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Labor’s FTA worker test ‘discriminates against China’

The Australian, Canberra

Labor’s FTA worker test ‘discriminates against China’

23 September 2015

By Greg Sheridan, Foreign Editor, Melbourne

Bill Shorten’s demand to impose new labour market testing requirements on Chinese workers who may come to Australia under the China-Australia free-trade agreement would involve actively discriminating against China compared with Australia’s other FTA partners, according to the think tank headed by former Labor foreign minister Bob Carr.

Australia China Relations Institute deputy director James Laurenceson says that proposed labour market testing would “impose a restriction with respect to the China FTA which we haven’t applied to those with Chile, Japan, Korea, Malaysia, New Zealand, Singapore, Thailand and the US”.

He believes such discriminatory labour market testing could explode the FTA, rendering worthless a decade of negotiations and depriving the Australian economy of billions of dollars of benefit.

“The Chinese might decide to just walk away,” Professor Laurenceson writes in an article in The Australian today.

This analysis underlines the dramatic fallout from Labor policy on the FTA. The ACRI research also demonstrates that concerns about Chinese labour flooding Australia are wildly overblown. Some 90 per cent of Chinese temporarily entering Australia for work purposes are in the “managers and other professionals” category. These are in category one and two of skill levels and there is no requirement for labour market testing for these skill levels.

Under the proposed FTA, workers from China in skills level three would be exempt from labour market testing, as level three skill workers are from other countries Australia has free-trade agreements with. However, the entire number of Chinese workers under skill level three who have come into Australia in the past nine months is 269. This represents 0.7 per cent of all 457 visa holders to enter Australia.

From China there were in that time fewer than five electricians coming to Australia, fewer than five carpenters and no plumbers.

Even without labour market testing, there is no incentive to bring such workers to Australia on cost grounds as employers are required by law to pay them the same wages as Australians earn for the same work.

Australia has FTAs with several countries that have low wages, such as Thailand and Malaysia, and even with some that have wages lower than those in China.

The requirement to pay temporary workers Australian wages means there has been no significant demand to bring in workers from those countries.

In the past nine months the number of level three skill workers coming to Australia from Thailand was 29, and from Malaysia 38.

The ACRI research also addresses the potential for Chinese companies to bring workers into Australia under the separate memorandum negotiated on Investment Facilitation Arrangements. These arrangements cover infrastructure projects worth more than $150 million. These are determined on a case-by-case basis and the Australian government retains the right to impose labour market testing on any project that it chooses.

The rights of an Australian government to do this are not diminished by the IFA memorandum.

The ACRI paper also cites the conclusion by the nonpartisan Migration Council Australia that labour market testing is in any event ineffective.

“Malicious employers could easily sidestep such regulation while the majority of employers who acted in good faith were burdened with administration proving the job advertisement requirement,” the council says.

The International Monetary Fund recently forecast that China’s economy, despite the recent slowing of its growth rate, would be 44 per cent bigger than it was today by 2020.