Joint Standing Committee on Trade and Investment Growth – Report

Published on Tue 8 August 2017 6:21pm

There is no justification for having an arrangement that means workers, temporary labour, can come into this country, without first ensuring that there is no Australian labour available to undertake that task. That is a simple thing.

Mr Wilson (6:21pm) — I’m glad to have the opportunity to speak on this committee report by the Joint Standing Committee on Trade and Investment Growth. I thank its members for what is a compelling and comprehensive examination of our current and potential trade relationship with Indonesia, especially at a time when we are in the process of negotiating the Indonesia-Australia regional economic partnership agreement.

The broad observations made at the outset of this report are fascinating and they reinforce the great significance of our relationship with Indonesia, not least because Indonesia is becoming a powerhouse in the Asia-Pacific. Indonesia is the fifth largest nation by population and it has the 16th largest economy. But, from the Australian perspective, we need to hold onto the projection that Indonesia is expected to be the fourth largest economy in the world by 2050. Australia is currently the 13th largest economy, and yet our trade with Indonesia—our next door neighbour—is such that neither country at the moment is a top 10 trading partner of the other. That gives a sense of the potential in the trade and economic relationship between our two nations.

The shadow minister talked about the great example provided by the Australia Indonesia Business Council of the disparity in terms of Australian companies currently involved in Indonesia and New Zealand. New Zealand is comparatively small, with four million people, and yet there are 12,000 Australian companies that have an involvement on the ground there, and only 300 in Indonesia. Another measure of that disparity is in the quantum of that investment: $86 billion worth of investment by Australian companies in New Zealand, and only $11 billion by Australian companies in Indonesia.

The committee report is also instructive in its observations about Australia’s approach to trade agreements in general. To some degree, my perspective on that and my interest is as a member of the Joint Standing Committee on Treaties. As the shadow minister and the member for Bruce observed, both the JSCOT and the JSCTIG—which I will take the liberty of calling the committee that has produced this report—are in broad agreement about some of the risks and shortcomings both in substance and process of the government’s approach to settling preferential trade agreements, and there are three particular points I would like to touch on: independent economic analysis, the question of trade and jobs—which is really an issue that needs to be looked at a lot more closely than is currently the case—and the issue of ISDS, or investor-state dispute settlement provisions. Recommendation 4 of this report states that the final text of the Indonesia-Australia regional economic partnership agreement, which is currently in negotiation:

… should be accompanied by independent analysis conducted by either the Productivity Commission or equivalent organisation.

In the Joint Standing Committee on Treaties report 165, on the Trans-Pacific Partnership, there was a similar recommendation, recommendation 2, which stated:

The Committee recommends that the Australian Government consider implementing a process through which independent modelling and analysis of a proposed trade agreement is undertaken by the Productivity Commission, or equivalent organisation …

The report of the trade references committee of the Senate Foreign Affairs, Defence and Trade References Committee in June 2015 was called Blind agreement. It made a similar recommendation, recommendation 8, which says:

The committee recommends that a cost-benefit analysis of trade agreements be undertaken by an independent body, such as the Productivity Commission, and tabled in parliament prior to the commencement of negotiations or as soon as is practicable afterwards. The cost-benefit analysis should inform the government’s approach to negotiations.

We have seen from multiple committees, over several years, a clear recommendation to government, and it is a commonsense one.

Unfortunately, the minister for trade, in responding to the JSCOT recommendation, has indicated—the government member for Groom said earlier—that the government has no interest in doing that. How can the Australian public, the Australian parliament or the Australian government be confident that these agreements are what they’re cracked up to be, that they’re worth entering into, on balance, without an informed view, without a view supported by appropriate high-level independent economic analysis? The answer is: they cannot have that confidence. That is why we on this side of the House have been pushing for that change to be made. Those on the government side have been fiercely resisting it.

It does matter because there is plentiful evidence that trade agreements tend to overpromise and under deliver. I know that in report 165, on the TPP, there was plentiful evidence that the assessment of a range of trade agreements in recent times has substantially overestimated the benefit that accrued from them. We also know that governments have a habit of talking up and misrepresenting the value of trade agreements. We have heard from this government that trade agreements are going to be enormously productive of jobs in the Australian economy when, by its nature, liberalising your economy, especially if you are a developed nation, does not tend to create jobs, it tends to see jobs go to areas where labour is cheaper. That is one of the things you deal with through proper transition arrangements and by expanding your economy in other areas.

The TPP was cited, on numerous occasions, as one of the ways in which this government was going to deliver the as yet still distant jobs and growth that we desperately need. There was no independent economic analysis of the TPP, so there was nothing to give us confidence that it would be productive of jobs in the Australian economy.

In fact, the only assessment of jobs that was relevant to the TPP was by a Tufts University paper that assessed that over the first 10 years of the TPP it would likely cost 36,000 jobs in the Australian economy.

There are two further aspects of the committee’s report that I would like to touch upon, contained in recommendation 4, about ISDS and the waiving of labour market testing. They both represent an extension of trade agreements outside what you would think of as being their traditional remit. These days we talk about trade agreements; they really are trade and investment agreements and they cover a range of other matters. In the case of ISDS, there is a real risk with those mechanisms that we cede our policy and government making sovereignty, that we allow foreign companies to have access to tribunals to dispute Australian policy and Australian government decisions.

It is, effectively, a discrimination against the Australian based companies. It has no demonstrated benefit, in terms of attracting investment, and it puts us at risk. In the case of waiving labour market testing, it means, through a range of recent trade agreements, that people can come in under contractual services, provide a category that covers some 650 professions—

I think the shadow minister for trade suggested to me the other day that in time to come that may well cover something like 70 to 75 per cent of all jobs in Australia. There is no justification for having an arrangement that means workers, temporary labour, can come into this country, without first ensuring that there is no Australian labour available to undertake that task. That is a simple thing.

I won’t say more about the report other than to again thank the members for a strong majority report and for making the recommendation strongly and clearly that those things should be changed in both substance and process by which we approach, negotiate and enter into preferential trade agreements. Thank you.

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