China-Australia Free Trade Agreement: Article by Jennifer Westacott

10 August 2015

This opinion article by Jennifer Westacott, Chief Executive of the Business Council of Australia, was published in The Australian on 8 August 2015 under the title ‘Don’t be fooled by union campaign: China FTA in national interest'.

Next week the federal parliament’s Joint Standing Committee on Treaties will begin its investigation into the China-Australia Free Trade Agreement (ChAFTA).

This is an ideal opportunity to lay out the transformational benefits of the agreement and what we stand to lose if it is not ratified.

There is a real risk the parliament will be swayed by a ­mischievous and inaccurate campaign against the agreement by unions rather than sensibly considering all the safeguards and whether there is appropriate transparency and resourcing for compliance and enforcement.

The committee’s deliberations must contribute to bipartisanship on ChAFTA rather than adding to misplaced concerns that jobs are under threat. Nothing could be further from the truth.

We must understand the competitive global environment we are operating in and if we don’t seize the opportunity presented by this agreement then our competitor countries will. Every week that goes by without this agreement being finalised is a week our competitors will take advantage of

In this context it is unimaginable that we would want to risk an agreement which boosts economic activity with our biggest trading partner and underwriter of our enviable living standards since 2007. Two-way trade between our countries is already massive, at $160 billion, and ­accounts for almost one quarter of Australia’s trade with the world.

ChAFTA will take investment into Australia to another level, making our economy stronger and creating more jobs for Australians long into the future. It will continue to do this because the agreement confers most favoured nation status on Australia, meaning every time another country gets greater access to Chinese markets, the same access is ­extended to Australia.

The only way we will create the jobs of the future is to tap in to the new markets and this massive market in Asia. We simply cannot do this without ambitious free trade agreements.

So let’s have a look at Australia’s safeguards around foreign workers. Firstly there are a suite of safeguards which exists in the use of foreign skilled workers — the 457 visa scheme — when specific jobs can’t be filled locally. They include requirements that market salary rates are paid to foreign workers, that the worker is sponsored by an employer, that they have minimum English language proficiency, and that they match a skilled occupation list.

Then there are safeguards related to the particular provisions of the ChAFTA such as investment facilitation arrangements, which specify the number of 457 visa workers which can be brought in for very large projects. This includes market analysis to confirm skilled labour shortages and ministerial approval.

And when it comes to filling these vacancies, the relevant 457 visa scheme safeguards apply.

Apart for the higher $150 million project value threshold, which applies to investment facilitation arrangements, these are the same safeguards which apply to project agreements which are available to all countries — there needs to be a labour market analysis which demonstrates a need.

While ChAFTA removes the requirements for automatic assessment of skills, this brings China into line with 180 other countries and does not remove the requirement for foreign workers to obtain all relevant licences and authorisation before working.

And while concerns around the removal of labour market testing under ChAFTA are understandable, they are unwarranted. Several reviews have found these just add cost and administrative red tape, and more importantly, are ineffective given all the other safeguards.

It’s simply not true there aren’t safeguards in place to protect ­Australian jobs and companies.

When you look at all these safeguards, are they a justification for a mischievous scare campaign — no. The scare campaign is wrong, is xenophobic and it puts our country in a very bad light.

Therefore, provided the government can guarantee sufficient resourcing of the department to ensure compliance and enforcement of the safeguards and requirements, the parliament should ratify ChAFTA as overwhelmingly in Australia’s national interests.

It should do this quickly and without a dangerous and ill-informed debate. It is the combined effect of this agreement with those already in place with Korea and Japan that will have the truly transformative effect on our economy.

This combined effect is expected to see our exports to North Asia increase by 11 per cent by 2035. Between 2016 and 2035, the cumulative impact of the free trade agreements, compared to what would otherwise have been the case, is estimated to boost GDP by $24.4bn, adding 7900 new jobs in 2016, rising to 14,600 in 2020.

Real wages during this time are expected to increase by 0.5 per cent more than would have been the case without the agreements.

In years to come we will look back and either see this as a time when Australia was finally in the right part of the world, at the right time, with the products to buy and sell; or, we will see it as a time when we let the biggest trading opportunity in our history slip by.

I’m confident parliament will act in our national interest and seize this historic opportunity to ratify the ChAFTA so we can ­continue a journey of prosperity that is the envy of the world.



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