Labor's worker safeguards will break the ChAFTA deadlock but could have gone further

Labor’s proposals designed to “safeguard” Australian workers under the China-Australia Free Trade Agreement (ChAFTA) are a step in the right direction and are likely to break the impasse that has prevented the trade agreement passing through the Senate.

In essence, Labor has recommended the Migration Act 1958 be amended to address three areas of concern arising from the ChAFTA.

First, Labor proposes that labour market testing be required under legislation for investment facilitation arrangements. This is a positive reform as it will ensure the source of this requirement that employers advertise locally before recruiting Chinese workers is in legislation rather than policy.

Labor has also proposed useful accountability measures around investment facilitation arrangements (IFAs) such as requiring IFAs to be listed on a public register and ensuring employers adopt support plans for overseas workers.

Labor’s second proposal is around increasing the Temporary Skilled Migration Income Threshold (TSMIT) to $57,000 and ensuring it is indexed to inflation. In essence, the TSMIT is the base salary for all 457 visa workers. Labor is correct that the TSMIT helps protect temporary migrant workers from exploitation by ensuring they have the economic means to support themselves while in Australia and ensuring that the 457 visa program is only used for skilled jobs which tend to receive a higher pay than the TSMIT.

Labor’s third proposal seeks to require 457 visa holders in trade occupations to obtain the relevant trade and occupational licenses. This proposal goes some way to redressing the erosion of skills and safety contained in the removal of mandatory skills assessments by the ChAFTA’s side letter. Given their removal, it is vital that electrical workers from China and other countries are required to obtain a licence from their state regulatory body and that this requirement is enforced.

Another benefit of Labor’s proposal is the reversal of the onus of proof upon visa holders to present a licence to the Department of Immigration within 60 days, rather than the Department undertaking spot-checks and monitoring compliance.

Labor’s proposals: a verdict

The primary strength of Labor’s safeguard proposals is that they do not single out China or require renegotiation of the agreement. They offer some improvements on the status quo in terms of protecting local workers’ wages, conditions and job opportunities, and greater accountability and transparency around IFAs. Labor’s proposals are also pragmatic and moderate, making it highly likely the Government will accept them.

Nonetheless, in my opinion, even with Labor’s proposals, there are insufficient safeguards to protect Australian wages, conditions and job opportunities. In my report, I outline some key entry pathways where the ChAFTA allows Chinese workers to enter Australia without labour market testing.

Importantly, for two categories of workers, “contractual service suppliers” and “installers and servicers”, a genuine domestic skill shortage will not be required before an employer can access Chinese workers for these categories.

This means, in many jobs - such as electricians, plumbers, welders, engineers and nurses - Chinese workers can replace Australians in our labour market. Labor has not addressed this in its proposals and even though trade minister Andrew Robb repeatedly refers to the ChAFTA as “rolled gold”, this is one key weakness of the agreement for Australian workers that even the best rhetoric can’t hide.

Why is labour market testing important?

Although politically explosive here, the role and importance of labour market testing is not controversial internationally. The migration policies of the UK, Canada, Germany, Ireland and Austria each require some form of labour market testing which ensure that local workers have preferential access to jobs.

But Australia’s current model of employer-conducted labour market testing is only weakly enforced (if at all) by the Department of Immigration.

Under the current policy, businesses only need to post a single job vacancy on a business’s website, any other website or on a social media platform. Additionally, there is no minimum duration for the advertisement or a requirement of advertising. It seems a rather hollow victory for Labor to secure labour market testing for IFAs under the ChAFTA because the current approach inadequately protects local jobs.

There are other valid options. One would be for the Department to more stringently enforce the employer-conducted labour market testing requirement. A better option is for Australia to introduce a model of rigorous independent labour market testing similar to the UK, where an independent body assesses the skills and labour needs of the economy and devises a responsive occupational shortage list.

The OECD, a recent Senate inquiry and the Coalition Government’s independent review into the 457 visa all advocated Australia introduce independent labour market testing. All three reports recognised the importance of having an independent means of assessing whether an employer’s request to access temporary migrant labour is genuinely motivated by a skill or labour shortage.

Although Labor has not secured a proper victory on labour market testing in this term of parliament, it should be part of its policy platform for the next election. This should apply to Chinese ‘contractual service suppliers’ and ‘installers and servicers’ as well as other temporary migrant workers seeking to enter Australia in trade occupations.

What else should Labor have done?

Labor should also have pushed harder in terms of the accountability measures around IFAs. Labor’s proposal requires the public register for these IFAs to identify the employer’s name and the date the agreement was signed and comes into affect. But given the potential of IFAs to erode local wages, conditions and opportunities it is vital they be made publicly available.

Enterprise bargaining agreements are on the Fair Work Commission website. If Australian employers have to comply with this principle of full disclosure, surely Chinese employers seeking to operate within Australia using IFAs can do the same.

Because of the extreme politicisation of the debate around the ChAFTA, Labor was stuck between a rock and a hard place in seeking to develop proposals to improve the ChAFTA’s impact on Australian workers. While Labor’s proposals go some way to improving the situation, there is still more to do to ensure the ChAFTA does not erode Australian wages, jobs and opportunities.

Dr Joanna Howe was commissioned by the Electrical Trade Unions to write the report, 'The Impact of the China-Australia Free Trade Agreement on Australian Job Opportunities, Wages and Conditions, published by the University of Adelaide'. It was a condition of the commission that the ETU had no editorial control over the content of the report.