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Tag Archives: ChAFTA

Michaelia should read her own reports

In October last year, Minister for Employment Michaelia Cash issued a media release about the China Free Trade Agreement.

“The landmark China-Australia Free Trade Agreement will unlock immense benefits for Australians for many years to come,” Minister Cash said.

“As well as adding billions to the economy and drive higher living standards for all Australians, this deal will ensure thousands of jobs are created across all States and Territories.”

“It greatly enhances our competitive position in key areas such as agriculture, resources and energy, manufacturing exports, services and investment – these are industries that already generate many jobs but importantly they are sectors where we will see extraordinary opportunities for future jobs growth.”

Sounds good, until you read a report issued by the Minister’s Department of Employment last month titled the Employment Outlook to November 2020 which states that, for the five years to November 2020, employment in manufacturing is projected to decline by 45,700 (or 5.3 per cent), mining by 31,900 (or 14.1 per cent), and agriculture by 9,400 (or 3.1 per cent).

The largest fall across all sectors is projected for Motor Vehicle and Motor Vehicle Part Manufacturing (down by 27,500 or 58.3 per cent), following the announced plant closures by major car manufacturers. A number of other sectors in Manufacturing are also projected to decline such as Clothing and Footwear Manufacturing (5,600 or 34.6 per cent), Other Fabricated Metal Product Manufacturing (4,900 or 7.7 per cent) and Furniture Manufacturing (4,100 or 11.6 per cent).

The report also shows that, despite advertising campaigns by billionaires and compliant politicians suggesting otherwise, mining contributed only 11,300 to employment growth over the last five years and the future is not rosy.

Employment is projected to decline for a number of mining-related sectors. The largest decline is projected for Coal Mining (8,800 or 20.5 per cent), reflecting weak global demand. Employment is also projected to decline in Metal Ore Mining (7,900 or 11.9 per cent), Exploration (6,700 or 18.0 per cent), Heavy and Civil Engineering Construction (4,800 or 6.5 per cent) and Other Mining Support Services (3,000 or 15.4 per cent).

As Barnaby Joyce talks about how well he has done with record prices, Sheep, Beef Cattle and Grain Farming is projected to record one of the largest falls over the period (14,000 or 16.3 per cent).

Over the past few decades the Australian economy has continued to shift away from lower skilled jobs towards a higher skilled, service based economy and this trend is projected to continue over the five years to November 2020, with the strongest employment growth, in percentage terms, projected for those with Diploma or higher qualifications.

The employment level of Labourers is projected to fall by 14,600 (or 1.3 per cent) in the five years to November 2020. Overall, the majority of the occupations projected to decline fall within the lowest skill levels, where seven of the bottom 10 occupations have a skill level commensurate with a Certificate III or lower (for example Product Assemblers and Bookkeepers). The remaining three of the 10 bottom occupations have a skill level commensurate with Certificate IV or Certificate III with at least two years on-the-job training (Secretaries, Structural Steel and Welding Trades Workers and Metal Fitters and Machinists).

What is the government’s plan for jobs for these people?

Australia’s largest employing industry sector – Cafés, Restaurants and Takeaway Food Services, also supported by domestic tourism and further increases in international arrivals, is projected to make the largest contribution to growth over the five years to November 2020 (up by 84,300 or 14.9 per cent).

The largest projected occupation increase is for Sales Assistants (General) (up by 65,800 or 11.9 per cent), the bulk of whom are employed in Retail Trade. Healthcare workers and carers are strongly represented with employment projected to increase by 51,400 (or 20.0 per cent) for Registered Nurses, 43,000 (or 30.6 per cent) for Aged and Disabled Carers, and 39,000 (or 26.1 per cent) for Child Carers.

It should be noted that this government wants to cut penalty rates, have already blocked wage increases for aged and child care workers, and have slashed hospital funding, all of which will impact on our biggest projected growth occupations.

Structural changes in the labour market favour service industries which tend to be concentrated in eastern capitals. Employment in metropolitan areas is projected to increase by 9.5 per cent over the next five years, compared with 5.8 per cent projected for regional Australia.

At the more detailed regional (SA4) level, employment growth is projected to be strongest (in percentage terms) in Sydney – North Sydney and Hornsby (up by 35,200 or 15.1 per cent) and Sydney – Eastern Suburbs (23,600 or 14.4 per cent), while the largest projected increases in employment (in thousands) are for Melbourne – Inner (48,400 or 13.9 per cent) and Gold Coast (35,700 or 11.4 per cent). By contrast, employment is projected to fall by 300 (or 0.7 per cent) in South Australia – Outback and very weak growth is projected for Queensland – Outback (100 or 0.2 per cent) and Western Australia – Wheat Belt (600 or 0.9 per cent).

The free trade agreements were supposed to create jobs. Lord knows, they tell us that often enough, but the facts show otherwise. It is apparent that the FTAs will exacerbate low-skilled and regional unemployment, hitting those who are least resilient and most likely to sink into poverty. It’s all very well to talk about breaking the cycle of welfare dependency but this government is actively destroying jobs and industries as they entrench the interests of major corporations at the expense of ordinary citizens.

And Malcolm’s coup has done nothing to turn things around despite his “jobs, jobs, jobs” rhetoric.

Over the first six months of 2016, the pace of employment growth has slowed considerably, with the level of employment rising by just 0.4 per cent. The decade average growth is 1.8% per annum (this period includes the GFC).

In monthly terms, the latest ABS Labour Force Survey showed a trend employment increase between July and August 2016 of 0.08 per cent, which remains below the monthly average over the past 20 years of 0.15 per cent. The rate of growth in employment has remained below this average for the past eight months. The trend underemployment rate increased to a series high of 8.6 per cent in August 2016.

Ian Verrender sounds a warning on the Drum pointing to the Productivity Commission’s findings that free trade agreements – especially bilateral deals – do very little in improving trade. In fact, they can be downright damaging. The Australia-US Free Trade Agreement, signed a decade ago, now costs about $US53 billion in lost trade per annum.

As Turnbull and Bishop lecture the Americans about the TPP, it should be understood that it has very little to do with free trade creating jobs – moreso extending monopoly powers of American corporations, while maintaining tariffs and quotas for US farmers, and entrenching power and governance among the wealthy.

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What does ChAFTA really mean for Aussie jobs?

The Chinese-Australia fair trade agreement (ChAFTA) began negotiations in May 2005 with the agreement formally signed on the 17th July 2015, by Australian Minister for Trade and Investment, Andrew Robb and the Chinese Commerce Minister, Gao Hucheng. The ceremony was witnessed by Australian Prime Minister, Tony Abbott who described the signing as a “momentous day” for the Australian-China relationship. “It will change our countries for the better, it will change our region for the better, it will change our world for the better,” Mr Abbott said. He paid tribute to Chinese President, Xi Jinping whom he described as a “shrewd” negotiator and “friend of Australia”. He further toasted the deal saying “I trust that today our Chinese friends will enjoy the fine beef and the good wine that will soon be more readily enjoyed by their countrymen.”

Last year was a busy year for the Abbott government, which also signed off on the Korea-Australia free trade agreement (KAFTA) and the Japan-Australia Economic Partnership Agreement (JAEPA). According to a Department of Foreign Affairs and Trade (DFAT) report titled, Economic benefits of Australia’s North Asia free trade agreements, it will create lots of new jobs. It has estimated that between 2016 and 2035 the FTAs will lead to 178,000 jobs, at an average of 9,000 per year. Mr Robb also enthused the three FTAs job creation, saying that “Given what’s going on in the region, the extraordinary explosion of people going into the middle class, this is a landmark set of agreements, and it will see literally billions of dollars, thousands, hundreds of thousands of jobs, and will underpin a lot of our prosperity in the years ahead.”

The report also forecast an additional GDP increase between 2016 and 2035 of $24.4 billion and a boost in real consumption of $46.3 billion, equating to an increase in household consumption of nearly $4,500. This has been questioned by the Australian Fair Trade and Investment Network (AFTINET). It said the study authors were “consultants which produced wildly optimistic estimates of benefits for the Australia-US FTA (AUSFTA) which did not eventuate.” Ten years on it’s still unclear as to what benefits the American-Australian FTA has had for Australia or even America.

The Australian Council of Trade Unions (ACTU) is worried about how the deal will affect local jobs and unemployment levels. There is the ChAFTA and there is a memorandum of understanding (MOU) document, about an Investment and Facilitation Agreement (IFA), that was signed before the formal signing. An IFA is a project to be established between the Department of Immigration and Border Protection (DIBP), or its equivalent, and a project company. A project company is eligible to establish an IFA where:

  1. (a) 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;
  2. (b) There is a proposed infrastructure development project (“the project”) by the project company with an expected capital expenditure of $A150 million over the term of the project;
  3. (c) 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;
  4. (d) The project company is registered as a business in Australia;
  5. (e) The project company agrees to comply with all Australian laws and regulations, including applicable Australian workplace law, work safety law and relevant Australian licensing, regulation and certification standards; and
  6. (f) The China International Contractors Association (CHINCA) and the Department of Foreign Affairs and Trade of Australia (DFAT) have recommended the project and the project company meet the criteria in paragraphs 2(a) through 2(e).

Section four, covers the areas of negotiation for DIPB and the project company, which includes –

  1. (a) The occupations covered by the IFA project agreement;
  2. (b) English language proficiency requirements;
  3. (c) Qualifications and experience requirements; and
  4. (d) Calculation of the terms and conditions of the Temporary Skilled Migration Income Threshold (TSMIT).
  5. The project company may be asked to provide additional information by DIBP in respect of its requests for concessions in the above areas. Other than the areas referred to in paragraphs 4(a) through 4(d), the grant of visas will be subject to meeting all other Australian nomination and visa requirements.

Interestingly the ChAFTA Myths versus realities released by DFAT only mentioned option 2. (b), most likely because it fits in with the infrastructure narrative. The “concessions” also aren’t mentioned but imply that the project company can negotiate a private contract with DIPB, to import Chinese workers on projects in lower skilled occupations. Though workers under the 457 visa scheme are required to be paid above TSMIT and possess a certain amount of English ability, this also looks like it can be negotiated under the IFA.

In paragraph six it states – There will be no requirement for labour market testing to enter into an IFA. The IFA is valid for four years from the date of execution and with the possibility of an extension. In the actual ChAFTA itself, in Article 10.4: Grant of Temporary Entry, it states – In respect of the specific commitments on temporary entry in this Chapter, unless otherwise specified in Annex 10-A, neither Party shall

  1. (a) Impose or maintain any limitations on the total number of visas to be granted to natural persons of the other Party; or
  2. (b) require labour market testing, economic needs testing or other procedures of similar effect as a condition for temporary entry.

Here is the ChAFTA side letter between Mr Robb and Mr Gao after the formal signing of ChAFTA, that provides more detail and states –

Australia will remove the requirement for mandatory skills assessment for the following ten occupations on the date of entry into force of the Agreement. And that the aim is to further reduce occupations or eliminate the requirement within five years.

Automotive Electrician [321111]

Cabinetmaker [394111]

Carpenter [331212]

Carpenter and Joiner [331211]

Diesel Motor Mechanic [321212]

Electrician (General) [341111]

Electrician (Special Class) [341112]

Joiner [331213]

Motor Mechanic (General) [321211]

Motorcycle Mechanic [321213]

Alan Hicks of the Electrical Trade Union (ETU) said that the Government’s decision to remove the mandatory skills assessment for Chinese workers in ten occupations was a disgrace. “For the Federal Government to come out and waive that under a free trade agreement, without any consultation with unions or employers, is an absolute disgrace,” he said. “It’s going to create significant workplace dangers, not only just for electricians, but all those people who use electricity.” Mr Hicks said China’s statistics of workplace deaths was of “genuine concern” to Australians. “Australia leads the way in electrical safety. We’ve got some of the best electrical workers in the world. A lot of countries aspire to have the same level of safety standards that we do,” he said. “We’ve got a licence system right across the country – no matter which state or territory you work in, you’ve got to be licensed to carry out the work – and those sorts of systems aren’t in place in other countries like China. Mr Hick’s also said that “And China has a woeful workplace health and safety record. They have over 70,000 workplace deaths a year, so we are genuinely concerned.”

There is also a ChAFTA DFAT factsheet that says – In order to better facilitate the temporary entry of workers associated with trade and investment, Australia and China will also increase cooperation in the areas of skills recognition and licensing, including through encouraging the streamlining of relevant licensing procedures and improving access to skills assessments.

Besides the Abbott government’s ideologies being against the work of the unions, it’s unclear as to why industries relating to the ten different occupations including employers, weren’t consulted. In the ChAFTA Myths versus realities document, it tackles untrained Chinese electrician worries, but it doesn’t mention doing away with the mandatory skills assessments or mention the total amount of visa’s on offer. The ChAFTA agreement also enables an Executive arm of government power that goes against the parliament’s 457 visa bill in 2013, where employers, are expected to conduct labour market testing.

The Chinese government’s response to ChAFTA through correspondence with Mr Robb is clear – I have the further honour to confirm that my Government shares this understanding and that your letter and this letter in reply shall constitute an integral part of the Agreement. What any of this means in the long term, in regards to state and federal industrial laws remains to be seen. But it does look like an overreach by the Abbott government in regards to executive power, with the Minister for Immigration and Border Protection, Peter Dutton, deciding matters without employer input, let alone employees, the opposition or workers. It also has the faint scent of Work Choices, an unpopular set of federal industrial laws brought about by former Prime Minister, John Howard in 2006. Taking the power away from workers, over employers in your own country is one thing but taking on China’s is another. The IFA seems to enable these features, and how this will impact on local employment in Australia, also remains to be seen.

Either which way, training needs to be involved, and concessions made solely by Mr Dutton, is not enough to allay justifiable fears from the Unions and Australian’s looking for jobs in the areas of – Food and Agribusiness; Resources and Energy; Transport; Telecommunications; Power supply and generation; Environment and the Tourism sectors. The other question is, if it’s just a matter of training Chinese workers in Australian regulations etc; who is providing this training and how long does it take? And lastly, is there options for Australian’s who have the skills but don’t speak Mandarin and so on?

This article was originally published on Mel’s blog Political Omniscience.


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