Tuesday, 18 September 2018
Foreign Affairs, Defence and Trade References Committee; Report
I present the report of the Foreign Affairs, Defence and Trade References Committee on the proposed comprehensive and progressive agreement for Trans-Pacific Partnership together with a Hansard record of proceedings and documents presented to the committee. I move:
That the Senate take note of the report.
As chair of the Foreign Affairs, Defence and Trade References Committee, I'd like to speak to the committee's inquiry and firstly put on the record the good work that the very efficient secretariat of the committee has done in compiling and progressing through consideration and presentation of all of the evidence. Over the course of completing this inquiry, we received 63 submissions and held two public hearings, the first in Melbourne on 30 July 2018, the second in Canberra on 20 August 2018. At the hearings, the committee had the opportunity to speak to a number of organisations and took evidence from the Department of Foreign Affairs and Trade.
While the committee heard evidence identifying particular benefits of the TPP-11, the inquiry also highlighted a number of areas of concern. Many of these issues were familiar to the committee from previous inquiries. In order to address these concerns, the committee has made a number of recommendations which I intend to briefly refer to—reform to the treaty-making process. Similar to previous inquiries conducted by this committee, evidence to this inquiry highlighted concerns about the treaty-making process, with much of the evidence focused on the need for reform to increase transparency and, in particular, with reference to the consultation process.
Evidence to the committee emphasised that organisations and the general public are seeking more information to be made publicly available during the treaty negotiation process. While recognising the need for confidentiality, the committee recognises the need for information to be made available more regularly and has recommended that the government provide public updates on each round of trade negotiations and release draft text during negotiations where feasible with the appropriate safeguards. The committee also heard that stakeholders are interested in becoming more active participants in the treaty-making process. With this in mind, the committee has recommended the creation by legislation of an accredited trade advisers program where industry, union, civil society would provide real-time feedback on draft trade agreements during negotiations.
The committee also recommended that DFAT review its own consultation mechanisms as well as other models used internationally. The parliamentary scrutiny of treaties undertaken by JSCOT is a crucial part of the treaty-making process and it is important this committee is appropriately briefed. To assist the Joint Standing Committee on Treaties in its analysis of treaties, the committee has recommended the Australian government provide the government's statement of objectives for negotiation to the Joint Standing Committee on Treaties for consideration and feedback, and to provide the Joint Standing Committee on Treaties with a briefing at the end of each round of negotiations.
Similar to previous inquiries, the committee received evidence expressing concern about the economic modelling undertaken to assess the impact of TPP-11. Several witnesses and submissions questioned the objectivity of the national interest analysis. This committee, as well as the JSCOT, has previously made recommendations that, to increase transparency of the benefits and the costs, there should be independent analysis of free trade agreements before the agreements are signed, to provide an accurate picture on the impact on jobs and the economy. It continues to be the view of the committee that the Productivity Commission is best placed to undertake such an assessment. The committee has also recommended that the Australian government make a reference to the Productivity Commission to conduct a review of Australia's bilateral and regional trade agreements.
On the investor-state dispute settlement, as with the committee's inquiry into the TPP-12, the committee received much evidence expressing concerns about ISDS provisions. Many contributors to the inquiry shared the view that ISDS provisions grant legal rights to global corporations that are unavailable to domestic investors. These provisions may affect the Australian government's ability to legislate in a range of areas, because of the threat of legal action. Evidence from DFAT emphasised the safeguards included in the agreement which seek to protect the Australian government from ISDS cases. However, several witnesses and submissions were not reassured by current safeguards. The committee notes the ongoing concern about ISDS and has recommended that the Australian government remove ISDS provisions from existing free trade agreements and legislate so that a future Australian government cannot sign an agreement with such provisions.
The issue of labour market testing was another area of concern raised with the committee. Under the TPP-11, Australia will extend the commitment to waive labour market testing in the contractual service supplier category to six TPP-11 countries—Brunei, Canada, Malaysia, Mexico, Peru and Vietnam. DFAT emphasised that Australia has obtained equivalent reciprocal commitments from each of the six countries and that, although Australia has made commitments to waive labour market testing, there will be sufficient flexibility in the operationalising of this commitment due to the fact that the skilled occupations list administered by the Department of Jobs and Small Business is not bound by the TPP-11.
Despite these reassurances from DFAT, evidence to the inquiry indicated that concerns remain about the negative impact that the commitment to waive labour market testing may have on Australian workers. There is a sense that, under the agreement, Australian workers would be disproportionately affected. Concern was also raised about the high number of professions that could currently be covered by the term 'contractual service provider'. In order to address these concerns, the committee has recommended that the government reinstate labour market testing for contractual service suppliers, where it has been waived, and legislate so that a future government cannot waive labour market testing for contractual service suppliers in new agreements.
As the implementation of the TPP-11 is expected to benefit Australian businesses, it is important that the business community is informed and supported to ensure that it can take advantage of available opportunities. The committee supports the implementation of DFAT's outreach strategy, which includes hosting, alongside Austrade, information sessions throughout Australia. It is the committee's view that these sessions need to be promoted widely, held in a variety of locations and formats, such as webinars, and targeted to a range of affected sectors.
Finally, the committee's inquiry was conducted at the same time as the Joint Standing Committee on Treaties' inquiry into TPP-11. Concurrent inquiries were also conducted when the committees inquired into the original Trans-Pacific Partnership. In this context, the committee is concerned that, in conducting this inquiry, it has largely replicated the work of JSCOT, which is established to look into such agreements. Two different committees looking into the same agreement was also confusing for submitters and for witnesses. As this does not appear to be the best use of limited committee resources, the committee has recommended that the Joint Standing Committee on Treaties consider a resolution to enable participating membership for inquiries. I commend the report to the Senate.
I'll just be brief on the TPP and what's going on with it. My brother, Peter, and I set up a large piggery in the late eighties. In the early nineties, the then Hawke Labor government allowed the importing of pig meat because it would be cheaper bringing hams in at Christmas time when it's freezing cold in Canada and there's not much call for ham then. I thought this was crazy. We didn't have a decent labelling system, and people were getting confused about whether they were buying Australian ham or ham processed here and coming from Denmark or Canada. They hurt us farmers. Where I live, in the Inverell area, there were some five or six large piggeries. Today there are none.
We've gone past that. We've moved on to other things. I thought it was crazy. Australia led the world in reducing tariffs and quotas and removed all barriers, but the rest of the world was not doing it. I thought, 'We're suckers; we're leading the way, and it's costing us dearly with jobs.' However, since then things have changed. We've got the free trade agreements. There are many of them, from Thailand to Korea, to Japan, to China and so on. Now the benefit is flowing through. We're seeing the benefit in agriculture. There are record prices in wool, mainly because we run 70 million sheep now instead of 180 million sheep during the boom times. There are record cattle prices, lamb prices and mutton prices. There are record grain prices, of course, due to the drought and the huge demand and lack of supply there. But we've moved past it. It did hurt us. Now we're benefiting from these extra markets and a demand on Australian food as far as farmers go.
It is likewise with the TPP-11, which will remove barriers and give us access to their markets. They've got access to ours. There are no hurdles to bring anything into Australia as long as they are FSANZ standard of foods or whatever. Of course, we import so much in the way of manufacturing goods and whitegoods et cetera. But this allows us access to more markets, and that is only good. We've seen it from what we've done with the other free trade agreements. Sure, it's not always perfect, but it's better than what it was when these countries kept their barriers in place, restricted us from exporting into there and were being uncompetitive. Those barriers being removed adds trillions of dollars worth of economies and is worth billions of dollars to Australian industries, especially the agriculture industry. It's only a good thing. Some people mightn't like it, but the last five years have proved that free trade agreements allowing us access to these markets and getting that competitive edge like we did with Korea, Japan and China in relation to America have only been a good thing. We've seen the price in the cattle yards, in the sheep yards and at the farm gate. Things are looking very bright for agriculture, except for the rain—hopefully that will come soon. But I welcome the TPP-11 because it will provide access to more markets, better prices and more demand, and that's only good for rural Australia.
I rise to speak on the TPP report. Unfortunately, this report is groundhog day. Every time we see a trade agreement come through the parliament, we see discussions about economic benefit, we see discussions about ISDS, we see discussions about labour market testing and we see recommendations for change. But nothing seems to change in these agreements. I look at the TPP-12 report and I see that the economic benefit over the period of now to 2030 is something like 0.7 per cent of GDP. Under TPP-11, it's down to 0.5 per cent. We must temper those figures with the knowledge that the Productivity Commission has done analysis and has stated that these modelling results are often overstated. They're often exaggerated, so there is questionable benefit in respect of economic growth as a result of the TPP-11.
One would normally say, 'That's okay, we can still proceed, because we're optimists and we do want to see us trading internationally,' but the problem is the downsides. Senator Gallacher mentioned a number of them. I'll just mention a few. The first is the lack of transparency. Time and time again we see reports come through that talk about the lack of transparency in trade negotiations and recommendations that suggest we need to open that up. Then time and time again we see the bureaucrats just continuing to do what they do. I'll read a statement from a book by Professor Clinton Fernandes which describes these negotiations very aptly and succinctly: 'A small number of DFAT officials and their counterparts overseas, along with a few hundred corporate lawyers and lobbyists, negotiate free trade agreements in secret. Once the insiders have agreed to the terms, they're presented to the parliament in a "take it or leave it" deal. Take it or leave it will remain the strategy of the bureaucracy until such time as this parliament stands up and says no.'
It is the same with ISDS. ISDS is highly problematic in my view for three reasons. ISDS allows corporations to take legal action against the Australian government, seeking compensation, if the Australian government changes its public policy and it affects the business. That's what we saw happen—or it was an attempted—with plain tobacco packaging. Philip Morris took the government to the High Court. The High Court ruled unequivocally that the parliament had got a right—they had made laws that were constitutional—only to find that Philip Morris then invoked ISDS clauses in a Hong Kong agreement so that the matter could then be heard by three lawyers. That is, not seven judicial officers of the greatest judicial minds in this country but three legal officers who could, in fact, have overturned our High Court. It gives away our legal sovereignty.
In actual fact, what we see happening in these provisions is it allows sovereign risk to be transferred from the corporate entity to the taxpayer. By changing our laws of public benefit, the sovereign risk transfers to taxpayer. The second point about ISDS is that the Australian corporations that are operating here in Australia don't get the same opportunity when there is a change of the law. In some sense, it's discriminatory against Australian companies. Of course, the third reason, which I've already touched on, is that it erodes our legal sovereignty.
Another point that Senator Gallacher mentioned was labour market testing. Under this agreement, we've waived labour market testing for contract orders or service suppliers for six signatory countries, which means that workers from Canada, Peru, Brunei, Mexico, Malaysia and Vietnam will be able to fill jobs in Australia without these jobs being offered to Australians first. It means that we might get an electrician who comes in from another country to participate in a program that had no labour market testing. That electrician probably doesn't understand Australian wiring laws, so not only is it unfair to Australian workers but it may actually be dangerous as well.
My difficulty here is that, time and time again, we see these recommendations made; time and time again, they are ignored. We just continue in the same manner that we have always continued. The reality here is that the Australian Greens, Pauline Hanson's One Nation and Centre Alliance have stated publicly that they will vote down the enabling legislation. They will draw a line in the sand. Being very clear to the Labor Party, whose policy platforms reject some of these things we're talking about, like ISDS provisions and the waiving of labour market testing: they can be stopped. All that has to happen is Labor has to stand by the courage of its own convictions and assist us in voting down this legislation. That will send a very, very strong message to the bureaucrats.
I know the Labor Party has said that, when they get to government—and there's a presumption there; you may not get there—they will seek to change the agreements. Firstly, it's disingenuous to allow an agreement to go ahead that you will then seek to overturn in government, but I suspect you won't overturn it in government because there'll be some rhetoric, there'll be some discussions, the bureaucrats will advise accordingly—
Senator Hanson-Young interjecting—
and, as Senator Hanson-Young is pointing out there, it will actually become a very, very difficult task.
Senator Gallacher interjecting—
You're absolutely correct: you can withdraw. But it's not necessary. You simply don't have to support the enabling legislation, and then the agreement can't come into force. This report covers all the ground very, very thoroughly off the back of TPP-12, off the back of JSCOT, in parallel with JSCOT. The report is quite a good report; it's just that the recommendations are Groundhog Day. They're weak, and the Senate needs to draw a line in the sand.
I rise to contribute to the discussion on this report as well. I concur with many of the comments made by Senator Patrick. He described this as Groundhog Day. This is the second report into this particular version of the TPP and about the third or fourth into the TPP across the board. There will be another one, of course, when the Legal and Constitutional Affairs Committee hands down their report into the implementing legislation. So this debate is far from over. But what is absolutely crystal clear is what a dog of a deal the TPP is for Australia. It is a very, very marginal boost to our GDP. We know that even the Productivity Commission, one of the most conservative economic bodies in the country, has said, 'Really, this is a bad deal; it doesn't give any real benefit to Australia'. In fact it does the opposite.
It does the opposite in a number of ways. Firstly, in relation to the exemption for six out of the 10 countries Australia is entering into a deal with, they can simply bring in as many workers as they want without having to check whether there is an Australian in the community who could do the job. So at a time when we're talking about how we get jobs for Australians, young people in particular—I come from South Australia, where we have one of the highest unemployment rates in the country and the highest unemployment rate among young people in the country—this allows big foreign companies to ship in their own workers. They don't have to check if somebody else is available do the job or would like to do the job or could be skilled to do the job or is already skilled and willing and able to do the job; they can just bringing their own workers. What does that do? It doesn't just undermine the ability of young Australians to get a foothold in the workforce; it pushes down wages and working conditions. It is a very, very bad step for the future of the changing workforce here in Australia.
One of the other key problems with this deal is, of course, those investor state dispute resolution clauses—the ISDS clauses as they have been called by other speakers. These rules allow a foreign company to sue the Australian people through our federal government, our state government or local government. It means that if our parliament decides to enact a law that our citizens want, that our community wants, such as plain packaging of tobacco, or a moratorium on coal exports or no new coalmines, or protecting a particular part of the Great Barrier Reef, or stopping oil and gas drilling in the Great Australian Bight, big foreign companies attached to the 11 countries involved in the TPP can come and sue the Australian people and our government simply for enacting laws that we want our government to act on. This is a huge undermining of democracy. As the European Union and their Court of Justice have found, it is a threat to national sovereignty.
In the European Union, ISDS clauses have become so problematic that they are now ruled out of any trade negotiations. They're not to occur; they're not to be used; they have no ability to be included. In fact, as Australia is continuing to talk to the European Union about our free trade agreement with the EU, Australia has been told, point blank, by the Europeans, 'Don't even think about bringing those insidious ISDS clauses to the table, because we're not having a bar of it.' Yet here in Australia, in the absolute desperation of this government to get a deal done at all costs, we saw the then trade minister, Steve Ciobo, and the government roll over, sign on the dotted line, sign up to everything, throw Australian workers under the bus and throw Australian democracy and the sovereignty of the nation under a bus, all so that they could come home and say, 'Deal done. It's okay. We, the government, have done something.' It's a pathetic and a very, very dangerous precedent for Australia and our relationship with trading neighbours and nations in the years to come.
Australia is, of course, a trading partner. We have to be. We can't pull down the shutters and nor should we, but we have to drive a fair dinkum bargain and negotiate properly. Canada got what they wanted out of the TPP deal. New Zealand got what they wanted out of the TPP deal. New Zealand got out of the idea of having to be caught by the ISDS clauses, even when it came to Australia, but our government and our trade minister went to water and sold Australia short. Now the Labor opposition, rather than turning the heat on this government and doing their job as an opposition, have rolled over. They're going to vote for this legislation. They're going to cuddle up to the Morrison government, big business and big corporations, and to the unions and Australian workers across the country they're going to say, 'Just wait until we're in government and we'll fix it. It'll all go away.' Bollocks. We all know that when you sign a deal like this it sticks. It's very, very difficult to get out of the TPP once it's signed, sealed, delivered and passed into law through this place.
The Leader of the Opposition, Bill Shorten, is carrying on and trying to pretend that he can have it both ways: he can cuddle up to business, give the workers a pat on the back and say, 'She'll be right, mate.' Well, she won't be right, because it's going to be very, very difficult to get out of this once it's in place. Which nation in this agreement is going to say, 'Australia has a new Prime Minister'—another Prime Minister—'We'll just reopen negotiations because it suits Australia.' That is not how trade negotiations work. The government know it, the Leader of the Opposition, Bill Shorten, knows it and decent people within the Labor Party know it, and they're hoping the Australian people just don't notice. It's a dud deal. It's been a dud deal for Australia from the beginning. It's appalling to see the opposition go to water on this. It is absolutely appalling to see the Labor Party, the workers' party, throw the unions and Australian workers under the bus, along with the right of the Australian people to be represented properly and with full integrity in their parliaments, all because they want this dealt with so that it will go away. All the Labor Party need to do is not vote for this legislation when it comes before this House. They've already gone to water over in the House of Representatives. The Leader of the Opposition went weak at the knees at the idea that he had to confront the new Prime Minister over this. Well, in this place they can redeem themselves. They can stand up for the rights of Australian workers, for the rights of the Australian community and for the environment.
I tell you what: second to Australian workers' rights being undermined through the TPP will come the environment. These multinational companies care about nothing but their own profit and ripping out what they can from this planet. Maximise profit today, forget about what happens tomorrow—that's what this deal delivers. It is a deal for corporations. It's a deal done for boardrooms, in secret behind back doors, not for people and not for the community. It's a dud deal and it should absolutely be thrown out on its ear. The Labor Party should know better.
With due respect to Senator Hanson-Young, you can see why Australia should be forever grateful that Senator Hanson-Young will never be trade minister. This has been wonderful work by the Australian government and all the other governments involved. I pay particular credit to the former trade minister, Mr Ciobo, who worked very hard on the Trans-Pacific Partnership. I know that that good work will be carried on by Senator Birmingham as he takes on this very important role for Australia. Senator Hanson-Young may not be aware but, of course, Australia produces far more agricultural goods than it can ever consume itself. Trade is vital to Australia and our farmers—not the big corporates that Senator Hanson-Young was talking about but the little family businesses that do so well out of Australia's exporting.
I'm particularly pleased with the Trans-Pacific Partnership because it does wonderful things for the beef industry and the sugar industry. Where I come from, in North Queensland, beef and sugar are two of the biggest industries. The town that I live in, Ayr, and Home Hill in the Lower Burdekin area, is one of the premier sugar-producing areas in the world. But, within Australia, we produce far more sugar than we can ever consume and so we have to sell it. We have to trade. The Trans-Pacific Partnership was particularly good to sugar in its terms and conditions.
Rather than being done behind closed doors, as Senator Hanson-Young suggested in her contribution, the Trans-Pacific Partnership was negotiated widely not only between officials from all of the countries involved—and Australian officials did a wonderful job—but also representatives of the small family farms; not the corporate Australians that Senator Hanson-Young would try to confuse people about. Representatives of family sugar farmers in Australia were there at the table working on deals that did so well for Australia and the Australian mum-and-dad industries in the sugar industry.
Similarly, in the beef area, Australia came out of the Trans-Pacific Partnership arrangements in a great position to export even more of the prime quality beef for which it is recognised. We had done a free trade agreement with Japan, Korea and the United States previously. But, in the Trans-Pacific Partnership with Korea, Japan and other countries—of course, the United States eventually wasn't involved in that—Australia did even better than it had done in the bilateral free trade agreements with some of those other countries. If I recall correctly, under our free trade agreement with Japan, the Japanese tariffs on our beef came down year by year, but slowly, and we were always behind the United States in the amount of tariffs on beef. But the Trans Pacific Partnership changed all that, and the United States and other exporters to Japan jumped. Our tariffs will go down to nil at a much earlier time, which is great news for our meat industry, our beef industry, in Australia. Again, this is not the big corporates that Senator Hanson-Young would have you believe—if anyone took notice of what Senator Hanson-Young said in this particular area. It has been a really great deal for the mum-and-dad cane farms, the family beef properties right throughout northern Australian and other parts of Australia as well. It's been a great deal in any other aspects as well, but I particularly focus on those two.
I can never quite understand why the member of parliament who represents perhaps the biggest sugar-growing areas in Australia and one of the biggest beef-growing areas in Australia—the electorate of Kennedy—continues to oppose free trade agreements and continues to oppose the Trans Pacific Partnership. Because if there's one thing that has done so well for the two major industries in his electorate, it's these free trade agreements and yet Mr Katter seems to oppose them at every turn. Some people suggest it's because the ETU, the Electrical Trades Union, pays him a lot of money at election time to campaign and that he is therefore influenced by the ETU and other unions into opposing it. But I can't understand that because his constituents, who he is supposed to represent, do very well out of free trade agreements and particularly out of the Trans Pacific Partnership.
This report from the committee is an important look at what happened with the Trans Pacific Partnership. I wasn't a member of that committee but I am a member of the Joint Standing Committee on Treaties, which had a very, very close look at the Trans Pacific Partnership and conducted some public inquiries into it. The members of the treaties committee were, like I, individually, very happy with the Trans Pacific Partnership. Senator Hanson-Young seems to have used most of her speech to attack the Labor Party. I, on the other hand, usually do attack the Labor Party but, in relation to the Trans Pacific Partnership, I give credit where credit is due, in spite of some misgivings which I know individual members of the Labor Party have, in spite of misgivings that I know a lot of the unions have—and we know the unions control the Australian Labor Party. But in spite of all that, I think the opposition understood the benefits to Australia from the Trans Pacific Partnership And they were prepared to allow crass political motives to be put aside in Australia's interests. Australia's interests certainly do well in the Trans Pacific Partnership and so, rather than criticising the Labor Party, I think it's to the Labor Party's credit that they put the national interest before their crass political interests or the crass political interests that the Greens political party would have them do. Senator Hanson-Young also couldn't help a final dig about the environment and the Trans Pacific Partnership. I'm not quite sure that she explained how that would happen. But with the Greens political party, it doesn't matter about the facts; it doesn't matter about the data—if you can raise a scare campaign in someone's mind then you achieve something. Of course the Greens political party are noted for the lies that the Greens political party tell about the Great Barrier Reef, to the detriment of the tourist industry and the tens of thousands of people who make their living out of the tourist industry on the Great Barrier Reef. Yet the Greens will continue to tell outright lies about the Great Barrier Reef. Somehow it comes into the Trans-Pacific Partnership. Unfortunately, Senator Hanson-Young didn't have time to explain how that would happen. Certainly, as far as trade is concerned, as far as the interests of Australian farmers and Australian small businesses are concerned, this is a wonderful trade deal. Congratulations to the officials who negotiated it. Congratulations to Minister Ciobo, who played a principal role in getting it underway. I seek leave to continue my remarks later.
Leave granted; debate adjourned.