Monday, 25 November 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
I rise to speak on the two bills which implement the Indonesia-Australia Comprehensive Economic Partnership Agreement: the Customs Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill 2019 and the Customs Tariff Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill 2019. The agreements implemented in these bills touch on important aspects of the different roles I occupy in this place—firstly, as a senator for the Labor Party, the party representing working people; and, secondly, as shadow foreign minister, with an abiding interest in Australia's place in the world. First, I want to offer a simple proposition as a member of the Labor Party, the party of working people. The proposition is this: trade benefits working people. Trade benefits working people by contributing to economic growth. Trade benefits working people by improving productivity. It benefits working people by creating better pay and more rewarding and more secure jobs. And it benefits working people by delivering lower prices and greater choice for consumers.
It's important to note that Labor has deep roots in reformist trade policy. As Prime Minister in 1948, Ben Chifley took Australia into the new multilateral trading system negotiated as part of the Bretton Woods post-war international economic architecture. Chifley's vision for post-war economic reconstruction was to develop the manufacturing industry in new export markets, initially in America and over the long-term in Asia. He knew the value of trade from his life before entering parliament, when he worked as an engine driver. The trains he steered between Bathurst and Sydney carried goods from western New South Wales destined for export markets. On the return journeys, they brought back imported goods—everything from pianos and sewing machines to Irish whiskey and corned beef. Just as hundreds of thousands of train drivers and truck drivers today move exports and imports around Australia, Chifley's tradition lives on.
The next Labor government, led by Gough Whitlam, cut tariffs by 25 per cent in 1973. Gough said the short-term aim of the tariff cut was to reduce inflation, whilst its longer term aim was to improve efficiency. Certainly a more efficient economy was the primary motivation for the 1988 and 1991 tariff cuts by the Hawke and Keating governments. But Hawke and Keating also recognised that tariffs were pushing up the price of clothing, whitegoods, cars and other basic consumer items. They recognised there was nothing progressive about a policy which meant working people struggled to afford decent school shoes for their children. It has been estimated that the Hawke and Keating tariff cuts have put nearly $4,000 a year into the pocket of the average Australian household.
Trade liberalisation was one of the economic reforms contributing to Australia enjoying more than a quarter of a century of uninterrupted economic growth, continued also by the Rudd and Gillard governments. More recent economic analysis has estimated that, over the period of 1986 to 2016—which spans governments of both political persuasions but certainly includes the Hawke and Keating governments and the Rudd and Gillard governments—Australia's policies of trade liberalisation boosted Australian GDP by 5.4 per cent and increased the average income of family households by nearly $8,448 a year. So this was a benefit to our economy but also to households.
Today, exports and imports account for about 40 per cent of Australia's GDP. According to the Centre for International Economics, one in five Australian jobs depend on trade. That's 2½ million Australian workers. The highest percentage of export related jobs are in mining. Seventy-five per cent of mining jobs are export related. Forty-three per cent of agricultural jobs, 38 per cent of metal product manufacturing jobs, 28 per cent of jobs in food manufacturing and 31 per cent of jobs in transport and storage jobs are all related to export trade. These are the people my party represents—mine workers, including the copper-mining and refining workers in South Australia, not to mention the people working in our wine industry, which has been a national export success story. Wine exports to China have grown substantially since the China-Australia Free Trade Agreement came into effect. There are also farm labourers, meat workers, manufacturing workers, truck drivers, wharfies, airline industry workers, shop assistants, storemen and packers. In addition, there are thousands of jobs in hospitality and transport that rely on tourism and, of course, higher education and vocational education rely on the rapid growth in the export of education services.
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 that is 13 per cent higher than nonexporters. Austrade research shows that, on average, exporters provide more secure jobs, are more likely to provide employees with training, are more likely to negotiate wages through enterprise bargaining and are more committed to safety in the workplace. What all of these studies indicate is that exporting doesn't only mean more jobs; it also means better jobs for working people. Australia can never rely solely upon our domestic economy to generate the growth we need to create jobs. Trade agreements open up world markets for Australian businesses, allowing them to find new sources of demand for the goods and services that Australian workers produce.
I know that there are some in our movement who believe that trade protectionism, such as tariffs on imports, supports local jobs. Jobs are Labor's priority. But, let's remember, tariffs raise prices. So there would be a cost to this approach, to workers, consumers, and to the broader economy. Tariffs lead to uncompetitive industries, an inefficient economy and, ultimately, jobs that are not sustainable—and Australians will not thank us for such outcomes. Equally, they will not thank us for sitting on the sidelines while other countries negotiate trade agreements to their advantage. Refusing to engage in trade agreements allows our competitors to gain market share at Australia's expense, reducing export growth for our businesses and potentially leading to job losses for our workers, and certainly to the creation of fewer jobs.
But the reasons for supporting these bills are not just for the domestic benefits they bring to Australians; there are also strategic reasons for supporting trade that are of particular concern to me as shadow foreign minister at this time. Our region is the locus of strategic competition, including around who makes the rules that govern relations between nations. The nature of the region and its arrangements, including on trade, are fundamental to Australia's future prosperity and Australia's future security. Labor wants a region which retains a system of institutions, rules and norms to guide behaviour to enable collective action and to resolve disputes. We want a multipolar region in which those seeking to make or shape the rules do so through negotiation, not imposition; we want a region with an open trading system and investment transparency to maximise opportunity; and, obviously and ultimately, we want a region where outcomes are not determined only by power.
There is a strong nexus between international trade, economic growth, development and poverty reduction. We are also by now well aware of the benefits of development and poverty reduction when it comes to countering violent extremism. Protectionism and mercantilism foster tit-for-tat retaliation and hostility, which can put the wider system of international cooperation under pressure. History has shown us this. History has shown us that mercantilist approaches to trade have contributed to international tensions and rivalries. The protectionism of the 1930s exacerbated the Great Depression and contributed to the tensions that ultimately led to World War II. It is no coincidence that, in the aftermath of that dreadful conflict, countries sought to establish a multilateral rules based trading system.
In terms of Australia's own strategic interests, there are few countries more important than Indonesia. This economic partnership agreement between Australia and Indonesia will help it to address a relationship that is underdone. Indonesia has a population of some 260 million people and is one of our closest neighbours, but it accounts for only two per cent of our exports. In 2018, two-way trade in goods and services was worth $17.6 billion, making Indonesia only our 14th-biggest trading partner. Moreover, Indonesia is an emerging economic giant in our region and in the world. The Indonesian economy has expanded strongly over recent decades. It is the third-fastest growing economy in the G20, behind India and China. By 2030, Indonesia will move from the 16th-largest economy in the world to the ninth largest, and to the fourth largest, on current predictions, 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. But, of course, we should not overlook its challenges. To realise its potential, Indonesia will need to continue the structural reform with the economy undertaken by President Widodo. It will have to improve its business and investment climate, cut red tape, and continue to tackle corruption.
Under IA-CEPA, Australia will eliminate all of its remaining tariffs on Indonesian goods imported and, in return, Indonesia will provide duty-free or prejudice residential access to 99.9 per cent of goods from Australia. It's an agreement which locks in fresh trade opportunities for Australian steel manufacturers as well as for our meat-growing, sugar, dairy and horticultural procedures. 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—good news for Australian manufacturing, especially for companies like BlueScope and for its workers in Port Kembla.
Australian farmers will be able to export 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 already our 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 economic partnership agreement will be critical in this regard.
The five per cent tariff on Australian live cattle will be eliminated and a quota established for 575,000 head of cattle, growing four per cent annually over five years to 700,000. Northern Australia—Queensland, the NT and Western Australia—will be a great beneficiary of this.
Indonesia will progressively eliminate tariffs on a wide range of other products, including frozen beef, sheepmeat, dairy, honey, citrus fruit, vegetables, copper, plastics, automotive parts and machinery products. Australian vocational education and training providers will able to establish ventures in Indonesia with up to 67 per cent Australian ownership; and, under the agreement, Australian businesses will also be able to invest up to 67 per cent in international companies. So you can see how the strategic and economic benefits align in support of this agreement with Indonesia.
There are other components of this legislation, relating to our free trade agreements with Hong Kong and Peru. Hong Kong is our fifth-largest source of inward investment and an important entry point into China and the North Asian market as well. It is also an important recognition in support of 'one country, two systems' that we have an agreement with Hong Kong alongside our free trade agreement with China. Meanwhile, Peru is a growing market for Australian goods and service exports, 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 deepen engagement with the dynamic markets of Latin America.
Whilst I support these agreements, I'm conscious that, along with the great benefits of increasing global economic integration, there are risks. Such integration can also unleash rapid, unpredictable and unsettling change. We must ensure Australians benefit from globalisation rather than being left behind. We must be committed to giving people the tools they need to participate in the global economy—tools like a quality education, mastery of workplace skills, an understanding of technology, and an ability to adapt to change and learn new skills. As the world becomes increasingly internationalised, these attributes are critical to people's ability to succeed in the workplace and to cope with economic change.
Trade agreements should not undermine domestic regulations that deliver legitimate public policy goals. Unlike the coalition, Labor understands that trade policy must be complemented by investment in education, skills, infrastructure, innovation and research, because trade, notwithstanding the broad benefits, can place uneven pressures on our society. So, because I do support more open trade, I also believe we must have proper social democratic institutions and complementary progressive policies. That means insisting on high-quality trade agreements that maximise local employment; it means trade agreements that do not undermine public policy in health care, the environment or labour rights; and it means trade agreements supported by policies which have at their heart the expansion of opportunity—investments in education, innovation and infrastructure—to ensure people prosper in the globalised economy.
My colleague the shadow minister for trade, Madeleine King, won significant concessions from the government on Labor's behalf to ensure that the implementation of these agreements will safeguard Australian jobs and address the exploitation of foreign workers. These concessions would not have been won if not for Labor, and I commend Ms King for that work.
I also recognise and acknowledge there has been concern about investor-state dispute settlement provisions. I would note that the provisions in the agreement with Indonesia do have safeguards for public policy in areas like health, environment and government services. In fact, these provisions represent a step forward, because the new safeguards in these agreements increase Australia's sovereignty by replacing the regressive ISDS which was in place under the existing bilateral investment treaty with Indonesia. At Labor's insistence, the government has further committed to review older-style investment treaties to replace them with modern safeguards and to review the ISDS mechanisms in this agreement five years after it enters into force.
In another win for Labor, this is also the first FTA finalised by the coalition where they have conceded to Labor demands not to waive labour market testing for contractual service supplies. The labour mobility provisions in the IA-CEPA relate only to business visitors, intracorporate transfers of executives, and independent executives. These are amongst the narrowest movement-of-natural-persons provisions in any FTA under the coalition and are in line with provisions to which Labor has previously agreed in office. With these commitments, Labor believes it is in the national interest to support this legislation, for the reasons I've outlined.
In conclusion, Australia's economic welfare, Australia's strategic opportunity, our national security and our cultural dynamism will all depend on how deeply and how well we integrate with fast-growing economies like Indonesia's, not only in traditional goods trade but also in investment, tourism, services supply chains and people-to-people links. So we need to continue the Labor mission of trade liberalisation to ensure Australia can take advantage of the changes that will unfold in years to come. Australia cannot afford to withdraw. Australia cannot afford to mimic the 'America first' approach, which, paradoxically, risks America's leadership in the world. We are a trading nation, and our wellbeing depends on the quality and depth of our engagement with the world. We are a substantial power, but we are not a superpower. We can't throw our weight around. The Prime Minister may seek to mimic 'America first' with his tactic of criticising what he calls 'negative globalism', but, ultimately, Australia's interests in trade and in climate change, for example, are in constructive international cooperation. Labor does not pursue reform on trade and trade liberalisation out of blind adherence to abstract theories. We pursue trade liberalisation because it has demonstrated that it delivers concrete benefits for the people we represent. Trade raises our living standards. So I support trade not despite being a progressive but because I am a progressive.
I am very proud to have rolled in here this afternoon as the representative of a movement which is listening to the community when it comes to trade, and particularly listening to the union movement and concerns that have been expressed by that movement in relation to the legislation brought before the chamber—the Customs Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill 2019 and Customs Tariff Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill 2019. I will, in good time, outline in detail our concerns with each of the proposed agreements to which this legislation gives force, and I will foreshadow in detail our second reading amendments and the amendments which we will seek to bring forward during the committee stage.
But before I go into that explicit detail I want to just bring us back to some sense of accessible reality in order to facilitate an understanding for the broader Australian community of exactly what is happening in their Senate here this afternoon. Global cooperation is a wonderful thing. Peaceful global cooperation is vitally needed in the world today. Whether it be on issues like addressing climate change or tackling global wealth inequality or the many other key challenges which we as a human species face together, we will solve them only if we are able to come together and take coordinated global action, and trade can be a part of that. Through the agreements that we make with other countries, we can make sure that environmental laws protect precious places; that labour market provisions support workers and promote high wages and good working conditions; and that we promote and advance human rights. These are the possibilities put on the table when we have the opportunity to sit down with other countries and work out the terms and conditions upon which we will trade goods and services with each other.
Unfortunately, what we have seen over the last 20 or 30 years is the major parties allowing these processes to be turned into mechanisms by which corporations write rules to benefit themselves and maximise their ability to make profit and avoid the regulatory mechanisms and laws that the community puts in place to protect the environment, labour standards and human rights and to promote them globally. These dodgy trade deals championed by both sides of politics have seen the destruction of entire industries here in Australia. They have seen our precious places continue to be put at risk and have even opened up doors for corporations to sue the Australian people if government regulates in the public interest in a way which a corporation perceives might damage its assets, interests or ability to make money here. There is an urgent need to take the power back from these vested corporations and create trade agreements that enable us to put human rights, workers' rights and environmental protections at the heart of how we negotiate these agreements. And, while we are at it, we need to enable the community to independently scrutinise the content of these agreements to make sure that they work for the community, not just for big corporations. Unlike the major parties, the Greens care about people and the planet. We do not take corporate donations and will never sell the community out. We are willing to confront corporate vested interests and do the work that is needed to create a future for every single one of us.
On the implementing legislation that we are considering here today—and I want to go into it in quite specific detail—we are dealing with legislation that facilitates the implementation of three individual trade agreements: an agreement between Australia and Hong Kong, an agreement between Australia and Indonesia, and an agreement between Australia and Peru. Each of these agreements contains extremely concerning aspects, and I want to go through them in detail. Firstly and primarily with Hong Kong, the Greens have listened to the request of democracy activists in Hong Kong right now who have been saying to the Australian parliament that they need breathing space in order to continue their fight for democratic justice in that community. They have asked us to put a pause on these negotiated processes so that they can have that breathing space, and that is a position that we support.
In addition to the concerns around human rights, within the body of the agreements which this legislation seeks to facilitate the implementation of, we have ISDS clauses. For anyone following along at home, an ISDS clause is a complicated way of saying 'a pathway that enables a corporation to sue the Australian public for regulating in a way which they perceive to pose a threat or have a detrimental impact on their ability to make profit in this country'. The tribunals set up as part of ISDS processes sit totally outside of usual judicial procedural justice here in Australia in two particularly alarming ways: they sit outside of the process in relation to their transparency and independence as they are often conducted behind closed doors; in addition, the tribunal composition, which usually comprises a representative on behalf of the corporate actor and on behalf of the state party to the proceeding, is then added by a so-called independent third member. Members of these tribunals are in no way prohibited from having previously represented or subsequently representing a corporate entity in a future tribunal process. This ISDS clause sits within the Hong Kong agreement, and, while it does contain a carve-out explicitly recognising the right of the Australian government to legislate in relation to tobacco, it does not extend those explicit carve-outs to areas such as environment and labour standards here in Australia.
The concerns with the Indonesian agreement—the flaws in that agreement—are different once again. Within chapter 12 of the Indonesia agreement, there is a permit given to that country to utilise between four and 5,000 work permits, which sit outside of the previous 457 process. Enabling the import of that number of workers poses two particular challenges. One is that it may well undermine or depress the Australian labour market and wages. But it also creates another category of vulnerable workers, another bunch of folks, who are in a terrible situation where, if they speak up, if they say that something is not right in their workplace, they are under threat of being deported. That is not right.
Additionally, within the Indonesia agreement there is an ISDS clause, once again. Yet with this ISDS clause there is no carve-out for tobacco, enabling this ISDS agreement clause to be used to relitigate issues around tobacco regulation. And we all here know that our community fought a pitched battle to implement plain packaging of cigarettes, against corporations like Philip Morris. This potentially opens us up to relitigating that incredibly expensive and vital public health policy defence process. There is also a concern that this may well be the loophole through which any tobacco giant seeks to temper any potential legislation in relation to vaping which may be developed down the track. There is no doubt about the power of tobacco corporates in Indonesia, and the concern on behalf of civil society and other groups is very, very valid in relation to this issue. Peru, once again, contains that same ISDS process. That may, again, serve as a launching pad for those particular litigation processes.
There's been a lot of talk in the lead-up to this debate on what is or is not the position of many of the major parties and other players in this space, so I want to make it very clear as to the choices which the Australian Greens are going to give this chamber this afternoon or whenever we manage to get ourselves to a vote on these pieces of legislation. First of all, we will be moving a second reading amendment that puts in writing the concerns that I have outlined to the chamber this morning. Every single one of you in here will have the opportunity to vote for our amendments—to back the community concerns and the union concerns in relation to the aspects of this bill. We will then proceed to move three amendments during the Committee of the Whole process which make the implementation of these trade agreements contingent upon addressing the concerns that I have outlined. We will make the implementation contingent upon the removal of ISDS clauses for all three agreements and upon stringent market-testing processes for all three agreements, and we propose to put a pause upon the Hong Kong agreement to enable the situation to develop and to be in line with what democracy activists have asked us to do. Every single party in this chamber will have the opportunity to vote with the Greens and the community on those amendments.
As was foreshadowed in the contribution before mine, there is a profound level of disappointment in our community when it comes to what seems to be shaping up to be the Labor position in relation to these implementing bills. Let's make no mistake; let's be absolutely clear: these agreements have been written by large corporations to facilitate them making a profit. That's what they wanted to do—and their hollow shells in the LNP have been more than happy to facilitate them doing that. That has been the role of the Liberal Party in relation to trade since time immemorial. Corporates say, 'jump', and the Liberal Party not only say, 'how high?'; they ask them whether they would be like a complimentary backflip at the end. That's the role of the LNP. The community expect better from the so-called opposition in this place.
The union movement particularly has expected better from Labor in relation to this issue. The Electrical Trades Union has been very clear, and has branded this—and I believe rightly so—a lack of leadership on behalf of the federal opposition. Let's be clear: if you guys decided to find a spine on these issues, we could have a real debate about what trade should look like here in Australia. But you've decided to cave before you've even had the argument. That is so disappointing to so many of your members. The ACTU has rightly pointed out the presence of ISDS clauses within all three of these agreements, and that, regardless of any aesthetic changes that might be painted on top of a couple of them, these clauses represent a risk to Australia's sovereignty; they represent an unacceptable undermining of the ability of the government to legislate in the public interest; and they should be opposed. That is the clear message that the ALP have been sent, and yet it looks as though they are getting ready to jump into bed with corporates and with the government and get these deals through. It is incredibly disappointing to see. I note also that the Electrical Trades Union has said that it is basically done with the ALP, and that it will no longer donate nor provide logistical assistance to the ALP—based on the spinelessness that you have shown during the debate. They are right to be disappointed. I am no longer surprised at such tactics from the so-called opposition, but they expected better of you guys.
I would say to the ALP once again: the Greens amendments offer you the opportunity, at this late hour, to take the position that is in line with the union movement, that is in line with community expectations, and that is based in evidence and fact. Nobody here is talking about a return to 1930s-era protectionism. Nobody here is questioning that there is value in global, peaceful cooperation and in the facilitation of the development of mutually beneficial industries—nobody is arguing against that. The conversation which is being had is purely and simply about what the nature of these agreements is. What is the nature of these agreements? What kind of a trade environment is Australia trying to promote and support? The Greens, the community and the union movement are taking the very simple view that we here should use these opportunities to promote human rights, to promote environmental protections, and to promote the raising of labour standards at home and across the world. That is our simple contention. Our request is simply that the parties in this place join with us to force those contingencies to be placed on the implementation of this legislation.
It's not a big ask. It's not a radical ask. It's not complicated, convoluted or particularly controversial to say that a corporation should not be granted the powers to sue a government for regulating in the public interest—powers and rights that are not granted, I should say, to domestic investors. You are creating an internationally uneven playing field for the benefit of global multinational corporations, and there is no need for it. These clauses are inserted by these corporations because they do the simple calculation that no major party is willing to resist them.
We have the opportunity, this afternoon, to prove them wrong. I ask the ALP to reconsider their position—as in vain as I'm sure that request is—and to simply go back, hit the phones, talk to the ACTU, talk to the Electrical Trades Union, talk to AFTINET and talk to the folks who've done such good work in this space. Reconsider your position. Do you really want to end the year in this depressing way, doing multiple backflips for corporate Australia at the behest of the Liberal government? It makes absolutely no sense to me. The Greens will stay strong in our position: we will continue to listen to the community, we will fight for these amendments on the floor and we will continue to be the voice of people and planet and put them first—never corporate interests.
I move the second reading amendment standing in my name:
At the end of the motion, add:
", but the Senate is of the opinion that:
(a) the current process for negotiating trade agreements needs to be amended to increase transparency around the negotiations and final text of agreements;
(b) all trade agreements should be subject to independent national interest assessments;
(c) investor-state dispute settlement (ISDS) provisions need to be excluded from all trade agreements; and
(d) human rights, labour, and environmental protection provisions must be included in all trade agreements."
The growth of our country has, for a very long time, been inextricably tied to our ability to produce a broad variety of products, to export and transport those products and to compete in the global marketplace. After all, it was once said that Australia rode on the sheep's back, in reference to our wool industry.
The government is committed to continuing to pursue our ambitious export growth agenda and to develop further export opportunities for our producers. Presently, Australian export businesses hire about 23 per cent more staff, pay 11 per cent higher wages and have 13 per cent higher labour productivity than non-exporters. These numbers are very significant for a number of reasons. Chief among them is the higher employment rate. Australians want jobs, and the export industry delivers more than any other. Australians want to earn more money, and export industry jobs deliver this. The unions should be very supportive of the industry, for their members. These numbers highlight the importance of our export industry and the way in which trade contributes to our economy: more jobs and higher-paying jobs, which in turn add to our capacity to pay for the essential services Australians rely upon.
Driving our ambitious trade agenda has already delivered results. These are tangible results that only come about from sensible and responsible fiscal management strategies. We have already seen growth to more than 53,000 businesses exporting products in 2017-18. That's 18.5 per cent more since 2013-14—not insignificant. With that growth came more jobs. In fact, one in five Australians are now employed in trade related industry. In round numbers, there have been about 240,000 trade related jobs created in the last five years. These are real jobs, permanent jobs, because developing industry develops real jobs for today and for the future. And here's the best part, the part that I really like being able to tell you: Australian household incomes are estimated to be around $8,500 higher as a result of opening new markets through trade. This is how we build prosperity. This is how we build nations. With 21 consecutive months of trade surpluses, with record levels of exports and with every month of 2019 recording a trade surplus, we know we are on track. This is what happens when you apply sensible, responsible fiscal management. This is what this government does.
But the news gets better, as those of us on this side of the chamber knew it would. Our free trade agreements also continue to help Australian businesses. Our free trade agreement partner countries have the largest average export value per merchandise exporter. Japan led the way, with $13.7 million, and China was right behind them, with $13.6 million. That's Aussie products making real impacts on world markets. Almost all our bilateral free trade agreement partners saw an increase in export.
We will continue to help our Australian exporters to become even more competitive for more international customers by working to ensure that around 90 per cent of Australia's trade is covered by free trade agreements by 2022. To do so, we will implement export agreements such as the recently signed, although yet to be ratified, deals with Indonesia, Peru and Hong Kong. We will pursue strong export agreements with the European Union and the Pacific Alliance of Mexico, Chile, Peru and Colombia. The Regional Comprehensive Economic Partnership is also in our sights and, when they are ready, we will work with the UK on similar agreements.
As part of our commitment to deliver 1.25 million jobs over the next five years, we'll be aiming to boost the number of Australians employed in trade related areas by a further 240,000. This legislation is needed in order to ratify our recently signed trade agreements with Indonesia, Peru and Hong Kong. These agreements are predicted to bring additional export opportunities for Australian businesses, farmers and investors, which will ultimately mean more jobs for Australians and a further boost to our economy.
There are a number of key market access gains under the Indonesia-Australia Comprehensive Economic Partnership Agreement that serve to illustrate what is possible under similar agreements. Frozen beef and sheepmeat exports will have their tariff halved from five per cent to 2½ per cent immediately and eliminated altogether by 2023. This should go a long way to improving our exports of these products and decreasing our reliance on live export of Australian cattle.
This will also remove all remaining tariffs on dairy exports, further strengthening Australia's dairy export markets. We've all heard recently how our dairy industry is suffering. Exports to Indonesia have the capacity to increase our production. Products such as cheese, yoghurt and cream are all increasingly desired by Indonesia's burgeoning middle-class population. In fact, Indonesia's predicted to have 141 million middle-class citizens by next year. That's a huge number of people sitting on our doorstep, desiring access to the types of products that we have. Improved market access outcomes on services and investment will also give Australian businesses increased certainty in the Indonesian market, including in vocational education and mining and related services, as well as in tourism.
The Australia-Hong Kong Free Trade Agreement delivers a different set of unique opportunities. This comprehensive and ambitious agreement provides the ability to govern the trade and investment relationship, including modern e-commerce rules governing free data-flows across borders and guaranteed access for service suppliers in key sectors, including financial services, education, transport, tourism and professional services.
Our Peru-Australia Free Trade Agreement will ultimately eliminate over 99 per cent of tariffs on Australian goods to Peru. This represents incredible opportunities for our exporters, who know Peru to be one of the fastest-growing economies in Latin America. In fact, 44 per cent of the Peruvian population are in the middle-class bracket, and this is expected to increase in coming years. The benefits of this agreement include elimination of tariffs on beef after five years. This will give us the same market access as the US currently has. There will be instant elimination of tariffs for sheepmeat and wheat, and instant duty-free access on 7,000 tonnes of dairy products—again, supporting our dairy industry—and immediate elimination of tariffs on pharmaceutical products.
The Customs Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill 2019 will amend the Customs Act 1901 to provide key changes in support of growing Australia's export and trade capabilities. These changes will provide new rules for origin for goods imported into Australia from one of the respective parties, to determine if those goods are eligible to claim preferential treatment under the free trade agreements for Indonesia, Hong Kong and Peru. Furthermore, these changes will enable regulations to impose record-keeping requirements on Australian exporters seeking to access preferential tariff treatment when exporting to Peru, Indonesia or Hong Kong, and on people who produce such goods, where consistent with the commitments to individual agreements. Such measures are vital to ensuring confidence in our trading partners.
The Customs Tariff Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill 2019 will amend the Customs Tariff Act 1995 to provide preferential rates of customs duty on entry into force of our free trade agreements with Peru, Indonesia and Hong Kong for all goods, excluding excise equivalent goods.
From across our trade sector come many voices speaking in support of our government pursuing our agreement for more growth in export. Recently, in October, CEO for the Australian Food and Grocery Council Tanya Barden said that food and grocery manufacturers will greatly benefit from ratification of the deal and that any opportunity to help manufacturers to export their goods to the world is a great support to Australia's biggest manufacturing sector. In fact, she said:
The food and grocery manufacturing sector provides over 324,000 jobs and nearly 40 percent of those jobs are in rural and regional Australia …
And she said:
Providing access to export markets with improved trading arrangements enables favourable conditions to expand the business, thereby giving confidence to invest domestically, leading to increased employment and economy contribution.
She said that they hoped to see 'a fast ratification in the parliament before the end of the year', and that they welcome the bipartisan support from all Australian political parties on these deals.
AUSVEG is the industry representative for Australia's vegetable and potato growers. Their CEO commented in October on the agreement with Indonesia, stating that:
The agreement to increase import quotas and decrease tariffs for carrot and potato exports—two of the Australian vegetable industry's key export crops—will lead to an immediate increase in the trade of these commodities to Indonesia and must be ratified now …
He also commented that the trade agreement 'aligns closely with our industry's increased activities in market development' and said:
… given Indonesia is predicted to have the world's fifth largest economy by 2030, it will help ensure that Australia, and its horticulture producers, will be able to benefit from the country's expected economic growth.
The CEO of the Australian Chamber of Commerce and Industry, James Pearson, also spoke in support of ratification of the free trade agreement with Indonesia. He sees this as necessary to improve market access for Australian small and medium enterprises, and it needs to be completed as soon as possible. He also notes that the Hong Kong trade deal has made real inroads for the Australian services sector to gain greater market access for insurance, banking and financial technology products, as well as reducing red tape.
The list of key supporters goes on, with the Business Council of Australia chief executive, Jennifer Westacott, stating:
Trade delivers Australians more choices and greater opportunities. Better access to markets will give Australian businesses the chance to grow, invest and create new jobs.
The Business SA chief executive predicted that South Australia's exports to Indonesia will grow towards $1 billion over the next decade, given that it is on track to be the world's fourth- or fifth-largest economy. The chair of the Red Meat Advisory Council, which includes the Australian Meat Industry Council and Meat & Livestock Australia, Don Mackay, said:
Indonesia is a vitally important trading partner for the Australian live cattle and beef industry – along with a steady requirement for sheepmeat. Combined, the existing trade was worth over … $1 billion in 2018.
A fairly significant portion of that trade comes from northern Australia and my home of the Northern Territory, where the red meat industry and live export are vital, and Indonesia is one of our most significant trading partners.
My list goes on and on, with support from the Australian Livestock Exporters Council, the National Farmers Federation, CANEGROWERS, Australian Dairy Farmers, GrainGrowers, the Group of Eight universities, Australian Grape and Wine, the Minerals Council of Australia, Rio Tinto and many more. Ratification of our free trade agreements is dependent upon this amendment being passed. Continued growth and expansion of our trade industry is also dependent upon the passing of this bill. Our farmers, producers and exporters—along with rural, regional and even urban Australians—need these agreements and this amendment, and I commend this legislation to the Senate.
Thank you, Mr Acting Deputy President. When the Prime Minister, Scott Morrison, went to Bangkok earlier this month for the East Asia Summit, he came bearing gifts for the Thai Prime Minister. It wasn't a stuffed koala or a bottle of Grange; it was a gift of jobs, but not to Australian citizens. The Prime Minister brought with him the pledge to expand the number of places for Thai citizens under Australia's working holiday visa program from 500 to 2,000. This doesn't sound like a big number in the context of the whole working holiday visa program, which currently allows many thousands of people from countries around the world to come to Australia every year and work. It certainly is small when you contemplate the 900,000 or 1.4 million people—depending on how you calculate—who are here in Australia on all types of temporary visas with working rights. But I raise this story to highlight how temporary work visas are expanded in this country and how we are increasingly embedding more rights for temporary workers in trade agreements, which by their very nature cannot be vetted by the parliament.
In the United States, the elected representatives in congress get to debate trade agreements and enshrine conditions, including labour rights, and environmental and other protections to ensure that their local workforce is not made worse off by the deal. In the European Union, trade deals are negotiated far more openly, with stakeholders consulted and engaged, and governments held more accountable for deals they sign. In Australia, the trade negotiations are a black box. We don't see the details until the deal is done. The parliament, if it's lucky, gets an up or down vote on some enabling legislation, not the substance of the trade agreements. In fact, it is the case that Australia's civil society—unions, churches, public health advocates and environmental activists—often have to rely on information from other countries that is in the public domain to find out what is being negotiated in our own country for our own citizens.
There is no doubt that the Australian people as a whole benefit enormously from the trade we conduct with countries in our region and beyond, and we should never apologise for asking the tough questions about the detail of the trade agreements that we sign up to on behalf of the Australian people. I believe that the Australian people want a more transparent system of trade negotiations. I believe that more sunshine will allow us to make better deals and to enhance the confidence that all Australians have in our trade system. I know that at a time when our youth unemployment is above 11.5 per cent, and above 20 per cent in some regional areas, there's a real concern about the way this government is adding to an already large and often exploited pool of temporary workers.
I say all this at a time that I acknowledge that Australia has an incredibly successful and open trading economy, and our standard of living in large measure comes from the trade generated from our mining, education, agriculture, tourism and manufacturing industries, as well as the professional and other services we sell overseas. These industries support workers and their families both directly and indirectly. Australia's commitment to our open trading system has also delivered benefits to ordinary Australians via the lower prices paid for clothing, furniture, building materials, appliances, cars and other imported goods. As well as growing jobs and lowering prices in our economy, there are also important strategic benefits. But we must not allow our trade agreements to dilute the rights and job opportunities of the Australian people.
Today the Senate is considering enabling legislation for these trade agreements. Labor is supporting the passage of this enabling legislation—the Customs Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill 2019 and Customs Tariff Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill 2019. We do it whilst making it very clear that, if we'd been in government, the trade agreements this legislation enables would look very different, and we do so having asked for a series of amendments that we think do the minimum to make these agreements at least somewhat improved.
As is the case with all trade agreements negotiated by Australia with other countries, the potential upsides and downsides of these deals never get the real consent of the Australian people via their representatives in parliament. They are never ventilated in public until after their secret negotiations are concluded. As well as being negotiated in secret, these trade agreements are never subjected to economic testing to judge the full impact on our labour market and wider economy. It is scandalously easy for the government to just assert that there will be jobs created, without any independent analysis on the real cost as well as benefits. Even the Productivity Commission has advised that trade deals that Australia is negotiating should be subject to higher scrutiny. The government, however, has chosen to present them as a job lot to be voted up or down. If trade agreements are worth signing, they are worth the proper attention of our legislature.
I want to highlight just a few of the issues raised by these deals which I believe should be subject to more scrutiny and debate. I do this because there are more trade deals on the horizon, and these deserve proper scrutiny by the public and their elected representatives. Take the trade deal agreement with Hong Kong. Australia and Australians are heavily invested in the success of Hong Kong both as an important economy and in terms of its status as a unique democracy under the 'one country, two systems' status. Some half a million Australians live and work there. It's currently facing the most important test of its democratic and independent legal institutions since its handover to China from British rule in 1997. Pro-democracy activists have recently told Australian lawmakers that they have called on us to hold off on ratifying this deal until the authorities agree to an independent investigation into the actions of the police during ongoing demonstrations. The bipartisan Joint Standing Committee on Treaties considered the Hong Kong agreement, as it did the other two, but this committee will always ultimately have a majority of government members and, therefore, is not more than just an opportunity to review and air concerns.
Let's take the trade agreement with Indonesia. This undoubtedly has important strategic benefits for Australia. Indonesia is a rising regional power and is a critically important neighbour. The agreement also has important economic benefits. Under the Indonesia-Australia Comprehensive Economic Partnership Agreement, signed in March this year, the Australian steel industry may be able to sell hundreds of millions of dollars worth of steel into the Indonesian market, which may create jobs in our steel industry as Indonesia steps up its ambitious public works program, including building its new capital city.
But as legislators it is our duty to not just look at the potential benefits of any trade deal but also look at the potential detriments. There remain some real concerns in the Labor caucus about some of the provisions in this agreement, particularly those related to the increased number of temporary workers that will be added to the growing pool of over 900,000 to 1.4 million workers, depending on how you measure it. The Indonesian trade deal alone will allow for 4,100 more working holiday visas once the agreement comes into effect until the cap rises to 5,000 a year in the sixth year of this agreement.
The findings of the Migrant Workers' Taskforce, released earlier this year, found that as many as half of the migrant workers employed in Australia were being underpaid. The exploitation sees these workers being systematically paid under the legal minimum, as well as being forced to overpay their employers for accommodation or other expenses. Language barriers, a lack of education about their working rights in Australia, the lack of union right of entry and the right to inspect the books of those companies engaging these exploited workers, the fear of speaking out against employers who will sponsor their visas and the fear of being deported are among the reasons that wage theft and other forms of exploitation of migrant workers go unreported and are never prosecuted. Employers who are caught out underpaying their workers often try to pay off some workers quietly, with the hope they will be grateful for the money they get before they return home. The degree of exploitation is substantial.
We also know that we have a growing underclass of vulnerable workers, with little policing of wage theft and illegal working conditions. We are systematically undermining the pay and working conditions of the wider workforce. The government is dragging its heels on the 22 recommendations addressing the exploitation of workers that arose from the Migrant Workers' Taskforce. At the same time, it is happy to bring more temporary workers into Australia to add to this group of the potentially exploited.
Because of the concerns about some of the provisions of these trade agreements and the way in which they have been negotiated, Labor asked the government to make a series of guarantees to improve them. The government has agreed to these, and we intend to hold them to these promises. We asked for additional measures designed to ensure that holders of working holiday visas are not exploited. We have also asked, and they have agreed, to make sure that these workers are, in fact, qualified for the work they are performing in Australia. We have also asked, and the government has agreed, to make changes to the flawed investor-state dispute settlement mechanism that is in the Indonesia agreement. The government has also agreed to terminate the old 1993 bilateral investment treaty with Indonesia, which contained an investor-state dispute settlement—ISDS—mechanism that allows global corporations to sue governments over laws to protect public health, the rights of Indigenous people and labour and environmental rights. There will be an ISDS mechanism in this new agreement, with some carve-out for public health. It is better than the old ISDS, but there are still concerns about the power this gives to unelected global companies. It is an improvement that the government has also agreed to improve the new investor-state dispute settlement mechanism after five years. We have also asked them, and they have agreed, to ensure there is nothing in this agreement that would require the privatisation of government services, nor any provisions that would put any limits on any future decisions to acquire public assets.
Finally, the government has agreed that the Joint Standing Committee on Treaties conduct an inquiry into all aspects of Australia's treaty-making process with the aim of improving transparency, in consultation with the wider public. I welcome this initiative but I say again: this is not a substitute for a real debate about the merits of treaties. Our system currently excludes this, and trade agreements remain, effectively, in the gift of the executive in Australia. For this reason, the promises extracted from the government about how these trade agreements will be improved and implemented are just that—promises. They are not written into the trade agreements, because the agreements have already been signed. Such is the 'black box' system of treaty making that we have in Australia.
I'm not saying the government is inherently untrustworthy on these particular promises. I welcome the fact that they have recognised that some of the aspects of these treaties are potentially—and are—deeply unpopular with hardworking Australians, who are facing flattening wages, cuts to penalty rates and no sign of wage growth on the horizon. I do, however, make this important point. Our policy is critical, as trade and visa rights are given as part of these agreements. The only way for elected representatives and the public as a whole to have their concerns addressed is for promises to be backed up, not as an afterthought. Of course, we are currently replaying the black box of trade negotiations with the ongoing deliberations around the RCEP, the Regional Comprehensive Economic Partnership. India has not agreed to sign up, but 15 countries have—China, Japan, Australia, New Zealand, South Korea and 10 ASEAN countries. But, as with these trade agreements, this parliament will be once again presented with an up or down vote on the RCEP, with very little room to consult with those affected or to scrutinise the agreement and make it better for ordinary working Australians.
We are a nation built on the notion of fairness, but we cannot have fairness when the deliberations about important international agreements are so opaque and the ability to reform them is so limited. If we maintain support for open trading systems, then we have to make sure that agreements like these get some sunlight and debate. They need to come out of the black box.
I rise to speak to the Customs Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill 2019 and the Customs Tariff Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill 2019, which implement trade agreements with Hong Kong, Indonesia and Peru. Let me say from the outset that the Greens unequivocally oppose these bills as they stand. In ratifying these free trade agreements with Hong Kong, this government—and, it must be said, with the full support of the Labor Party—is selling out Australian workers, selling out support for public health and selling out support for a clean environment. It's undermining our ability to make social and environmental policy, and it's sending a very clear message to people who are fighting for democracy and human rights in places like Hong Kong and West Papua. This is an agreement that says: 'We might mouth the words of concern around the abuses that are taking place in places like Hong Kong and West Papua but, when it comes down to it, we do not care about your basic human rights.
The Greens are very proud that we don't say one thing before an election and another thing afterwards, and that we don't resile from our principles. We have been steadfast in our opposition to free trade agreements that contain investor-state dispute settlement provisions. Let's be very clear about what these are: these are provisions within the agreements that give power to big multinational corporations to sue governments if governments decide to regulate in the public interest. If a government decides to introduce laws to protect public health that might impact on the profits of a multinational corporation, the corporation can sue the government. If a government passes laws that protect labour standards—again, multinational corporations can sue the government. If a government passes laws that protect the environment and that will curb the activities of a corporation because they are having a detrimental impact on the environment—well, guess what? The multinational corporation can sue the government.
We are handing over, in this agreement, inordinate power to multinational corporations and basically saying that we value their rights ahead of the rights of governments to protect people and act in the national interest. These clauses favour profits of multinationals over everyday Australians and our environment. Don't take our word for it; listen to the numerous stakeholders who have participated in this debate. Listen to the voice of the union movement, who say explicitly that the provisions in these free trade agreements will be harmful to working people. That applies specifically to the Indonesia-Australia agreement, which is going to waive labour market testing requirements and allow thousands of additional working holiday-makers each year.
The timing of this deal is appalling. Just take the proposed free trade agreement with Hong Kong. Last month we had the Chinese president, President Xi, saying of the Hong Kong protesters:
Anyone attempting to split China in any part of the country will end in crushed bodies and shattered bones.
And we know that President Xi will make good on those threats. We've seen months of brutal crackdown on dissent in Hong Kong. What are the people of Hong Kong calling for? Things that we take for granted here in Australia—universal suffrage and an independent police force that's subject to oversight. We've seen anti-democracy emergency powers to ban face masks. We've seen rivers of tear gas flow. We've seen live bullets from police, and people being killed and injured. Five thousand people have been arrested since June. People as young as 12 have been convicted. In the last week we saw a siege on the Hong Kong Polytechnic University, with protesters still trapped on campus as of yesterday and roughly a thousand people arrested.
In spite of this people are taking to the streets, expressing their democratic rights. And what is our response? As far as the Australian government is concerned it's business as usual. Worse still, here we are rushing legislation through this parliament to ratify a free trade agreement with Hong Kong—and, it must be said, with the full support of the Australian Labor Party. What are the pro-democracy activists in Hong Kong saying? They've been listening to our debate here in Australia, and they've been asking us to do something very, very straightforward. They're asking us not to proceed with the free trade agreement at this time, while they are being violently attacked. Hong Kong pro-democracy leader Bonnie Leung has further urged Australian MPs not to ratify the deal unless specific human rights guarantees are inserted into that agreement. Surely that's something that Australia should listen to.
Here in Australia, the ACTU have said of this free trade agreement:
We feel it's important that we show solidarity with the protesters, and our support for human rights, civil society and the rule of law in Hong Kong, before we decide on how to proceed with a free trade agreement.
We simply do not buy the argument that was advanced by the coalition and the ALP during the JSCOT inquiry that this agreement will strengthen Hong Kong's status under 'one country, two systems'. This is the perfect opportunity for the Australian government to send a message to the Chinese government and the Hong Kong authorities. Let's back up words of concern with real action to demonstrate that we will not tolerate pro-democracy activists having fundamental rights being crushed.
We're going to move an amendment to do something very straightforward, and that is to delay the implementation of the agreement with Hong Kong by one year. We don't think we should be ratifying this agreement at all—not while it contains ISDS provisions and a range of other problematic issues—but if this government is determined to press on then we urge the government and, indeed, the ALP to vote against these bills or to at least support the delay by at least a year. Support this amendment, which comes at the request of the pro-democracy movement in Hong Kong—people who have been putting their lives on the line.
Of course, it's not just appalling timing when it comes to what's going on in Hong Kong. Let me move on to the Indonesia-Australia free trade agreement. Again, we have grave concerns about investor-state dispute clauses and labour market access, as I mentioned earlier. These alone are reason enough not to support this legislation, but there's also the issue of the appalling human rights abuses currently going on in West Papua. We've seen shocking bloodshed in West Papua in recent months. Scores of people have been killed—probably more than we know, because journalists are prevented from covering what's going on there and human rights observers have been forbidden access to the region. We know that, in just one example, Indonesian security forces opened fire on an anti-racism rally of high school students in Wamena just a few months ago. What were they protesting about? The students there were responding to being called 'monkeys' by the Indonesian authorities. Rather than entering into a free trade agreement with Indonesia, we should be condemning the actions of the Indonesian government and its security forces; we should stop training Indonesian authorities, empowering them to commit these terrible abuses; and, of course, we should not be ratifying a shoddy free trade agreement that's opposed by the people in that region and by the unions, and where our neighbours are being subject to a ruthless and violent occupation.
We know that the Liberals have little respect for human rights and they will do everything they can to hand over power to big multinational corporations because, for them, ensuring that multinationals have the power to sue governments and to prevent the improvement of public health and labour standards and the protection of the environment is absolutely bread-and-butter politics. But I want to say to the Labor Party: oppose these bills. Why on earth would you be giving more rights to big corporations than are given to ordinary working people? Why on earth would you support a free trade agreement that allows a multinational corporation to trample over labour standards, the protection of public health and the regulation of a healthy environment? Show a bit of courage, recognise that people want you to behave like an opposition, stand up to this rotten government and ensure that that legislation that passes this parliament is legislation that protects people rather than handing over power to multinational corporations.
I'm pleased to have the opportunity to speak on the bills that are in front of the Senate today—the Customs Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill 2019 and the Customs Tariff Amendment (Growing Australian Export Opportunities Across the Asia-Pacific) Bill 2019. The Indonesia-Australia Comprehensive Economic Partnership Agreement and the Australia-Hong Kong Free Trade Agreement are already in force. The bills before the parliament simply put into effect the consequential amendments to customs and tariff arrangements that flow from the executive entering into the treaties.
I want to use this opportunity to speak on the bills to make a few comments more broadly about the bilateral treaty process, the commitments given by the government in order to secure Labor's support for the Indonesia agreement in particular, and the future of the debate within Australia about these agreements and future agreements that the Commonwealth enters into. I want to begin by stating the obvious—that a trading nation like Australia needs to have a more detailed, constructive and preferably bipartisan conversation about trade than has occurred in the past. The debate should genuinely include civil society, unions, industry organisations and human rights and environment groups. It's a debate that shouldn't be the preserve of big business and the current DFAT orthodoxy that any agreement is better than no agreement—the orthodoxy that Australia's interest lies only in increasing GDP regardless of whether the exports are in up-the-value-chain industries and regardless of the impact on jobs, particularly in regional Australia.
A better debate first requires reaching a consensus about the elemental purpose of trade policy and economic statecraft around trade in economic, geopolitical and social terms. National objectives around trade should be set around establishing export markets that support good jobs in the country, particularly, as I said, in regional Australia. That means establishing a clear-sighted and tough-minded approach to privileging market access for Australian goods that are up the value chain, having a much tougher approach to ensuring temporary guest workers work only in areas of short-term genuine skills shortage and are not exploited and that there is an honest and independent accounting of the geopolitical as well as economic interest that drives regional agreement-making and bilateral agreement-making.
In the context of the geopolitical shifts underway globally, particularly in our region, trade is a vital tool. But the debate in this country must rise above the superficial. That means that proponents of agreement should be explicit about the strategic and geopolitical value of trade agreements rather than hide behind bald and often indefensible assertions of the unchallengeable economic benefit of these agreements. Recent experience has been that trade policy has been not much more than an ideological megaphone for any trade agreement that happens to come along—a shouting-down of opposing voices rather than a tough-minded approach that puts the national interest and the interest of Australian workers and firms at the heart of the national approach to trade. Too much of the debate is unaccountable, with perfunctory scrutiny and without acknowledgment of the real costs of jobs in favour of wild assertions about the benefits to consumers.
Trade agreements, particularly bilateral trade agreements, can or should deliver economic benefits that are in the national interest. But those benefits can be spread unevenly, and, in a developed, high-wage country like Australia, they can cost jobs. Of course, Australia has gone much further, in shedding blue-collar jobs, than our trade agreements have pushed us in to. I note in particular the deliberate offshoring, by the Abbott government, of the Australian automotive industry—40,000 jobs in suburban and regional Australia.
The period of trade liberalisation is associated not just with an unequivocal economic benefit but also with a loss of Australian industrial, engineering and manufacturing capability, skills and employment. In 1993, 13.6 per cent of the Australian workforce was employed in Australian manufacturing, and manufacturing accounted for 12.9 per cent of GDP. In 2018-19, seven per cent of the workforce is in manufacturing, and manufacturing is 5.6 per cent of GDP. In 1993, just over a million people were employed in manufacturing, which has fallen to 871,000 today. The first two decades of the decline in these jobs and the hollowing-out of regional and suburban blue-collar work occurred against a backdrop of tariff reduction and globalisation attributable to Australia's aggressive approach to trade liberalisation, with no countervailing effort by government in terms of industry policy to make sure that good Australian manufacturers and good Australian industry had the capacity to export and create good jobs.
The precipitous decline in Australia's export complexity since the GFC and the consequent collapse in the manufacturing share of national product should be a source of real concern for every Australian. Since the global financial crisis, Australia has dropped 24 places in Harvard University's Export Complexity Index rankings. That's one of the reasons for wage stagnation and it's one of the reasons for the collapse in good jobs in the Australian economy.
Export complexity—that is, the mix of products and services that countries export—has been found to be a good predictor of income distribution and a good predictor of equality in the economy. The more complex a country's products—not just their diversity but the expertise and technological infrastructure required to produce them—the greater equality it enjoys relative to similar-size economies in similar-size countries. Achieving a higher level of export complexity is critical to generating good jobs across the community on a scale that minimises inequality. Australia's current preponderance of commodities is 79 per cent as a percentage of our total exports, but the production of commodities doesn't employ people at a level proportionate to its footprint as a percentage of GDP. These industries taken together employ less than five per cent of Australian workers. They are base load for national income. But Australia in the 21st century, in hopefully a multipolar, growing Asian regional economy, will need economic diversity to push its exports up the global value chain.
To the extent that the efficacy of trade agreements is measurable, proponents usually assert an association with rising gross national income. However, GDP aggregates conceal more than they reveal. In Australia, exports compose just under 22 per cent of GDP, and, as I said, 79 per cent of that is commodities. There are some sectors that contribute significantly to export related national income that are high value and labour intensive—for example, higher education—but too many of Australia's exports are too low down the value chain to sustain future prosperity and equality.
The Harvard Atlas of Economic Complexity found that Australia ranks as the 93rd most complex economy in the Economic Complexity Index ranking. Compared to a decade prior, Australia's economy has become less complex, worsening 22 positions in the ranking. It found that Australia's worsening export complexity has been driven by a lack of diversification of exports. That should provoke a sense of shock and urgency amongst Australian policymakers and it should be of deep concern to Australians in government who care about jobs—good jobs—and future national self-reliance.
Export related firms are where good jobs are located, and a continued shift of Australia's exports down the value chain to fewer skills-intensive commodities spells mortal danger for the long-term sustainability and growth of the Australian economy. It is not possible to deliver growth or deal with inequality in an environment of declining export value, which is one of the key factors underlying wage stagnation in the economy. Failure to act condemns Australia to a future of intensifying precarious work, lower wages and shrinking government revenues, with consequences for public sector employment and social dislocation.
Trade agreements, of course, aren't the only factor in determining whether or not Australia can shift its exports up the value chain. Government action in industry policy, skills and vocational education and institutional cooperation in the labour market are all critical here, but trade policy and agreements do matter if they prioritise access to markets for higher value exports rather than a complacent focus on commodities. It's that effect of trade agreements that's partially responsible for the discontent in adversely affected communities that manifests itself in the rise of populists, right-wing populists and other political undesirables in Australia and in nations overseas. It's a discontent that, unless addressed in the way that we approach these matters, will lead to more dislocation and more social disadvantage. That's a matter of fact.
A World Bank commissioned analysis of the TPP showed that the TPP would cost 38,000 full-time jobs in Australia while adding something like half a per cent to GDP over the course of a decade. One of the major shortcomings with our approach to trade at present is that we have no way of assessing on an independent basis the likely outcomes of agreements that we settle. We don't commission independent analysis of an agreement in prospect, and we can't, therefore, assess whether its outcomes match our expectations in the short, medium or long term. I'm glad that the Joint Standing Committee on Treaties, of which I'm a member, has again with these agreements—as we did on a number of occasions in the 45th Parliament—recommended that the government institute the practice of commissioning such independent economic analysis.
It's also a matter of fact that contemporary trade and investment agreements involve matters that are well beyond the scope of core trade related matters such as tariff reduction and increased access quotas. They include arrangements in relation to the power of multinational companies to challenge government policy through questionable international tribunals. As we saw with the Philip Morris action, these challenges are costly, time-consuming and reform-delaying and have a potential chilling effect on government action in the public interest. They include, in Australia's case, arrangements that shape our approach to temporary foreign labour. In the past, these have been lopsided concessions on Australia's part. We've allowed access to temporary workplace visas without any matching benefit for Australia and without adequate safeguards against worker exploitation. What is more serious about this is that we've done it in an environment of abandoning the principles of labour market testing and actual skills testing in key trades like electrical and plumbing. These matters are of concern to the Australian public. There's a strong argument in relation to these issues that they are not in the national interest. At the very least, we need to have that conversation and we need to be able to have that argument.
In relation to the Hong Kong agreement, it essentially formalises the existing arrangements and does terminate, critically, the old bilateral treaty that Philip Morris used when they sued the Australian government. In relation to the Indonesia agreement, there are non-trade aspects that deserve scrutiny. While we recognise the benefits that may come with the agreement, there are legitimate concerns about both the substance of the trade deals and the process by which, more broadly, they have been settled.
In the main, I think it is fair to say that most Australians wouldn't know a lot about ISDS arrangements but, when they come to know more about them, they are more concerned. If, in the Prime Minister's weird formulation of it, you were concerned about negative globalism, whatever that is, and protecting Australia's sovereignty and our capacity to make laws in the national interest, you would have a big concern about ISDS arrangements. The government has added to the unholy mess of ISDS mechanisms, the 'noodle bowl' of arrangements, by putting new arrangements in place with countries like Japan for the first time and making additional or replacement arrangements with numerous countries. Many are inconsistent with one another. Some explicitly protect tobacco control, and some explicitly protect measures like the PBS. Others don't. Some mention health and the environment. Others don't. Why? How can we claim we’re putting in place the best ISDS mechanisms when every mechanism we sign up to is different from the last?
In chapter 12 of the Indonesian agreement, there is a provision for future agreements on labour market access. We know that the government, which is making a big noise about reducing permanent migration, is at the same time looking to expand temporary migration in order to meet its own budget forecasts. It is critical to note that the expansion of temporary work visas is not just a function of the trade agreements that the country has reached. They are a result of deliberate government action, well beyond what is required in trade agreements. The consequences are stagnant real wages, falling standards of living, record underemployment, stalled productivity, stagnant economic growth and further damage to our skills and innovation systems. The government, now in its seventh year asleep at the wheel, has deliberately created this situation and is continuing to make it worse.
In order to secure Labor's support for the Indonesia agreement, Senator Birmingham wrote to the Labor shadow minister for trade and made a number of commitments, including to seek the termination of the existing bilateral investment treaty with Indonesia; to do a review of older style ISDS provisions, to replace them with modern safeguards; to do an assessment of the operation of the investor-state dispute settlement mechanism in a review of the Indonesia agreement, which is mandated five years after its entry into force; to not use the provisions of the Indonesia agreement to extend any labour market testing waivers for Indonesian contract service providers; to ensure working holiday-makers are not exploited, by implementing the government's response to the recommendations of the Migrant Workers Taskforce, including new criminal penalties; to ensure that working holiday-makers are qualified for work undertaken in Australia, including for electrical and plumbing work; and to confirm that the agreements neither create an obligation to privatise any government services nor restrict any future decision to acquire public assets.
During supplementary estimates, I asked the minister about the process and timing for the government to implement the commitments he gave to the shadow minister. In relation to the termination of the 1993 investment agreement between Indonesia and Australia, the minister said that, having reflected on the JSCOT report and the commitment he gave to seek termination of that agreement, it would have been preferable to seek termination of the bilateral treaty as part of the overall negotiations for the agreement being enabled by these bills. However, I welcome the statement from the minister in estimates that he has authorised the department to commence exploratory discussions with Indonesia toward the goal of terminating the 1993 bilateral treaty. The department in turn indicated that they have reached out to Indonesia and proposed a text, which will be finalised in due course, given that Indonesia is also of a mind that the 1993 bilateral investment treaty should be terminated.
In relation to article 12.9, which the minister described as a 'soft commitment' that the government may enter negotiations on waiving labour market testing following a review at some future point, the minister indicated that a first threshold test is whether we agree to even have a review after three years; and then, if we have that review, what it finds and how it's run. Then there is a further threshold of whether we agree to do anything out of the review. Most importantly, in response to questions, the minister told the hearing that the government had made it clear that it would not entertain, propose or bring forward anything that involves labour market testing waivers and, were the review provision to be exercised and any changes recommended, would bring those forward to JSCOT for consideration.
In relation to the exploitation of temporary foreign workers, the minister indicated that he has had discussions with Ministers Porter and Coleman about implementation of the recommendations of the Migrant Workers Taskforce. It has been indicated in answers to questions taken on notice that the opposition will be provided with a timetable for the implementation of those provisions. In relation to trades licensing and safeguards, the minister confirmed that somebody who is going to work as an electrician in any state or territory of Australia needs to be able to prove and demonstrate their skills and meet local licensing provisions, regardless of what visa or residency status they have.
I will always support, and Labor will always support, fair and free trade, especially where it can be advanced cooperatively on an even, bilateral or multinational basis, and on the basis that it is actually in the national interest, in the interest of Australian firms and in the interest of Australian workers.