the great nirvana, when really it's failing to address the broader concerns and anxieties that Australian workers have. These anxieties are real and something that I hope the government takes on board when considering this. It is not enough just to pass free trade agreements and enter into them. It's what happens every day after.
The government's track record on free trade agreements is a lot of talk and a lot of rhetoric but not a lot of delivery. That is why independent economic analysis is so critical. Are they creating the jobs that have been promised? Are they growing the industries that have been promised? Are they actually ensuring that workers who come here in good faith are not being exploited and mistreated? These concerns that are being raised by workers' unions and civil society need to be addressed, they need to be considered if we are to have confidence in free trade going forward.
I've always stood in this place and said that we support fair trade, yet 'fair' is increasingly becoming a dirty word in the debate about trade. You can support trade and still believe in fair trade; it isn't one or the other. But, unfortunately, with this government, free trade agreements are the only positive economic narrative they have. Yet Australians are sceptical, and they have a right to be sceptical not just because of the points I've outlined but because of the points many others have outlined. (Time expired)
On balance, Labor has decided to support this legislation not because these agreements are perfect but because these agreements are positive on the basis of jobs for Australians and the Australian economy. The fact is that one in five Australians depend upon trade for their work. The fact is that Indonesia isn't even in our top 10 trading nations. We can and we should do better. These agreements, particularly after the safeguards that Labor demanded from the government as a condition of our support have been agreed to in writing by the minister for trade, Simon Birmingham, mean that the overall assessment of the jobs that will be created has to be positive. Therefore, as I've said before, Labor will not oppose just for oppositions sake. Where the government is prepared to engage and be constructive, we will participate in those processes. That is what the people who sent us to this parliament expect of us. The fact is that we consulted very widely to identify practical, commonsense measures that will ensure that their implementation achieves the goals of creating Australian jobs and opening up opportunities for our exporters, measures that will safeguard Australian jobs and working conditions, measures that will expand opportunities for Australian exporters, including those in the manufacturing and agricultural sectors.
Labor will always fight for what's good for the Australian economy, for what's good for jobs and for what's good for Australian workers. Last week, we demanded and have now received these undertakings that we sought from the government. I confirm that we have been successful and the government has guaranteed in writing that, first, Australian jobs will be protected. There will be no new labour market testing waivers, and these agreements will not change Australia's workplace laws.
Second, the government has agreed that it will not use provisions of Article 12.9, or any other provision of the Indonesia-Australia Comprehensive Economic Partnership Agreement, to propose, create or extend any additional labour market testing waivers for Indonesian contractual service suppliers.
Third, it will, for the first time, bring forward legislation to introduce criminal penalties for the worst forms of worker exploitation.
Fourth, new measures will be introduced to ensure that working holidaymakers are not exploited and are appropriately qualified for the work that they undertake.
Fifth—and I think this is a critical point—it will seek the termination of the existing 1993 bilateral investment treaty with Indonesia, which includes out-of-date investor protection provisions and does not contain appropriate public interest safeguards. When we were having discussions with interested parties about the nature of these agreements, there was no-one who said that what is in the agreements that are being proposed here is a backward step from the agreements that currently are in place over trade between Australia and Indonesia. This is a step forward. Therefore, the removal of the existing bilateral agreement, which doesn't have the safeguards that we will have going forward, is an important step. To me, that alone signals that when people are saying an agreement is an improvement then it's one that, pragmatically, we should support.
Sixth, the existing investor-state dispute settlement and other agreements will be updated, where possible, to include modern, stronger safeguards.
Seventh, we'll review the ISDS mechanism in the new agreement as part of the five-year review of that agreement.
Eighth—and this is important, as well, because this was of concern in the submission from the Nurses and Midwives' Association to the JSCOT inquiry—the agreements do not force the privatisation of any government services and, what's more, they don't provide any restriction whatsoever on any future decision to acquire public assets. So you'd have more public ownership, not less. But it's not impacted at all by these agreements.
Ninth, on the Hong Kong agreement we sought confirmation that we would continue to monitor the situation there, given the internal issues that are taking place, to make sure that Australia's strong support for the one country, two systems principle is maintained.
Lastly, the Parliamentary Joint Standing Committee on Treaties will conduct an inquiry into all aspects of Australia's treaty-making process, with the aim of improving transparency and consultation. That is an important thing going forward, because we are certainly of the view that whilst this legislation is connected up with the treaties that are proposed, it's not actually legislation about the treaties. That goes through a cabinet process. It's one on which there is no parliamentary vote. Given that it is in the province of the executive rather than the parliament, it's important that there be far greater transparency in these processes up-front so that people can be satisfied that, on balance, any of these agreements are in the interests of Australian jobs. We don't give a blank cheque on these. They should be analysed on the basis of: are they in our national interest to do so?
In particular, Labor has a very strong view that the agreements need to demonstrate that nothing in any agreement will undermine Australian working conditions. Nothing in any agreement should ever lead to exploitation of foreign workers, if they participate. Our strong view about labour market testing is that, as our first preference, we want Australians to do jobs which Australians are qualified to do. We make no apology for putting the interests of Australian workers first.
Subject to proper protections we will support arrangements that lead to the creation of new jobs, because Labor is the party of jobs. With these agreements reducing barriers to trade, I'm convinced that they will be positive overall. Labor, indeed, initiated negotiations for the Indonesia-Australia Comprehensive Economic Partnership Agreement; we did that in 2013, after we commissioned a joint feasibility study with Indonesia earlier on.
When we look at Indonesia, it is the world's third-largest democracy. It is our closest neighbour. It has the largest Islamic population in the world. You've always got to examine the counterfactual as well, and the counterfactual is this: particularly since Paul Keating's leadership, Labor has recognised the importance of the relationship with our near-neighbour to the north and the importance of friendship between our two peoples. If they were to say, 'We have this agreement that won't undermine workers' rights, that won't lead to foreign workers replacing Australian workers, that won't put any pressure on any other issues that have been raised on privatisation or anything else'—if this parliament were to reject that agreement, then I think if you were in Indonesia, in Jakarta, you'd be entitled to think, 'Why is it that Australians want to fly over us, to China, to Japan, to Korea, to other countries where we have agreements in place, and ignore Indonesia?'
Indonesia will grow to be the fourth-largest economy in the world by 2050. It is a democracy. It is one that is growing at more than five per cent. Based on current trends, by 2030 it will have around 135 million people who are consumers. But the economic relationship between Australia and Indonesia currently has the lowest bilateral trade volumes of any pairing in the G20. I find that quite remarkable. The fact is: in 2018 Indonesia accounted for just two per cent of Australia's exports, and there has been no increase in recent times.
This agreement will facilitate Australian suppliers of technical and vocational education and training to provide services, for example, through majority Australian-owned businesses in Indonesia. They'll be able to establish ventures with up to 67 per cent Australian ownership. Australian universities currently have more than 118 formal agreements with Indonesian universities. They'll be allowed to open up campuses in Indonesia. If Australia was to receive the same proportion of students from Indonesia as it receives from Malaysia, this would add around 150,000 additional students—which would equate to approximately $11 billion in additional exports for the nation.
The agreement also eliminates and reduces tariffs. This figure, I think, is pretty significant: in return for two per cent of Indonesian exports getting tariff-free access to Australia, 25 per cent of Australian exports to Indonesia will not face any tariffs. That includes steel—something that is of particular importance to the Illawarra and other regions around Australia. The agreement provides for guaranteed import permits of 250,000 tonnes of Australian steel per year. If you want to visualise that: that is the equivalent of five Sydney Harbour Bridges. BlueScope, in particular, is set to benefit from this arrangement, opening up the potential for more competitive exports to Indonesia—which translates simply as jobs.
In Western Australia, grain will benefit from this agreement. The whole of northern Australia has particular potential to benefit from this agreement as well. It will open up new opportunities for Australian manufacturers of medical devices, cosmetics and skin products and other high-value manufacturing that takes place here. That means jobs for Australians.
In Indonesia, on the day that and I and our shadow foreign minister met with the foreign minister of Indonesia, President Widodo announced a new capital city—a bit like Canberra—where there is currently nothing at all. Do you know what that means? It means a demand for engineers, demand for steel, demand for architects and demand for legal and service providers—demand which can be met by Australian infrastructure companies. This is an enormous benefit for the Australian economy.
Of course, Hong Kong is an important destination as well. It's our fifth-largest source of inwards investment. Given the nature of Hong Kong and given that we have an agreement with China, it's important that we also have an agreement with Hong Kong, which is an entry point into China and into North Asia as well.
Whilst these are not agreements that we would have negotiated—we would have had up-front a very different attitude towards labour market testing and a range of measures, as we have very publicly said—we have assurances from the government and we do think that, on balance, this is in the interests of Australian jobs and Australian businesses, which is why we will be supporting these agreements. The government entered into discussions in good faith and put responses in writing, and I confirm that it is on the basis of these commitments that Labor will be supporting this legislation. I seek leave to table the letter giving commitments from the Minister for Trade.
I rise to speak in support of the Customs Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill 2019 and the second reading amendment moved by the member for Brand. This legislation is the enabling legislation for the Indonesia, the Hong Kong and the Peru free trade agreements.
Australia is a trading nation. Forty-two per cent of Australia's nominal GDP is based upon trade. Since the Whitlam government it has been the bipartisan policy of governments, since the early seventies, to pursue trade—and for good reason. We are unlikely to be able to maintain the level of prosperity that we have in our country today, as well as the level of employment, if we are solely based on engaging in that with our domestic economy of 25 million people. To maintain high-quality jobs and the prosperity and the standard of living that we enjoy today, Australia needs to be a part of the global trading system; we need access to markets around the world.
When we look at Australia's trading landscape, one of the countries which stands out in a glaring way—that our trading relationship is underdone with—is Indonesia. Currently, our two-way trade with Indonesia is $16.8 billion. That compares with Singapore, where our two-way trading relationship is $27.8 billion, and Malaysia at $21.5 billion. But the difference is this: in Singapore, the population is six million people and in Malaysia it's 32 million. In Indonesia, the population is 270 million people. It is anticipated that by the middle of this century, as a result of that enormous population and that enormous potential market, Indonesia will become the fourth-largest economy in the world. So if we seek to have trade continue to play the role in our domestic economy that it does today and to use it to build high-quality jobs in this country going forward, then we must be in a trading relationship with Indonesia on a bigger scale than is currently the case.
But the Indonesian agreement, and indeed the Hong Kong agreement, also form part of Australia's engagement with Asia. This is a story which has been written by Labor governments, going right back to the Chifley government. In the aftermath of the Second World War and Australia's focus on the Pacific theatre of that war, it was the Chifley government which understood that out of the ashes of the Second World War in the East Asian time zone would grow an economic powerhouse. But, just as significantly, it was understood that it was absolutely essential that Australia find its security in Asia. This was a sentiment that was reflected in a very famous quote that was made half a century later by another Labor Prime Minister, Paul Keating, who said:
… Australia needs to seek its security in Asia rather than from Asia.
It was of course the Whitlam government which established diplomatic relations with the People's Republic of China and all that that has implied since in terms of our economic relationship with that country. It was the Rudd-Gillard government which gave us the Asian century white paper, published in October 2012, which spoke about the enormous opportunity that the rising middle class in Asia represented for our economy, as well as the strategic significance of East Asia to Australia.
But if we look at Indonesia specifically, again, it was the Chifley government which placed Australia at the forefront of supporting Indonesia's independence movement. It was Paul Keating who, in December 1995, establish the signature Australia-Indonesia Security Agreement, and it was the Rudd government which invited President Susilo Bambang Yudhoyono to this place to address the Australian parliament in March 2010. In doing so, he was the first Indonesian president to address the parliament.
On that occasion President Yudhoyono referred to the history of our relationship with Indonesia. He said:
We are not just neighbours, we are not just friends; we are strategic partners. We are equal stakeholders in a common future with much to gain if we get this relationship right and much to lose if we get it wrong.
… … …
We in Indonesia will always remember that Australia resolutely stood by us when Indonesia was struggling for our God-given right to independence and statehood. We remember how Prime Minister Chifley, foreign minister Evatt and diplomat Sir Richard Kirby actively supported Indonesia during critical moments of diplomacy in the United Nations—a standard collegiate with that of the Netherlands. That was one of the finest hours of our relationship, and we have had many more high points since.
Those comments spoke about how important our relationship is with Indonesia going forward. In that context, it is worth noting that the Indonesian free trade agreement, which will be enabled by the legislation that we are debating today, will be the first free trade agreement that Indonesia enters into with any other nation in the world.
Free trade agreements shape economies, and whilst it is important that we are doing this agreement it's important that the agreement is a good deal. But I would submit that this is a good deal. This will provide a reduction in tariffs for two per cent of Indonesian exports to Australia and an increase of 4,000 places in Australia's working holiday visa scheme. It's worth noting that that is in a context of 210,000 people being in Australia today under working holiday arrangements and in a context where the existing cap of 1,000 working holiday places provided to those from Indonesia is not fully subscribed at this moment, so the increase in the number of working holiday visas in Australia as a result of this agreement will be, by any measure, marginal.
But, on the Australian side, what the agreement will provide is a reduction in tariffs in respect of 25 per cent of Australian exports to Indonesia—in some cases, a reduction in tariffs from 30 per cent down to zero. In the case of Australian exports of steel we will see the reduction down to zero of a 15 per cent tariff on steel exports to Indonesia. In areas such as mining services and agriculture, commodities such as grains, sugar and cattle, and in the provision of services around education and health care, the Indonesian free trade agreement will provide much better access for Australian exports to Indonesia and, in the process, build our economic relationship with Indonesia and, in the process of that, create jobs and build prosperity in our nation.
This agreement is not exactly the agreement that Labor would have made had we been in office. We have sought a number of improvements to it, which are contained in the second reading amendment that has been moved by the member for Brand and that Labor supports—improvements which would see the labour market testing that currently applies in Australia's temporary work arrangements apply to any future providers of contractual services to Australia from Indonesia, making sure that working holidaymakers, when they come to this country, are not exploited; making sure that there is the termination of the 1993 bilateral investment treaty which has contained in it an old investor-state dispute settlement clause, which is very wide, and replacing it with the clause which is currently in this agreement, which is more modern.
In making that observation I'd also make the observation that Labor has a longstanding opposition to investor-state dispute settlement clauses in trade agreements but, given there is this clause in the agreement which is before us today, we have been seeking a commitment from the government that there be a review of that clause after five years. We've also been seeking an agreement that the Joint Standing Committee on Trade engage in an inquiry on the entire treaty-making process in our nation so that it is more transparent not only to the public but also to this parliament. We want to make sure that there is absolutely no inference whatsoever within the Indonesian free trade agreement that there would be any privatisation of Australian government services, we want to make sure that there is an enforcing of the existing anti-dumping measures within Australia and we also want to make sure that there is an adoption of independent economic modelling and analysis of future free trade agreements.
That is what's contained in the second reading amendment, but it was also contained in a letter from the member for Brand, Labor's shadow minister for trade, to the Minister for Trade on 17 October, along with a request that, in respect of the Hong Kong free trade agreement, nothing removed Australia's support for the principle of 'one country; two systems' in terms of Hong Kong's relationship and being part of the People's Republic of China. There is a response to this letter by the Minister for Trade on 21 October, which agreed to just about every one of the improvements that were sought in the letter from the member for Brand.
In that, it has to be said that this represents a very significant win on behalf of all those, including those within the trade union movement, who have been campaigning for the very best trade agreements that we can have and that Australia can enter into. As the Leader of the Opposition said, it is on the basis of the commitments that have been provided by the Minister for Trade that Labor is now able to support this legislation today.
There are a number of concerns that have been legitimately raised by many people within our community, including the trade union movement, particularly around the exploitation of those in Australia under temporary work visa arrangements. This is a real issue. There is exploitation of people on temporary work arrangements in this country today, and it is a stain on our country that that exploitation occurs. But, in saying that, this has not principally evolved as a result of Australia entering free trade agreements—although it is natural, given clauses that have existed in free trade agreements, that people are anxious about the interaction of free trade agreements with the question of temporary workers in this country. It is an issue which needs dealing with, but it is not principally a function of trade agreements. Indeed, the investment facilitation agreement of the China free trade agreement, which was the subject of much debate in this place, has seen no investor facilitation agreements registered in accordance with ChAFTA since it has come into this place and, accordingly, no temporary workers come into this country as a result of that agreement. As I mentioned earlier, the impact that the Indonesian free trade agreement will have on the number of persons coming to this country on working holiday visas will be marginal. That said, the issue, more generally, is one which needs to be dealt with.
There is, by virtue of repealing the 1993 investment agreement with Indonesia, a situation now where the investor-state dispute settlement provision within the Indonesian free trade agreement will be much better. There is no provision in this agreement which will see any inference at all in relation to the privatisation of any government services. It is worth noting that Indonesia is a signatory to the eight core ILO conventions. There is nothing in this agreement that will waive labour market testing, nothing that will undermine the Pharmaceutical Benefits Scheme, nothing that will undermine our antidumping provisions, nothing that will undermine the government regulation of public welfare or the safety of products and nothing that will undermine existing government procurement policies. There is no exemption of any person from Australian law, and there is nothing which undermines Australia's skills certification regime.
Our place in Asia is absolutely central to our future. Our place as a trading nation is absolutely essential to continued job growth and prosperity in this country. For those two reasons—supporting this legislation, which enables the Indonesian free trade agreement, the Hong Kong free trade agreement and the Peru free trade agreement, along with the second reading amendment, which has been moved by the member for Brand—it is absolutely essential to make sure that we continue to trade, that we continue to see jobs growth and that we continue to engage with our region.
Labor supports trade between Australia and the rest of the world, because it's only through trade that jobs are generated, our economic growth is boosted and living standards in our great nation are improved. This legislation before us today seeks to reduce barriers to trade through creating more competitive industries and further benefit customers through lower prices and greater choices. Overall, deeper regional integrations through the agreements implemented through this legislation will generate added trade and output gains in Australia's sectors of comparative advantage, in particular agriculture, mining and education. This will mean more jobs and training opportunities for Aussies in or wanting to get into these same industries.
We are an export nation. Businesses in Australia that export on average hire 23 per cent more staff and pay 11 per cent higher wages. Trade is good for jobs and growth in our nation at a time where economic growth is the slowest since the global financial crisis, wages are stagnant, almost two million Aussies are looking for more work and living standards are going backwards. These trade agreements are a positive step to getting our economy back on track, and, frankly, under this government, they are about the only thing that is heading that way now. Labor support trade and we will support these agreements. As we encounter an increasingly unstable international trading system and possible limits to the power of the World Trade Organization in resolving trade disputes, Australia must engage in bilateral agreements to support our interests. It's in our nation's best interests to diversify the access we have to markets around the world lest our current trading partners make decisions that may affect our ability to trade freely.