Luke Gosling (Solomon, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak about the Joint Standing Committee on Treaties's Report 186 on the Indonesia and Hong Kong free trade agreements. Labor welcomes progress made to safeguard Australian jobs and economic growth. I want to acknowledge the members of the JSCOT. In this JSCOT report on the Indonesia and Hong Kong free trade agreements, Labor particularly welcomes the recommendations that the government conduct independent modelling of all proposed trade agreements and pursue the termination of the existing bilateral investment treaty (BIT) between Australia and Indonesia.

Importantly, the report confirms that there is no waiver of labour market testing for contractual service supplies in either the Indonesia or the Hong Kong agreement. While Labor does not support the inclusion of the investor-state dispute settlement, ISDS, provisions in trade agreements, the report highlights that the ISDS provisions in IA-CEPA, the Indonesian agreement, include safeguards equivalent to the best Australia has agreed to date. Moreover, the ISDS provisions in this agreement are superior to those currently in force under the BIT, the bilateral investment treaty with Indonesia. The report has found that IA-CEPA would reduce tariffs imposed by Indonesia, facilitate cooperation to address non-tariff barriers, ease restrictions on Australia's participation in Indonesia's services sector and improve protections for Australian investment in Indonesia.

In the case of the Hong Kong FTA, Labor welcomes the committee's acknowledgement of concerns about the political situation in Hong Kong and its view that the treaty's ratification would strengthen Hong Kong's unique status under the one country, two systems arrangement and provide greater certainty for Australian business.

As set out by my colleague Peter Khalil, the Deputy Chair of JSCOT, when presenting this report in the House this week, Labor is pleased that the body of the report stresses the importance of improving consultation mechanisms to be more inclusive of civil society, the union movement and businesses. The Labor members of the committee argued that any future agreement with Indonesia for the entry of temporary foreign workers should: one, be negotiated as a treaty-level agreement so that it would come back to JSCOT for further consideration; and two, include a commitment to labour-market testing to preference Australian jobs and also skills tests to ensure that any temporary foreign workers meet the same standards as Australian workers.

In light of these concerns, Labor will continue to push for the expertise of industry, unions and community groups in the course of trade negotiations. But I note that the report concludes that these agreements are ultimately in Australia's national interest. The economic gains to be made for Australians are major. Deepened economic cooperation with one of our closest and most important neighbours is clearly in Australia's national interest, and this is obvious in light of the fact that Indonesia will be larger than the UK and France economically by 2030 in PPP terms. Indonesia is predicted to be the fourth-largest economy in the world by 2050, which will make it half the size of the US economy in PPP terms and roughly four times the size of the Australian economy by then. In that light, it's extraordinary that Indonesia accounts for two per cent of our exports.

Northern Australia is particularly well placed to reap the benefits of expanding our trade and investment portfolio in Indonesia, and vice versa. There are huge opportunities for northern Australian retail and hospitality suppliers to better integrate the Indonesian tourism supply chains. Under IA-CEPA, there are real opportunities for northern Australian education and VET providers to work in the Indonesian education sector. There are opportunities for Australian cattle, dairy, vegetable, wheat, sugar and steel exporters and mining services firms, among other sectors.

But these economic gains are also a means to an end, and the longer term end is the intergenerational effort of deepening the people-to-people links and strategic trust between Indonesia and Australia, because our freedom, wealth and security are inseparable from Indonesia's. As the representative of Australia's northern capital of Darwin and a long-time friend and student of Indonesia, I'll continue to do my part to deepen our ties. I truly believe the Australian Labor Party will continue to play a major role in this long-term endeavour, as that has been the historic and enduring position of the Australian labour movement from the time it first supported Indonesia's independence.

I was very proud to be appointed recently by the member for Grayndler, the Leader of the Opposition, as the chair of federal Labor's Indo-Pacific trade task force. We've got stuck in to work that is truly in the national interest. It was fantastic to be able to travel to Jakarta to meet with the Indonesian foreign affairs minister with the opposition leader and also the shadow minister for foreign affairs, Penny Wong. We had a great roundtable facilitated by the Australian embassy in Jakarta. I'd like to thank the ambassador and staff and all the participants of that event. We learnt a great deal.

Then, self-funded, I travelled through Indonesia to West Timor, which is one of the close neighbours of Darwin and the Northern Territory, where I met with the deputy governor. There's a lot we can do, particularly from northern Australia, with NTT, Nusa Tenggara Timor, that very eastern province of Indonesia. We talked about increasing connectivity and the opportunities for Australian businesses to partner with businesses in NTT.

It's important to lead. It doesn't matter whether you're in opposition or in government, it's incumbent on all of us to be active leaders in bringing our two countries together. The future for our two countries is in deeper engagement. We need to deepen our economic, cultural, people-to-people and business-to-business links with Indonesia. I strongly believe that, and it's self-evident that geography doesn't change, so our strengthened ties with Indonesia are incredibly important. I would suggest that it behoves us all to continue to think about Indonesia as an absolute economic, strategic partner.

I'm glad that, even though the opposition isn't in total agreement with what the government members of the JSCOT report concluded, there are some very strong recommendations in it that are going to be very important for our future economic ties. The recommendation to conduct independent modelling on all proposed trade agreements was a very important one. So too was the recommendation to pursue the termination of the existing BIT—bilateral investment treaty—between Australia and Indonesia, because it contained very poor ISDS protections.

Mr Deputy Speaker, I will leave it there, but before I finish I want to emphasise the importance of our relationship with Indonesia and the contribution that this report has made to our deliberations in relation to the Indonesia-Australia Comprehensive Economic Partnership Agreement, in particular, and in relation to the treaty with Hong Kong.

Nicolle Flint (Boothby, Liberal Party) Share this | Link to this | Hansard source

As a member of the Joint Standing Committee on Treaties and a proud supporter of Australian businesses, I rise to support the findings as outlined in the report, specifically the establishment of comprehensive trade agreements between the government of Australia and the government of Indonesia; and between the government of Australia and the government of the Hong Kong Special Administrative Region. I'd like to take this opportunity to recognise the Minister for Trade, Tourism and Investment, Senator the Hon. Simon Birmingham, for his work on these agreements, and I'd also like to acknowledge and recognise the Chair of the Joint Standing Committee on Treaties, the member for Wentworth.

As we know, free trade agreements provide enormous benefits to Australian businesses and to each and every Australian, and the benefits of the free trade agreements with Indonesia and Hong Kong are clear. They include the reduction of tariffs on a range of things. In relation to the Indonesian free trade agreement, we will see a reduction of tariffs on Australian agricultural and industrial goods going to Indonesia, including frozen beef, sheepmeat, feed grains, sugar, dairy, citrus and vegetables, and also hot and cold rolled steel coil and copper cathodes. This free trade agreement is particularly important for our agricultural sector. In fact, the CEO of the National Farmers Federation told the Treaties Committee:

Indonesia is a critically important neighbour and, with a population of over 250 million people, a growing market for Australian exporters … The parliament must act to ensure farmers could benefit as soon as possible.

The CEO of the NFF, Mr Mahar, further highlighted that the agreement would:

… create new opportunities for Australian exporters to partner with Indonesian businesses both to supply Indonesian customers with even more quality Australian agricultural produce and export more broadly with the region.

These sentiments were echoed by Don Mackay, chair of the Red Meat Advisory Council, who said:

The benefits of ratifying IA-CEPA and securing more trade certainty with a key export market are unsurpassed – particularly at a time of global trade disruption.

But the agricultural industry is not the only industry that will benefit from the free trade agreement with Indonesia. The agreement also provides certainty for Australian investors and service industry suppliers by guaranteeing levels of Australian ownership, with the strongest services commitments Indonesia has made in a trade agreement. I note that in the services space the free trade agreement covers work training, university education, mining, hospitals, in-hospital services, tourism and transport. Just to give you a few examples of what it will deliver, Mr Deputy Speaker, majority Australian owned suppliers of technical and vocational education and training can provide services in Indonesia, and majority Australian owned businesses can operate railway and road transport infrastructure. In the tourism sector, wholly Australian owned three-star to five-star hotels and resorts can be established anywhere in Indonesia.

Similarly, the Australia-Hong Kong Free Trade Agreement ensures that Australia's existing duty free access is locked in. Australian goods exporters will continue to have tariff-free entry into the future, despite Hong Kong's legal right, under the World Trade Organization, to introduce tariffs on a range of products. Australia's exports to Hong Kong are dominated by gold, with gold exports worth $7 billion in 2018, accounting for nearly 70 per cent of Australia's total exports to Hong Kong. The FTA with Hong Kong locks in duty-free access for gold and other resources, including iron ore, coal and petroleum. The wine annex, something of great interest to my home state of South Australia, provides new commitments to improve transparency of regulations and labelling requirements for wine, which will reduce uncertainty and lower the costs of doing business. This is great news for Australian wine producers, including in my fine home state of South Australia. The food products annex aims to facilitate trade in all food products, including by promoting the use of international standards, and providing a mechanism to enhance collaboration between regulators. It will also facilitate speedy resolution if consignments of perishables are delayed at the border. The agreement also binds Hong Kong to maintain its open market settings for Australian services suppliers.

I could go into a range of other amazing benefits that this will provide to Australian businesses and service providers, whether through education in our universities or vocational education and training, but I'll just finish by noting the great benefits that free trade agreements provide to businesses. We know that more Australian businesses are exporting now, with over 53,000 businesses, including 46,000 small and medium-sized businesses, exporting in 2017-18. That is up 18½ per cent on 2013-14 figures. We know that one in five Australians are employed in trade related jobs, with more than 240,000 of those jobs created in the last five years. We are working to ensure that around 90 per cent of Australia's trade is covered by FTAs by 2022 because there are such significant benefits to our economy by increasing the trade we can do with other nations.

Josh Wilson (Fremantle, Australian Labor Party, Shadow Assistant Minister for the Environment) Share this | Link to this | Hansard source

I'm glad to have the opportunity to speak on report 186 of the Joint Standing Committee on Treaties, which deals with two preferential trade agreements, the first with Hong Kong and the second with Indonesia. I'll say something brief about each agreement in a minute, but I want to begin by making the point that we do need to be able to have a more detailed, constructive, and critical conversation about trade in this place and in the public domain.

For a trading nation like Australia it shouldn't be the case that our national conversation about trade is relatively shallow and basic. At the moment, in many cases it's reduced to not much more than cheerleading for any and all trade agreements as they come along. You would think, at the very least, we could acknowledge that every trade agreement involves negotiation and that no trade agreement achieves all the things we would like.

We should remember that while trade agreements may deliver an aggregate economic benefit, that benefit can be uneven: it can include gains and losses; it can create a substitution effect; and, in a relatively developed high-wage country like Australia, it can cost jobs. That's a matter of fact; it's a matter of common sense. It's happened in the past and it will happen again; it shouldn't produce howls of outrage to say that. The World Bank-commissioned analysis of the Trans-Pacific Partnership showed that the TPP would cost 38,000 full-time jobs in Australia while adding something like 0.5 per cent to GDP over 10 years.

One of the major shortcomings with our approach to trade at present is that we have no way of assessing on an independent basis the likely benefit of the agreements we settle. We don't commission independent analysis of an agreement in prospect, and we can't therefore assess whether its outcomes match our expectations in the short, medium or long term. I am glad that the JSCOT has again, with these agreements—as we did on a number of occasions in the 45th Parliament—recommended that the government institute the practice of commissioning such independent economic analysis. It's worth noting that it was a recommendation in the submission to the JSCOT from the Australian Chamber of Commerce and Industry.

It's also a matter of fact that modern trade and investment agreements involve matters that are well outside the core trade-related subject matter of tariff reduction and increased access quotas. They include arrangements in relation to the power of multinational companies to challenge government policy through questionable international tribunals. As we saw with the Phillip Morris action, these challenges are costly, time consuming and reform delaying, and have the potential to massively undermine vital policy in the public interest for the sake of preserving corporate profit. They include, in Australia's case, arrangements that shape our approach to temporary foreign labour. In the past, these have been lopsided concessions on Australia's part. In other words, we've given away that access without some matching opportunity. And what is most serious about this is that we've done so by abandoning the core principles of labour market testing and actual skills testing in key trades like electrical and plumbing.

Modern trade agreements include arrangements that are the opposite of a free market philosophy, if that's your bag, in so much as they extend the intellectual property rights of big pharmaceutical companies. Indeed, if the United States had remained in the TPP, Australia was prepared to extend the monopoly rights for biologic medicines from five to eight years. That would likely have cost the PBS hundreds of millions of dollars or else delayed affordable access to these important medicines. All these extraneous matters, non-core trade matters, are, and should be, matters of concern to the Australian public. There's a strong argument in each case that these arrangements are not in the national interest. At the very least we need to have that conversation. We need to be able to have that argument.

The Hong Kong agreement essentially formalises, or locks in, the existing free trade tariff arrangements between our countries. It doesn't represent an expansion of access. It does help to retire the old bilateral investment treaty, and that's welcome to the extent that it was the old BIT that Philip Morris used when they sued the Australian government. They used an investor-state dispute settlement mechanism. And we must remember that their action was not lost on the substance of the claim; it was lost because the tribunal determined that Philip Morris weren't, in effect, a Hong Kong company and so they couldn't have the benefit of that mechanism. We'll never know whether they might have succeeded if not for that technical issue. Clearly, they had legal advice that suggested they could use ISDS to knock out Australia's incredibly important and successful plain-packaging laws, which have helped reduce smoking, reduce the deaths that come with smoking and reduce the enormous costs to our health system.

The Indonesia agreement does include some substantial trade gains, including for grain producers and providers of educational services. That is welcome. It is welcome that we draw closer in our engagement with Indonesia, but there are non-trade aspects of the Indonesian agreement that deserve scrutiny. And while we recognise the benefits that may come with trade agreements, let's not run scared from the fact that there are legitimate concerns about both the substance of these trade deals and the process by which they have been settled. Let's remember that trade and investment agreements these days cover a lot more than tariffs and quotas alone.

There is a lot of huffing and puffing about the economic benefits of preferential trade agreements, and that's easy to do when you don't have independent economic analysis, but the government is very quiet about investor-state dispute resolution mechanisms, and it's deathly silent about the concessions it has been making in relation to temporary foreign labour access and skills assessments. In the main, I think it is fair to say that most Australians would not know a lot about ISDS arrangements. When they come to know about them, they're understandably concerned, and they should be, because ISDS allows foreign multinationals to sue the Australian government in questionable international tribunal processes. I don't know what 'negative globalism' means—it strikes me as a bit of opportunistic gobbledegook—but if you were concerned about negative globalism and protecting Australia's sovereign capacity to make laws in the public interest and the circumstances in which we make those laws, you would have a big concern about ISDS.

This government has added to the unholy mess of ISDS mechanisms by putting new arrangements in place with countries like Japan, for the first time, and additional replacement arrangements with numerous countries. Many are inconsistent with one another; some explicitly protect tobacco control, and some explicitly protect measures like the PBS. Others don't. Some mention health and the environment. Others don't. Why? How can we claim we're putting in place the best ISDS mechanisms when every mechanism we sign up to is different from the last?

In relation to the expansion of temporary foreign labour in Australia, make no mistake: this government has been using trade arrangements to undermine Australian jobs and working conditions. It has, on a number of occasions, included in trade agreements provisions that allow contractual service providers to bring workers in without recourse to labour market testing, and those service providers cover something like 65 per cent of all professions in Australia. That is a matter of concern.

In chapter 12 of the Indonesian treaty there's a provision for a future agreement on labour market access, and I moved, in the JSCOT process, a recommendation that said:

… the future resolution of an agreement with Indonesia on the movement of natural persons … only occur on the basis that any temporary foreign labour arrangements include the application of labour market testing and actual skills testing in relevant areas like electrical trades …

That wasn't supported in the JSCOT process. The government doesn't have to respond to that recommendation, because it didn't get up. That means, unfortunately, the legitimate concerns and the legitimate anxieties of working people remain unaddressed.

We know that this government, which is making a big noise about reducing permanent migration, is at the same time looking to expand temporary migration in order to meet its own budget forecasts. The government is steadily building a very significant cohort of temporary foreign workers in this country—and we know that those people are often subject to exploitation and that they're commonly employed on substandard pay and conditions—at a time when it is running the vocational and education systems in this country into the ground. What are going to be the consequences of that approach? We are living those consequences: stagnant real wages, falling standards of living, record underemployment, stalled productivity, and weak and falling economic growth. A lot of people are asking what the government is going to do to address those things. If you are asking that question, you have missed the point. This coalition government has created those circumstances and is continuing to push all the buttons and pull all the levers that will continue to make it worse.

I will always support, and Labor will always support and has always supported, fair and free trade, especially where it can be advanced cooperatively on an even and multilateral basis, where it ensures that economic activity does not come at the expense of our common wealth and our wellbeing in the form of workers' rights and our health and our environment. But, if we are to pursue trade on that basis, we need a much more constructive, detailed and critical engagement on this government's trade agenda, rather than what we've got now, because what we've got now is just the senseless cheerleading of each and every trade agreement that is rushed down the chute.

John McVeigh (Groom, Liberal Party) Share this | Link to this | Hansard source

I welcome this opportunity to address the JSCOT report into the Indonesia-Australia Comprehensive Economic Partnership Agreement and the Australia-Hong Kong Free Trade Agreement. This is in the context of the Morrison government's continuing pursuit of our very ambitious export growth agenda. Australian businesses that export, on average, hire 23 per cent more staff. They pay 11 per cent higher wages and have labour productivity rates that are 13 per cent higher than those of nonexporters. That's why trade contributes to our economy, creates jobs—higher paying jobs—and adds to our capacity to pay for the essential services that Australians demand and rely upon. Therefore, I welcome the findings of JSCOT in this report that the parliament should proceed as soon as possible to implement the Indonesia and Hong Kong free trade agreements. That's why the government is certainly progressing in that regard and is keen to ratify those agreements as soon as possible.

The Indonesia-Australia agreement, once implemented, will mean that over 99 per cent of Australia's good exports will enter Indonesia duty-free and under preferential arrangements. Frozen beef and sheepmeat, for example, will have their tariffs halved, with them being eliminated entirely after five years. Removing all remaining tariffs on dairy exports is so important for our ailing dairy industry. And there are opportunities in the vocational education, mining and related services, and tourism sectors, amongst others.

The Hong Kong-Australia Free Trade Agreement provides a comprehensive, ambitious agreement to govern the trade and investment relationship, including modern e-commerce rules governing free data flows across borders; guaranteeing access for service suppliers into key sectors such as finance, education, transport, tourism and professional services; and guaranteeing tariffs will be bound at zero per cent.

What is industry across Australia saying about this? The National Farmers' Federation stresses that the only way we can really provide greater certainty for our agricultural exporters is by signing free trade agreements. The dairy industry is certainly celebrating the Indonesian agreement in terms of job prospects and growth in existing exports. The grain industry, similarly, particularly focuses on Indonesia's stockfeed manufacturing market. The list goes on. In terms of food and agriculture value chains, the Australian Food and Grocery Council certainly celebrates the fact that more jobs and more impact in rural and regional Australia as a result will flow from the agreement. AUSVEG similarly talks about Indonesia being so important to us—because they're a close neighbour, quite obviously, but, most particularly, because they're expected to be the world's fifth-largest economy by 2030—particularly relating to opportunities in carrots and potatoes in their case.

I mention these examples because the government is implementing what industry is calling for in the interests of economic growth. The Australian Chamber of Commerce and Industry talks about the Hong Kong agreement providing so much more market access for our insurance, banking and fintech industries, as well as reducing red tape, which is certainly what our government's all about. And of course the Business Council focuses on not only the agricultural opportunities that I've mentioned, but those in education and vocational education as well.

Today in Canberra, we have the 10-year strategic plan for the red meat industry being released. The chair of the Red Meat Advisory Council, Don Mackay, has talked about Indonesia being such an important partner for us in the live cattle trade, in the beef industry, and the fact that this agreement will secure more trade certainty for red meat products. This is the same situation with the Hong Kong agreement. I appreciate the fact that Hong Kong provides us with so much potential, given that out of my home city of Toowoomba we have a weekly freighter flight from the Wellcamp Airport that goes directly into Hong Kong, flown by Cathay Pacific. This flight, amongst other things, takes meat products from our own Oakey Beef Exports—a significant exporter and certainly the largest employer in the township of Oakey, outside Toowoomba.

This is about fair dinkum outcomes. This is about building on the advantages and efforts that we have in place already. That's why the National Farmers Federation CEO, Tony Mahar, says that lower tariffs and expanded quotas for a whole range of products—and, again, he talks about dairy, beef and sheepmeat, but also sugar—are so important. Let's remember that it's the NFF that's been in Parliament House this week celebrating its 40th anniversary, such is the significance of that organisation.

With regard to education, the Group of Eight universities talks about advantages. My colleagues referred to the Australian grape and wine industry, and of course the same goes for the minerals sector in our economy.

I've referred to my own experience in the Darling Downs. Ours is a dairy, grains, cotton and beef production area. As I mentioned, that weekly freighter flight from Wellcamp Airport straight into Hong Kong promises so much for future export growth and more jobs that don't exist at present in our economy. In my own case, prior to politics I had a significant background in the cotton industry and direct exports into Indonesia, having spent many years in Jakarta, Yogyakarta and other places, such as Bandung. We have a cotton industry trade that doesn't progress as much anymore, but this means—

A division having been called in the House of Representatives—

Proceedings suspended from 11:03 to 11:17

Debate adjourned.