Patching the flaws around ChAFTA's labour provisions

Provisions in the China-Australia Free Trade Agreement (ChAFTA) allowing temporary labour from China to be employed in Australia have become a political lightning rod. While business supports the provisions, unions claim Australian workers will be locked out of jobs in infrastructure projects, and have been pushing for Labor and the independent senators to vote down the legislation in the Senate.

The temporary labour provisions contain commitments that Australia should not have made as they give rise to a potential loss of jobs for Australian workers and allow a loophole which could be used to relax the job skills required of the Chinese workers.

The Senate has a straightforward choice: approve the legislation as it is, or not. But the Australian government also has powers it could use to address the problem.

Where the problems lie

The provisions affecting the inflow of Chinese workers into Australian labour markets are in two main locations of ChAFTA.

Chapter 10 lays down the general rules and Annex 10-A contains the Australian “specific commitments” relating to four categories of Chinese labour - business visitors, intra-corporate transferees, independent executives of China and contractual service suppliers.

These categories have become standard in the FTAs signed by Australia and other countries in recent years. (Annex III contains the specific commitments made by China to allow the import of temporary Australian labour into China. The Contractual Service Supplier category covers many more specific sectors - most of the professions in fact - than the Australian commitment.)

Most contentious is the Memorandum of Understanding on an Investment Facilitation Arrangement, which was negotiated in parallel to the ChAFTA.

This MOU relates to the movement of “skilled labour” and defines the skill levels of occupations as well as the eligibility of Chinese companies to import labour for infrastructure projects worth A$150 billion or more.

It covers English language proficiency and qualifications and experience of the Chinese workers, and the minimum income the company will be required to pay them.

In this MOU, the project company may request “concessions”, such as those granted to Chinese workers under the existing 457 visa category.

But there is no general requirement for labour market testing for a company project, as there is for other 457 visa applicants. Labour market testing may be required in individual projects, though the extent of this possibility is not stated. There is no limit on the number of Chinese workers who may be employed.

Had a limit been imposed on the number or proportion of Chinese workers on a project, most of the possibilities of Australian job losses would have been contained. (I note that an aggregate limit of 1800 workers is imposed on contractual service suppliers from China in Chapter 10 and a limit of 5,000 on Chinese Work and Holidaymakers under a second parallel MOU.)

The possibility of further “concessions” is a loophole that could be used to relax the job skills required of Chinese workers and to expand the list of occupations, which already cover a large part of the total skilled workforce on many infrastructure projects, especially in the mining sector. There are no transparency requirements for an Infrastructure Facilitation Agreement.

All of these provisions covering temporary labour discriminate in favour of the Chinese as they are not available to non-Chinese infrastructure investors under other trade agreements which Australia has signed.

The Senate should approve the legislation without amendment

The Chinese Government will not agree to the renegotiation of the provisions. This leaves the Senate with a straightforward choice – to approve the legislation as it is, or not.

The Senate should certainly approve the Agreement. First, failure to enact the Agreement would lead to the loss of the gains from improved market access for Australian exporters which are also a part of the Free Trade Agreement.

The Coalition government rightly claims that these gains are substantial. They apply to a variety of producers in the agricultural, mining and service industries. Second, failure to ratify the Agreement would severely damage the Australian Government reputation and its ability to negotiate treaties in the future.

The government has powers it can use

There are still measures which the Australian government could adopt to limit the problems concerning unions and Labor.

For instance, labour market tests should be conducted where this is possible. The “concessions” are at the discretion of the Australian Government. They should be granted, if at all, only under very stringent conditions that make sure that skilled Australian labour has every opportunity to fill the jobs on infrastructure projects.

The Department of Immigration and Border Protection should be given the resources necessary to monitor and enforce the commitments of all the Chinese companies involved in the infrastructure projects - any legislative requirement is only as good as its enforcement.

Key features of each infrastructure arrangement should be made available promptly to the Australian public; these include the aggregate number of Chinese workers in each occupation, their skills and remuneration and the labour market tests that were conducted.

Only if these measures are taken can the Australian public be sure that the provisions which allow the importing of skilled Chinese workers operate in the interest of our nation.

Peter Lloyd does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.