NEWSFLASH! In September I will join The Conversation as its Business and Economy Editor. I have been honoured to work at The Age for the past ten years, originally alongside the legendry Tim Colebatch, and for the past four years as economics editor in my own right.

At The Conversation, my job will be to make the best thinking from Australia's 40 univerisites accessible to the widest possible audience. That means you. From the new year I will also write a weekly column.

On this site are most of the important things I have written for Fairfax and the ABC over the past few decades. I recommend the Search function. The site is a record for you, as well as me.

I'll continue to post great things from The Conversation and other places here, and also on Twitter and Facebook. Enjoy.

Tuesday, September 08, 2015

China-Australia Free Trade Agreement: the collision course that's a distraction

We're in the middle of a phony war. Labor and the Coalition are saying diametrically opposed things about the China-Australia Free Trade Agreement. Few of us have time to work out who's right.

When pressed, both sides of politics agree about the details. Mind you, they need to be pressed.

Labor says the new investment facilitation agreements provided for in a memorandum of understanding negotiated alongside the free trade agreement could allow Chinese-owned firms to bring in their own workers for middle-sized and big projects worth more than $150 million without first asking whether there are Australians who can do the jobs.

The Coalition says that's not true. Labour market testing is "mandated by government policy". The problem for the Coalition in making that claim is the stark words in the memorandum itself: "There will be no requirement for labour market testing to enter into an investment facilitation agreement."

The words are clear, but they are not the end of the story. The Coalition insists that the operative words in that sentence are "to enter into". After a Chinese firm running a project worth more than $150 million enters into a facilitation agreement it might find itself required to test the labour market later, at the time it or its contractors are ready to find workers.

The memorandum itself confirms this, saying contractors can seek approval to sponsor temporary skilled workers, subject to requirements "including any requirements for labour market testing". It seems like a safeguard for Australian workers, and the department of immigration is keen to outline the labour market testing it requires.

Except that it doesn't have to require it. The requirements aren't enshrined in law. A departmental spokesperson conceded to ABC Fact Check that "in unique and exceptional circumstances" the requirements could be waived...

They can't be waived for ordinary imported workers, those on so-called 457 visas. Section 140GBA of the Migration Act requires labour market testing for most types of workers, but only for a class of employers defined in the regulations. The regulations impose the requirement on ordinary employers taking in a worker at a time, but not to employers using investment facilitation agreements to import them in bulk.

The Coalition says they are Labor's rules, and it is right. But what's proposed now is to apply those rules to workers from China, a nation with serious money, more than capable of mounting multiple major projects and importing its own workers and paying them in yuan.

John Holland Constructions is now 100 per cent Chinese-owned. If down the track it required the import of Chinese workers in return for committing to a major project or in order to escape industrial strife, the government of the day would have it in its power to agree.

Other Australian companies could set up projects in which a Chinese firm has, say, a 30 per cent stake, in order to take advantage of the loophole. A 30 per cent stake would be enough to allow them to apply for an investment facilitation agreement.

Trade minister Andrew Robb insists that those who do won't be able to import foreign workers without first offering jobs to Australians.

"Every person who comes in under those agreements, it will have to be demonstrated that they've done labour market testing and there aren't Australians available," he told Barrie Cassidy on Insiders program on Sunday. "That is clear as crystal in all the material that's gone out, it's government policy".

But it isn't required by law.

It would take just a simple amendment to Section 140GBA to require it absolutely without even the possibility of an exemption.

Former trade minister Craig Emerson has suggested something more mild: an amendment to 140GBA which would require the parliament rather than the bureaucracy to approve exemptions.

Either could be done without touching the China-Australia Free Trade Agreement or the memorandum of understanding that accompanies it.

(Separate measures within the free trade agreement itself would have to go through to the keeper. They extend downwards the skill level of contract workers Chinese firms can import one at a time using 457 visas, but they only apply to workers brought in one at a time.)

Labor isn't saying whether it will oppose the free trade agreement outright if its demands aren't met, but it needn't get that far. A quick agreement to legislate for the labour market testing both sides say they want would end the impasse.

Labor is required to make it look as if it might oppose the entire deal outright because that's the only weapon it has. In the Australian system the content of free trade agreements is kept secret until just after they are signed, when it's too late to change.

It's a bizarre topic to be debating. Its hard to believe that China is that fussed about being able to import workers for major Australian projects. Emerson says when he was negotiating the free trade agreement Chinese officials never raised it with him (although he says Chinese firms were interested).

What China did want was to be able to buy Australian land. It wanted the same $1.023 billion threshold the United States had. Labor might have agreed. The Coalition, mindful of its National Party constituency, said no, and cut rather than raised the threshold for foreign investment in agriculture.

It might have offered China easier access for its workers as a compromise.

In The Age and Sydney Morning Herald