Bob Kinnaird. China FTA ‘labour mobility’ fails the national interest test

Jun 24, 2015

Current Affairs.

Prime Minister Abbott said nothing about the ‘labour mobility’ provisions in the China Australia FTA (ChAFTA) package when releasing the FTA text last week. There will be a strong community reaction once these provisions are understood.

The Federal Labor Opposition set two benchmarks for the China FTA ‘labour mobility’ provisions to pass the national interest test: ‘retention of labour market testing or comparable safeguards on temporary migration’; and they must enhance, not constrain, job opportunities for Australians.

The Abbott government concessions on ‘labour mobility’ in the China FTA comprehensively fail both benchmarks and undermine the Coalition’s claim that 457 visa workers are ‘supplementary to’ Australian workers.

Australia implements its FTA obligations on ‘the movement of natural persons’ for longer-term work stays through the standard or non-concessional 457 visa program. In 2013 Labor amended the Migration Act 1958 to require labour market testing (LMT) by sponsors in specified 457 occupations (skill level 3, engineering and nursing), with Ministerial discretion to expand LMT into all other 457 occupations.

In the standard 457 visa program, the China FTA removes the ability of all future Australian government and Parliaments to apply ‘labour market testing or any economic needs test or other procedures of similar effect’ to all Chinese citizens. That includes Chinese nationals already here in Australia on other temporary visas like overseas students and graduates, visitors, and backpackers.

All 457 sponsoring employers (not just Chinese companies) can engage unlimited numbers of Chinese citizens on 457 visas in all eligible 651 ‘skilled’ occupations (trade, technical and professional), with no legal obligation to prove qualified Australian workers are not available.

Chinese citizens currently comprise around 7 per cent of all 457 visa grants, but much more – 16 per cent – of all temporary visa holders in Australia. They are the largest and fastest-growing group, increasing 15 per cent annually.

The FTA also excludes any ‘comparable safeguards’ (to LMT) in the standard 457 visa program. Australia cannot cap the number of 457 visas for Chinese citizens and has limited ability to change the 457-eligible occupations list. The prohibition on any economic needs test or ‘other procedures of similar effect’, combined with FTA market access provisions, closes off these options.

As well, the Australian Parliament will no longer be able to legislate preference for Australian workers over Chinese 457 visa workers in redundancy situations, eg as a construction project winds down. ‘National treatment’ obligations in the China FTA require the Australian government to treat China FTA workers on standard 457 visas ‘no less favourably’ than Australian workers ‘in like circumstances’.

The FTA ‘national treatment’ obligation will therefore take precedence over the Commonwealth Racial Discrimination Act 1975 which permits employers to discriminate in favour of Australian citizen and permanent resident workers over temporary visa holders in redundancy situations.

ChAFTA also binds Australia to extend the same new rights being granted to Chinese citizens in the 457 program, to all foreign national employees (not just Chinese citizens) of all businesses in China transferring to their Australian branch – ‘intra-corporate transferees’.

The second area involving the 457 visa program is the ‘Infrastructure Facilitation Arrangements’ (IFAs). These allow ‘infrastructure development projects’ in Australia with total capital expenditure of $150 million or more (and only 15 per cent Chinese participation) to access 457 visas on non-standard or ‘concessional’ terms, below standard 457 minimum requirements, for Chinese and other nationals.

That means workers nominally in ‘skilled’ occupations but who for example have substandard English skills; and most significantly, workers in ‘semi-skilled’ or sub-trade occupations like concreters, scaffolders, and grader operators, who can also be approved with substandard English skills.

Including semi-skilled workers in any FTA package is unprecedented for Australia.

IFAs will be approved with no upfront labour market testing or any assessment whatsoever of projected shortages of Australian workers. Employers engaging the 457 workers for project work likewise have no mandatory legal obligation to LMT.

IFAs are not formally part of the China FTA treaty but are covered in a Memorandum of Understanding (MOU) between the governments of Australia and China. China’s agreement (but not the Australian Parliament’s) is needed to change the MOU. The Abbott government is handing joint control of a sensitive part of Australia’s immigration policy to a foreign government – China.

The combined ChAFTA 457 visa concessions mean that the entire skilled and semi-skilled workforce on IFA projects could be Chinese 457 visa workers, employed with no legal obligation on the project owner or employers to undertake the legislated 457 LMT.

Far from ‘enhancing’ job opportunities for Australians, the ChAFTA labour mobility provisions directly challenge these opportunities. As well as direct job losses through the 457 program, they will feed community resentment and distrust about deeper Chinese involvement in Australia. That in turn will threaten job growth in two ‘super-growth’ industries from China trumpeted by the Abbott government itself – international education and tourism.

Growth in these sectors depends on large and growing numbers of Chinese citizens in Australia on temporary visas. That growth will be threatened, if the community believes the primary job rights of Australians are not adequately protected.

The China FTA will also have knock-on negative job impacts. It sets the precedent for all other FTAs Australia is negotiating including the TPP. Every developing country will demand the same or better access to the Australian job market as China, through the standard 457 visa program and IFA-style agreements. This includes India, the largest country in the 457 program with 24 per cent of all visas. Concluding the India FTA in 2015 is the Coalition’s next self-imposed deadline.

The Coalition will be glad to oblige. The China FTA exposes the Coalition’s pretence that 457 visa workers are ‘supplementary to’ Australian workers. FTAs guarantee under international law that 457 visa workers compete with Australian workers. That’s the dirty little secret in the China FTA.

Bob Kinnaird is Research Associate with the Australian Population Research Institute and was National Research Director CFMEU National Office 2009-14.

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