“Workers from China can come under temporary work visas just about in any category and will not be subject to labour market testing… Projects worth $150 million or more can actually bring in labour from China with lower level English, with lower skills and they can, in fact, be used to implement those projects… If you can bring an entire workforce in to build that building from another country then you immediately lock out Australian workers.” - Ged Kearney, President of the ACTU, in an interview with Fran Kelly on ABC RN Breakfast, Thursday June 18, 2015.

Australian unions have long warned that Australian workers could be disadvantaged by the China-Australia Free Trade Agreement (ChAFTA), which was signed and made publicly available last week.

After reading the sections of the agreement relating to labour mobility and labour market testing, Ged Kearney from the Australian Council of Trade Unions said her fears have not been allayed. She said the deal could “immediately lock out Australian workers” from certain jobs.

Is that right?

No need to show local skills shortage

Checking Ms Kearney’s statements against the text of the agreement, she is correct that Australian workers can be excluded from labour market opportunities through ChAFTA.

When asked for a source to substantiate Ms Kearney’s claim that the ChAFTA will lock out Australian workers, an ACTU spokesperson pointed to Article 10.4, paragraph three of the agreement, which states that:

In respect of the specific commitments on temporary entry in this Chapter, unless otherwise specified in Annex 10-A, neither Party shall… require labour market testing, economic needs testing or other procedures of similar effect as a condition for temporary entry.

As part of the agreement, China and Australia have signed a Memorandum of Understanding (MOU) on the topic of an “Investment Facilitation Arrangement” (IFA).

The IFA allows a project company registered in Australia but with 50% Chinese ownership to bring in Chinese workers for a proposed infrastructure development project. The development must be projected to involve capital expenditure of A$150 million over its term.

There is no requirement under the MOU for labour market testing. This means the project company will not need to prove that they are unable to source Australians to work on the project. There is no requirement to prove that there is a skill shortage or that the project company has had recruitment difficulties in enticing Australian workers. (This is different to the 457 visa programme, where employers are supposed to show they have tried and failed to find Australian workers for jobs, before hiring skilled foreign workers.)

Just about any category? Lower skills and levels of English?

Ms Kearney’s statement that “workers from China can come under temporary work visas just about in any category and will not be subject to labour market testing” is not technically correct, although the breadth of industries permitted under the ChAFTA is extensive.

The MOU allows Chinese workers to be brought into Australia to work on the project, so long as the project is related to infrastructure development within the food and agribusiness; resources and energy; transport; telecommunications; power supply and generation; environment; or tourism sectors.

Ms Kearney’s most alarming allegation is that Chinese workers with lower skills and lower level English will be permitted to work in Australia as part of an IFA.

I assume by this that she is comparing the immigration possibilities opened up by the ChAFTA to Australia’s official pathway for labour immigration, the 457 visa.

The 457 visa is aimed as a highly skilled work visa and is subject to a number of restrictions upon employer-sponsors, in particular:

occupations must be listed on the Consolidated Sponsored Occupations List (CSOL)

employers must show evidence of failed recruitment efforts

visa holders must meet certain English language requirements and

visa holders’ salaries must be above the Temporary Skilled Migration Income Threshold (TSMIT). The TSMIT is currently set at $53,900.

Whilst it is true that Chinese workers will need to be employed in compliance with Australian labour laws, the MOU allows “concessions” to be made with regards to the required standards for the CSOL, English language ability and the TSMIT.

This means that the project company can negotiate via a private contract with the Department of Immigration to import Chinese workers to work on the project in lower skilled occupations.

Similarly, whilst temporary migrant workers under the 457 visa scheme must be paid above the TSMIT and possess a certain level of English-language ability, concessions can be negotiated under the IFA for Chinese project companies.

This means Ms Kearney is correct that the ChAFTA has the potential for Chinese workers to be permitted into Australia with lower level English and lower skills than under the 457 visa programme.

Broader concerns

Free trade agreements like the ChAFTA have far-reaching implications and need to be closely scrutinised. Traditionally, countries like Australia have fiercely guarded their borders in order to safeguard national living standards. Although Australia’s temporary migrant worker programme (the 457 visa) has been increasingly liberalised since its inception in 1996, the ChAFTA is a game changer.

It allows Chinese companies registered in Australia to import Chinese workers for the duration of projects, so long as the capital expenditure exceeds $150 million.

Whilst this does increase the level of economic activity in Australia, it does not translate to increased job opportunities for local workers as it is likely that through the IFA, these projects will be staffed by temporary migrant workers from China.

Even more concerning, is the fact that Chinese businesses can negotiate “concessions” with the Department of Immigration and that these will be stipulated as a term of a private contract between the two parties and not be on the public record. This allows the Executive arm of government enormous discretion in the making of these arrangements, with limited opportunity for transparency and public accountability.

Still on the topic of transparency, the ChAFTA has also allowed the Executive arm of government to sign an agreement with a foreign government that goes against the parliament’s wishes in 2013 that Australia’s temporary migrant worker programme include employer-conducted labour market testing.

This requirement, approved of by the Australian parliament, has been circumvented through the ChAFTA as Chinese businesses will not have to prove that there are no local workers available to perform an occupation prior to the hiring of a Chinese worker.

Verdict

Ms Kearney is correct that Australian workers can be excluded from labour market opportunities through ChAFTA. It is not technically correct to say that “workers from China can come under temporary work visas just about in any category and will not be subject to labour market testing”, although the breadth of industries permitted under the ChAFTA is extensive. Ms Kearney is correct that the ChAFTA has the potential for Chinese workers to be permitted into Australia with lower level English and lower skills than under the 457 visa programme.

Review

This is a sound review that raises some very real concerns. The Investment Facilitation Arrangement could see a project being wholly staffed by Temporary Skilled Chinese migrant workers – and, yes, there is no labour market testing requirement.

As discussed above, this trade allows removal of some of the checks and balances that frame the 457 visa, which themselves are being subject to review.

ChAFTA moreover introduces a radical shift in the institutional context within which the negotiation of employment standards and conditions has traditionally occurred. Under the Investment Facilitation Arrangement, terms and conditions covering occupational classifications and qualifications, experience and language proficiency requirements, as well as remuneration, would be negotiated by the Chinese investor with the Department of Immigration and Border Protection and resolved in a Memorandum of Understanding. These could also be subsequently renegotiated.

Such an arrangement introduces a new level of opacity to Australia’s industrial setting. It effectively removes established industrial relations stakeholders – such as workers or their unions – from any involvement in the negotiation of the terms and conditions of employment in Chinese-owned enterprises investing in projects that have a value of $A150 million or more. It is worth noting that there is no timeframe set on the term of the project in the calculation of the expected investment. Nor are there explicit guidelines directing the Department of Foreign Affairs and Trade, which is charged with oversight of this benchmark, about what actually is required to meet the investment benchmark.

This arrangement removes agreements on employment terms and conditions from the purview of interested industrial relations stakeholders and the Australian public more generally. – Stuart Rosewarne

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