Tony Zappia (Makin, Australian Labor Party, Shadow Parliamentary Secretary for Manufacturing) Share this | Link to this | Hansard source

In recent times government expenditure has often been driven by job creation. Major projects have been brought forward and minimum local job content is being specified as a criterion for the awarding of contracts by all three levels of government. It was job creation that went to the heart of the Rudd government's economic stimulus package during the global financial crisis. The strategy is a clear admission that government procurement can be an effective economic lever in the same way that the 'Buy Australian' campaign is seen to be good for the Australian economy.

Whilst talking up local job creation, the federal government simultaneously signed up to more international agreements which restrict the government's own procurement flexibility. When the Victorian government stated that it would use Australian steel in construction projects, 'breach of international trade obligations' was immediately raised. Likewise, when new country-of-origin labelling laws were being considered by the federal government, compliance with international agreements became an obstacle. In the same vein, the USA was found to be in breach of WTO obligations over country-of-origin labelling it had brought in to protect its beef and pork industry. The WTO ruling in that matter—after two years—highlights just how complicated these agreements make issues and the ongoing uncertainty they create.

Australia has for years been a signatory to World Trade Organization agreements. In recent years it has signed several new free trade agreements and, more recently, the Trans-Pacific Partnership, all adding to the mounting procurement obligations Australia is bound by. Less widely known is the government's formal application on 16 September 2015 to join the WTO Agreement on Government Procurement, or GPA. Existing free trade agreements with the USA, Chile, Korea and Japan already contain procurement requirements, presumably consistent with the GPA. The GPA application, if successful, will give Australian entities access to government markets across 45 WTO members, including the EU and USA. In return, entities in those countries will have rights to Australian government contracts. On the surface it sounds fair. However, on close scrutiny the agreement may not be so attractive.

On these matters Australia takes its international obligations seriously. Regrettably, the same cannot always be said of all others, with behind-the-border barriers often created in order to control trade within countries or to block the entry of imports when they are not wanted. Furthermore, Australia already starts with a disadvantage. Australia's wages, adherence to international labour standards and compliance with industry standards are matched by few competitors. That being the case, Australia's ability to win contracts in other countries is unlikely to be enhanced by being admitted as a GPA member. The more serious concern will be that, by using exploited labour or non-complying materials, overseas competitors will be able to undercut Australian businesses bidding for work within Australia or elsewhere. The member for Gorton, who is in the chamber, would know very much about that because he has raised these matters within this parliament time and time again.

The use of cheap labour and non-complying building products has already proven to be a problem for Australia. Managing these issues is also difficult, costly and time consuming. The world is not a level playing field and Australia should not be so naive as to believe that anything will soon change or that all other countries will be so open, particularly when their own economies are still struggling.

The bid by Australia to be a signatory to the GPA has to date attracted little attention. Perhaps it has been overshadowed by public interest in the TPP and the earlier China-Australia FTA. With federal, state and local government procurement worth around $100 billion per annum this is an important issue. The government claims it consulted widely in 2014 before lodging its application for GPA membership. Broader public engagement prior to signing of the agreement may shed more light on the pitfalls and benefits of being a signatory. With most international agreements, the community only learns about them after they have been signed. More agreements add more uncertainty, more regulation, more confusion and more red tape to government decision making—totally contrary to what this government claims to be doing. The only guaranteed winners will be the lawyers providing advice, interpreting agreements and appearing in WTO court cases.