Clearing the FTA Labour thicket

A pathway exists for the successful passage of the Australia-China free trade agreement. But for both political parties to clear the thicket blocking it and walk down it together requires an appreciation of the facts. The key fact is that, contrary to government assertions, the agreement does not require labour market testing to determine whether Australian workers are available before issuing visas to Chinese workers.

China has not insisted on the abandonment of labour market testing, by which project proponents wanting to bring in overseas workers must first ascertain the availability of Australian workers to do the job. But the Abbott government has left open the option of not requiring labour market testing, at its own discretion, on a case-by-case basis. Under the agreement the Australian government’s application of labour market testing does not require concurrence by the Chinese side. The flaw in the agreement is not of China’s making; it is there because the Australian government wanted to put it there.

Those ministers who assert that union claims about the absence of mandatory labour market testing are ill informed are themselves ill informed. Or they have deliberately chosen to misrepresent the facts.

Based on these facts, the solution is clear – pass legislation obliging all Australian governments to apply labour market testing in respect of all future trade agreements. This would not require amending or renegotiating the China-Australia agreement. It would be a separate piece of legislation relating to all future agreements, not just to the China-Australia agreement. Since the Abbott government claims that labour market testing will apply and asserts this is clear from the text of the China-Australia agreement it should have no difficulty supporting such a bill.


How did this fiasco come about? A reading of the negotiated text of the agreement, plus two memoranda of understanding and a side letter reveals that Australia may apply labour market testing. Whether or not it does so is entirely up to the Australian government. The Department of Foreign Affairs and Trade has assured the media that the Immigration Department would always require labour market testing, but the Immigration Department itself has said publicly it could waive the requirement in exceptional circumstances. In doing so, the Immigration Department has confirmed that labour market testing is not mandatory.

In any event, the Immigration Department does not have the authority to provide any assurances about labour market testing for particular projects. That decision would be up to the government of the day.

It is not difficult to imagine the present Australian government or a future government wanting to keep Australian construction workers and tradespeople off the site of major projects as an arm of its industrial relations policy. If the government wants to abandon labour market testing it should say so and be willing to have the debate about the merits of this policy, instead of surreptitiously pursuing its agenda through a high-stakes free-trade agreement with China. But if, as the present government claims, that is not its agenda, then it would have no difficulty legislatively binding itself to labour market testing to which it claims it is already bound.

Opposition leader Bill Shorten has repeatedly offered to sit down with the government and work through this problem. To date the government has refused, choosing instead to ramp up its rhetoric about racism and xenophobia.

The whole debacle is damaging Australia’s standing in China. The China-Australia free trade agreement offers greatly improved access to the massive Chinese market for Australian exporters and service providers. It is the sort of agreement envisaged in the previous government’s white paper on Australia in the Asian century. But by dealing with labour market testing not in one place but in four separate documents the Australian government has deliberately or inadvertently given itself the latitude to waive a requirement to which it claims it is committed.

That China has been caught up in this domestic political brawl is acutely embarrassing. The simple proposition of a separate bill, requiring no amendment to the trade agreement, should break the impasse and allow the passage of the enabling legislation for the benefit of both nations.

Craig Emerson, a former Labor trade minister, is adjunct professor at Victoria University’s College of Business.