Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697634869028.pdf (Australia)
ACTU Submission Senate Inquiry into the China- Australia Free Trade Agreement 28 August 2015 1 Proposed China-Australia Free Trade AgreementSubmission 50 TABLE OF CONTENTS Introduction ............................................................................................................................................ 3 Key points ................................................................................................................................................ 4 ACTU position on the skilled migration program and the movement of temporary overseas workers under free trade agreements ................................................................................................................. 6 The importance of labour market testing ............................................................................................... 8 Analysis of key provisions of CHAFTA ................................................................................................... 10 Commitments in the text of the agreement ..................................................................................... 10 Commitments in the MOU on Investment Facilitation Arrangements ............................................. 13 2 Proposed China-Australia Free Trade AgreementSubmission 50 INTRODUCTION The ACTU welcomes the opportunity to make a submission to this Senate Inquiry into the China-Australia Free Trade Agreement (CHAFTA).
The ACTU is the peak body for Australian unions, made up of 46 affiliated unions.

We represent almost 2 million working Australians and their families.

In this submission, we focus on the impact of CHAFTA on Australia’s domestic labour market testing obligations and laws, and assess whether the agreement provides the necessary protection and support for the rights of Australian workers to have first access to Australian jobs.
This assessment must be done with reference to the specific detail of the text of the agreement and supporting documentation, such as the relevant Memorandum of Understanding (MOU).
It cannot be done, as the Australian Government continues to do unfortunately, by resorting to name-calling and casting aspersions and slurs on the motivations of anyone who questions the agreement, without any genuine effort to engage with and address the actual detail of what the agreement says and what it means for Australian workers.

The submission that follows first provides the Committee with some context for this debate.
This includes an overview of our broad position on skilled migration and proud record of representing and standing up for the interests of migrant workers.

It includes our position on the importance of labour market testing to support Australian jobs.

We then take the Committee through the key provisions of CHAFTA that give rise to our genuine and well-founded concerns about the lack of protection in it for Australian jobs.
In doing so, we will also highlight the many confused and misleading elements of the Government’s position on these matters that require greater scrutiny.

We rely on and refer the Committee to the ACTU submission to the current JSCOT Inquiry for our position on other relevant issues such as the investor-state dispute settlement provisions in CHAFTA.

3 Proposed China-Australia Free Trade AgreementSubmission 50 KEY POINTS Australian unions are not anti-trade.
We recognise the value of lower tariffs, increased exports and freer access to overseas markets for Australian businesses.

We welcome the opportunities for workers that come from participating in the 21st century global economy.

We can believe in all these benefits of free trade agreements, and at the same time have a rock-solid commitment to ensuring that other provisions of free trade agreements do not jeopardise Australian jobs.
In relation to free trade agreements and labour market testing our position is clear.

We have no objection to overseas workers from any country being employed in Australia provided there is genuine, verifiable evidence through labour market testing that the employer has not been able to find a suitable, qualified Australian to do the job.
However, we cannot support this fundamental obligation on employers to support Australian jobs first, simply being waived as part of the cost of pushing through free trade agreements.

Our position is that the Australian Government should not be entering into any free trade agreements that trade away the right of the Australian Government – and the Australian community - to require that rigorous labour market testing occurs.
Unfortunately, the evidence from the terms of the agreement itself and the supporting MOU is that the Australian Government has struck a free trade agreement with China that does just this i.e.

under the agreement, there will be no obligation on an employer who wants to take on a Chinese national to first conduct labour market testing and ensure there was no Australian who could do the job.

There are three key provisions that give rise to these concerns, set out below.
Together, these provisions either state explicitly that there will be no labour market testing, or, at the very least, fail to provide any reassurance or certainty that labour market testing will apply.

1.

Article 10.4 of CHAFTA which states that neither party shall require labour market testing as a condition of temporary entry.
This general prohibition on labour market testing applies to all temporary skilled workers entering under the 457 visa program, despite the Government attempting to suggest, incorrectly, that the exemption applies only to a much narrower range of specialist workers and executives.

4 Proposed China-Australia Free Trade AgreementSubmission 50 2.
Paragraph 6 of the MOU to the agreement that states there will be no requirement for labour market testing for parties to enter into an Investment Facilitation Arrangement (IFA) for projects worth $150 million or more where a Chinese company has a stake in the project of 15% or more.

3.

Paragraph 8 of the MOU that refers to the possibility of labour market testing for individual labour agreements that fall under an IFA but fails to include any mandatory requirement for this to occur.
Our position has been confirmed by a number of independent fact checks 1 and has not been seriously challenged by the Government.

Instead of engaging in a genuine debate on the issues, the Government has relied on bald assertions that labour market testing will apply - despite the text of the agreement saying exactly the opposite - and resorted to the lazy and offensive argument that those who question the agreement and stand up for Australian workers are racists.
Unions will stand by their record of representing and advocating for the interests of workers any time – whether they be Australian citizens, permanent residents, or temporary migrant workers.

The matters identified above are serious deficiencies with the China Australia Free Trade Agreement.

The ACTU recommends that the relevant provisions be renegotiated in order to provide proper support for Australian jobs through labour market testing.
1 The Conversation, “Could the China-Australia FTA lock out Australian workers”, 22 June 2015; ABC Fact Check, “Does the China Free Trade Agreement threaten Australian jobs”, 13 August 2015.
5 Proposed China-Australia Free Trade AgreementSubmission 50 ACTU POSITION ON THE SKILLED MIGRATION PROGRAM AND THE MOVEMENT OF TEMPORARY OVERSEAS WORKERS UNDER FREE TRADE AGREEMENTS Free trade agreements that deal with the movement of temporary overseas workers into Australia are important issues for Australian unions and our members.
Quite simply, this is because the fundamental issues at stake are about support for Australian jobs, support for Australian training opportunities, and support for fair treatment and decent wages and conditions for all workers.

These are core issues for unions.

That is why unions will continue to campaign and advocate strongly in debates over the labour mobility provisions in free trade agreements.

As part of these debates, unions are routinely accused of being xenophobic, of playing the ‘race card’.
In the present debate over the China Australia Free Trade Agreement, this appears to be the fall-back response from a Government that is unable or unwilling to explain the impact and implications of the agreement it has signed Australia up to.

It is a lazy and offensive response that betrays their own lack of understanding of the issues involved.

In standing up for the interests of workers, unions will not allow the migration or free trade debate to be hijacked in any racist or xenophobic direction.
Australian unions are long-standing supporters of a strong, diverse, and non- discriminatory skilled migration program.

We embrace all the benefits migration has brought to Australia’s social, cultural and economic life.

Unions are particularly proud of the fact that thousands of our members across the country are migrants or come from migrant backgrounds.

Indeed, union officials too have similarly diverse backgrounds.
Our clear preference is that the migration program operates occurs primarily through permanent migration where workers enter Australia independently.

This gives migrants a greater stake in Australia’s long-term future and it removes many of the ‘bonded labour’ type problems that can arise with temporary migration where a worker is dependent on their employer for their sponsorship and ongoing prospects of staying in Australia.
We accept there is a role for some level of temporary migration to meet critical short- term skill needs but there needs to be a proper, rigorous process for managing this.

6 Proposed China-Australia Free Trade AgreementSubmission 50 There are three key priorities in how we approach the temporary work visa program, and any related provisions in free trade agreements that deal with the movement of temporary overseas workers into Australia.
One, is that the priority must always be on maximising jobs and training opportunities for Australians – that is, citizens and permanent residents, regardless of their background or country of origin.

Whether it is young Australians looking for their first job or older Australians looking to get back into the workforce or change careers, they deserve an assurance that they will have first access to Australian jobs.
A rigorous system of labour market testing is critical in this respect and this should not be undermined by labour mobility provisions in free trade agreements.

Two, that when overseas workers are required on a temporary basis to fill genuine shortages that cannot be filled locally, those workers must be treated well, be safe in their workplace, receive proper Australian wages and conditions, and be able to join and be represented by a union, just as all Australian workers can.
And three, this is also about ensuring that employers are not let off the hook; making sure employers cannot just take the easy option of using temporary overseas workers without first testing the local labour market and investing in training to develop the skills of Australian workers – and ensuring employers who do do the right thing are not undercut by those employers who exploit and abuse temporary visa workers.
Unions have a long and proud record of representing and standing up for the interests of temporary migrant workers.

Regardless of the visa type, unions are there to provide whatever support we can for migrant workers who are being underpaid, made to work in unsafe conditions, or are mistreated or exploited in some other way.
In many cases, it has been unions who have uncovered and reported cases of exploitation, bringing these cases to wider public attention, while also securing a remedy for the workers involved.

Our position on these matters is set out in more detail in our submission to the current Senate Inquiry into the temporary work visa program.

2 2 http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Education_and_Employment/temporary_work_visa (see ACTU submission no.

48.)
48.)

7 Proposed China-Australia Free Trade AgreementSubmission 50 THE IMPORTANCE OF LABOUR MARKET TESTING As noted above, one of the fundamental principles underpinning the skilled migration program must be that Australian workers – citizens and permanent residents – have the first right and opportunity to access Australian jobs.
If public statements on the subject are taken at face value, there appears to be universal support for this principle across the party political spectrum, and from unions, employers and community groups.

If that principle is accepted, then it follows, in our submission, that there needs to be a mechanism, a process, to ensure that this is actually occurring in practice.
A requirement for labour market testing provides such a mechanism, ensuring there is independent assessment and verification of whether employers wishing to employ overseas workers have first made all reasonable efforts to find a suitably qualified Australian for the position and were not able to find one.

In our submission, a legal requirement for labour market testing to occur is a logical extension of the principle that the priority should always be to employ Australians first.
Without genuine labour market testing, it is entirely unclear how the Government and the community, not to mention affected workers, can be assured that Australian workers are in fact being given priority.

Rigorous labour market testing is more important than ever now with unemployment remaining stubbornly at or above 6% for over a year - the highest levels in more than a decade.

800 000 Australians are currently unemployed and looking for work.
Of particular concern is youth unemployment, which is more than double that, just below 14% in the latest monthly ABS figures.

This equates to almost 300 000 young people out of work.3 Over the past 12 months or more there have been a string of announcements of major job losses across the country and skill shortages are at ‘historic lows’ according to the Government’s own departmental advice.
There are generally large fields of applicants for skilled jobs and employers continue to recruit skilled workers with little difficulty.4 If we look just at the two main broad occupational groups where the majority of 457 visa workers are used – ANZSCO level 2 Professionals and ANZSCO level 3 Technicians and Trades Workers – there are currently more than 350 000 Australians in those occupations who are either unemployed or underemployed.
3 ABS Labour Force, 6202.0 4 Department of Employment, Skill Shortages Australia 2014 8 Proposed China-Australia Free Trade AgreementSubmission 50 For example, there are currently 32 020 trades and technician workers in Australia on 457 visas, yet there are 63 300 Australian trades and technician workers out of work and a further 88 000 looking for more work than they currently have.
Similarly, there are currently 46 010 professionals employed on 457 visas while at the same time there are currently 62 600 professionals unemployed and further 149 600 who are under- employed.

5 Whether it is young people looking for their first job or older workers looking get back into the workforce or change careers, they deserve an assurance that they will have priority access to local jobs before they can use temporary workers from overseas.
That is why the labour market testing requirements currently in place under the 457 visa program are so important to ensure that employers have a legal obligation to employ Australians first.

Unions therefore welcomed and strongly supported the passage of legislation in the previous Parliament that introduced new provisions for labour market testing through the Migration Amendment (Temporary Sponsored Visa) Act 2013.
While the system introduced does have its limitations, and in our submission to the current temporary work visa inquiry we outline particular aspects of labour market testing that could be improved or made more effective, it does mean that employers seeking to use 457 visa workers now have a legal obligation, at least for those occupations which are subject to labour market testing, to look locally first and demonstrate to the satisfaction of the Minister that they have sought to employ Australian workers and no suitably qualified and experienced Australian is readily available to fill the position.
This requires employers to provide evidence of their recruitment attempts, such as job ads and participation in job and career expos, and detail the results of such recruitment efforts.

In relation to labour market testing and free trade agreements, unions have advocated consistently since its introduction in 2013 that labour market testing should be applied to all positions under the temporary 457 visa program.
We do not support existing exemptions from labour market testing on the basis of international trade obligations, or on the basis of skill level or occupation.

Our position is that the Australian Government should not be entering into any free trade agreements that trade away the right of the Australian Government – and the Australian community - to require that rigorous labour market testing occurs.

This is our position regardless of which country the free trade agreement is with.
5 ABS Labour Force Detailed, Quarterly, cat 6291.0.55.003, table 18 and 19; Subclass 457 quarterly report, quarter ending at 31 March 2015, Department of Immigration and Border Protection, Australian Government.
9 Proposed China-Australia Free Trade AgreementSubmission 50 ANALYSIS OF KEY PROVISIONS OF CHAFTA Commitments in the text of the agreement Under the terms of CHAFTA, a general prohibition on labour market testing applies to positions being filled by Chinese nationals under the standard 457 visa program – or any other temporary visa types for that matter.

This means an employer will not have to provide any evidence of their efforts to first employ an Australian worker to fill those positions.
The text of the agreement leaves no room for ambiguity on this point, as is clear from chapter 10, article 10.4 (3) which states: 3.
In respect of the specific commitments on temporary entry in this Chapter, unless otherwise specified in Annex 10-A, neither Party shall: (a) impose or maintain any limitations on the total number of visas to be granted to natural persons of the other Party; or (b) require labour market testing, economic needs testing or other procedures of similar effect as a condition for temporary entry.
Significantly, the text of the agreement shows the relevant “specific commitments” made by Australia to not undertake labour market testing extend beyond high-level occupations such as ‘independent executives’ and ‘intra-corporate transferees’, and apply to the broad category of ‘contractual service suppliers of China’ coming to Australia for up to four years.
This is confirmed by Mr Robb’s own Department, DFAT, in their information note to the JSCOT inquiry on the specific commitments under chapter 10.6 Under chapter 10, clause 10 in Annex 10-A to the agreement, a contractual service supplier is defined as: “…a natural person of China who has trade, technical or professional skills and experience and who is assessed as having the necessary qualifications, skills and work experience accepted as meeting Australia’s standards for their nominated occupation and is: (a) an employee of an enterprise of China that has concluded a contract for the supply of a service within Australia and which does not have a commercial presence within Australia; or (b) engaged by an enterprise lawfully and actively operating in Australia in order to supply a service under a contract within Australia.” 6 http://dfat.gov.au/trade/agreements/chafta/news/Documents/information-note-on-movement-of%20natural-persons- provisions.pdf 10 Proposed China-Australia Free Trade AgreementSubmission 50 Effectively, this means the exemption from labour market testing under article 10.4 (3) applies to any and all workers from China with trade, technical and professional skills i.e.
all 651 occupations currently under the standard 457 visa program.

7 The exemption applies regardless of whether the employer is a Chinese company or an Australian company.

Minister Robb has attempted to suggest on a number of occasions that this exemption from labour market testing under the terms of the agreement applies only to a small group of high-level executives and managers, and possibly to workers installing specific machinery.
For example, on 24 August 2015, he stated: “ the clause…about no labour market testing being required for individuals applying for temporary work entry, that again is in every trade agreement…it’s for business executives, it’s for senior managers in major companies, it’s independent executives, it’s not skilled workers, it’s the management team of companies.8 And earlier, on 3 August: Andrew Robb: Well one of these provisions which applies in every Free Trade Agreement – signed by Labor or ourselves – is where senior business executives are able to come in without the need for market testing.
That is an obvious provision; if you’ve got senior executives in the company that need to come in and help establish the project, then it’s not a question of workers, it’s a question of the management of the company being able to come and get full access.

If they’re putting in tens of billions of dollars, they should be able to have some of their management in there to conduct affairs.

David Speers: So that only applies to management, not to labour.
Andrew Robb: There’s only one provision; where they have got technical expertise which relates to the purchase of a major piece of equipment – a multi-million dollar piece of equipment – they can come in on a particular visa which is only short-term and it only applies to the fact that it’s a piece of equipment that requires expertise to either install it or maintain it in the short-term.
But it’s quite explicit in the agreement that those people cannot stay for long, they’re only in there to help put in place a major piece of machinery.9 7 As set out in the Consolidated Skilled Occupations List: https://www.border.gov.au/Trav/Work/Work/Skills-assessment-and- assessing-authorities/skilled-occupations-lists/CSOL 8 Media transcript, 24 August 2015, Minister Robb interview with Leon Byner, radio 5AA 9 Media transcript, 4 August 2015, Minister Robb interview with David Speers, Sky News – PM Agenda 11 Proposed China-Australia Free Trade AgreementSubmission 50 The explanation offered by Minister Robb is at odds with the text of the agreement in Annex 10-A, the advice of DFAT referred to above, and the interpretation the Department of Immigration and Border Protection (DIBP) has provided of similar clauses in other free trade agreements i.e.
that the removal of labour market testing for ‘contractual service suppliers’ applies to all skilled trades, technical and professional occupations.
For example, in the case of FTAs with Chile, Thailand, Korea10 and Japan, which contain the same commitments from Australia to remove labour market testing for the category of ‘contractual service suppliers’, explanatory materials from DIBP confirm that Australian businesses are exempted from the requirement to labour market test for any employee, regardless of occupation or skill level, from those countries: “ International trade obligations LMT will not need to occur where it would conflict with Australia’s international trade obligations, in any of the following circumstances: • The worker you nominate is a citizen/national of Japan or Thailand, or is a citizen/national/permanent resident of Chile, Korea… ” 11 Minister Robb either does not understand the provisions of the agreement he has signed Australia up to or is being misleading in suggesting that only executives and management teams are being exempted from labour market testing.
Mr Robb also mistakenly suggests in the interviews above that every free trade agreement has to have the same provision, as if there is some immutable law that a free trade agreement has to exempt the category of ‘contractual service suppliers’ from labour market testing.
In actual fact, as the current legislative instrument that sets out the various exemptions from labour market testing under different free trade agreements shows, a variety of different exemptions have been agreed to in the past.12 For example, while a number of free trade agreements, including Chile, Thailand, Korea and Japan, have removed labour market testing for contractual service suppliers, others, including free trade agreements with Singapore, Malaysia and the US, have been able to confine the exemptions to labour market testing to those higher-level executive type positions.
10 Astoundingly, in the case of the Korean deal, Australia has given up labour market testing in regard to Korean workers coming to Australia, while Korea was able to insist on retaining its own labour market testing for Australian workers going to Korea.

The report of this same Committee into the Korean FTA picked up this very point and recommended the Australian Government seek to renegotiate with Korea to preserve the right to labour market testing, noting that Korea retains this right.
The Australian Government in its response to the Senate Committee did not even try to defend or explain the imbalance in outcomes and merely presented it as a result of the negotiations.
11 DIBP, Temporary Work (Skilled) (subclass 457) visa, p. 25. http://www.border.gov.au/forms/Documents/1154.pdf 12 See: IMMI 14/107 - Determination of International Trade Obligations relating to Labour Market Testing http://www.comlaw.gov.au/Details/F2014L01510 12 Proposed China-Australia Free Trade AgreementSubmission 50 Unions have had a consistent position on these issues.

In our view, labour market testing should be applied to all positions and occupations under the temporary 457 visa program.
For that reason, we have said consistently that the Australian Government should not be entering into any free trade agreements, regardless of which country the agreement is with, that trade away the right of the Australian Government and the Australian community to require that labour market testing occurs and Australian workers are given first right to Australian jobs.

Free trade agreements should not be used for the purpose of further widening exemptions to labour market testing.
Notwithstanding this position, we have said that where Australian Governments nevertheless continue to make commitments in free trade agreements on the ‘movement of natural persons’ that provide exemptions from domestic labour market testing laws, those commitments should not be extended to the category of ‘contractual service suppliers’, given the expansive meaning applied to that term across professional, technical and trade occupations.
These are positions the ACTU and affiliated unions have advocated consistently since and before the introduction of labor market testing in 2013.

We reject the contemptible suggestion by Minister Robb that unions have only raised these concerns in relation to CHAFTA alone as evidence for the government’s slur that the union position on CHAFTA is racially motivated.
In summary then, the implications from the text of CHAFTA and, specifically, article 10.4 (3) (b), and clauses 9 and 10 of Annex 10-A, are that Chinese workers across a wide range of skilled, trade and technical positions who are accessing Australia’s 457 temporary work visa program will not require their positions to have passed labour market testing requirements to determine that no Australian workers are able and willing to do the work.
As a direct consequence, there can be no guarantee that Chinese workers employed under the agreement are not occupying jobs that could and should be occupied by the growing number of Australians looking for work in those occupations.
Commitments in the MOU on Investment Facilitation Arrangements In addition to the commitments on temporary entry in the text of CHAFTA described above, an MOU establishes special provisions for new Investment Facilitation Arrangements (IFAs) for infrastructure projects in Australia.

This is the first time Australia has signed a free trade agreement that has such provisions attached to it.
IFAs will apply to infrastructure projects across the sectors of food and agribusiness, resources and energy, transport, telecommunications, power supply and generation, environment, and tourism, which have an expected capital expenditure of $150m or more over the term of the project (MOU clause 2 (b) and (c)).

13 Proposed China-Australia Free Trade AgreementSubmission 50 IFAs will be negotiated between the DIBP and the project company.
Under the terms of the MOU, the project company will be eligible to establish an IFA where either: … a single Chinese enterprise owns 50% or more of the project company; or, where no single enterprise owns 50% or more of the project company, a Chinese enterprise holds a substantial interest in the project company (MOU clause 2 (a)).
Under the MOU, a ‘substantial interest’ occurs when a single foreign person has 15 per cent or more, or several foreign persons and associates have 40 per cent or more, of the issued shares, voting power, or potential voting power.
This means that IFAs will be available for any infrastructure projects worth $150million plus, where the project company is majority Chinese-owned, or even where a single Chinese company has a stake of just 15% or more in the project company, in cases where there is no majority owner.

A key attraction of IFAs is ‘increased labour flexibilities’ for Chinese companies.
13 This means the ability for those companies to negotiate ‘concessions’ to bring in a specified number of overseas workers with lower-level skills and experience, lower-level English language, or lower wages than would otherwise be allowed under the standard 457 visa program, 14 as the text from the MOU indicates below: 4.
The areas which will be subject to negotiation between DIBP and the project company in respect of the eligible project will include: (a) the occupations covered by the IFA project agreement; (b) English language proficiency requirements; (c) qualifications and experience requirements; and (d) calculation of the terms and conditions of the Temporary Skilled Migration Income Threshold (TSMIT).
The significance of these provisions was well captured by migration expert Bob Kinnaird: “The Coalition government will not admit that these IFA arrangements are unprecedented.

Australia has never before in an FTA package deal permitted concessional 457 visas for even skilled workers, let alone for semi-skilled workers (like concretors, scaffolders, truck drivers, even office workers).
15 13 http://dfat.gov.au/trade/agreements/chafta/fact-sheets/Pages/fact-sheet-movement-of-natural-persons.aspx 14 It should be noted that the provision for a ‘specified number’ of workers to be negotiated relates only to those positions where concessions are negotiated to the standard 457 visa program requirements eg skill level, English language etc.
There are no such limits on the number of Chinese workers who can be employed, either by Chinese or Australian companies, on standard, or ‘non- concessional’, 457 visas that do meet all the standard program requirements.

These workers can be employed in unlimited numbers without the need for labour market testing.
15 Kinnaird, B., “More government dishonesty on China FTA”, 23 July 2015 http://johnmenadue.com/blog/?p=4268 14 Proposed China-Australia Free Trade AgreementSubmission 50 Turning to the question of labour market testing under IFAs, Minister Robb has claimed that: “Under CHAFTA, a Chinese company investing more than $150 million in specific types of Australian infrastructure projects MUST USE AUSTRALIAN WORKERS (his emphasis), unless it can prove there are no qualified Australians to do the job.” 16 This would be a welcome statement if it were correct (and putting to one side the fact a Chinese company will not necessarily need to be investing $150 million to be eligible for an IFA, as Minister Robb states.
As indicated above, a Chinese company could access an IFA with as little as a 15% stake).

A mandatory requirement for Australian workers to have first priority on Australian infrastructure projects would be entirely consistent with the position advocated by Australian unions and in line with community expectations.

However, there is nothing in the text of CHAFTA or in the MOU that provides such a guarantee.
There is certainly no provision for labour market testing to be part of the IFA approval process up-front.

In fact, the MOU states explicitly that ‘there will be no requirement for labour market testing to enter into an IFA’ (MOU, clause 6).
This means an IFA can be negotiated and entered into with no absolutely no evidence required as to the state of the Australian labour market or consideration of local unemployment levels, and no assessment of whether in fact Australians could fill positions under the project.
At the same time, the IFA can approve the inclusion of overseas workers in lower skill level occupations and with lower English language levels than would be allowed under the standard 457 visa program, and can waive the current minimum wage floor for the program.

17 The Government has tried to argue the provisions for IFAs are the same major project provisions Labor introduced when in office for Enterprise Migration Agreements (EMAs).

This is yet another incorrect claim.


Key differences between EMAs and IFAs include: • The threshold for access to EMAs was capital expenditure of $2 billion and a peak construction workforce of at least 1,500.

The threshold for access to IFAs is only $150 million total project expenditure and no minimum workforce size.

Chinese participation can be as low as a 15% stake in order to access the IFA concessions.
• IFAs cover a far broader range of infrastructure projects and sectors than EMAs which were designed specifically for major resources construction sector projects.

16 Minister Robb, press release, 7 July 2015.

17 The Temporary Skilled Migration Income Threshold, or TSMIT, currently $53 990 p.a.
15 Proposed China-Australia Free Trade AgreementSubmission 50 • Under EMAs, the project proponent at least had to produce a ‘labour market analysis’ to justify the need for the ‘concessional’ 457 visa workers, based on projected shortages in the occupations concerned.
IFAs will be approved with no upfront or subsequent requirement to demonstrate projected labour shortages (MOU clauses 2- 5).18 • Under EMAs, consultation with relevant unions and other stakeholders was mandatory, before an EMA could be approved.

Under IFAs, a project is approved as ‘eligible to establish an IFA’ simply by agreement between DFAT and the China International Contractors Association (CHINCA) that the project meets the eligibility criteria.
This will be followed by agreement between DIBP and the project company on the concessions that will be granted on skill levels, English language, qualifications and experience, and minimum wage requirements (MOU clauses 2, 3 and 6).

Once an IFA is agreed to, individual labour agreements can fall under its umbrella.

The text in this section of the MOU appears to suggest labour market testing may apply at that stage, but it is far from definitive on that point.
There is certainly no mandatory requirement as the earlier statement from Minister Robb suggests.
The relevant clause of the MOU (clause 8), and the footnote that accompanies it, reads: “ A labour agreement will be entered into in a timely manner and will set out the number, occupations and terms and conditions under which temporary skilled workers can be nominated, consistent with the terms of the IFA, and the sponsorship obligations associated with the labour agreement, including any requirements for labour market testing.
Where labour market testing is required, employers may satisfy this requirement by demonstrating that they have first tested the Australian labour market and not found sufficient suitable workers.
DIBP will make publicly available information on how any labour market testing requirements could be met.” In support of their assertion that labour market testing will (and must) in fact apply to the individual labour agreements under an IFA, the Government is now relying on a set of guidelines for what they are calling project agreements.
The Government position is that IFAs will be covered by these project agreement guidelines19 and the guidelines (p. 8) say labour agreements will require evidence of labour market need and domestic recruitment efforts.

However, the Government’s reliance on these project agreement guidelines, dated May 2015, raises more questions than it does answers in terms of the extent, if any, to which labour market testing will be applied to any future IFA labour agreements.
18 Clause 5 says only that ‘the project company may be asked to provide additional information by DIBP in respect of its requests for concessions....’.

19 http://www.border.gov.au/WorkinginAustralia/Documents/project-agreement-employer.pdf 16 Proposed China-Australia Free Trade AgreementSubmission 50 To start with, it is not clear how and when these project agreement guidelines were developed and finalised, and for what purpose.
As far as we can tell, the Government first referred to their existence on 22 July 2015 - more than a month after CHAFTA was tabled in Parliament on 17 June - in a press release from Senator Michaelia Cash and Parliamentary Secretary Steven Ciobo.

In that release, unions were accused of ‘egregiously and deliberately ignoring’ the guidelines.
It is difficult to see how unions deliberately ignored guidelines that we were not aware even existed, given we were never consulted on them and the Government, to our knowledge, had never referred to them publicly before.

They were not deemed important enough to mention, for example, in DFAT’s “myth-busting’ Fact Sheet released in mid-July.

As far as we can ascertain, project agreements are there to replace what were previously known as EMAs.
However, it should be noted that unions and other stakeholders were consulted by the Department of Immigration, under both the current Government and the previous Labor Government, in the development of guidelines for EMAs.

By contrast, the new project agreement guidelines were not the subject of any consultation, at least with unions.
They simply appeared after several weeks of debate over the labour mobility provisions of CHAFTA, and we are told that they now apply to IFA labour agreements that are made under the terms of CHAFTA and the relevant MOU.

A key concern we have is that the MOU itself makes no reference at all to the project agreement guidelines.
If the Government’s commitment, or claim, that labour market testing will apply to IFA labour agreements was so rock solid, it begs the question as to why the MOU does not expressly state that.
This could be a simple provision in the MOU along the lines of “…Labour market testing will be required for individual labour agreements under IFAs, in accordance with the provisions of the Australian Government project agreement guidelines.” The fact the MOU has no such guarantee in it means that unions and the community at large are left to accept the word of the government that labour market testing will apply, rather than having a mandatory, enforceable legal provision for labour market testing under the terms of CHAFTA.
Even if we take the Government at its word that some form of labour market testing will apply under IFAs, there are still a range of further questions the Government has yet to answer.

These include who such labour market testing would apply to and what type of labour market testing would it be.
On the first point, the Government has failed completely to address the issue of how the general prohibition on labour market testing in the text of CHAFTA (article 10.4 (3)) relates to the provisions on IFAs in the MOU.

The Government needs to be very clear how these provisions intersect.
Read together, it appears on our interpretation that any labour market testing that might occur under IFA labour agreements would apply only to the additional lower-skilled ‘concessional’ workers engaged under an IFA (ANZSCO 4 and 17 Proposed China-Australia Free Trade AgreementSubmission 50 above).

It would not apply to the ANZSCO 1-3 skilled occupations (‘trade, technical and professional’) because they are caught by the prohibition on labour market testing in article 10.4 (3) of CHAFTA.
This means that all China-based and Australian companies contracted to do work on these IFA projects will be able to use unlimited number of 457 visa workers from China in all 651 skilled occupations under the 457 standard program with no legal obligation to prove there are no qualified Australian workers to do the job i.e.

to undertake labour market testing.


We are happy to be wrong on this point, but the Government is still to properly address this issue and again it has failed to engage with and explain the detail of its own agreement.

This is not helped by the fact, demonstrated above, that whenever this question is raised Minister Robb confuses the issue by continuing to insist, wrongly in our view, that the exemption from labour market testing in article 10.4(3) applies only to high-level management positions.
Any labour market testing that does apply to IFA labour agreements will also fall short of the legislated standard for labour market testing under the Migration Act.

For example, the project agreement guidelines, if they are to apply to labour agreements under IFAs, only refer to evidence of recruitment efforts that must be provided at the time of entering into a project labour agreement.
As Bob Kinnaird has pointed out: “This is a much lower standard than the legislated 457 LMT obligation where sponsors must prove to DIBP that no suitably qualified Australian is available to do the job, at the time of each 457 visa nomination (our emphasis added)”.

20 Kinnaird also picks up on the practical issues and considerations that would arise once an IFA is in place.
“The Minister’s attempt to assure that these ‘guidelines’ offer adequate protection for Australian workers also conveniently ignores the fact that these applications for concessional 457 visa workers by individual IFA project employers will be made in a context where the project owner has already secured approval for large numbers in the umbrella IFA agreement.
This places undue pressure on DIBP officers to approve 457 visa applications from individual IFA employers, especially operating in a high-profile 457 visa program area with no legislative framework and far too much room for Ministerial and political intervention.” 21 20 For more on this point and further analysis of the China FTA provisions, see Kinnaird, B., “More government dishonesty on China FTA”, 23 July 2015 http://johnmenadue.com/blog/?p=4268; and “China FTA ‘labour mobility fails the national interest test”, 24 June 2015, http://johnmenadue.com/blog/?p=4130 21 Kinnaird, B., “More government dishonesty on China FTA”, 23 July 2015 http://johnmenadue.com/blog/?p=4268; 18 Proposed China-Australia Free Trade AgreementSubmission 50 Finally, there is a further point that is often lost as much of the debate has been focused on the IFAs that cover infrastructure projects.
That is, that even in the event that labour market testing in some form does apply to IFA projects, not all Chinese workers coming to Australia on the 457 visa program or other temporary visa types will be employed in workplaces covered by the IFA provisions.

For all other jobs that are filled by Chinese workers under temporary work visas, again under the terms of article 10.4 (3), there is a clear prohibition on any labour market testing being applied at all.
In summary, our analysis of the text of the labour mobility provisions in chapter 10 of the agreement and in the MOU indicates that labour market testing will not be required for most, if not all, workers from China who work in Australia under the 457 visa program or any other temporary visa types.

This means both Australian companies and Chinese companies operating in Australia will be able to employ Chinese workers without having to first check if there was an Australian who could do the job.
Without the requirement for labour market testing, the potential is there for whole projects to be staffed by Chinese workforces in both skilled and semi- skilled occupations, with Australian workers excluded.

19 Proposed China-Australia Free Trade AgreementSubmission 50 ADDRESS ACTU 365 Queen Street Melbourne VIC 3000 PHONE 1300 486 466 WEB actu.org.au D No: 115/2015 20 Proposed China-Australia Free Trade AgreementSubmission 50