Rick Wilson (O'Connor, Liberal Party) Share this | Hansard source

I rise today to speak in support of the Customs Amendment (Korea-Australia Free Trade Agreement Implementation) Bill 2014, and to highlight some of the tremendous opportunities that this agreement presents for the farmers, fishermen and miners of my electorate of O'Connor.

Past policies of high tariff protection for our manufacturing industries have generally disadvantaged our primary production sector, which has borne the brunt of restricted access to key markets across the globe. The move to reduce tariff protection, begun by the Hawke government in the mid-1980s—which, I hasten to add, had the full cooperation of the coalition—has transformed our economy, allowing efficient industries to thrive and prosper while those unable to compete on the global stage have fallen by the wayside.

Unfortunately, many previous trade liberalisation agreements have focused on manufactured products, with many of our trading partners choosing to protect their domestic primary industries. As we all know, Australian farmers and miners are the best in the world and have long waited for the opportunity to compete on a level playing field, particularly into our key Asian markets. The bill before us today represents a major breakthrough, especially for farmers, horticulturalists and viticulturists across my electorate.

While I will outline in detail the specific tariff reductions and how they will benefit producers, it would be remiss of me not to mention the father of the free trade movement, the former member for Wakefield, known universally and affectionately as 'the modest member', Charles Robert—Bert—Kelly.

Bert Kelly was the strongest advocate in the federal parliament during the 1960s and 1970s for the principles of free trade, particularly lower tariffs, reduced government regulation and increased economic liberalism. This was an era of strong protectionist policies, and Bert Kelly was almost a lone voice, with occasional support from predominantly Western Australian farmers and miners. One of those Western Australian farmers was John Hyde, the member for Moore between 1974 and 1983, who is still active today promoting dry economic policies—an expression he coined and made his own.

In his foreword to the book The Modest Member: the life and times of Bert Kelly, John says that Bert Kelly used the opportunities afforded by his office to win public opinion for economic management that was efficient, mindful of the future and which did not give a privileged few the capacity to raise prices above competitive levels at the expense of many. That is a fine set of principles for any member of this place live by. In a happy coincidence, one of Bert Kelly's three sons, Tony, and his wife, Dawn, farm at Mount Barker in my electorate. I am sure that they and many other farmers, horticulturalists and viticulturists will finally enjoy the benefits of this KAFTA as well as other free trade agreements that are, in part, Bert Kelly's legacy to us all. I am certain that Bert would have been very proud of the tireless efforts by Minister Andrew Robb and the staff of the Department of Foreign Affairs and Trade in securing this agreement, which will substantially liberalise Australia's trade with South Korea.

Formal discussions between our two governments began in 2009 and concluded in May 2014, when the Korea-Australia Free Trade Agreement was tabled in parliament after signing by the Hon. Andrew Robb and his South Korean counterpart, the Minister for Trade, Industry and Energy, Mr Yoon Sang-jick, on 8 April 2014 in Seoul, South Korea. The governments of both Australia and Korea aim for this agreement to enter into force in 2014.

Korea is currently Australia's third largest export market and our fourth largest trading partner. The implementation of this agreement will significantly boost Australia's position in this major market, where other competitors already have preferential access. The United States, the European Union and the Association of Southeast Asian Nations are already benefiting from their respective FTAs with Korea, and Chile, Canada and New Zealand are close to concluding their own agreements.

Goods liberalisation alone is estimated to be worth nearly $5 billion in additional GDP to Australia between 2015 and 2030. On entering into force, 84 per cent of Australia's exports, by value, to South Korea will enter duty-free, rising to 99.8 per cent on full implementation of KAFTA. This agreement contains simplified and trade-facilitative rules of origin and related documentary requirements. Goods imported into Australia that meet the rules of origin implemented through this bill will be entitled to claim preferential tariff treatment in accordance with the agreement. The amendments include relevant obligations on Australian producers and exporters wanting to export Australian goods and to obtain preferential treatment for those goods in South Korea. This agreement reflects Australia's close bilateral economic relations with South Korea.

My electorate of O'Connor stands to benefit tremendously from the proposed tariff reductions and, in many cases, the complete elimination of customs duty on many of the agricultural products and mineral resources we export to Korea. Likewise, business in O'Connor will realise substantial cost savings on certain imported Korean products vital to our mining and agricultural sectors such as heavy machinery, diesel motor vehicles and tyres. My constituents throughout the electorate stand to benefit from more affordable Korean imports such as telephones, televisions and computer monitors, tyres, motor vehicles and refined petroleum.

With respect to exports, O'Connor is blessed with an incredible mineral wealth. Our iron ore, nickel and gold exports make up a substantial proportion of the $16 billion worth of energy and mineral products Australia exports to Korea. Whilst a large proportion of these mineral resources already enter Korea duty-free, there persists a tariff of up to eight per cent on some resources including gold. KAFTA will result in the elimination of the remaining tariffs on all resource products over the next 10 years.

My electorate of O'Connor is also one of Australia's largest agricultural electorates, producing cattle and sheep for the live and chilled meat export trade as well as cereal, oil seeds, premium wine and horticultural produce. On full implementation of KAFTA, 99.8 per cent of all Australian agricultural exports to Korea will have no tariffs. Tariffs of up to 300 per cent will be eliminated on key agricultural produce such as beef, wheat, dairy, horticultural produce, seafood and wine.

Although Australia's beef exports to Korea already account for a further $640 million in export earnings—and we are the largest supplier of beef into this market—our main competitor, the United States, has a 5.5 per cent advantage due to its 2012 free trade agreement with Korea. When enforced, KAFTA will eliminate the current 40 per cent tariff on Australian beef, 18 per cent tariff on offal and 72 per cent tariff on processed beef products over the next 15 years. This is great news for beef producers in my electorate, who have already seen increasing demand following this year's announcement of a $1 billion contract between chilled meat producers V&V Walsh and China.

Roger Fletcher, owner of the Fletcher International meat-processing plant in Narrikup and exporter of chilled meat, believes that the growing sheep meat industry in Korea can only benefit from the elimination of these tariffs. As a sheep producer myself, it is heartening to see that the 22.5 per cent tariff on lamb will be eliminated over the next 10 years. The tariff on pork, which is currently 22.5 to 25 per cent, will be eliminated over five to 15 years. O'Connor's small but significant dairy industry also stands to benefit from growing duty-free dairy quotas as well as the elimination of high tariffs on cheese, which is currently 36 per cent, and butter, 89 per cent, over 13 to 20 years.

With respect to fisheries, the southern rock lobster industry based on the south coast of my electorate will benefit from the elimination of rock lobster tariffs of 20 per cent over the next three years. O'Connor is also a productive grain-growing region, with our Wheatbelt, Esperance and Great Southern regions producing over 50 per cent of Western Australia's wheat, barley, oats and canola. Korea will eliminate its 1.8 per cent tariff on wheat and eight per cent tariff on wheat gluten immediately the KAFTA enters into force. Korea will also provide a growing duty-free quota for malt, and malt and barley, and over the next 15 years they will eliminate their high out-of-quota tariffs of 269 per cent and 513 per cent respectively. Tariffs on canola oil, currently at eight to 30 per cent, will be eliminated over five to 15 years.

The horticultural food bowl of my electorate surrounds the town of Manjimup and produces a large variety of fruit and vegetables for export. Many of these horticultural products will enter Korea duty-free on entry into force of KAFTA. Tariffs on premium produce such as asparagus, which can be as high as 54 per cent, will be gradually phased out over three to 10 years. Counter-seasonal demand will result in the high tariffs on produce such as chipping potatoes of up to 304 per cent being eliminated during their off-season, which coincides with our export season. WA produces some of the cleanest disease- and residue-free potatoes in Australia, which are very much in demand overseas. Potato growers in the Pemberton area, such as Dom Della-Vedova and his neighbour Bendotti Exporters, who process potatoes grown for export, stand to benefit tremendously from any tariff relief.

The farmers of my electorate are not alone in their support for the KAFTA. The National Farmers' Federation view is:

… that the agreement will provide millions of dollars in export value to Australian farmers, including those in the red meat, grains, dairy, sugar, pork and horticulture sectors. The agreement recognises agriculture as one of the nation's export strengths and will open opportunities for the sector in Korea.

The wine-growing regions in the Great Southern—Frankland, Mount Barker and Cranbrook—and Pemberton are currently subjected to a tariff of 15 per cent on all sparkling, white and red wines, whilst their Chilean, American and European counterparts enter Korea duty-free. On the entry of KAFTA into force, Korea will immediately eliminate all tariffs on imported Australian wines. I would hope that this would lead to an immediate rallying of our wine industry, which has seen a decline of wine exports into Korea of more than 30 per cent since 2007. One of my constituents, Kim Tyrer of Galafrey Wines in Mount Barker, currently exports premium wines to China and names Korea as a perfect market for their particular calibre of wine. The hip, young, educated Korean apparently loves cool-climate red wine, and tariff elimination will even the playing field with major players like the US, the EU and Chile.

When it comes to imports, up to 86 per cent of our current imports from Korea will enter Australia duty-free when the KAFTA enters into force, and this will increase to 100 per cent within eight years. For O'Connor, this means immediate tariff removal on some types of agricultural and mining equipment which are currently subject to an import duty of four per cent to five per cent. Australia wide, small to medium size petrol vehicles and medium size diesel powered off-road vehicles will have their five per cent tariff abolished on entry into force of the KAFTA. Larger petrol passenger and off-road motor vehicles, as well as larger diesel-fuelled vehicles, will have their four to five per cent tariff gradually reduced over three years. Importation of new tyres will be subject to immediate removal of the five per cent tariff, while retread tyres will have their five per cent tariff eliminated in five equal annual stages.

Independent modelling suggests that the Korean agreement will be worth $5 billion in additional income to Australia over the next 15 years, after which it will provide an annual boost to the economy of $653 million per annum. By 2030, agricultural exports to Korea are projected to be 73 per cent higher than without the free trade agreement. Mining exports will be 17 per cent higher than otherwise, and it is projected that KAFTA will create over 15,000 jobs between 2015 and 2030. For my electorate, these are all huge gains that everyone in O'Connor should be able to reap some benefit from.

Finally, I would like to reiterate my earlier thanks and congratulations to Minister Andrew Robb and the hardworking staff at the Department of Foreign Affairs and Trade for their tireless efforts in bringing this Australian free trade agreement to a conclusion. I commend the bill to the House.

Ms CHESTERS (Bendigo) (12:34): I thought it was important to rise and speak on the Customs Amendment (Korea-Australia Free Trade Agreement Implementation) Bill 2014 and put on the record some of the concerns that I have with this free trade agreement. There are some good things about the KAFTA. It will give Australian exporters an increased access to Korean markets, and it will help maintain Australia's competitiveness with the United States, the European Union and other nations in the Korean market. It will especially benefit Australian agricultural industries and offer other significant potential benefits to other service sectors. Modelling shows that it will boost Australia's exports to Korea by $3.5 billion by 2030. In particular, it will boost Australia's beef exports to Korea by 59 per cent, a figure that almost every speaker has highlighted in this House. It is believed that it will create an additional 1,745 jobs by 2015. The agricultural sector will stand to benefit by the inclusion of beef, sugar, dairy, wheat, wine and horticulture. These sectors employ more than 200,000 workers in Australia, including close to 4,000 in production in my electorate and about 6,000 in total in the central Victoria and Bendigo region when you put agricultural production together with the agricultural sector.

But my question is: when we create these jobs, who will actually be working them? There is a need not just within this free trade agreement but within government policy to look at building workforce participation of locals in these industries. We are actually in a crisis when it comes to creating jobs in our country areas, and I do not believe that this free trade agreement alone will give those people the working opportunities. For all the talk of jobs that we are creating, it is about who will work those jobs. The reason why I do not believe that those jobs will go to locals is the current employment practices going on in our production and manufacturing facilities already.

I will just give a few examples from my own electorate about how jobs that are being created are not going to the locals or to the permanent residents. KR Castlemaine—for everyone who likes their Dons and likes the KR Castlemaine bacon—employ about 1,500 workers. Most of them are local, but their seasonal work that is coming up will be entirely sourced by tourist working holiday visas. That is about 70 jobs that will not go to locals. Hazeldene's chicken factory, another big employer in food production in my electorate, has at least 200 boners that are on some form of visa arrangement, whether it be 457, a tourist visa, a protection visa or an international student visa—again, 200 jobs that are not going to permanent residents or locals. The last one I wish to highlight is Hardwicks, which is a beef and lamb slaughterhouse and a food producer. They have about 200 employees and on a recent site visit there I met 40, which is quite a significant chunk of their workforce, who were on tourist working visas, people who were over here on a working holiday—again, jobs going not to locals but to people recruited overseas by employment agencies and brought into Australia. Quite often, they are paid the award or worse, so undercutting the wages and the conditions of those locals employed in that facility.

My concern, and what I strongly encourage the government to do, is to ensure that in this agreement, in future agreements and in government policy we are encouraging development of a local workforce to take up job opportunities that may be created by free trade agreements. I believe that the government should have secured a better deal with Korea that picks up some of these very issues. I believe that KAFTA should not include the investor-state dispute settlement provisions, and many people on this side of the House have serious reservations about this inclusion within KAFTA. This provision gives Korean firms greater legal rights than Australian firms. Labor remains opposed to the inclusion of these provisions. In government, we will seek to renegotiate with Korea the removal of these provisions, ensuring that there is a fairer trade agreement with Korea.

Government should also require employers to show that there are skill shortages through the labour market testing provision if they wish to utilise the KAFTA provisions on labour mobility. This links back to the issue that I have just raised about who will be working these new jobs that potentially will be created as a result of the KAFTA agreement. This agreement is in danger of creating a net job loss if we do not address labour and employment conditions within the agricultural sector, as well as in other sectors. And why I say a massive net job loss is that if we are not creating good jobs that you can count on in the agricultural sector, if those jobs are actually being taken up by people on a tourist visa, on a 457 visa, on an international student visa and, at the same time, accelerating the job losses in the manufacturing sector, then we will actually see a massive net job loss in this country.

We have to ensure that the industry is ready to employ locals, which means we need government to be investing in that skills development, which means government needs to be making sure that we have locals ready to work. But it also means ensuring that we require employers to show that there is a skill shortage in their labour market. Quite frankly, the current provisions around that are just not strong enough.

In my electorate, from where I have used some examples, we have hit youth unemployment of 30 per cent. That is one in three young people. I doubt very much that every one of those young people has been asked if they want a job at KR Castlemaine, if they want a job at Hardwicks or if they want a job at Hazeldeans. I doubt very much that those people have been asked if they would like the opportunity to work in those facilities. That is part of the problem with this agreement.

I agree with the CFMEU's position that no 457 visa concessions should be included in this free trade agreement or in any free trade agreement. Australia's temporary visa program should not even be on the negotiating table when it comes to free trade agreements. These are domestic policy matters for the Australian parliament, in consultation with Australian industry and Australian workers.

The inclusion of this in the area of labour mobility, which is the clause that I am referring to, could open up the 457 visa program to Koreans. And we are not talking about small numbers of Koreans already working in Australia on the 457 visa system. Data shows that, as of 31 March 2014, there were almost 2,500 Korean nationals working in Australia on 457 visas. This is up from 1,750 the previous year. So we have already had a 39 per cent increase in the 457 visa program from Korea. That is six per cent of the total 457 visa program.

These workers are quite often exploited and have very few and limited avenues to voice their opposition and the challenges that they face. For an example about how bad the 457 visa system can be, the case that jumps to mind—a hire one, get another worker free—is the case where a Filipino couple employed by a motel chain in country Victoria had their employment unexpectedly terminated this July when they were overseas. This particular couple were hired under the 457 visa program in early 2013. They were hired as residential managers but both of them worked an average of 14 hours a day over six and sometimes seven days a week. Only one of the couple received a wage and that wage was for 40 hours of ordinary work—no overtime. The other partner in the relationship received no pay at all. They currently have a claim before the Fair Work Ombudsman for $250,000 worth of back pay. When asked why they continued to work in this situation, the couple said they had to pay off their debt to the recruitment agency first, before they started to earn a dollar.

This is the kind of exploitation currently occurring under our 457 visa system. These are the loopholes; these are the problems that need to be tightened up to ensure that overseas workers are not exploited at the expense of Australian workers. Again, my question is: how hard did this hotel try to find a local worker? How hard is it in regional Victoria, where we see unemployment peaking, to find somebody who could be this manager? It is easier for employers to look for the cheaper alternative, which is to engage an employment agent and bring an overseas worker in. As I have demonstrated, they are quite often exploited. If we are going to include the weakening of the 457 visa program within our free trade agreements, we need to ensure we have a stronger and more robust system which can ensure these workers are treated properly and that, if they do have an issue, they are supported in getting that issue resolved.

As I have mentioned, the KAFTA will lead to job losses in other parts of our manufacturing sector. We have heard from previous speakers that it will speed up the closure of automotive manufacturing in Australia. One of the things that really strikes me about the government on this issue is that they are standing up and championing cheaper cars for consumers yet, when you are out there talking to people, they get how important the auto industry is and they like their Australian-made cars. These job losses will not only immediately affect our local economy by withdrawing those wages, they will also affect our skill base and our capacity to maintain high-skill jobs in the future. The KAFTA will only add pressure to an industry already struggling to survive. That is why it is so important, when we negotiate these agreements as a nation, that we think about the long-term impact. Our auto industry has high-skill, highly trained workers from the people who draft and design our autos to the people who put them together. When you lose that skill base you do not get it back. We have seen that with the textiles industry. There is now no university or TAFE that offers a pattern-making or pattern design course in Australia. They do not need to because we no longer have a textiles industry, or if we do it is quite small. We have lost that skill base yet ADA, the manufacturer in my area which still makes uniforms for our Defence personnel, is now looking overseas for a pattern maker because we have none in Australia. This is an example of the skill base we will lose in the auto industry when this agreement—this trade policy—is finally signed off.

The question of whether a particular trade policy or trade agreement is in the long-term best interest of the nation must always take into account opportunities to develop and grow jobs, but not at the expense of others. These are just some of the concerns I have with the KAFTA and I urge the government to negotiate a better deal for our country.

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