ChAFTA: Foreign Worker Invasion Fears Unfounded

Bill Shorten’s latest (counterproductive) demands for supporting the China-Australia Free Trade Agreement show how low the political debate has sunk.

The fears over mass Chinese immigration are not supported by evidence: more than 80% of current 457 visas do not require any form of labour market testing; i.e. the requirement to advertise jobs locally. This is a strong indication that the measure is not — and should not be —a blockade against the alleged ‘foreign worker invasion’.

The much more effective requirement already in place mandates 457 visa workers to be awarded Australian wages and pay Australian taxes, and  in some cases at higher rates.

The 457 visa programme has been uncapped since its implementation in 1996, so in theory nothing apart from labour market condition actually prevents a potential unlimited flood of migrant temporary workers. Nonetheless, in practice only an average 100,000 foreign temporary workers (less than 1% of Australia’s labour force) have arrived annually in the past five years, with figures actually dwindling since 2013.

Yet the Federal Opposition brands the labour market condition relaxation under the China-Australia Free Trade Agreement (ChAFTA) as an armageddon for Australian workers.

Nothing could be further from the truth. As former ALP Prime Minister and ACTU President Bob Hawke admonishes: “Talk of opposing it [ChAFTA] is just absolutely against Australia’s best interests.”

Make no mistake: ChAFTA is a landmark victory for Australians, opening up a cornucopia of future export opportunities. It will boost Australian jobs, creating new possibilities and demand in our economy.

Up to 95% of all Australian exports will enter China tariff-free once the deal is fully in force. And it is important to keep in perspective that China is already our largest trade partner, currently worth $150bn in annual bilateral commerce, not to mention tens of billions of dollars of incoming Chinese direct investment to Australia every year.

ChAFTA will help diversify our economy, moving away from the dead — and nearly buried or cremated — mining boom. A fast-increasing number of Chinese families are moving up the social ladder towards a middle-class status, demanding new consumption habits that Australian industries are well positioned to explore.

For instance, under ChAFTA, tariffs on Australian wine (currently up to 30%) will be completely eliminated within four years. In the beef and dairy sector, Australian farmers will enjoy the same tariff reductions conceded in the New Zealand’s deal with China, largely quota-free. Australian horticulture — which has seen its exports to China grow six-fold in the last seven years — will be another big winner with most tariffs eliminated. Australia will be able to move from the mining boom to a thriving dining boom.

Further, our competitive and experienced service sector will reap expanded opportunities from the deal, with Australian providers in travel and tourism, financial and legal services, health and aged-care, all given access to operation and ownership in the ‘Middle Kingdom’. And we should not forget a considerable increase in the number of Australian educational institutions that will win increased promotion from the Chinese government.

Despite all the undisputable gains, the Federal Opposition gave in to the self-interests of Construction, Forest, Mining and Energy Union, backing a fear-mongering ad campaign. After weeks of backlash, including from its own ranks, and the real possibility of China walking away from the agreement, Mr Shorten decided to retreat, demanding instead a trifecta of counterproductive backdoor amendments to the Migration Act.

The first condition requires lifting the minimum base salary for 457 visa holders from $53,900 to $57,000, including indexation for coming years, which has the potential to harm several industries in the hospitality and farming sectors where average wages, especially in regional Australia, are below the new proposed threshold.

Further, Labor has also demanded 457 visa holders obtain a relevant trade license within 60 days of arriving. A move that simply increase costs and red tape, with little evidence to justify the need for such a request. More than a million 457 visa holders have come, worked and paid taxes in Australia since the inception of the programme without the new proposed licensing arrangements.

The last of Labor’s amendments requires the mandatory labour market testing for the investment facilitation agreements, especially for those under the ChAFTA banner. As shown above, the requirement to advertise jobs locally is hardly an effective measure to ‘protect Australian jobs’.

The Government has pledged to discuss Labor’s proposal in ‘good faith’. A tough task. The fact that it might have to give in for the sake of bipartisanship — rather than developing an agreement for the benefit of Australia — is a clear pointer to the parlous state of our political debate.

Dr Patrick Carvalho is a Research Fellow at the Centre for Independent Studies.