The PRESIDENT (10:01): Does any senator wish to have the question put on any of those three motions? There being no such request, we will proceed.

Senator RYAN (Victoria—Assistant Cabinet Secretary) (10:02): I move:

That these bills may proceed without formalities, may be taken together and be now read a first time.

Question agreed to.

Bills read a first time.

Senator RYAN (Victoria—Assistant Cabinet Secretary) (10:02): I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

CUSTOMS AMENDMENT (CHINA-AUSTRALIA FREE TRADE AGREEMENT IMPLEMENTATION) BILL 2015

The Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 amends the Customs Act 1901 to implement Australia's obligations under Chapter 3 of the China-Australia Free Trade Agreement (ChAFTA).

Chapter 3 sets out the rules of origin criteria and related documentary requirements for determining the eligibility of goods to obtain preferential tariff entry into Australia under the Agreement.

The complementary Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015, will amend the Customs Tariff Act 1995 to set out Australia's tariff commitments under the Agreement.

We have heard a lot about the China-Australia Free Trade Agreement in recent weeks. These amendments, and parallel amendments to the Customs Tariff Act 1995, are the only legislative amendments that the Parliament will need to pass to allow the Government to bring ChAFTA into force. The Joint Standing Committee on Treaties, under the outstanding chairmanship of the Member for Longman, is still finalising its report on ChAFTA. However, in view of the sitting schedule, the benefits to Australian businesses of a double cut to tariffs on Australian exports to China, should ChAFTA enter into force before the end of the year, and the importance to the Parliament and the community of seeing the limited changes that are required to be made, we are introducing the implementing legislation at this time. Some amendments to subordinate legislation, as set out in the National Interest Analysis, will also be required in due course.

I had the honour of signing this historic agreement with my Chinese counterpart, Minister for Commerce Dr Gao Hucheng, on 17 June 2015 in Canberra. In close consultation with the Government of China, the Australian Government is working towards entry into force in 2015 in order to maximise the business gains for both Parties.

The China-Australia Free Trade Agreement is a comprehensive agreement that will substantially liberalise trade with Australia's largest trading partner. The Agreement will create significant new commercial opportunities for Australian businesses, through increased trade in goods, investment, services and labour. Importantly, the implementation of this Agreement will boost the position of Australian businesses against competitors in New Zealand and the Association of Southeast Asian Nations who are already benefitting from preferential access into China.

On entry into force of the Agreement, over 85 per cent of Australia's exports, by value, to China will enter duty free, rising to 95 per cent on full implementation. As Australia's largest export market, the Agreement will help level the playing field for Australian resources, agricultural and manufacturing businesses.

Tariffs on coal exports to China will be eliminated within two years of implementation, helping Australian coal exporters compete with Indonesian firms, who already benefit from preferential access into China. In agriculture, full implementation is estimated to boost Australian beef production by two hundred and seventy million dollars annually. By 2030, the total benefits for beef production are expected to approach $3.3 billion. Tariffs on products such as barley, oats, sorghum and millet; certain wood and paper products; and certain base metal ores and their concentrates will be eliminated on entry into force of the Agreement.

The Agreement contains simplified and trade facilitative rules of origin and related documentary requirements. Goods imported into Australia that meet the rules of origin, implemented through this bill, will be entitled to claim preferential tariff treatment in accordance with the Agreement.

The amendments also include relevant obligations on Australian exporters and producers who wish to export Australian goods to China under the Agreement and obtain preferential treatment for those goods in China. The amendments also confer certain powers on authorised officers to examine records and ask questions of exporters or producers of goods exported to China in order to verify the origin of such goods.

CUSTOMS TARIFF AMENDMENT (CHINA-AUSTRALIA FREE TRADE AGREEMENT IMPLEMENTATION) BILL 2015

The Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 is the second bill relating to the China-Australia Free Trade Agreement.

This bill contains amendments to the Customs Tariff Act1995 to implement part of the Agreement by:

providing duty-free access for certain goods on entry into force and preferential rates of customs duty for other goods including certain articles of plastic, rubber, paper, textiles, clothing, footwear and base metals, and other goods also specified in the Agreement that are Chinese originating goods;

creating a new Schedule 12 to provide for phasing rates of duty for those goods and to specify excise-equivalent duties on certain alcohol, tobacco, and petroleum products;

phasing these preferential rates to Free in either 3 or 5 annual reductions;

amending Schedule 4 to maintain customs duty rates for certain Chinese originating goods in accordance with the applicable concessional item.

This bill complements the amendments contained in the Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015.

Senator WONG (South Australia—Leader of the Opposition in the Senate) (10:02): The Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 and the Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 implement the commitments on tariff reductions which the Australian government has made under the China-Australia Free Trade Agreement. China is Australia's No. 1 trading partner and accounts for a third of our merchandise exports. Trade with China helped Australia to keep growing through the global financial crisis. Trade with China is critical to our economic future. China is the world's second largest economy and is set to become the world's biggest economy during our lifetimes—the world's largest economy right here in our region. It represents a major new market with hundreds of millions of increasingly affluent consumers demanding new goods and services.

China will also continue to be a source of valuable investment funds, which Australia needs to create and grow new businesses and new jobs. Our proximity to China represents a tremendous opportunity for Australia, an opportunity for the jobs, growth and prosperity of future generations of Australians. Asia's middle class is now around 500 million and is expected to increase more than sixfold in the next fifteen years to 3.2 billion middle class consumers in Asia by 2030, which would be 66 per cent of the world's middle class—and a large slice of these consumers will be in China. As we articulated in government, particularly in the Australia in the Asian century white paper, these numbers will translate into rising demand from the region, particularly from China, for a range of products and services, including many things that Australia does well: food, education, tourism, health, aged care, and financial and professional services.

Growing, deepening and diversifying the trade relationship with China has the capacity to deliver jobs and prosperity to future generations of Australians. We need to export more Australian agricultural goods and food products to China. We need to export more sophisticated services to China, like education, health care, aged care and financial services, business and professional services and tourism. We need to see advanced Australian manufacturing playing its part in the global and regional supply chains, which are increasingly centred on China, and of course we need to see more investment flows between Australia and China. All this means new opportunities for Australian businesses, stronger growth for Australia's economy, better living standards for Australian families and more and better jobs for Australian workers. We are already in a strong and mutually beneficial economic relationship with China, which has been nurtured by successive governments of both persuasions, and a high-quality free trade agreement with China will improve and deepen that relationship.

Labor recognises that the China-Australia Free Trade Agreement, also known as the ChAFTA, will deliver significant benefits to Australian exporters, Australian consumers and Australian jobs. This agreement has been nearly 10 years in the making, and both coalition and Labor governments have played their part in negotiations. I pay tribute to former Labor trade ministers Simon Crean, Craig Emerson and Richard Marles for their roles in progressing the negotiations. I also acknowledge the role of Andrew Robb in bringing the negotiations to a conclusion. I also recognise the work of the diligent officials from the Department of Foreign Affairs and Trade, and those from other departments, who worked tirelessly on the negotiations which have resulted in this agreement. In this regard, I make particular mention of Jan Adams.

Labor believes that the government could and should have secured a better deal, and I will have something to say about what we see as the shortcomings of the deal in a moment. In particular, it should be recognised that in this legislation this government has allowed access to the Australian labour market to a far greater extent and at far lower skill levels or different skill levels than in any previous trade agreement—and, as yet, the government has not articulated an economic rationale as to the merit of that. But let's start first with the opportunities for Australia which are contained in this agreement, notwithstanding the shortcomings.

ChAFTA will give Australian businesses greater access to the Chinese market. Some 85 per cent of Australian exports by value will enter China with no tariffs immediately, rising to 95 per cent when the agreement is fully implemented. ChAFTA will also improve market access for services like banks, insurers and fund managers, education providers, professional services firms and health and aged-care facilities. As we know, China's economy in the coming years will rebalance away from manufacturing and towards more sophisticated services, and ChAFTA's services provisions will give Australian services businesses opportunities to take advantage of this rebalancing.

So ChAFTA will deliver considerable economic benefit for Australia. But, as I said, from the opposition's point of view, the agreement negotiated by the Abbott government had shortcomings. Obviously, there were some agricultural goods which were not included or did not benefit from the deal. The deal does not contain further market access for rice, wheat, cotton, sugar, canola or vegetable oils.

But our first concern about the agreement is the investor-state dispute settlement provision. The government should not have included an ISDS provision in this agreement. There are legitimate public concerns over the impact of ISDS provisions on Australia's public policies in areas such as health care, public services and environmental protection. These concerns come from mainstream economic and legal experts. Even the former Liberal Prime Minister, John Howard, refused to include an ISDS provision in the Australia-United States Free Trade Agreement despite pressure to do so from the US. Labor's position against ISDS provisions has been clear and, in fact, preceded much of the public disquiet about them here in this nation. In government we adopted the policy of not including these provisions in trade agreements, and in opposition we continue to oppose those provisions in trade deals.

We do not believe the government should have included an ISDS provision in the ChAFTA. If returned to government, Labor will seek to review all of our existing ISDS provisions in trade and investment agreements with our trading partners and we will work with the international community to reform ISDS tribunals so they remove perceived conflicts of interest by temporary appointed judges, so they adhere to precedence and so they include appeal mechanisms.

As I have previously said, Labor has also raised concerns about the impact of the China free trade agreement on safeguards in Australia's temporary migration system. We want to ensure that the China free trade agreement supports rather than reduces the number of jobs for Australians. That is why we have been determined to address concerns about the impact of the ChAFTA on jobs, wages and skills. It is why Labor has negotiated with the government and has achieved a comprehensive package of safeguards around ChAFTA's temporary migration provisions. Our safeguards will support local job opportunities, maintain workplace skills and safety standards and deter the exploitation of overseas workers. They will ensure that temporary migrants coming to Australia are employed in jobs where there are skills shortages, not as a way of bypassing local workers.

I think there is a very simple principle here. Australians do accept the need for a temporary migration system where there are skills shortages and where there are labour supply shortages. Australians do not accept a temporary migration system which is used to bypass Australian workers and to provide opportunities to overseas workers which are not made available to Australians.

We have designed our safeguards according to two key principles—firstly, that they are consistent with the ChAFTA and do not require the changing of the agreement and, secondly, that they do not discriminate against China. They do not discriminate against Chinese companies, nor against Chinese workers seeking to come to Australia under our temporary skilled migration system. It is true that there has been a lot of concern raised about this aspect of the agreement and it is regrettable that the government has never sought to come into this chamber or go to the public and articulate a clear economic rationale as to why it agreed to the labour migration provisions that it did in the ChAFTA.

Labor has done what minor parties in this place could never do: we have negotiated and achieved real outcomes and real safeguards so that this agreement can come into effect, unlocking economic benefits for Australia whilst ensuring local jobs are supported. I seek leave to table a letter from the Minister for Trade and Investment to me, dated 20 October 2015. I understand it has been circulated to the whips.

Leave granted.

Senator WONG: I table the letter in which the minister writes to confirm our agreement regarding labour market testing, project agreement and labour agreement guidelines, the temporary skilled migration income threshold and market rates of pay, and changes in relation to skills, visa condition 8107 and transparency.

I want to explain how Labor's job safeguards will work. The ChAFTA allows temporary skilled migration from China through a new mechanism known as an investment facilitation arrangement. This will allow Chinese workers to be engaged on Chinese funded infrastructure projects worth more than $150 million. The government intends to implement the ChAFTA IFAs through migration work agreements. These are agreements between employers and the Minister for Immigration and Border Protection which allow employers to bring in workers on 457 visas.

Labor's safeguards will require employers entering work agreements with the Minister for Immigration and Border Protection to conduct labour market testing before turning to overseas workers. Labour market testing requires employers to show that local workers are not available before they turn to 457 workers by providing evidence showing that they have advertised the jobs locally. The government has agreed to entrench labour market testing for work agreements in the Migration Regulations. That means it will be a legally binding safeguard, not just another coalition promise able to be broken.

In addition to labour market testing, the opposition has secured agreement from the government to implement a series of additional safeguards for migration work agreements. These include a requirement for employers to first demonstrate there is a labour market need to use 457 visa workers, to adopt training plans showing how they will train local workers to address skills shortages, and to adopt overseas worker support plans showing how they will support 457 visa holders, including by providing information about workplace entitlements and rights. These requirements will be included in immigration department guidelines for work agreements, which in turn will be underpinned by a new migration regulation.

The requirements also allow the minister for immigration to impose additional conditions on work agreements, such as specifying that a minimum number of Australian workers be employed or placing a ceiling on the number of overseas workers that may be employed. In relation to wages and conditions, we have secured a major improvement in the market salary rate requirement for 457 visa workers. The market salary rate requirement is a key safeguard designed to ensure that 457 visa workers are treated fairly and that temporary skilled migration does not undercut Australian wages and conditions. It requires such workers to be employed on market salary rates, wages and conditions that are no less than those for a local worker performing the same job in the same location. Under our agreement with the government, the migration regulations will be amended so that the wage rates under relevant enterprise agreements will be the benchmark when assessing whether 457 visa workers are being paid market salaries. This is a significant strengthening of the market salary rate requirement, and it responds to legitimate concerns that the existing arrangements do not reflect market wage rates under enterprise agreements. I want to emphasise this will apply to all 457 visa workers under the standard business sponsor stream. For 457 visa workers under the work agreement stream, the government has agreed to include a comparable requirement in departmental guidelines.

Another area of significant community concern with the ChAFTA is in its removal of mandatory skills assessments for Chinese workers. The coalition government has agreed to remove mandatory skills assessments as part of the 457 application process for Chinese workers in 10 trades occupations, including electricians, mechanics, carpenters and joiners. Chinese 457 workers will still be required to obtain the relevant occupational licences from state and territory regulators. But the removal of the mandatory skills assessments from the immigration process has raised legitimate concerns about workplace skills and safety standards. The Electrical Trades Union is concerned that state and territory occupational licensing requirements may not be adequately enforced. These are not only concerns which emanate from the ETU. The National Electrical and Communications Association, which represents electrical contractors, has said it was not consulted by the government before it made this significant change. The Master Builders Association has said that the removal of mandatory skills assessments means the immigration department will need to take alternative steps to ensure all applicants possess the requisite skills and experience. And the BCA, the Business Council, has said there will need to be greater coordination with state and territory regulators to ensure visa holders exempted from automatic skills testing meet all licensing requirements for work before working in Australia.

So Labor has secured agreement from the government to add new visa conditions for 457 workers in occupations where holding a licence is mandatory under state and territory workplace skills and safety laws. The new conditions will require 457 visa holders in these occupations, first, to not perform the occupation without holding the relevant licence; second, to obtain the licence within 90 days of arriving in Australia; third, to comply with any conditions imposed on the licence; fourth, to not engage in any work or duty that is inconsistent with the licence; and, fifth, to notify the department in writing if their application for a licence is refused or if they are granted a licence but it is subsequently revoked or cancelled.

This is a significant strengthening of the existing visa conditions in licensed trade occupations. Those existing visa conditions for such 457 workers do not put a deadline on the requirement to hold a licence, do not explicitly require visa holders not to perform any work until they obtain a licence, and do not require them to notify the immigration department if a licence is refused, revoked or cancelled. I want to emphasise that these new visa conditions which Labor has secured will apply to all 457 workers in licensed trades occupations, not just 457 workers entering under ChAFTA's labour movement provisions. It is an overall strengthening of the temporary migration system in respect of licensed trade occupations across the board, and these are much stricter requirements.

Breach of these requirements would expose visa holders and employers to significant sanctions. A 457 worker breaching these conditions would be liable to have their visa and their right to stay in Australia cancelled. An employer of a 457 worker breaching these conditions would face sanctions, including having their approval to sponsor 457 visa workers cancelled. These requirements for 457 visa holders in trade occupations will mean immigration authorities will be better able to monitor and enforce compliance with workplace skills and safety standards. They will more effectively link the migration system and visa conditions with the state and territory trades licensing systems.

Given that unemployment under this government is increasing, it is important to ensure that trade agreements support rather than displace local employment. As I have said previously, a fundamental premise of Australia's temporary skilled migration is that it is for filling skill shortages where local workers cannot be found to fill positions. Labor's safeguards will ensure this objective is upheld. These safeguards will ensure that employers have to make genuine efforts to recruit local workers and train local workers to address skill shortages, do not use migrant workers to undercut local wages and conditions, and do not rort the system. These safeguards are also complementary to the ChAFTA and will not require renegotiation of the free trade agreement. This means the agreement can enter into force at the earliest opportunity, allowing our exporters to realise the benefits of the agreement whilst ensuring local jobs are supported.

In short, the opposition has determined to support the ChAFTA and Australia's economic engagement with China while delivering safeguards that support local jobs, maintain workplace skills and safety standards, and deter exploitation of overseas workers. This position demonstrates our commitment to an open, outward-looking, competitive Australian economy, expanding and deepening Australia's economic relationship with China, creating the opportunities for the future and, importantly, ensuring to the maximum extent possible that the benefits of trade flow to the community in the form of more jobs, higher growth and better living standards.

Senator WHISH-WILSON (Tasmania) (10:21): The Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 and Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 enable the so-called Chinese free trade deal. The heart of the matter for the Australian Greens is that we have a fundamentally flawed and broken treaty-making process in this country and that therefore the legislation we see before us today also reflects a fundamentally flawed and broken trade deal with China.

The Chinese free trade deal was negotiated in secret. At no stage were the Australian parliament or the people it represents asked why we were seeking to negotiate this agreement or what we wanted from it. At no stage were the expertise or insights of businesses, unions, academics or a host of other interested parties called upon to help inform the government about the implications of this deal, whether the provisions in the deal were in the national interest, or whether the whole deal was in the national interest. There was no transparency around the negotiations. ChAFTA was initiated and agreed to by the executive government and presented to parliament as a take-it-or-leave-it prospect. Once these secret trade deals are signed by the executive, there is no way of changing the detail in the deal. The melee that follows is familiar: there is an overhyping of benefits, the government literally exponentially inflates the number of jobs—and I am glad they did clear that up in the Senate recently—and there is a confected sense of urgency. The chant is: 'We must sign this now; it is absolutely critical'.

Free trade is being presented as being inherently good, and those who speak out against it are accused of being xenophobic and antitrade. I refer to the comments made by the Minister for Trade and Investment over the weekend to the ABC. After five years of secret negotiations the Trans-Pacific Partnership Agreement was released. Those who have been following this very closely, who have significant expertise in this area and who have raised concerns were immediately called 'hysterical' and attacked by the government. After releasing a secret deal and finally providing the details—although I have to say it did not include all the details, because the details in the hundreds of side letters were not released to the public—Minister Robb had the gall, the nerve, to attack people who are questioning a fundamentally undemocratic process and the outcomes which have been given to us. They were being attacked by the trade minister for raising concerns.

Against this backdrop, the JSCOT is meant to provide a calm and reasoned assessment to inform the government of the day. To a large extent, the committee report provides this. However, as is the pattern, the subsequent recommendations are either inadequate or nonexistent and do not reflect the content of the committee report. On free trade, the committee has unfortunately become a rubber stamp for the executive.

There are serious problems with the agreement we are debating today. It is lopsided. The projected economic benefits are based on faulty modelling. On labour mobility, ChAFTA reads like the Korean free trade deal and appears to be creating a parallel industrial relations system. Let us make this very clear: this deal, like KAFTA and like the Trans-Pacific Partnership, is a deregulation agenda for the labour market. It is designed to set up a parallel industrial relations system in this country.

Let us look at this a little bit more closely. Senator Wong mentioned that the China free trade deal has taken 10 years to get to parliament and that Labor had a say in the various stages of this deal. The Korean free trade deal also took years to get to parliament—Labor did not complete that deal while they were in government. You should ask yourself what the reason for that might be. Why did Labor not complete the Korean free trade deal or the Chinese free trade deal? The labour market issues—whether it be labour market testing or labour mobility—were fundamental issues for the Labor Party while they were in government and they were fundamentally concerning issues for the union movement. We know there is a lot of concern in the union movement about 457 visas as they stand now: the rorting of the system, the lack of regulation and the lack of auditing of standards and licences. These issues are being talked about by the union movement in church halls around the country as we speak. The unions are talking to their members about their concerns about the deregulation of the labour market through these trade deals. Labor did not sign these deals while they were in government. They did not complete them.

The Korean free trade deal was the straw that broke the camel's back for the car industry. Car industry CEOs themselves said it would be the straw that broke the camel's back—hundreds and thousands of workers out of work because of these free trade deals. The question then is: why are Labor supporting these deals now if they had concerns while they were in government? I will get back to that before I finish.

I turn now to the issue of investor-state dispute settlement clauses where we give corporations special rights to sue sovereign governments if they feel that legislation or policies impact on their profits, their future profits or the value of their investment. On this issue, in the China free trade deal—whether Chinese corporations should be able to sue our government for public policy changes—Australia, our government, appears content for the EU and the US to sort that out for us at a later date. We have an open-ended ISDS clause in this Chinese free trade deal. We are told by DFAT that in a few years time they will fully finish the ISDS clause and negotiate it then—that China is not ready to finish the detail on this yet because they are in their infancy in moving into the trade deal space. So we in this parliament are being asked to sign up to an ISDS clause that is open-ended.

The Greens fundamentally oppose giving corporations special rights to sue our sovereign government. We fundamentally oppose that. I have put up a bill in this parliament to have ISDS provisions banned. The comprehensive evidence from around the world, from a number of experts, is that we do not need them. They do not add anything to labour mobility between countries. There is no evidence at all that they support so-called free trade, but we know they add risk and directly challenge the sovereignty of our governments. We do not need them. Senator Wong's language was interesting. She said that, while Labor had not traditionally supported ISDS clauses, they would 'seek to amend these clauses when they get to government'.

Our view, as Greens, is that they cannot be amended—they cannot be fixed. They fundamentally should not be in secret trade deals. This is not the road we want to go down, giving corporations more power to influence our parliament. Anyone who has been a senator or a member of parliament, not just in federal parliament but in state parliament, knows how much power corporations already have over the functioning of our democracy. We all know about the special interest effect and the power that corporations wield on the legislation and the outcomes that we, as representatives of the Australian people, produce in parliament. But to give them special rights, to go a step further, in shading parallel legal systems with no right of appeal and no transparency, is fundamentally unacceptable.

I have not time to debate the TPP today, but there have been some attempts to try and provide some disincentives for corporations to bring these cases. But let me tell you—once again, this is evidence based—that the wording of every previous ISDS clause has failed to stop corporations from bringing strategic litigation. They are set up to give corporations the right to challenge regulations in the public interest, be it around public health, be it around environment, be it around labour laws in our country. I will be moving a second reading amendment, when I finish this speech, on that particular issue—that we remove ISDS clauses from the Chinese free trade deal. I just want to emphasise before I move on that in this case it is exceptional that we are being asked to support an open-ended ISDS clause that has not even been finished in its detail yet.

I would also disagree with Senator Wong's point that this deal brings significant benefits to this country. There is no doubt that in some sectors of our economy this deal will bring benefits to producer groups and to some industries. I want to make it very clear that the Australian Greens believe we should be seeking to consolidate economic relations with China, our largest trading partner and the second largest economy in the world. Further open and transparent trade relations help breed trust between nations which can in turn help bring a more peaceful and prosperous world. However, in its current form ChAFTA is not a good deal. It is not in our national interest, and we do not feel it should be supported.

So let us get back to these significant economic benefits. We have had a couple of interesting questions without notice here in the Senate on this exact issue. I think we all know now that the government, as is always the case with these secret trade deals, hold the cards. They have the detail. We do not see it until it is signed. By that stage they have given drops to newspapers, and stories are on the front page of the news and in the bulletins on TV about the billions of dollars of wealth that it is going to create for our country, about all the agricultural producers it is going to benefit, and about the hundreds of thousands of jobs it is going to create. Mr Robb's direct quotes in relation to the free trade deals we signed with China, Japan and South Korea were that these were a:

… landmark set of agreements and it will see literally billions of dollars, thousands, many hundreds of thousands of jobs and will underpin a lot of our prosperity in the years ahead.

The evidence does not suggest that. In fact, it is quite the opposite. For all of these three deals—not just one, not just the Chinese deal which we are debating today—the Department of Foreign Affairs and Trade's independent modelling contradict these claims by Minister Robb. Their analysis estimates these agreements will increase GDP by 0.05 per cent in 20 years time, or an additional $780 million per year in today's terms, and would increase employment in 2035 in total by 5,434 jobs. That is very different to the hundreds and thousands of jobs that we have heard about in this place and elsewhere from the trade minister.

My point is these deals are highly politicised. When we get to the detail, governments always over-promise and under-deliver. The evidence is there from the US free trade deal, which was going to pave the roads with gold 10 years ago and has recently been modelled has having had almost no effect on our economy. We all know the technical, theoretical jargon around trade diversion with bilateral trade deals and that they never deliver what they promise. Yet we still go through this rigmarole in our national debate and in the Senate about how great they are going to be for our economy. We always ignore the risks.

There are always winners and losers in trade deals. Any first year economics student will tell you that. In theory, the winners compensate the losers, and that is how we are all better off. We do not even do an analysis of who the losers are going to be. But at least the labour movement in this country is standing up on this issue of the deregulation of the labour market, because they know they will be losers under these deals if there is not adequate regulation around labour market testing, skills assessments and other important issues. I look forward to moving amendments when we go in committee on this particular issue. So I will not go into the detail now; I can deal with that a little bit later.

Free trade deals are about spin—a lot of spin. There is very little evidence that they live up to the hype. Yet our governments are happy to shove this down our throats and attack anyone who dares criticise the minister on issues around trade or raise perfectly valid questions. I would say this view that the treaty process is broken and fundamentally flawed is not just the view of the Greens. Numerous Senate committees have made recommendations on exactly this issue. In fact, recently the Senate Foreign Affairs, Defence and Trade References Committee looked at the ChAFTA, which we are debating here today, and highlighted in chapter 5, in the conclusions and recommendations, that the Senate had completed a previous significant inquiry into the treaty-making process and made four key findings that essentially we need to incorporate into any future trade deal. The recommendations include that an independent analysis be undertaken prior to the commencement of negotiations, as well as an evaluation of likely costs and benefits after negotiations have concluded, through some body such as the Productivity Commission; that we grant access to the draft treaty text so people can see the detail; and that we create a model trade agreement that covers controversial topics. This is the conclusion that the Senate drew:

5.3   The committee's inquiry into ChAFTA illustrates that these findings and recommendations have continuing relevance. It is worth considering whether the issues with the labour mobility components of ChAFTA would have surfaced if improvements to the treaty-making processes had been made. In the view of the committee, it is possible these issues could have been appropriately resolved before the final treaty text was agreed. In this context, the committee reiterates its recommended reforms to the treaty-making process.

If we do not fix that going forward, we are always going to be having the same politicised debates about something as important as trade, where there are always winners and there are always losers.

That is why the Greens are fundamentally a party of fair trade, where the opportunities through the treaty process are not just open to a few and where the opportunities are at least there to be scrutinised by everyone—opportunity for all. At the moment, I have no doubt that those groups that have the minister's ear will be winners. We have seen with the trans-Pacific partnership agreement that 500 corporations had access during the draft treaty making process, whereas civil society and others were invited along to the odd 'show and tell' but were shown no detail at all. These corporatised trade agreements do not provide opportunity for all. That is our view as the Greens. We fundamentally question the logic behind trickle-down economics that is attached to these trade deals and what it has delivered for the community. We do support trade, but we want to see that it is fair and that externalities, such as environmental externalities and social externalities, are incorporated into these deals so that we do have a balance and that we do have fair trade—and that is going to be a big issue with the Trans-Pacific Partnership Agreement in coming months, no doubt. It is interesting to note that the Chinese free trade deal does not even have a labour chapter and it does not have an environment chapter—unlike the Korean deal, which did. It does not even include those issues.

This is the first time we have seen an investment facilitation agreement, an IFA, included in a trade deal as a side letter, as an annex. At estimates recently I asked DFAT who had proposed the IFA—knowing it must be Australia, because that is a process that we use—and they admitted that they had proposed the addition of an IFA to the Chinese to help facilitate the trade deal. That is more evidence, if you need it, that the Chinese were playing hardball on labour access arrangements and on labour mobility.

There is no doubt, there is no secret, that wherever the Chinese have invested around the world they have liked to vertically integrate. They have liked to bring in their own labour, their own expertise and their own skills, particularly around significant direct foreign investment. I do not think it is any secret that that was a barrier that had to be overcome to get the Chinese to sign this deal. I intend to go into more detail on labour mobility issues when I move amendments in committee.

This enabling legislation supports a fundamentally flawed deal, and that is because our treaty and trade negotiation process in this country is fundamentally flawed. If we do not make a stand on that, it will never be fixed. When I look at the so-called benefits of these deals, I do not believe that they are going to bring significant economic benefits and jobs to this country, but they do introduce significant risk to labour markets and to our sovereignty by allowing ISDS. The Greens fundamentally oppose corporatised, secret, trade details.

I move:

At the end of the motion, add:

", but the Senate calls on the Government to negotiate any future articles relating Minimum Standard Treatment and Expropriation in the China-Australia Free Trade Agreement:

   (a) within the terms of current international law;

   (b) to exclude investor losses due to changes in government policy or regulation; and

   (c) to ensure that governments can change policy and regulate in Australia's public interest, without legal resource from another party."

Senator SESELJA (Australian Capital Territory) (10:42): Before I speak in support of the Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 and the Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015, which I am very pleased to do, I will briefly respond to some of Senator Whish-Wilson's commentary. I take his comment that 'free trade deals are about spin' as almost summing up the Greens policy towards free trade, towards this free trade agreement and towards other free trade agreements. I think it is an interesting analysis. We heard Senator Whish-Wilson saying, 'There are winners and losers in these deals and one cancels out the other.' He did not of course acknowledge the great enabling potential of free trade to grow the world economy and to grow the Australian economy, as we have seen over decades. In fact over hundreds of years we have seen the prosperity of trading nations rise.

There seems to be this narrow focus where he suggests that it is almost a zero-sum game—that we give up a little bit and we gain a little bit and really nothing changes. But that ignores the realities of history and ignores how positive free trade and trade between nations has been. Given that the founder of the Greens talked about one-world government, you would think that they would be a little more open to relations with other countries and to trade with other countries. We should be supporting that trade. I think what Senator Whish-Wilson said represents a very small view of the world, when analysis shows that this is a historic agreement.

I am pleased to support these bills and to support the China-Australia Free Trade Agreement. These are landmark bills. I think that we should acknowledge the great work of Andrew Robb, on behalf of the Australian people and the Australian government, to get this deal done. We should acknowledge his hard work in helping bring about something which, I think, will have great positive effects for many decades on the Australian economy and our regional economy. I think that this free trade agreement sets us up for a future of prosperity. It opens up investment and gives Australian businesses the chance to break free of red tape and unnecessary restrictions on trade with one of our most significant trading partners. The two-way investments we have conducted over the years play to our strengths, and they are often complementary to our trading relationship.

Before I get into some of the key numbers, I want to take a step back and look at what this means for our relationship with China. We all know how much we rely on China buying our mineral resources. There is no doubt about that, and that will continue to be an important factor in our economy for many, many years to come. As we see other nations, such as India, growing, their increased demands will see those types of relationships emerging there as well. But as China moves away from the production phase of its economy into a greater consumption phase in its economy with a growing middle class, the demand for services and demand for high-end goods will be greater and greater—and this is what this agreement fundamentally does.

A massive Chinese middle class demanding the kinds of things that many of us in the West have been fortunate enough to experience for a long time, will present opportunities for not just high-end agriculture, food and other areas but also a wide variety of services exports—and that is the game changer here. We will continue to export minerals and resources, but services are something that Australia does very well. They are under-represented in our exports but, with a growing middle class who are demanding those services, these kinds of free trade agreements place Australia in a fantastic position. If you want to diversify our economy and move away from, perhaps, an over-reliance on mineral exports, this is one way to do it: by growing our services sector and our services exports. That is fundamentally what this deal represents.

When you look at Australia-China trade you see total exports of $107.5 billion, total imports of $52.1 billion—total two-way trade of $159.6 billion, which is a 23.8 per cent share of Australia's total trade. A quarter of our trade is in our relationship with China. The top five exports to China are: iron ore and concentrates, $57 billion; coal, $9.3 billion; gold, $8.1 billion; interestingly, education related travel services, $4.1 billion; and copper, $2.1 billion. The top five imports from China are: clothing, $5.1 billion; telecommunications equipment and parts, $4.9 billion; computers, $4.8 billion; furniture, mattresses and cushions, $2.2 billion; prams, toys, games and sporting goods, $1.8 billion.

The Australia-China investment scenario: Australia's investment stock in China is $29.6 billion. China was the 12th largest destination for Australian investment abroad in 2013—and, of course, this will grow. China's investment in Australia is $31.9 billion. China was the eighth largest source of investment in Australia in 2013. That is an important point to pause on. We have historically relied on foreign capital. As a low population, large-land-mass economy, we have needed a lot of foreign capital to help grow our economy and exploit our resources, and Chinese investment is an important part of that mix.

ChAFTA will unlock significant opportunities for Australia. China is Australia's largest export market for both goods and services, accounting for nearly a third of total exports, and a growing source of foreign investment. Tariffs of up to 19 per cent on all dairy products, like infant formula, liquid milk and manufactured products, will be phased out completely. Tariffs of up to 25 per cent on beef and lamb will also be progressively eliminated. All vegetable, fruit and nut tariffs will be eliminated. Wine tariffs ranging from 14 to 30 per cent will also be phased out over four years. Australia's tourism sector is set to benefit from ChAFTA through encouraging investment in Australia, making it easier for Chinese students to study in Australia. A work-and-holiday arrangement concluded alongside ChAFTA will allow 5,000 Chinese work-and-holiday-makers into Australia annually, increasing demand for tourism services and supporting the development of the sector.

Importantly, these benefits flow both ways. As we invite investment, we will also have the opportunity to export into China without unnecessary red tape holding up the process and without unnecessary costs. As we see tariffs come down, there will be benefits for consumers as well. There are benefits for producers. There are benefits for jobs and for people seeking employment in Australia. But, of course, as we have seen with other free trade agreements that are being concluded we see benefits for consumers, and surely that is something we should be in the business of promoting.

Earlier this year I had the great pleasure of participating in a seminar with small business owners from the Canberra region to discuss and learn about the historic free trade agreements the coalition government has delivered in the last two years. Around 130 interested small business owners attended the event, which was hosted by the then Minister for Small Business, Bruce Billson. The economy of Canberra and the local region thrives on the success of these businesses, and that seminar helped create some additional tailwind for those businesses who are considering international markets. Those of you in this place who come from the far-flung corners of Australia may not realise just what a vibrant small business sector we have here in Canberra and in our region. We have wineries and gourmet food, tourism, retail as well as a strong focus on education, finance and other service industries. The China free trade agreement benefits all of these industries.

In particular, it is easy to look at the billions of dollars of value in our trade with China and think this is just the realm of big businesses. It is not. This is an agreement for small businesses and medium businesses as well. This is an agreement that helps small businesses enter new markets. They can look beyond our shores and find new buyers and new investments. When small businesses take these opportunities, build wealth and grow, everyone benefits. Trade promotes growth and raises incomes, gives consumers and business greater choice, makes products cheaper and encourages innovation. These agreements extend the open trading environment in which traders and investors operate. They make exporting a more attractive prospect by guaranteeing new levels of access to these markets. This is the case whether you are large or small, whether you have 10 or 10,000 staff.

As I was hearing the arguments put forward by the honourable Senator Whish-Wilson in relation to this, I cast my mind back to some of the great debates we have had in relation to free trade in the past. You cast your mind back to those arguing against abolishing tariffs or reducing tariffs. There is always a strong argument. There is always an argument you can make to say someone might be worse off. Would anyone want to go back? Would anyone want to go back to Australia being behind the tariff wall? Is anyone seriously arguing that that would be a better place for us to be as a nation? I certainly would not support that, I do not think many in this place would, and I do not think many in the community would, because they have seen the benefits. That high level of protectionism that we saw led to inefficient industries and it led to high costs for consumers. Both sides of politics have seen reductions in that tariff wall. I am always reminded of that when I hear some of the relatively small-minded criticisms of this free trade agreement and of free trade more broadly. Those arguments were made loud and clear during the 1980s and 1990s as we were seeing these kinds of reforms, but is anyone seriously going to come into this place and argue we should go back, that we should go and construct a tariff wall again?

During that small business seminar, one of the small business owners I had the pleasure of meeting was Michael Tear of WildBear Entertainment. WildBear are a great example of a modern, innovative 21st century small business taking advantage of globalised technology and, importantly, ready to reap the benefits of the China free trade agreement. WildBear is a factual entertainment company working in television, theatre, corporate, educational and government communications. WildBear was formed after the merger of two Australian production companies, WildFury and Bearcage.

Michael is a Canberra local who built Bearcage into a formidable production house producing award-winning television and commercial productions. His credits include Building Australia on the History Channel, The Digger, which won the Gold Dolphin at the Cannes film and television awards, as well as a number of other TV documentaries. With all of this success, Michael has been able to expand his productions, working with networks in the USA, the UK, Germany, France, Sweden and, importantly in relation to this bill, China. Michael produced a six-part documentary called The Story of Australia for Chinese TV in 2012. It earnt an audience of over 21 million people and was praised by President Xi, who cited it as an example of the close relations between China and Australia.

Michael told me that China's media market is, unsurprisingly, highly regulated and complex. He said it took his company a long time to navigate and understand how the media environment worked. Simplifying the regulations for travel, visas and business transactions will make this work a lot easier for WildBear's future productions. While there will always be intellectual property laws of two different countries to navigate, breaking down some of the barriers will create more opportunities not just for companies like WildBear but for so many others in the service and innovation sectors who will have the opportunity to thrive. It is important to remember that small businesses that are adaptable and innovative will have greater chances to grow under this agreement.

As many here would know, one of the Canberra region's key overseas export markets is the wine industry. We have a sensational wine industry, with around 30 wineries operating in and around the ACT. Many of these wineries have produced world-class, award-winning wines. Over the next four years, through the China free trade agreement, we will see the 14 to 20 per cent tariffs on wine progressively removed. This will give our world-class wineries even more opportunities to break into the booming Chinese wine market. More broadly, rural Australia will benefit from not only the removal of wine tariffs but also the progressive removal of tariffs on beef, sheep meat and wool. Each of these products carry tariffs ranging from 12 to 25 per cent. Over the next eight to nine years we will see the end of these tariffs and we will also see the removal of horticulture tariffs. Already our agriculture is moving into the Chinese market and creating more and more wealth, something that will, as a result of this agreement, only continue.

Having touched on some of those agricultural exports, I come back to the services industry—financial, legal, education and aged-care services. Australia is world class in these areas. This agreement is a major breakthrough and will provide the opportunity to export those high-class services to what will be the world's biggest economy and certainly the world's biggest middle class, who will increasingly have an appetite for our services and our high-quality goods.

We are pleased that we now have bipartisan support for this agreement. That is important. It is important, notwithstanding the contribution from the Greens, who are still singing from the union song sheet on this, that we have seen some progress from the Labor Party. We hope that that will continue. We hope that they will distance themselves from some of the union scare campaigns in relation to this free trade agreement. That will be an important test of leadership. We are pleased that they have come on board and that we have been able to negotiate a deal. I think it is a good thing. It is good to get agreement on such major issues between the two major parties of government. That is very important for confidence and for a range of other things. We are pleased with that. But the union scare campaign is dishonest and should be condemned, because it is painting a misleading picture of what this agreement means. We know that before federal Labor came on board there was support from Labor figures from across the board, including premiers like Daniel Andrews and Jay Weatherill, former Prime Minister Bob Hawke, former foreign minister Bob Carr, former leader Simon Crean, Martin Ferguson, former Premier John Brumby, former Premier Peter Beattie—there has been a chorus of voices on both sides of politics for this agreement. So it is important that we call out the scare campaigns for what they are. They are dishonest. This agreement has been thoughtfully and carefully negotiated over many years. It has been done with two fundamental goals in mind: to grow trade between our two nations whilst protecting Australia's vital interests. Andrew Robb has balanced that very well. He has done that in a way that is absolutely in the national interest.

In conclusion, this is an agreement we should be very proud of. It has been a long time coming. These agreements are not easy. I would again like to congratulate Andrew Robb and all those in the government who have been responsible for negotiating this deal. We cannot close ourselves off from the world. We cannot pretend that the world economy is not always evolving, and we need to respond to that. One of the ways we respond is by making sure that we break down some of the artificial barriers that nations put up between themselves that stifle trade.

There are always those who will say that any change is going to be negative and that we should argue against it, but we heard those same arguments put forward when we saw the debate about opening up Australia to the world and about lowering the tariff wall. Whilst the Greens might want to go back there, I do not want to go back there and I do not think the Australian people want to go back there. The Australian people do not want to go back to the 1970s, when we had an uncompetitive economy. We tried to close ourselves off from the world. We raised the barriers. We forced low- and middle-income earners to pay far more than they had to for goods because of a closed shop. It was not good for the economy, it was not good for consumers and, in the end, it was not good for workers—except for a select few who were being subsidised by everyone else. Those are the facts of the matter.

Senator McKim interjecting—

Senator SESELJA: We are hearing this argument—and we are even getting it in interjections—from the Greens, who would like to take us back there. We disagree with that. We reject that. I hear Senator McKim, and he is saying, 'If we have free trade we don't have sovereignty. We are not protecting our sovereignty.'

Senator McKim: That is not what I said. I said we want to keep our sovereignty.

The ACTING DEPUTY PRESIDENT ( Senator Sterle ): Order! Senator McKim, I ask that you give Senator Seselja the opportunity to complete his remarks in silence.

Senator SESELJA: The same arguments that were made by those who are anti-free trade in the seventies and eighties are now being made by the Greens and the union movement in relation to this free trade agreement. Those arguments were false then and they are false now. They ignore the outstanding benefits—

Senator Heffernan: Mr Acting Deputy President, I rise on a point of order. I want to absolutely clarify something here. In the light of free trade agreements and international tax arrangements, there is a real risk of sovereignty being—

The ACTING DEPUTY PRESIDENT: What is your point of order, Senator?

Senator Heffernan: I am not going to let someone get away with bullshit.

The ACTING DEPUTY PRESIDENT: Thank you, Senator Heffernan. I will take that as a statement.

Senator SESELJA: I should have included Senator Heffernan with the Greens on this particular point.

Senator Heffernan: I will kill him in the detail stage, because has not got any detail.

The ACTING DEPUTY PRESIDENT: Senator Heffernan, order.

Senator SESELJA: I do not think that was a point of order, Mr Acting Deputy President.

The ACTING DEPUTY PRESIDENT: There is no point of order, but I did rule it as a statement.

Senator SESELJA: On this particular point, I lump Senator Heffernan and the Greens together. It ignores the reality of what free trade has achieved for the Australian economy and for the world economy over decades and centuries, and I therefore commend these bills to the Senate.

Senator BILYK (Tasmania—Deputy Opposition Whip in the Senate) (11:02): I rise to speak on the Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 and the Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015. Passage of these bills by parliament will implement commitments that the Australian government has made to the government of the People's Republic of China under the China-Australia Free Trade Agreement, commonly known as ChAFTA.

Labor knows that there are tremendous opportunities for Australia as global economic activity shifts to the Asia-Pacific region. That is why Labor, under Prime Minister Gillard, developed the Australia in the Asian century white paper, a comprehensive strategy to ensure that Australia taps into the growth of our Asian neighbours. We understand that the 21st century will see a massive growth in the economic power of our Asian neighbours, like China and India.

Australia's trading relationship with China will be central to our economic future. China is already our No. 1 trading partner. It accounts for a third of Australia's merchandise exports. Trade with China has been critical to our economic past. It helped Australia to keep growing through the global financial crisis. China is already the world's second largest economy. It is set to become the world's biggest economy during our lifetimes. Labor believes in a confident, open, competitive Australian economy that is engaged with the world. That is why Australian Labor governments have pursued trade liberalisation for over 40 years: from Whitlam's across-the-board tariff cut to Hawke and Keating's dismantling of protectionism to Rudd and Gillard's pursuit of free trade agreements in our region.

Increasing exports will drive our economy's growth, boost living standards and create new business opportunities and new jobs for the future. As the Labor Party's national platform states, more 'Trade is a pathway to a high-skill, high-wage future' for Australians. Analysis by the Centre for International Economics shows that one in every seven Australian jobs depends on exports—around 1.5 million jobs. Industries with the largest shares of export related jobs are mining, agriculture, metal-product manufacturing, food manufacturing, and transport and storage. The analysis shows another one in 10 jobs is involved in imports. That means around one million jobs are linked to imports in industries, like transport, storage and distribution, and wholesale and retail trade. This means that trade benefits working Australian people by giving consumers lower prices and wider choices and by driving economic growth, which creates jobs.

Exports and imports account for around 40 per cent of Australia's GDP. That means trade is inextricably linked to jobs. Our proximity to China represents a tremendous opportunity for Australia—a tremendous opportunity for the jobs, growth and prosperity of future generations of Australians. There is a major new market with hundreds of millions of increasingly affluent consumers demanding new goods and services and a source of valuable investment funds, which Australia will need to create and grow new businesses and jobs. Asia's middle class is now around 500 million. It is expected to increase more than six-fold in the next 15 years. That is 3.2 billion middle-class consumers in Asia—or 66 per cent of the world's middle class—by 2030. And a large slice of those middle-class consumers will be in China. This will translate into rising demand from China for a range of products and services, including those that Australia does well: food, education, tourism, health, aged care, and financial and professional services.

Growing, deepening and diversifying the trade relationship with China will be critical for our future prosperity. We need to export more Australian agricultural goods and food products to China. We need to export more sophisticated services to China like education, health care, aged care, financial services, business and professional services, and tourism. We need to see advanced Australian manufacturing playing its part in the global and regional supply chains which are increasingly centred on China, and we need to see more investment flows between Australia and China. This will mean new opportunities for Australian businesses, stronger growth for Australia's economy, better living standards for Australian families, and more and better jobs for Australian workers.

We are already in a strong and mutually beneficial economic relationship with China. As a senator for Tasmania, I am greatly aware of the opportunities that forming a closer relationship with China will have for Tasmania, and I am well aware of the importance of China as a destination for our wonderful fresh and manufactured foods. There was a strong push to grow the Chinese market under former Labor Premier of Tasmania Lara Giddings. Under Premier Giddings, Tasmania became the first state in Australia to have its own trade and investment representative embedded in Austrade on mainland China. Tasmania is also increasingly benefiting from Chinese tourism, with Chinese visitation to Tasmania increasing by 300 per cent in the last three years. I must say here that I am extremely disappointed that the government still has not delivered the extension to the runway at Hobart airport, which is needed for direct long-haul flights from China, and I am also still quite frustrated that this government cut the Australian Federal Police from the Hobart airport, which obviously Tasmania will need for the return of international flights.

Labor acknowledges that ChAFTA will deliver significant benefits to Australian exporters, Australian consumers and Australian workers. ChAFTA will give Australian businesses greater access to the Chinese market. Under ChAFTA, immediately 85 per cent of Australian exports by value will enter China with no tariffs, and this will rise to 95 per cent when the agreement is fully implemented. China will remove or significantly reduce tariffs on Australian beef, sheep, sheepmeat, dairy products, horticultural products, wine, barley, seafood and processed foods. These sectors employ more than 200,000 workers. This improved market access will be critical in ensuring that Australian farmers and food processors can tap into the opportunities that will come. Those opportunities will arise, as an increasingly affluent Chinese population means higher food consumption and changing patterns of consumption towards higher value food products. The National Farmers' Federation has said the agreement could see a tripling in agricultural exports to China over the next decade, but agriculture is not the only sector that will benefit.

ChAFTA removes Chinese tariffs on Australian resources and energy commodities, transformed resources products like copper, alumina and aluminium, nickel and zinc, and pharmaceuticals and other manufactured products. Once again, my home state of Tasmania can seek to profit in particular from the export of minerals and agricultural products but also engineering expertise in the energy sector, as ChAFTA will also open up access to the Chinese market for Australian services businesses. It is expected to deliver improved access for financial services for providers such as banks, insurers and fund managers. More education and training providers will be able to market their services in China. Australian hotel, hospitality and tourism operators will be able to invest in China. Australian health and aged-care facilities will be able to be established in China. Australian law firms will be able to service the Chinese market. Australian construction and engineering companies will be able to undertake joint construction projects. It will also deliver improved access for Australian telecommunications, manufacturing services, mining services, architects, software implementation and environmental services.

As China develops and modernises, services will become a much larger part of its economy. ChAFTA will give Australian services businesses opportunities to take advantage of this growth. ChAFTA has gained support from business groups and major companies, including the BCA, ACCI, the Australian Industry Group, the Minerals Council, the National Farmers' Federation, the Commonwealth Bank, ANZ, BHP Billiton and Qantas.

This agreement has been nearly 10 years in the making. Both coalition and Labor governments played their parts in the negotiations. I particularly want to pay tribute to former Labor trade ministers Simon Crean, Craig Emerson and Richard Marles for their roles in progressing the negotiations. I also acknowledge the role of Minister Robb in bringing the negotiations to a conclusion, along with the staff in the departments that have been involved. But Labor does believe that the coalition government could and should have secured a better deal. It is disappointing that the government left some agricultural goods out of the deal. They failed to win further market access for Australian rice, wheat, cotton, sugar, canola or vegetable oils. These agricultural goods represent a significant part of Australia's agriculture sector, and the government should have fought harder to have them included.

There has been some significant concern within the Australian community about the investor-state dispute settlement, ISDS, provisions in this deal. We on this side do not believe the government should have included ISDS provisions in this agreement. There are legitimate public concerns over the impact of ISDS provisions on Australia's public policies in areas such as health care, public services and environmental protection. The concerns come from mainstream economic and legal experts. These include the Productivity Commission; the pro-trade magazine The Economist; the Chief Justice of the High Court of Australia, Justice Robert French; former head of the Australian Industry Group and Reserve Bank of Australia board member, Heather Ridout; and numerous academics. The concerns also come from across the political spectrum, ranging from the union movement and the Australian Fair Trade & Investment Network on the Left to the libertarian Cato Institute on the Right. Even former Liberal Prime Minister John Howard refused to include an ISDS in the Australia-United States Free Trade Agreement, despite pressure to do so from the United States.

Labor have led the way in arguing against ISDS provisions. In government, we adopted the policy of not including ISDS provisions in trade agreements. In opposition, Labor continue to oppose ISDS provisions in trade deals, including in ChAFTA. If we are returned to government, we will seek to review all of Australia's existing ISDS provisions in trade and investment agreements with our trading partners. We will work with the international community to reform ISDS tribunals so they remove perceived conflicts of interest by temporary appointed judges, adhere to precedents and include appeal mechanisms.

Labor is also concerned about the impact of ChAFTA on safeguards in Australia's temporary migration system. We want to ensure that ChAFTA supports, rather than reduces, jobs for Australians. That is why Labor has been vocal in raising concerns about the impact of the ChAFTA on jobs, wages and skills. It is why Labor has negotiated with the government to achieve a comprehensive package of complementary safeguards for ChAFTA's temporary migration provisions. Importantly, we have secured those safeguards, which is an important outcome for Australian working people. Our safeguards will support local job opportunities, maintain work skills and safety standards and deter exploitation of overseas workers. This of course is important in safeguarding Australian jobs. Our safeguards will ensure that temporary migrants coming to Australia are used for jobs where there are skills shortages, not as a way of bypassing local workers.

We have designed our safeguards according to two key principles. Firstly, that they are consistent with ChAFTA and do not require changing the agreement, and, secondly, that they do not discriminate against China. They do not discriminate against Chinese companies and they do not discriminate against Chinese workers seeking to come to Australia under our temporary skilled migration system. Despite what those on the other side of the chamber have said, defending Australian jobs is not anti-China and it is not anti-free trade.

ChAFTA allows temporary skilled migration from China through a new mechanism known as investment facilitation arrangements. This will allow Chinese workers to be engaged on Chinese-funded infrastructure projects worth more than $150 million. The government intends to implement the ChAFTA IFA arrangements through what are known as work agreements. These are agreements between employers and the Minister for Immigration and Border Protection, allowing employers to bring in workers on 457 visas. Labor's safeguards will require employers entering work agreements with the Minister for Immigration and Border Protection to conduct labour market testing before turning to overseas workers. Labour market testing requires employers to show that local workers are not available before they turn to 457 workers, by providing evidence showing that they have advertised the jobs. The government has agreed to entrench labour market testing for work agreements in the migration regulations so this will be a legally binding safeguard, not just another coalition promise waiting to be broken.

Labor has also secured the government's agreement to a series of additional safeguards for work agreements. These safeguards include requirements for employers to demonstrate that there is a labour market need to use 457 visa workers; adopt training plans showing how they will train local workers to address skills shortages; and adopt overseas worker support plans, showing how they will support 457 visa holders, including by providing information about workplace entitlements and rights. These requirements will be included in immigration department guidelines for work agreements and these guidelines will be underpinned by a new migration regulation. They will also allow the minister for immigration to impose additional conditions on work agreements, such as specifying that a minimum number of Australian workers be employed or placing a ceiling on the number of overseas workers that may be employed.

Labor has secured a major improvement in market salary rate requirements for 457 visa workers. The market salary rate requirement is a key safeguard designed to ensure that 457 visa workers are treated fairly and that temporary skilled migration does not undercut Australian wages and conditions. It requires 457 visa workers to be employed on market salary rates, with wages and conditions no less than those for a local worker performing the same job in the same location. Under our agreement with the government, the migration regulations will be amended so that wage rates under relevant enterprise agreements will be the benchmark when assessing whether 457 visa workers are being paid market salaries. This is a significant strengthening of the market salary rate requirement, and it responds to concerns that the existing arrangements do not reflect market wage rates under enterprise agreements. It will apply to all 457 visa workers under the standard business sponsor stream. For 457 visa workers under the work agreement stream, the government has agreed to include a comparable requirement in departmental guidelines. The government has also agreed to consider Labor's proposal to increase and index the temporary skilled migration income threshold as part of a review.

An area of significant community concern with ChAFTA is its removal of mandatory skills assessments for Chinese workers. The coalition government has agreed to remove mandatory skills assessments as part of the 457 application process for Chinese workers in 10 trade occupations, including electricians, mechanics, carpenters and joiners. Chinese 457 workers will still be required to obtain the relevant occupational licenses from state and territory regulators. But scrapping mandatory skills assessments from the immigration process has raised very legitimate concerns about workplace skills and safety standards. The Electrical Trades Union is concerned that state and territory occupational licensing requirements may not be adequately enforced. The concerns do not only come from the ETU. The National Electrical and Communications Association, which represents electrical contractors, has said it was not consulted by the government before it made this significant change. Master Builders Australia has said the removal of mandatory skills assessments means the immigration department will need to take alternative steps to ensure all applicants possess the requisite skills and experience. The Business Council of Australia has said there will need to be greater coordination with state and territory regulators to ensure all visa holders in categories exempted from automatic skills testing meet all licensing requirements before working in Australia.

Labor has secured agreement from the government to add new visa conditions for 457 workers in occupations where holding a licence is mandatory under state and territory workplace skills and safety laws. The new conditions will require 457 visa holders in these occupations not to perform the occupation without holding the relevant licence; to obtain the licence within 90 days of arriving in Australia; to comply with any conditions imposed on the licence; not to engage in any work or duties that are inconsistent with the licence; and to notify the department in writing if they have been refused a licence or if their licence has been revoked or cancelled. These are strict requirements. Breaching them would expose visa holders and employers to significant sanctions. A 457 worker breaching these conditions will be liable to have their visa, their right to stay in Australia, cancelled, and an employer of a 457 worker breaching these conditions will face sanctions, including having their approval to sponsor 457 visa workers cancelled. These requirements for 457 visa holders in trades occupations will mean that immigration authorities will be better able to monitor and enforce compliance with workplace skills and safety standards. They will more effectively link the migration system and visa conditions with the state and territory trades licensing systems.

Labor has worked hard to ensure that ChAFTA works for the benefit of Australian workers, not to their detriment, and we recognise that an agreement as big and complex as this is a generational decision. We as an opposition have a duty to apply rigorous scrutiny to the flaws, risks and weaknesses that we have identified. This package demonstrates that Labor has been able to achieve significant concessions from the government to improve the ChAFTA. I therefore commend the bills to the Senate.

Senator LAMBIE (Tasmania) (11:23): I rise to contribute to the debate on the two bills before the Senate which give a green light to an unfair trade deal between China and Australia—the Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 and the Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015—and to indicate the JLN's strong opposition to this legislation. Before I explain the detail of my opposition to the bills before the Senate I think it is important to state an obvious fact that both Labor and Liberal party members choose to ignore. As these bills are being debated in this place, trouble on a grand scale is brewing in the South China Sea because of the expansionist, aggressive and bullying behaviour of the Communist government of China—the people we are entering this so-called free trade deal with. And no amount of name calling—like 'xenophobe' and 'racist'—from those Liberal-Nationals members opposite, in order to stop free debate and cover up the considerable faults of the legislation, will stop me from speaking the truth in this place today.

A news report from respected media source Reuters on 31 October this year leads with the headline 'China naval chief says minor incident could spark war in South China Sea'. The article goes on to say:

China's naval commander told his U.S. counterpart that a minor incident could spark war in the South China Sea if the United States did not stop its "provocative acts" in the disputed waterway, the Chinese navy said on Friday.

Everyone in the chamber knows that China's behaviour is appalling. China is behaving like an international bully in the South China Sea. But no-one in this parliament has the courage to tell the truth. China's military right now, following orders from its President, is threatening the free movement of peaceful civilian aircraft in international airspace and shipping on international waters. And the Labor, Nationals and Liberal parties of Australia, who have all taken big political donations from people closely linked to the government of China, are prepared to reward this bad behaviour with a deal that favours a government that many respected commentators say is turning into a dictatorship.

Shame, shame, shame is all I can say when I think of this year's approaching Remembrance Day, when we will all stop and pay our respects to those brave souls who died fighting for our human rights and our freedoms against anti-democratic, anti-human-rights governments similar to the ones we are now proposing to enter into a lopsided deal with. If China was not armed with 300 nuclear warheads fitted to sophisticated missiles and did not have one of the largest conventional armies, navies and air forces, I do not think the world would allow the Chinese communist regime to get away with the military threat they have now made to world peace and a third of the world's commercial shipping.

In a speech at a defence forum at the Ronald Reagan presidential library in California this Saturday the US defence secretary, Ash Carter, said:

How China behaves will be the true test of its commitment to peace and security. This is why nations across the region are watching China's actions in areas like the maritime domain and cyberspace.

China has reclaimed more land than any other country in the entire history of the region.

The United States is deeply concerned about the extent of land reclamation and the prospect of further militarization there, which could lead to a greater risk of miscalculation or conflict.

The United States is responding to China's moves by putting its best and newest assets in the Asia-Pacific and investing in space, cyber, missile defence, and electronic warfare.

So, while the US government at the highest levels rings the freedom bell in the most strident fashion, there sits the Labor, Liberal and Nationals parties of Australia, deaf and dumb, with their heads buried in a very, very dark place and their hands held out to the rich businessmen with strong links to the Chinese government while they agree to do a deal that sells Australia's children's sovereignty, our workers' job security and our national security under the guise of a free trade deal.

It is just wrong and misleading to tell the Australian people that it is only the US that runs the risk of losing the lives of its military. A senior communist Chinese military officer recently warned the Turnbull government that the possibility of military confrontation 'could not be excluded' should we support our American allies in freedom of navigation exercises through vital international trade routes. Australia's relationship with China is nearing a crisis despite the misleading statements made to me in the Senate by our government's bureaucrats. Today Australian sailors and American marines run the risk of being killed by Chinese ships, bombs and missiles because we want to keep international waters free and our skies open. And today our Prime Minister and Liberal, Nationals and Labor politicians pretend that our trade relationship with China is our trade deals with our other democratic international trading partners, which is absolutely ridiculous. The bottom line is that Australia is about to sign a free trade deal with a world superpower that has just warned that it may attack members of our Australian Defence Force. I repeat today what I have been saying publicly: at the very least we should delay signing any deal with China until a guarantee is given that our sailors will be safe while they are acting peacefully in international waters.

My political network and candidates will always oppose and fight this dangerous and unfair China trade deal. Unlike the Labor, Liberal and National parties, the JLN has not and will never receive millions of dollars in funding from people linked to the Chinese government. Speaking of politicians who enjoy the financial generosity of people strongly linked to the Chinese government, Hansard shows that the trade minister, Andrew Robb, said in the second reading speech on 16 September:

The free trade agreement with China has secured the overwhelming support of Australian business and industry. Daily, for months now, we have seen reports of industry and other organisations, all of whom studied this agreement and feel it is a fundamental part of the future prosperity and growth of this economy. The group so isolated those who are against this. We have seen Bob Hawke and all the luminaries of the Labor Party, including the current leaders at state and territory level and former major industry and trade ministers Simon Crean, former ACTU President, and Martin Ferguson, see the merit of this agreement.

My reply to Minister Robb is: before you use the commendations of former Labor members of parliament as glowing endorsements of your legislation and deal, at least have the honesty to admit that in recent years the AEC electoral figures show that the Labor Party accepted almost $2 million in political donations from businessmen closely linked to the Chinese government—about the same amount as the Liberal Party and the Nationals. If Minister Robb is going to use quotes from luminaries of the Labor Party to justify this unfair deal, he should make sure they disclose any private deals and income that is associated or linked, once again, to the Chinese state-owned companies. Their independence may raise eyebrows once their close political business links with Chinese state-owned entities are fully explored and vetted.

During my speech I have been critical of the way this government is so eager to pretend that a private company from mainland China is just like a private company from other free trade partners, like America, Japan, South Korea and so forth. Comparing a private company from South Korea to a private company from China is absolutely ridiculous. It is deliberately deceptive. It is a deliberate strategy to talk down the very real risks of entering a deal with communist China.

Most members of this parliament will acknowledge that The Economist magazine is one the world's most credible sources of well-researched economic, social and political information. The 12 to 18 September issue of The Economist, in a special report on business in China 'Back to business' has some very interesting things to say about the difference between private and public firms in China. Page 4 of The Economist's report reads:

The distinction between China's state-owned and private firms is not always as clear-cut as it might seem. A company's formal status can be misleading … And the Communist Party is everywhere: article 19 of China's company law states that a party cell must be set up in every firm above a certain size, public or private.

On page 5 the report reads:

"There are no genuinely private companies in China," declares a veteran adviser to multinational companies.

In one sense he is right. The state and the party are omnipresent and their role is enshrined in the law. Another noteworthy comment on page 5 reads:

To find out whether a given local firm is likely to behave like a state champion or a market-minded entity, you need to ask three questions. First, how strategic is its industry? Peter Williamson of Cambridge University's Judge Business School argues that the government will always meddle with firms in industries it sees as strategic, even if they are multinationals.

I wish we had Australian governments who naturally placed importance on strategic industries. That way we would have never lost our car manufacturing industry. Nor would we have lost our ability to refine petrol and come close to losing our steelmaking ability and Australian shipbuilding industry and our maritime skills.

Come to think of it, perhaps, if we want, we should outsource our government to China. If we are prepared to allow our mine and construction workers to be replaced by Chinese tradespeople, why not politicians? Australia would then have a hope of re-establishing a car industry and strengthening our ability to refine petrol, make steel and build and sail ships. While we are at it, perhaps we can get China to look after our defence as well. On paper it would be much cheaper. Of course, for those reading Hansard, who did not have the benefit of hearing the ironic tone in my voice, I said the last comments with my tongue placed firmly in my cheek.

The second question to ask, to find out whether a Chinese firm is likely to behave like a state champion or a market-minded entity, is: who decides on pay, promotion and the hiring? The Economist states that for big state-owned enterprises like Sinopec, an oil giant, the Communist Party organisation department deals with senior executives.

The third question, to find out whether a Chinese firm is likely to behave like a state champion or a market-minded entity, concerns the forms of relationship between the company and the Communist Party. The Economist notes:

Some business leaders proudly don the red hat. Wang Jianlin, the billionaire boss of Dalian Wanda, a vast private-sector conglomerate, was born an elite "princeling" and cunningly cultivates connections.

More comments from The Economist magazine, which prove Liberal, Labor and National party politicians are very silly to peddle the mistruth that Chinese private sector entities are the same as western countries' private sector entities, can be found on page 15 of their special report. It states:

A World Bank report published in June said that in China "the state has interfered extensively and directly in allocating resources through administrative and price controls, guarantees, credit guidelines, pervasive ownership of financial institutions and regulatory policies. These interventions have no parallel in modern market economies." The report quickly disappeared from the bank's website, to be replaced later by a more anodyne version.

Before I close, it is important to mention the proposed Chinese state-owned mine at Breeza, on the Liverpool Plains in New South Wales. The Shenhua mine at Breeza is a living example of why senators should vote against the bill. The mine itself was borne out of corruption from both Chinese and Australian sources. It is the wrong mine in the wrong place. It is a crime site, not a mine site. Under the provisions of these bills it will become very easy to employ Chinese workers instead of Australians once this legislation is passed. With regard to the international movement of natural persons ChAFTA's labour market testing provisions are set up to fail Australian workers and favour the importation of Chinese workers to Australia. If we cannot trust China to provide us with truthful financial figures about their economy how can we trust them to self-regulate and honestly test Australia's labour markets when it comes to hiring workers for their own projects?

In summary, the following are seven good reasons why I and every JLN candidate across Australia—including Rob Waterman, in Tasmania; Hugh Dolan, in Victoria; and Bob Davis, in Queensland—will oppose this legislation and unfair trade deal with China:

1. The Liberals and the Nationals have run a $10 million taxpayer-funded panda-hugging campaign on their deal with China. Trade growth and jobs will still happen without the Liberals' deal. A better, renegotiated deal with China is still possible.

2.    China is a security threat to Australia, America and all our western allies. It is a proven bully, thief, liar and human rights abuser. Why rush into a deal—done in secret—with a bully, thief, liar and human rights abuser?

3. Investor State Dispute Settlement in any trade deal fundamentally undermines Australia's sovereignty and our parliament's ability to make laws in the national interest.

4.    A trade deal should never open the door for Australian workers and tradesmen to be replaced by foreign workers. Let's be honest: no matter how you look at it, this deal opens the bloody door!

5. It does not make sense to put all our eggs in one risky and unstable economic basket.

6. Chinese political donations to the Liberal, National and Labor parties have most likely influenced ChAFTA terms and conditions in China's favour.

7.    The Chinese government has lent dangerous amounts of money to different Australian governments. Has this dangerous Chinese debt influenced the current trade deal and other Australian government behaviour?

New research shows China holds a potentially dangerous amount of Australian government debt. By one estimate it could be as much as 20 per cent. The world's second largest economy has begun to liquidate some of its US$3.7 trillion worth of foreign reserves, and that includes Australian government debt. There are fears that this could lead to higher borrowing costs.

On behalf of the people of Tasmania, and in the national interest, I strongly oppose these bills.

Senator HEFFERNAN (New South Wales) (11:40): It is not often that I get up in this place. There is nothing wrong with a free trade agreement and there is nothing wrong with foreign investment; it has just got to be on a level playing field, be captured by our revenue base, not distort the capital market and not distort the commodity market. All of these things can be at risk in a free trade agreement. I congratulate Australia for getting on and getting some free trade agreements. But it is not the free trade agreement you have got to worry about, it is what goes around it and what safety mechanisms we have within it. When we signed the American free trade agreement we were at 65c. Most people will not remember this. When we enacted it, in the following year, we were at 67c. We did away with five per cent and 15 per cent tariffs and within three years we had a 40 per cent deficit in our terms of trade because we went to parity. So the tariffs did not matter, it was the currency.

My question for this parliament—which is what I yelled out from the back of the room, as I often do, when we signed the free trade agreement over there in the Great Hall—is: when are you going to say to the Chinese officials, 'When are you going to put your currency on the market? How can you have a fair dinkum free trade agreement when your currency is a non-market currency? Please explain! Maybe the Minister for Finance or someone would like to explain that in due course. I have asked the question of Andrew Robb and, to his credit, he was quite polite. They have worked hard to do these things but we need to look at the detail around it.

Everyone knows that in most of Asia, which is a different culture to Australia, you can get a signature on any bit of paper you like as long as you find the right person to pay the facilitation fee to—in other words, 'bribe'. To its credit, China is getting rid of some people who are seriously in that league. Most companies in China have come out of the sovereign side of it. We read about Nugan Hand in recent days. A lot of that sort of money is coming into Australia out of Asia. It is hot money. And congratulations, by the way, to 60 Minutes for finding Mr hand.

So what we have got to do with a free trade agreement is make sure there is something in it for Australia long term besides the trade. You can have as much trade as you like, but if you are not collecting the revenue, what is the point? We will be having an argument in the parliament this week about the GST and superannuation tax arrangements et cetera. But like the institutions and child abuse and the judges and lawyers who used to go to Costello's—which I note did not raise a flag even though it is true—we turn a blind eye to it; we do not want to talk about it. Last year, the World Bank estimated there was $3 trillion on the merry-go-round running away from international tax arrangements. I do not have any notes, by the way; this is not prepared. There are nine sovereign entities in the world that have zero tax for corporates. Even our own Future Fund has some tax arrangements in tax-free sovereignties. I know we are talking about the free trade agreement with China, but an important part of it is: how do we get the tax law to catch up with technology? Technology has outsmarted the law. The World Bank said that, last year, $3 trillion was running away from tax in the Group of Eight. The US estimated that, in the same year, they missed out on between $650 billion and $800 billion. Does anyone know—hopefully the finance minister does—the turnover in the derivatives market last year? It was $30 trillion—and it is one of the major ways of diverting your tax.

We have signed a free trade agreement with China. It has potential. By 2070 China will have gone, barring a human catastrophe, to just on two billion people. Asia will have lost 30 per cent of its productive land due to urban sprawl and contamination. Two-thirds of the world's population will live in that area. Darwin is closer to that market than Sydney. So there is great potential. But it is a waste of time if we do not make sure that we capture it in our revenue base and that it does not distort by direct fully interposed trading—in other words, that it does not come on the market, which distorts the commodity market. If it is hot money, the investment potential is not to get a return on your money if you are over there and you are a crook—and there are plenty of them; there is plenty of it coming into Australia—but it is to find a safe haven for your money. So we have a bit of work to do. Sure, it is a great thing. Congratulations to everyone.

I just want to go to—and I know this is rambling a bit, Madam Acting Deputy President—Landbridge Industry Australia Pty Ltd. On the front page of The Financial Review today, there is a photo of JBS Swifts' boss—a Brazilian company with a Brazilian government guarantee and with a global market in beef. They are fantastic global manipulators of that market and fantastic tax avoiders in that market. We talk of Wilmar—the same in the sugar and oils industry. Fantastic. As Senator Sterle would know, before they did that deal in Queensland a couple of years ago, I said, 'These blokes will end up screwing the sugar growers,' because they are serious market manipulators—the same as ADM was, and still is. Sure enough, they have done it. We thought it was fantastic at the time, but they are going to screw us. We really have to be careful about the detail—a bit like the TPP, but I will not get onto that. I just want to go to Landbridge, which is on the front page of The Fin Review today. They have bought the Darwin harbour lease for 99 years. They have to be looking up. They have companies based in Australia. But hidden in the paperwork is who their business partners are. I asked the appropriate people in this government and in the Northern Territory government if they knew. To his credit, the Chief Minister rang me. I have also talked to Defence. The two business partners are two provincial governments. For God's sake! We are up there fighting them in the South China Sea and we have said to them: 'Hey! Come down here. You can have the harbour.' Two partners in the Landbridge company are—according to their paperwork; God knows what it is in reality—two provincial government companies.

I got up rudely before—without a point of order, trying to pretend it was—to say to anyone who says that what we are doing now with global investment is not redefining sovereignty: it is. It is absolutely redefining sovereignty. But maybe that is the way the world wants to go—I don't know. If it is true what the paperwork says, that Landbridge have business partners, and I am unaware of the extent, the present tax law says that, if you are an sovereign investor coming into Australia and you make a passive investment—in other words, you lend Senator Cormann the money to go and do something—you, under our international convention, as the sovereign investor, do not pay any tax. But, if Senator Cormann were the receiver of it and the investor here, he would get tax deductions. So it is a double hit on the market—on the taxpayer. And, God knows, we will put up all of the other taxes and fiddle around with the GST but we will look the other way on corporate stuff. I see today in the papers the yarn around how they went to the Senate committee, with Senator Whish-Wilson and others, and put it over them with some sort of dodgy front company as to why we could not reveal how much tax people pay. The largest tax avoidance case in the US in the last financial year, to June 2014—do you know who it was with? It was with an Australian company. They got a lot of publicity at the time—and I will not name them—for rearranging their corporate affairs. They put up some BS excuse, but it was to do with tax avoidance.

So, I am afraid, I have great difficulty with just flagging through the redefinition of sovereignty. Free trade agreements are part of the global economy. We no longer get around in bloody canoes. It used to take the cricket team six weeks by ship to go to England to play cricket when you can now go there overnight. The world is changing—with technology et cetera and online buying. But what we have to consider is: do we want to protect our sovereignty? To his credit, former Treasurer Joe Hockey took it to the G20—and it will have to happen at that level—to try to get the law to catch up with technology when it comes to collecting tax in order to maintain your capacity to have your own sovereignty. What you had to bring the army with you to do 100 years ago, if you were a foreign sovereigner coming into another sovereignty, now you just bring your chequebook. Sure, as long as everyone is alert to the fact that this is happening, they may well agree to it, because we are bloody lazy. But, if we want to maintain our hospitals and schools and an ageing population et cetera, in my view we have an obligation to protect our revenue base. I will not go through some of these free trade agreements. But what I am talking about is not just peculiar to the Chinese free trade agreement. As I say, China is a huge potential market, as is, in due course, India—which is 35 years behind China. Just about everyone in India has a mobile phone, but 800,000 people do not have sewerage—so there is a bit of work to be done. China, by the way, is moving some of its labour force work into Bangladesh, where—get this—the average person, 80 per cent of the population, lives on about $34 a month. They are pretty low labour costs.

The world, because of technology, transport and modern communication, is changing, and that aids and assists free trade agreements. China are ahead of the game. They recognise they have these serious problems with going from 35 per cent urban dwelling to 64 per cent urban dwelling, with people coming from the bush, the urban sprawl et cetera. You can go to places up there and never see the sun, not because of the cloud but because of the smog. They are, to their credit, on the ball. We need to take the opportunity that that presents to us, but we need to protect our sovereignty. People do not want to talk about this and I yelled at Senator Zed Seselja because he said it is garbage to talk about sovereignty. It is bloody not garbage; it is true. It took 50 years for us to realise what was going on in the churches with the altar boys, as it were. Let's wake up early about this, before it is too late. It is not too late; we just have to get the law to catch up with where we are. The bulk of the corporates are not breaking the law; they are avoiding tax. It is just that the law is out of date. It is telegram-era law.

The Foreign Investment Review Board did not look at the Landbridge purchase of Darwin port because that company had done a deal somewhere else in Australia and got the tick for that and, therefore, the FIRB gave it an automatic tick for Darwin. But, when I asked them, 'Do you know who they actually are?' they said, 'Yes, Landbridge—here it is, with their corporate headquarters in Melbourne or somewhere.' I said, 'There's a bit more to it than that.' They said, 'Oh, well, it's too late now.' Australia's defence forces are up in arms about that. I will not embarrass the government by telling what I hear and what I know, but it was a deal that was sort of half under the carpet.

In the future, two-thirds of the world's population will be just across the water. I think that madmen in Russia, Putin, is more likely to flex his muscles than China because, I think, China are doers and goers and are having a crack. The increasing middle class there has certain expectations, and at least the leaders are trying to do something about the corruption. It is like local government in Sydney: it is fairly endemic.

My message to the parliament is: sure, these things are good—and good on you, Andrew Robb—but we need some safety measures and there has to be a caveat. Australia on its own cannot be the solution. These free trade agreements will be good for certain parts of the economy. Doing away with tariffs or whatever and selling more wine to China are good things, but we have to make sure there is something in it for the Australian taxpayer so that we do not get smashed. We do not want to get to where the US got to at one stage. If you got sick, they left you in the gutter unless you had a shitload of money. It is endemic.

I will say another thing. A meat company in New South Wales—I will not name them because I do not want them knocking on my door—have just taken on an equity partner from Asia. Their adviser, a major, major accountancy firm in Australia, is having a blue internally with some of the people in the company because the major, major accountancy firm wants them now, with the opportunity they have, to do all transfer pricing of their products so their profit gets moved away to a low-taxing regime. This is a well-known Australian company. I think it is a disgrace, and I think it is a disgrace that people are not prepared to get up and say, 'We're living in the generation that may see sovereignty redefined.' It may be the way it has to go. I do not know; it might be like local government amalgamations. But I cannot see how we can maintain the expectations of Australia. Australia is still the best place in the world to raise a family, breathe fresh air and drink clean water. If we turn a blind eye, I cannot see how we can expect our hardworking taxpayers here, when they get to the frail-age stage in life, to look after themselves.

When the US objected to some of the tightening of tax arrangements, the US corporates lobbied the US politicians. If it cost $1.4 billion for Hillary Clinton's campaign for the presidency—and they are corporate donations—you can imagine that the corporates have the ear of the particular politician. I am not saying there is anything going wrong there, but then the corporates get up and say, 'We're not worried about the amount of tax we're not paying in America. We're supplying employment.' Hello? They wonder why the health system is breaking down, along with all the other things.

So, while free trade agreements are a great idea, they have to have some safeguards around them. I go back to my first question: how can you really have a free trade agreement and not have it shoved up you—I had better not say where—when your trading partner's currency is not on the market? There is an old bush saying where they shove something up you. You can have the potential to have something shoved up you if the country you have the free trade agreement with will not put its currency on the market. On the day I yelled that out here, luckily for me Mr Obama, in different language, said the same thing in America, urging China to come to the market with their currency. Otherwise they could just play with us to suit themselves. I am not saying there is an easy solution. Certainly there is potential because, as world experts say, between 2050 and 2070, barring a human catastrophe—Senator Sterle, who is in the chamber, has heard me say this many times—there will be about one billion people on the planet unable to feed themselves, which is not much different to today. Fifty per cent of the world's population will be poor for water. Two-thirds of the world's population will live in Asia. Thirty per cent of the productive capacity of Asia will have gone out of production. There could be up to—get this—1.6 billion people displaced on the planet.

We have to develop Northern Australia. We have to do it so there is something in it for the Australian taxpayers. I welcome all that northern development, being the original Chair of the Prime Minister's Taskforce on Northern Australia. Cape York Peninsula is twice the size of Bangladesh and has 14,000 people, who live out off the city of Cairns and down the coast. Bangladesh, at half the size, has 160 million people, who, if the sea rises to 40 per cent of what is predicted, will have to find somewhere else to live. We have got some issues. We should not shy away from them.

Senator POLLEY (Tasmania) (12:00): I rise to speak on the Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 and the Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015. In doing so, I reinforce Labor's support for the China-Australia Free Trade Agreement. This agreement has been in the making for the last decade and will deliver significant benefits to our Australian exporters, to Australian consumers and, importantly, to Australian workers. I am pleased that the government has agreed to Labor's amendments which will ensure that this legislation goes through with safeguards to put in place protection for Australian jobs.

I would like to acknowledge at this point the leader of the opposition in this chamber, Senator Penny Wong, for her leadership in negotiating, which, at times, I am sure, was quite difficult, on getting the Australian government to actually concede that Australian workers do in fact need protection. Nevertheless, she did a great job on behalf of the Labor Party and the Labor government in ensuring that Australian workers are protected.

But, as most of our contributors this morning have been saying, we are all in agreement that trade is essential to the Australian economy and essential for Australia's future. This is something that Labor has always understood, and Labor's amendments ensure that Australian jobs are protected and that Australian people get the first chance at any new jobs that are created. This is something that would not have happened without Labor standing up in defence of Australian workers.

Labor has always been engaged in trade liberalisation, and we have a very strong track record highlighting this. Our stance on trade liberalisation can be traced back to the 1940s, and it is something that we have pursued in government over the last four decades.

Both coalition and Labor governments have played their part in negotiations, but I think that any objective observer would agree that Labor governments have led the way on engagement with China. We have never needed to be given any lectures by those opposite on the importance of China.

I want to pay tribute to the Labor former trade ministers Simon Crean, Craig Emerson and Richard Marles for their role in progressing the negotiations. But I would also like to acknowledge and place on record our thanks to Minister Robb in bringing the negotiations to a conclusion. As Senator Penny Wong acknowledged in her contribution, it is also those within the departments of our bureaucracy who have worked tirelessly over a long period of time to ensure that the best negotiated agreement could be reached. And, as I said, it has only been made better and strengthened because Labor negotiated to ensure that Australian workers are protected.

Perhaps it had something to do with the government realising that they had dropped the ball on the issues that they came to the negotiating table and we finally had an agreement. But there is no doubt that the government could have, and should have, negotiated a better deal. Labor has led the way in arguing against investor-state dispute settlement provisions, and we do not believe the government should have included the ISDS provisions in the ChAFTA. Labor has improved the agreement, but there is still work to be done.

So the agreement may not be perfect—and I know there are still some in the community who have concerns—but it is a good start now. We have made significant provisions to ensure that the benefits do flow into the Australian community, and we need to weigh up the good and the bad and determine what is in the best interests of Australia—and that, of course, is to enter into this free trade agreement.

In my area of responsibility, of aged care, there are some wonderful opportunities for our Australian aged-care sector to lead the way in aged care in China. There are also added benefits to my home state of Tasmania, and already we see local government, through our councils, engaging in sister-city relationships with China, and they have been for quite some time. You would recall that recently the President of China visited Tasmania, in response, primarily, to a school in Launceston that had written to him and suggested that Tasmania would be a perfect place for him to visit when he came to Australia. So already we have increased numbers of Chinese visitors coming to our state, which is wonderful for our tourism industry because they understand the uniqueness of Tasmania in terms of our clean environment, wonderful food, open spaces and low population. And that is why Asians—those from China in particular—enjoy coming to Tasmania. That is something that we can still build upon. That is even without the exports that will be beneficial to our primary industry in Tasmania.

We are proud to support this agreement which now has been improved substantially by the safeguards that we were able to negotiate and for which we fought long and hard. Trade is vital for Australia's prosperity and growth into the future. Labor will always stand up for Australian workers. Without the leadership of the opposition in ensuring our workers were protected, this agreement would have left those in the Australian workforce at a disadvantage as to any new jobs that were going to be created. So this has been a fantastic outcome. This is what the Labor Party has always done: we have and will always put the best interests of the Australian community first, and we will always ensure that the best possible agreement can be put forward. I commend these two pieces of legislation.

Senator LEYONHJELM (New South Wales) (12:07): Today we debate the Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 and the Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015, which are intended to cut tariffs on imports from China, in line with the promises made in the China-Australia Free Trade Agreement. I support these bills, but, with the conclusion of this free trade agreement, as well as the Trans-Pacific Partnership, the key trade issue before us now is: what should we do next?

I believe that we should abolish our tariffs on imports from all countries. I believe this because free trade is fair trade. It is fair because of what the abolition of our tariffs would do for everyday Australians. There is a lot of talk about how the GST is regressive, but tariffs are far more regressive than the GST. Tariffs are imposed on products that everyday Australians use, like pasta, towels and umbrellas. But, unlike the GST, tariffs apply only to goods and not to services. Compared to rich people, poor people spend more of their money on goods rather than on services. So, even more than the GST, tariffs hit poor people harder than rich people.

Free trade is fair trade. It is fair because of what the abolition of our tariffs would do for poor people overseas. Because of our tariffs, poor people in both developed and developing countries sell less of their product into Australia. By abolishing tariffs, they will sell more to us. This will boost our living standards a little, and it will improve the living standards of the world's poor a lot. It will also be a sustainable boost, based not on aid and dependency, but on usefulness and self-worth.

Unlike the coalition, the Liberal Democrats have specific plans and the guts to make wide-ranging cuts to government spending. So, unlike the coalition, the Liberal Democrats have the credentials to make wide-ranging tax cuts. The Liberal Democrats would abolish all of our tariffs, which amounts to a tax cut, and we would fund this by reducing government spending. But even without spending cuts, the coalition could abolish tariffs responsibly by concurrently extending the GST to include fresh food, while still having revenue left over to provide income tax cuts. This would represent an improvement in the fairness and efficiency of the tax system.

Our tariffs are a make-work exercise for customs officials. We apply tariffs on almonds but not on walnuts, on maple syrup but not on golden syrup, and on biscuits but not crispbread. There is a tariff on guitars and drums, but not on violins and pianos; on calendars but not on diaries; and on granite and sandstone if it is in blocks, but not if it is roughly trimmed. And there is a tariff on flat steel if it is coated with zinc, but not if it is coated with tin.

The coalition wants to retain our tariffs on products imported from overseas as long as other countries impose tariffs on products they import from us. This is akin to shooting yourself in the foot as long as the bloke next door also shoots himself in the foot. The Liberal Democrats are the only free trade party in this parliament, and only Liberal Democrats stand for true tax reform in this country.

Senator BACK (Western Australia) (12:11): I thank you for the opportunity to speak on the Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 and the Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015, in my capacity as the chair of the Foreign Affairs, Defence and Trade Legislation Committee.

Can I first acknowledge the cooperation of the opposition, through Senator Wong, who negotiated with the government the conditions upon which the opposition is now to support the China-Australia Free Trade Agreement legislation. Those areas of agreement are these. Firstly, in relation to labour, with a view that Australians should always have priority in the labour market, and that overseas workers should be recruited only in circumstances where suitably qualified local workers are not available. I endorse that. As a Western Australian we have of course seen that in projects like Roy Hill, the iron ore project development in the Pilbara region of Western Australia. The amendment that has been agreed will be the existing requirement under policy that employers seeking to sponsor skilled workers on 457 visas under work agreements will have to demonstrate that they have made recent and genuine efforts to recruit local Australian workers first, and I endorse that.

The second relates to amendments to guidelines, which are now agreed, for companies seeking a work agreement. These amendments will incorporate additional criteria for the minister to consider in approving work agreements. To ensure observance of those guidelines they will be referenced in a new regulation, and I support that.

The third relates to the Department of Immigration and Border Protection including in its annual report details about the number of work agreements signed, including the number of 457 visas engaged under the agreements, so that we have program transparency for the Australian community.

Fourth, with regard to subclass 457 visas for overseas tradespersons, the government will amend a visa condition to make it clear that visa holders must also obtain licences, registrations or memberships, as required under Commonwealth, state or territory law. Further, the visa holder will be obliged to notify the immigration department if their licence or their registration is refused, revoked, ceases or is cancelled. That should give a high degree of satisfaction to those who expressed so much concern in the negotiations leading up to this agreement. Finally, the Department of Immigration and Border Protection will continue to investigate the evidence-based allegations of noncompliance with visa conditions.

I would like to make the point in general terms that we are a trading nation. Continentally, we are the geographic landmass of the United States of America, with the exception of Alaska, and we have the population of greater New York—23 million people. We are not capable of locally and domestically consuming the products that we produce in my home state. My state colleague Senator Cormann is present, and his own family is very heavily involved in grain production. We export 95 per cent of the 16 million tonnes that we produce in our wheat crop every year. What hope does Australia have to consume 95 per cent? None. Again, if you take our home state of Western Australia with its iron ore production of about 300 million tonnes-plus a year—almost one million tonnes a day—we do not have the capacity in our country to be able to locally use that iron ore to turn it into steel for various construction and other purposes. The same would apply with other commodities such as coal from Queensland and New South Wales and others. Therefore, we are a trading nation, and we must trade with those countries who desire our products and with whom we can work in terms of our trade agreements.

I want to make this point strongly: trade with China is worth in excess of $100 billion a year—$2 billion a week. It is interesting that our exports—Australia's exports to China—are more than the combined value of our exports to the United States of America, Germany, the United Kingdom, South Korea, France, Canada and all of South-East Asia. That is the scale of Australia's trade with China. How tremendous it is that we are able to negotiate this trade agreement with this country. I will comment a little further in a few moments and refer to the statements of some of our trading partners about just how important this agreement is. China is our largest two-way trading partner in goods and services. When you add goods and services, imports and exports, that $100 billion a year goes up to $160 billion a year—for the last financial year. China is our largest destination and our largest source of merchandise imports—valued in excess of $50 billion. But we face increasing competition from countries like the United States and Canada, and the European Union, that are looking eastward into our very sector of the world. For how many years has Australia been that little country Down Under in the bottom right-hand corner of the world? And here we are today as front and centre in Asia. In my own state of Western Australia the time zone is within one hour east and west of something like 60 per cent of the world's economic activity now. This is the agreement that is going to open up that opportunity even more for us. It is imperative, of course, that we are able to proceed as we are.

If I may, I want to go to the comment of Jennifer Westacott from the Business Council of Australia. She made the point that so many of us are aware of: if we are not able to reach the agreement that I hope we are going to reach today, the failure to be able to ratify this agreement before the end of December and the failure to get the two levels of tariff reductions—one for 2015 and one for 2016—will mean that within days in early January agriculture alone will stand to lose more than $330 million. Further than that, Ms Westacott made the observation that, if we do not ratify the agreement, the cost in the financial services sector by 2030, in her estimate, will be A$4 billion and 10,000 jobs. At a time when the world is in a position of economic stalemate, there are opportunities for this country, and it is fantastic that the opposition have seen the value and the opportunity.

I want to refer to the comments of the chairman of Mitsui Australia, Yasushi Takahashi. As we know, Mitsui is an enormous local company with Japanese equity. It has $8 billion of annual sales here in Australia—iron ore, coal and LNG agriculture. This is the point that this leading Japanese businessman has made about the China-Australia Free Trade Agreement: that Australia has been offered, in his opinion, a unique competitive opportunity through the agreement that we must not miss. I quote from Takahashi in a speech from 18 September:

It is an important fact that China has not made agreements with any other countries that compete with Australia in beef or iron ore or raw materials and other things like that.

His quotation concludes:

Australia has been given a great opportunity to have a competitive advantage over other exporters to China, so I sincerely hope the Australian government and Australian parliament will not miss this great opportunity.

Isn't it interesting that that is the statement of a leading Japanese businessman about the opportunity that Australia has with a country with whom they see an enormous competition, and that is China.

I would like to address a couple of questions—one of them being the investor-state dispute settlement scheme. There seems to be great argument and concern about its impact here in Australia. I want to relate to you my experience doing business in the oil and gas industry in India, a country with whom we do not have a free trade agreement and no opportunity of investor-state dispute settlement. Of course, there is the circumstance in which you negotiate in good faith with your client. You sign contracts and you commence your work and the government of the day says, 'We're going to put on a two or three per cent cess'—they use that term, being a tax or a tariff on all business associated with overseas companies; in their case, on this occasion for the purpose of educational advancement—'not into the future but on all existing contracts.'

The point I want to make about ISDS is that it helps companies enormously that will be doing business in China or, respectively, in Japan or Korea. Without this there is limited scope for an Australian company to put itself up against the might, for example, of the Chinese state in a dispute situation. So I say to people who are so concerned about the provision of ISDS in these agreements that it is equally there for the protection of Australian businesses and the opportunities we will have into the future.

It is a fact that, when we started negotiating this China-Australia Free Trade Agreement 10 years ago, commodities were the area in which China and Australia saw the opportunities. Ten years later, in 2015, it is as much about services as it is about commodities. Why is that the case? China today sees itself in competition with the United States of America to become the greatest economy in the world, but they recognise they have deficiencies in their services sector—potential regulation, corporate governance, insurance, banking and ACCC type activities—and they have recognised, fortunately for us, that Australia actually has these skills in services, in aged care and in health and in architecture and in a range of areas that the Chinese need. They do not want to go to the United States to get that expertise because the United States is their competitor. We are not a competitor of China.

The scope, as mentioned by Ms Westacott, for provision of services to China is enormous. For those of us with children and eventually grandchildren who will be looking for future employment in the highly paid skilled areas, let us look no further than the capacity to be able to provide those services in China. One example alone is that today there are more than 1,100 architects engaged on projects in China—not all of them are in China; many of them are here in Australia—and we have not signed or ratified the free trade agreement yet. The Chinese recognise that we have high-value, high-paying skills that are useful to them. We have often heard the criticism: why can the Chinese come here and take equity in our assets and yet we cannot do the same in China? The free trade agreement changes that. An example is Ramsay in the aged-care sector. Under the terms of the new agreement, Ramsay could establish a chain of aged-care facilities in China—own the land, operate the facilities, put Australian staff in there, along with Chinese staff, and expatriate the profits back to Australia, if and as they so desire. The same applies to the health sector and the education sector. We already know that the largest number of overseas students in this country are Chinese. We know that 10 per cent of the Australian population has a Chinese language as their first language in their homes. We know the influence now and we are so uniquely positioned.

Let me also make an observation, if I can, surrounding the whole question of sovereignty. The parliament at all times is able to protect the sovereignty of this nation and the people in it under our Constitution. The question has been asked: do we limit our sovereignty? Is our sovereignty diluted as a result of signing an agreement such as this one? I say the answer is no, it does not. The parliament at any time can rescind any agreement with any country if the parliament believes that our sovereignty is at risk or is being or has been diluted. I also make an observation, if I may, about commentary regarding currency—the fact that China has a regulated currency and ours is a free-floating currency. The simple point is that this free trade agreement and any other free trade agreement that we are negotiating or have negotiated do not have currency provisions. Many countries peg their currencies, for example—wisely or unwisely, in the case of some South American countries—to the US dollar. It is a question for those countries, but nothing at all impacts on our competitiveness as a result of signing this free trade agreement.

Let me conclude, if I may, with the value of this and other agreements to this country. We now have signed free trade agreements with Korea and with Japan, and we will hopefully ratify this one. But there is another point that the community needs to be aware of and that is that the minister and his negotiating team have negotiated most favoured nation status between Australia and those countries. What does that mean? It simply means that if the Koreans, sometime in the future, participate in a free trade agreement with another country—let's say it is associated with a commodity that we also export into that country—we must enjoy at least those conditions: the best most favoured nation conditions. It is important that we realise that each of these free trade agreements—while they are ratified and signed by the parliament—is only the beginning of a new relationship. I will give you an example: our relationship with Japan, in which rice was not included to anywhere near the extent of other commodities. We know there are very high tariffs on the import of rice into Japan. Why do I make that observation? Because the average age of Japanese farmers is now 68. The size of their land titles is too small for economic production of rice. The title system for purchase and sale of agricultural land in Japan is so tight that it is now simply impossible, or very difficult, to produce agricultural land of a critical mass sufficient to be able to economically produce rice. Also, the younger members of the Japanese community are now mainly in cities and are not following their families into farming. Why is this important? It is because if Japan gets to the stage where they will no longer be self-sufficient in rice production—and they are getting very close to that now—they will look to Australia under the Japan-Australia free trade agreement and the most favoured nation status. They must, inevitably, look to us as being those who can produce and export rice of a price and quality that they want.

The point I want to leave the chamber with is that each of these agreements builds on the other. Each of these agreements is the starting point for an absolutely new wave of economic activity. In the case of the China-Australia Free Trade Agreement, this will be in services, in commodities and in future wealth—in growing the size of the cake. If we are going to see continued economic advancement, continued employment and continued investment into and from this country it is going to be because we continue to understand and remember that we are a trading nation—that we are a nation on a huge landmass blessed with plenty of commodities and blessed with a well-educated population of people but a very small population. We always know that the best way of avoiding soldiers coming over borders is to make sure trade and investment cross those borders.

Senator LUDWIG (Queensland) (12:31): I rise also to speak on the Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 and Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 for the enabling of the China-Australia Free Trade Agreement. The Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 amends the Customs Tariff Act 1995 to provide free and preferential rates of customs duty on most Chinese-originating goods.

The customs tariff bill will be amended by, firstly, giving free rates of customs duty for most goods that are Chinese-originating goods in accordance with the division under the Customs Act; amending schedule 4 the Customs Act to maintain customs duty rates for certain Chinese-originating goods in line with the applicable concessional items, and then phasing the preferential rates of customs duty for certain Chinese-originating goods to be free of customs by the fifth year of phasing. Ultimately, that will mean that, over time, those custom rates will be phased down. It will also insert a new schedule to accommodate the preferential and phasing rates of customs duties and maintain excise equivalent rates of duty on certain alcohol, tobacco and petroleum products. This is done to achieve parity with rates of duty that would be payable if those particular products were manufactured in Australia.

The Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 also amends the Customs Act 1901 to introduce new rules of origin for goods imported from China. In addition, all of this will allow these goods to enter Australia at preferential rates of customs duty. The bill imposes record-keeping obligations on Australian exporters and producers of goods being exported to China under preferential Chinese tariff rates. These record-keeping obligations are designed to allow Australia's customs officials to verify that goods qualify for preferential access to the Chinese market under the China free trade agreement rules of origin. All of these are the mechanics of how we implement a China free trade agreement—important pieces to the machine—but, ultimately, the goal here is to achieve the signing off of the China free trade agreement.

Labor has been a party of trade liberalisation and Asian engagement for decades, and continues to be so. China is already our No. 1 trading partner, accounting for one-third of Australia's merchandise exports. Under ChAFTA, China has made commitments to Australia to remove and reduce tariffs on imports of Australian goods and to improve access for Australian services. It will also mean closer engagement with the People's Republic of China, which presents great opportunities for Australia that will lead to more growth and more jobs for the people of Australia. Increasing exports will drive our economy's growth.

One of the potential benefits of the agreement for Australia is removing Chinese tariffs on 95 per cent of Australian exports, which is particularly important for boosting our farm exports to China and improving access for agricultural products into China. I know many in the agricultural community have been strong supporters of this agreement because of the benefits that it will bring for them to improve and increase the export into China of our wonderful agricultural products. Also, it will mean that they will get better access through lower tariffs over time. Access for our services industries is just as important to the Chinese market.

This agreement has been 10 years in the making and will deliver significant benefits to Australian exporters, Australian consumers and Australian workers. Despite the obvious economic benefits, there have been serious concerns raised by Australia about temporary skills migration through the two mechanisms of the investment facilitation arrangement and movement of natural persons. Both of these mechanisms are argued to erode one of the key safeguards in the 457 visa system, which is labour market testing. In relation to the investment facilitation arrangements, Labor has delivered on safeguarding Australian jobs through labour market testing by introducing a new legal requirement in the Migration Act regulations that require labour market testing for work agreements. This requires the Minister for Immigration and Border Protection, when deciding whether to enter work agreements, to have regard to whether the agreements will support or create jobs for Australian citizens or permanent residents. The minister will also have the power to impose that a minimum number of Australian workers be employed or a maximum on the number of overseas workers that may be employed.

In respect of the movement of natural persons, Labor has delivered on upholding Australian pay and conditions through a better wages system for 457 workers. Labor's amendments will increase the temporary skilled migration income threshold for 457 visa holders from its current level of $53,900 to $57,000. The coalition have abandoned this area. They have failed to index the temporary skilled migration income threshold to wages growth for the past two years. In failing to do this, the coalition have lowered the skills threshold for the 457 program and undermined protections for overseas workers. Under the China-Australia Free Trade Agreement the coalition agreed to remove the mandatory skills assessment for Chinese workers in 10 trade occupations. Labor had fought, and continues to fight, to maintain Australia's skills and safety standards in this area by ensuring foreign workers have the relevant licence under Australian law. Following Labor's amendments, there will be a requirement for 457 visa workers in trade occupations to obtain a licence within 90 days, not work without holding a licence, and notify the Department of Immigration and Border Protection if a licence is refused or revoked.

I participated in the inquiry by the Joint Standing Committee on Treaties which looked into the China-Australia Free Trade Agreement. We heard from many submitters about these particular issues. Many others also provided submissions about the benefits that would accrue to Australia as a consequence of the Australian government signing the free trade agreement. What I said then, which I will reiterate briefly now, in additional comments to the report on the China-Australia Free Trade Agreement, is:

Trade drives growth, creates jobs and improves living standards.

Labor has been the party of trade liberalisation – and Asian engagement – for decades. Closer engagement with the People’s Republic of China is critical for Australia’s future. China is set to become the world’s biggest economy in coming years.

That growth presents great opportunities for Australia.

However, as I said during the inquiry, a number of serious concerns were raised by submitters, some of which have since been addressed by the government, agreeing to Labor's safeguards.

The memorandum of understanding, the MOU, on an investment facilitation agreement—more commonly referred to as an IFA—establishes arrangements between the Department of Immigration and Border Protection and an eligible Chinese project company. A project company is eligible to establish such arrangements either where a single Chinese enterprise owns 50 per cent or more of the project company or, if no single enterprise owns 50 per cent or more of the project company, where a Chinese enterprise holds a substantial interest in the project company. The project company then must be involved in a proposed infrastructure development project with expected capital expenditure of $150 million over the term of the project. That means the infrastructure development project must be within the food and agribusiness; resources and energy; transport; telecommunications; power supply and generation; environment or tourist sectors. It is about building our economy in this critical areas of need.

Evidence to the treaties committee indicated that the low threshold for IFA projects could capture the majority of infrastructure projects in a wide range of industries. One of the submitters, the Electrical Trade Union of Australia, identified large residential and commercial construction ventures, mining operations and tourist development as well as power supply companies as falling within this threshold. They said:

There are a number of Chinese companies considered likely buyers for the privatised New South Wales power transmission and distribution networks. The maintenance and upgrade contracts for these assets, as well as those in the Victorian energy sector that are already owned by Chinese companies, are well in excess of $150 million.

Although the government has compared the IFA arrangements with enterprise migration agreements, the Australian Council of Trade Unions pointed out that the threshold for the EMA is capital expenditure of $2 billion. It just does not hold water to make that comparison.

Additionally, the EMAs apply only to the resources sector and are available to projects with a peak workforce of more than 1,500 workers, while the IFAs themselves have no minimum workforce requirements. Finally, EMAs require labour market analysis to show detailed projected shortages to justify the need for 457 visa workers in semiskilled and skilled occupations. IFAs, on the other hand, have no requirement for labour market testing. This is why, on this side, we did want to examine this with a great more detail than the coalition's cursory look at it.

In addition to the labour market testing regime, the requirements for sponsors to undertake labour market testing—or, in short, LMT, if you forgive the acronyms—before employing temporary foreign workers under 457 visa arrangements ensure that Australian workers are given priority in the labour market. Chapter 10 of ChAFTA, on the movement of natural persons, specifically states that there will be no requirement for LMT or economic needs testing for temporary Chinese skilled workers, including contractual service suppliers and installers and servicers. Neither Australia nor China will impose any limits on the total number of visas granted under these provisions. This does raise concerns that unlimited numbers of Chinese workers could be brought into Australia to fill vacant positions without first checking if qualified local workers are available. These matters were raised during the treaties committee hearings, and I do not think the coalition adequately addressed these issues in the report. That is why I provided additional comments—to bring a little bit more scrutiny to these issues.

Under 457 temporary work visa arrangements, skill level 3, mostly trade-level, occupations have been subject to labour market testing since 2013. Skill levels 1 and 2 occupations have been exempted from labour market testing, except engineering and nursing occupations, by ministerial discretion. The provisions in chapter 10 of ChAFTA appear to remove ministerial discretion, suggesting that even engineering and nursing positions would no longer be subject to labour market testing. In addition to the provisions in chapter 10, the IFA arrangements will extend concessional 457 visas to semiskilled workers. The IFA states that there will be no requirement for LMT for these concessional 457 visas. The IFA is the first step in a three-step process to make these projects operational: the IFA, a project agreement and a labour agreement.

The government maintains that LMT will be applied at the second step in the process, the project agreement stage. The department says that 'labour market analysis would be required' to demonstrate a labour market shortage and labour market analysis is only a projection of possible market conditions at a future date. At stage three of the process, the labour agreement, the department says that 'labour market testing may be required'. But clause 8 of the IFA says that, under the labour agreement, direct employers will have to meet the 'sponsorship obligations associated with the labour agreement, including any requirements for labour market testing'. But we then go a little bit further and look at the footnote, which says that only 'where labour market testing is required' will employers need to demonstrate that there are no suitable Australian workers available. So, ultimately, the process depends on departmental guidelines, not legislation or regulation, and is therefore subject to change. There is no indication that LMT will be mandatory at any stage of the process.

The Migration Council of Australia, who otherwise support ChAFTA, have called for the government to clarify whether or not LMT can occur for an IFA or whether it is precluded by the provisions in chapter 10. The government has argued that the IFA 'does not form part of the formal treaty agreement' and therefore 'is not bound by international treaty law or the commitments made under the ChAFTA'. According to the government, the commitments under ChAFTA will be provided for through the 'standard' subclass 457 visa program while the IFA will be provided under the department agreement program and will be 'facilitated by the subclass 457, but it is not part of the 'standard' subclass 457 visa program'. That demonstrated to me during the treaties committee that the coalition government had taken their eye completely off the ball in this area and had not bothered to ensure that Australian jobs would continue to be protected as they have been. Labor has argued for and delivered a new legal requirement in the Migration Act regulations that requires labour market testing for all work agreements. Labor argued for that because, ultimately, what we want is the best of both worlds—and that is achievable here: a China free trade agreement that provides, economic growth and a potential for increased trade whilst maintaining a skilled workforce in Australia which we do not compromise through a trade agreement.

Witnesses at that treaties committee also voiced concerns over safety standards being compromised by the new arrangement, particularly with regard to the electrical trades area. Nobody wants to compromise safety in these areas. We want to continue to ensure that we have safety standards that are high and continue to remain high. Labor has ensured a new legal requirement for visa conditions and that 457 visa workers in trades occupations obtain licences within 90 days, do not work without holding licences and notify the department of immigration if licences are refused or revoked. All of this is important to ensure that the community and the public have confidence in this free trade agreement.

Senator Whish-Wilson interjecting—

Senator LUDWIG: Of course, the Greens just oppose everything. So I am not surprised. They are also opposing economic growth and opportunity for Australia. I am distracted by their interjections.

Senator Whish-Wilson interjecting—

Senator LUDWIG: Ultimately, I support free trade agreements. I know you are implacably opposed to them.

The ACTING DEPUTY PRESIDENT ( Senator Birmingham ): Address your comments through the chair, Senator Ludwig, and ignore the interjections.

Senator LUDWIG: I am sorry. I had been distracted—and I did say that. You do have to look at the record of the coalition, though. With the unemployment rate increasing under the coalition government, it is important to ensure that trade agreements support rather than replace local employment. This continues to be a fundamental premise of the Labor Party. We support Australian opportunities in Australia, we support skilled Australian workers and we support, and continue to support, programs that allow temporary skilled migration—but it is about filling skilled shortages, where employers cannot find local workers to fill vacancies.

Labor's safeguards are about ensuring that that is the system that we have in place and that the China free trade agreement, when it enters into force at the earliest opportunity, allows Australian exporters to realise the benefits of the agreement while also ensuring local jobs are supported. That is what Labor stands for. In short, Labor will support ChAFTA and Australia's economic engagement with China while making improvements to support local jobs, maintaining workplace skills and safety standards and deterring exploitation of overseas workers.

Senator WILLIAMS (New South Wales) (12:51): I rise to contribute to this debate on the legislation relating to the China-Australia Free Trade Agreement. And I will tell you a little story about when I was a pig farmer. I set up our piggery back in the late eighties. My brother and I did a lot of hard work. We shovelled about 120 tonnes of concrete and gravel into the cement mixer and built the large sheds and set up in the pig industry. We knew when we went into the pig industry that there would be some tough times. Pig prices go up and down, and grain prices certainly fluctuate according to the season. But we never, ever thought we would see a situation in which Australia would be importing pig meat from Canada and Denmark and places like that. The Hawke-Keating Labor government allowed the importation of pig meat, and it had a devastating effect on the pig industry in the Inverell area, where I live. There were five or six large piggeries—and when I say large I mean 100- or 200-sow piggeries. When you run 100 sows you are feeding about 1,000 pigs a day and when you run 200 sows you are feeding about 2,000 pigs a day. When the importing of these pork products from overseas was allowed, I thought, 'This is crazy.' The effect was that it shut down the piggeries.

What I am saying is that we led the world in removing tariffs, barriers, quotas et cetera, and I thought: 'Why are we doing this on our own? The rest of the world is lagging way behind.' Since then we have developed trade with Chile, America and Thailand and now South Korea, Japan and China; we are up to China now. I will say, first of all, that this is not a free trade agreement; this is a fairer trade agreement. To me, a free trade agreement is when the country you are trading with removes all barriers—all tariffs, all quotas, everything. Then you actually have free trade. So, this is what I call a fairer trade agreement that is much fairer than what we had before—the status quo.

This agreement is good for rural Australia. It is good news that Labor has decided to support the free trade deal, or the fairer trade deal, even though the unions are carrying on with their campaign of misinformation. This is probably why the Greens are opposing this. No doubt they will be getting a cheque, come election time, from the CFMEU and the other unions. They are taking the funds off the Labor Party and—

Senator Sterle: Not the TWU, they won't, mate!

Senator WILLIAMS: No, they would not get any off the TWU, Senator Sterle. I will take that interjection.

The ACTING DEPUTY PRESIDENT ( Senator Bernardi ): Ignore the interjections, Senator Williams, and address your comments to the chair.

Senator WILLIAMS: I thought it was a very good interjection, though, but I will disregard it.

The ACTING DEPUTY PRESIDENT: That may be the case, but you should ignore it.

Senator WILLIAMS: No doubt the Greens will be lining up a cheque from CFMEU, saying, 'Give us a cheque; it's campaign time'. Graeme Wood, with his—what was it, $1.58 million, Senator Macdonald, the biggest donation in the history of politics in this country—

Senator Ian Macdonald: Yes, the biggest ever.

Senator WILLIAMS: might have shut the cheque book up. He might have said, 'We've given them enough.' So, they will stick with the unions. I just cannot believe this. Why do the Greens hate farmers? That is the question I ask. What do they have against us exporting more of our products overseas at a better price?

Senator Waters interjecting—

Senator Whish-Wilson interjecting—

Senator WILLIAMS: I know the Greens are very close to PETA, People for the Ethical Treatment of Animals. One day this lady rang up Senator Heffernan. Her name was Claire Fryer. She said we should not run any sheep or any cattle in this country, that they should all just be exterminated. What a crazy situation. These are the friends of the Greens. This is what they do. You would think people like Senator Whish-Wilson would be keen to see exports in the wine industry. He has an interest in the wine industry himself, of course. And that is what this free trade agreement does.

Senator Whish-Wilson: I am happy to sell local.

Senator WILLIAMS: Senator Whish-Wilson is happy to sell local. Well, perhaps he does not realise that we have had a huge oversupply of grapes, for about a decade—a huge oversupply of wine. That is why in some cases you will see wine—the cleanskins—cheaper than bottles of Coca-Cola, or about the same price. So, let's not grow that! That is their attitude: let's shut it down, let's all go and live in caves again, get three sticks of wood to keep ourselves warm and cook our food for the week! So, you keep your carbon emissions down, and don't worry about the rest of the world. We produce about 1.3 per cent of the world's emissions, so we will do what the Greens say and go and live in a cave! That is about the attitude. The farming community is furious with the Greens. But they are looking for the cheque. They have the unions backing them and they are just waiting for the cheque to come to them from the CFMEU with their scare campaign.

The scheduled tariff cuts are based on the calendar year, which means that entry into force this year will deliver an immediate round of tariff cuts, followed by a second round of cuts on 1 January 2016. More than 85 per cent of Australian goods exports will be tariff-free upon the agreement's entry into force, rising to 93 per cent in four years. Some of these goods are currently subject to tariffs of up to 40 per cent. This agreement will eliminate tariffs on many key products, mostly within four to eight years, including beef, sheepmeat, hides and skins, livestock, dairy, wine—Senator Whish-Wilson, wine—seafood, sorghum and barley. Let's talk about the beef industry. Seventy per cent of the beef we produce is exported. As living standards grow in huge-population countries such as China, they can afford to buy good-quality, high-quality beef—and they want to buy it from Australia.

I took Chinese buyers to the Bindaree Beef abattoir only a couple of months ago. They were keen to buy beef here because of our reputation: clean, green, top-quality, safe to eat. That is the reputation we have overseas. It was amazing: Mr John McDonald, the founder of Bindaree Beef, told me some time ago now that in December 2012 Bindaree Beef sent six containers of beef to China and in December 2013 they sent 60 containers of beef to China. That is the growth. That is what is happening. And at last we have decent money at the farm gate for the beef producers, which is good for our rural communities, good for our regional towns, good for our environment. If you want to look after the environment, how can the farmers be green when so many—

Senator Waters interjecting—

Senator WILLIAMS: You ought to listen to this, Senator Waters; you might learn something.

The ACTING DEPUTY PRESIDENT: Address your comments to the chair, Senator Williams.

Senator WILLIAMS: And I will ignore the interjections.

The ACTING DEPUTY PRESIDENT: Yes, please ignore the interjections.

Senator Waters interjecting—

Senator WILLIAMS: It is very hard to ignore them. I will do my best. It is very hard for the farmers to be green when so many are so far in the red. It is as simple as that. Look at a map of Australia: about 60 per cent of this whole island continent is in the hands of farmers and graziers. We expect them to look after the land, to farm the land and care for it—not mine the land, and they were forced to mine the land in a situation where commodity prices have been so low for so long. Now we have an opportunity to raise those prices, to bring money back to the farm gate, to look after the farms better, for young ones to say: 'Hell, life on the land's looking pretty good now. I always had the attitude that I'm not going onto the land. I've seen my father and my mother work pork and beef for decades and go nowhere.' That is probably why the average age of farmers is around 56 or 57 years.

Senator Cameron: They should have joined their union!

Senator WILLIAMS: Now we are getting back to getting decent prices at the farm gate—something Senator Cameron would have no idea about, absolutely no idea. He will just be here like most of them on that side, doing what the unions tell them to do. That is who pays their way. That is where they all come from—the union movement.

Senator Cameron interjecting—

The ACTING DEPUTY PRESIDENT: Order! It has been very quiet.

Senator WILLIAMS: Thank you, Mr Acting Deputy President. That makes it a lot better now. I know Senator Cameron really wants to listen to what I have to say. Let's look at those tariff reductions. Dairy: tariffs of up to 20 per cent eliminated within four to 11 years. Let's look at the dairy industry. We produce around nine billion litres of milk a year. We only consume about 4½ billion litres here in Australia, so half our milk production relies on exports. Here is a huge market. Already now, Norco in northern New South Wales are flying fresh milk into China, retailing for around $8 a litre. They are prepared to pay it because they know it is good—the quality is perfect and it is safe. That is to start with, the dairy industry. The beef industry: tariffs of 12 to 25 per cent eliminated over nine years. This will make us even more competitive. As Senator Heffernan said, perhaps, hopefully, China will float their exchange rate one day and make us even more competitive.

Removing the barriers, and the lower Australian dollar, is good for exporters. Wine tariffs of 14 to 20 per cent will be eliminated over four years, giving us that edge over other countries. I notice that China was not part of the recent agreement on the Trans-Pacific Partnership, so when it comes to exporting we have an edge into China that that those other countries do not have. It gives us a price edge, a quality edge and a marketing edge. That is why the demand is so good and prices are heading in the right direction.

Wool will have a new Australia-only duty-free quota in addition to continued access to China's WTO quota. The wool industry has been terrible since the early 1990s. I know it pretty well and I have not forgotten about it. At last we have seen an indicator of over 1,200 cents. The price is getting up there. The volume of wool has decreased enormously. We used to run 180 million sheep in Australia, in the late 1980s, during the wool boom. We are down to around 70 million now. Of course, a lot of those are meat sheep with poor quality wool—cross-bred sheep, first-cross ewes et cetera. The wool industry is looking much better as a result of this agreement.

ChAFTA will not allow unrestricted access to the Australian labour market by Chinese workers. I want to make that point very clear. It will not allow Australian employment laws or conditions to be undermined, nor will it allow companies to avoid paying Australian wages by using foreign workers. That is very clear. We have seen the wrongdoings in the Four Corners story by my good friend Adele Ferguson about the disgraceful treatment of workers by 7-Eleven. The situation is that those on 457 or 417 visas come here to Australia and, under the visa, the students are not allowed to work more than 20 hours a week. What did 7-Eleven do? They said, 'You will work 40 hours week, we will pay $8 or $10 an hour, and if you dob us in we will dob you in to the immigration department for breaching your visa and you will get kicked out of the country.' What a terrible blackmailing situation that is. I am glad that we are catching up with those who are not treating our workers properly. A fair day's work for a fair day's pay is something that I have always believed in.

As a result of this agreement we will see more demand, especially for our rural products. We will see more jobs in those industries and more processing. The growth in exports will see more money coming back into our regional communities. I have seen too many towns now that have not grown, with too many empty shops in the main street and high unemployment levels. Bringing wealth into rural Australia is a good thing for our nation, and it is an especially good thing for people who live in those regions. That is what this agreement does.

Without speaking for my full 20 minutes, I want to say that I support this agreement. I congratulate Minister Andrew Robb. I think he has done an excellent job in his portfolio with South Korea, Japan, China and now with the 12 countries involved in the TPP, which no doubt has to be finetuned or finalised.

I am simply amazed that the Greens would oppose this agreement, which brings more wealth into our nation, creates more jobs, brings certainty and brings more money back to the farm gate in rural Australia. Yet the Greens oppose it. There are some crazy things going on around here and I think that is one of the craziest. I suppose we will hear why in the near future.

Senator IAN MACDONALD (Queensland) (13:04): I rise to speak on the Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 and the Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015. This is a very serious debate about an act that will implement a scheme that I believe is very important for Australia and is so very good.

In this debate I have been very pleased to listen to the very thoughtful contributions made by Senator Williams, Senator Back, Senator Heffernan and even, might I say, Senator Leyonhjelm. That does not mean that I agree with everything those speakers said, but I very much appreciated their thoughtful contribution to this very serious debate. I do not make much reference to the Labor Party except to say that there is one element of Senator Ludwig's speech that I do agree with. That is when Senator Ludwig said, talking about the Greens political party, 'The Greens political party oppose everything.' I certainly agree with that bit of Senator Ludwig's speech.

This is a very important measure and one which I wholeheartedly support. I must indicate that I originally had some reservations when, unfortunately, sugar could not be included in the China-Australia Free Trade Agreement. Sugar is the industry that thrives in the town where I live and in North Queensland and northern New South Wales generally. When Mr Robb rang to give me that bad news, I indicated to him that if his assurance that it would be included in the TPP was not met I would be voting against the TPP. I intended to support the China agreement because of all the good things that it does for every other part of Australian agriculture and manufacturing although, regrettably, sugar was not included. Sugar has been included in the Trans-Pacific Partnership. Whilst this is not to the extent that I would have liked to have seen, it is certainly a start and it will give the sugar growers in my area, the sugar industry of Queensland and New South Wales, some toehold into the American market, which has, so far, been very strictly controlled against Australian sugar.

I appreciate the support of the Australian Labor Party. You will recall that, when this first came out, at the behest of the unions the Labor Party were totally opposed to the China free trade agreement in spite of the fact that all the Labor state premiers, former premier and former union leaders said to the Australian Labor Party: 'Look guys, this is good for Australia. Get on board.' But in those early days the Labor Party here was more influenced by the union movement and so they came out in full-scale opposition to it. They have now realised the error of their ways. They have taken notice of some Labor luminaries and have understood just how good this is for Australian jobs, Australian workers, Australian businesses and Australian farmers.

I very much appreciate the Labor Party's about-face. Sometimes I am critical about about-faces but in this case I am not. They have been able to support the agreement with, I concede, some concessions made by the government—as I understand them they are concessions of words only and not much more. The amendment regarding 457 visas simply prescribes the existing requirement under the policy that employers seeking to sponsor skilled workers will have to demonstrate that they have made recent and genuine efforts to recruit local Australian workers. That has always been the case. What the Labor Party insisted upon is that it be codified. If that was the price of getting their support, it was a cheap price. Certainly, it is just stating the process that had always happened. It is important to note that labour market testing is already a mandatory requirement under current government policy, and that is detailed in the existing DIBP guidelines.

The government also agreed to make some minor amendments to guidelines for companies seeking a work agreement. To ensure observance of the guidelines they are going to be referenced in a new guideline. Those things already happen, but the Labor Party wanted them in writing. So they are there. Again, that is a small price to pay to get the agreement passed. The Department of Immigration and Border Protection will include in its annual report details about the number of work agreements signed, including the number of 457 visa holders engaged under the agreements, together with the occupations and industries which are engaged. In talking about 457 visas, it is important to understand that they were at their momentous peak at the time of the Labor government. In the six years of Labor government, there were more 457 visas holders working in Australia than there have been since the Abbott and Turnbull governments have been in power. Of course, we all remember that even the then Prime Minister's chief of staff was brought in on a 457 visa because apparently there was no-one good enough in Australia to run the Prime Minister's office. With the way that office was run, one would wonder whether the 457 visa holder who took on that job actually earned his money.

Senator Cameron: Even I agree with you!

Senator IAN MACDONALD: As we all know from history, that office was dysfunctional. The unions keep running this campaign against Labor—and I hear Senator Cameron. The Labor Party represents the unions, but who do the unions represent? I used to say that they represented only 17 per cent of the Australian workforce, which means 83 per cent do not support the unions and do not join a union. But I am now wrong. Those figures are outdated. The Bureau of Statistics has issued new figures. Actually, the figure is now 15 per cent. Unions in Australia, across the board, only represent 15 per cent of all workers. That means 85 per cent of workers choose not to join a union—and you can understand why when you see the latest revelations coming out of the royal commission about the corruption, dishonesty and theft that occurs in the union movement. The case of the National Union of Workers in New South Wales, which is very closely aligned to the New South Wales Labor Party, is just the latest in a series of disclosures that have shown how corrupt many of these unions are. One can only wonder why there are still 15 per cent of workers joining unions.

And in the private sector—that is, the non-government sector—that figure has fallen from 12 per cent to 11 per cent. So now only 11 per cent of workers in the private sector—which is, of course, the biggest employer group in Australia—choose to join a union. That means 89 per cent of all workers in Australia choose not to join a union, and yet the union controls the Labor Party and the Labor Party is an alternative government. So those figures need to be taken into account when you understand that the Labor Party were originally told by the unions to oppose this agreement despite Labor luminaries urging the Labor Party to support it. I am delighted—and credit where credit is due—that the Labor Party has woken up to itself and agreed to the China free trade agreement with a number of very minor regulatory arrangements which only codify the practices already involved.

I also want to laud the Minister for Trade and Investment, Andrew Robb. The work he has done with not just with the China free trade agreement but also the Japan free trade agreement, the Korea free trade agreement and the Trans-Pacific Partnership is miraculous and it is already legend.

I have just flown back from Darwin overnight where, unfortunately, I was able to attend only the first day of the Northern Australia Investment Forum because I could not get leave from this place. Having gone all day in Darwin yesterday, Sunday, the forum is also being held today and tomorrow. Coincidentally, it is being hosted by Andrew Robb and the newly appointed minister for northern Australia, the Hon. Josh Frydenberg, with the attendance of several other senior coalition ministers and state ministers. In my estimate, there were over 350 people at the forum; 250 of whom were foreign investors—people with money from overseas wanting to look at investments in northern Australia. The number of people there and the names of some of the people there—due to their commercial standing, particularly throughout South-East Asia—were something magnificent to behold. It was a wonderful start to the forum yesterday. There were a lot of positive words said. Today and tomorrow, the investment forum will continue its good work. This can only be good for Australia. It is related to investment in northern Australia, but investment in northern Australia means good things for the rest of Australia as well. It will help increase investment, increase business and increase jobs. That means a better living standard for us all.

I want to pay tribute, as well, to Mr Adam Giles, Chief Minister of the Northern Territory government. He is a very involved participant in the Northern Australia Investment Forum in Darwin. In fact, his government is hosting the facilities there. The attendees had a wonderful welcome to Darwin last night. They had some wonderful Northern Territory seafood, beef and other produce. This welcome demonstrated to the large number of potential investors there just what can be done in the Northern Territory. Mr Adam Giles is, as I say, a wonderful and exciting Chief Minister of that territory. I foresee that, under his leadership, the Territory will continue to go from strength to strength. Naturally enough, my interest in the China free trade agreement relates to northern Australia. It is where I come from. Senator Williams, Senator Heffernan and perhaps Senator Reynolds as well are the only three senators in this chamber who actually live in a small country town. In the case of Senator Williams and Senator Heffernan, they are actually farmers. They know firsthand the benefits that can flow from this.

I want to, just briefly, mention some of the benefits to northern Australia, particularly for my own state of Queensland and the Northern Territory. Tariffs on beef into China, currently between 12 and 25 per cent, will be completely eliminated within nine years. I am the patron senator for the electorate of Kennedy—and I must say, with some modesty, I do most of the work in that electorate because the current member is completely inept when it comes to assisting his constituents. Perhaps Ms Price, the member for Durack, will argue with me, but I would suggest that the electorate of Kennedy is probably the biggest beef electorate in Australia. Perhaps Durack might give us a run for our money, but I will go with Kennedy. What does the current local member do about the China free trade agreement? He says it is the worst thing that has happened to democracy in 300 years. Yet the tariffs on beef into China come off. You would think that would be a very, very strange comment from the guy who, supposedly, represents what I claim to be the biggest beef cattle electorate in Australia.

Also in Queensland, horticulture tariffs of 30 per cent will be eliminated progressively over the period. The tariffs of 14 per cent on rawhide and skin will be eliminated over two to seven years. I want to refer to the coal industry—and the Greens will be, I am sure, supportive of this! The three per cent tariff on coking coal into China will be eliminated when this agreement comes into force. The six per cent tariff on non-coking coal will be eliminated within two years. What a wonderful thing that will be for the coal industry up where I come from in the Bowen Basin—an area suffering huge unemployment at the present time because of the activities of the previous government in relation to coal and the unmitigated campaign against coal by the Greens political party and their fellow travellers. This free trade agreement will make it easier to take coal into China. Contrary to the claims of the Greens political party, China continues to use coal. The claims by the Greens that the Chinese coal use has fallen dramatically are, according to recent reports, dramatically overstated. So that is good news again for northern Australia.

Tariffs for liquefied propane and butane, currently at five per cent, and for refined petroleum, crude petroleum and LNG, all between five and nine per cent, will be eliminated when this agreement comes into force. Tariffs of one to two per cent on refined copper and alloys—very important in places like Mount Isa and Townsville—will be eliminated. The eight per cent tariff on alumina will be eliminated on entering into force. What a wonderful thing that will be for Weipa and all of the workers at Weipa. For those in the Gladstone area, represented by my friend Ken O'Dowd, the elimination of tariffs into China for alumina and aluminium sheets and plates will be a huge boost for jobs.

The Northern Territory—again, a very big beef producer—will do very well out of the reduction in beef tariffs. Mangoes currently attract a 15 per cent tariff into China. That tariff for mangoes grown, again, in the electorate of Kennedy, on the Atherton Tableland, and in the Northern Territory, will be completely eliminated within four years. What wonderful news that is for the mango growers in the electorate of Kennedy and the electorate of Lingiari. As I mentioned, tariffs on hides will go, and I have mentioned alumina. Precious stones currently have tariffs of three to eight per cent. Diamonds and opals are important up in the Kimberleys. Those tariffs will also be eliminated, over four years.

Time does not permit me to go further into the benefits for Northern Australia, but the couple of issues I have raised indicate just how very important this free trade agreement is to Northern Australia. It is important that it be passed now, so that we get the advantage of a reduction at the end of this year and another reduction at the beginning of next year. It is a wonderful agreement for Australia—I give all credit to Mr Andrew Robb—and perhaps I am a bit parochial, but it is an even greater benefit to Northern Australia. I am delighted that this bill will be passed, with support of the Labor Party, this week, at a time when we are involved in the attraction of investment from South-East Asia and, indeed, from across the world into Northern Australia at the Northern Australia Investment Forum, which is currently occurring. It is a wonderful time for Northern Australia. I am so excited about the agreement. I am delighted to support it and do everything I can to make sure that it is brought into play as soon as possible. (Time expired)

Senator McKENZIE (Victoria) (13:24): I too rise to put on record my views, my support and my praise for the Minister for Trade and Investment, Andrew Robb, for delivering, in race week, the trifecta of free trade agreements into the Senate. I thank the Labor Party for getting behind regional jobs right across regional Australia by agreeing to support the Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 and the associated bill through the Senate. Currently, China is our biggest market. It has a population of 1.4 billion, which is soon to be a lot greater with the recent lifting of the one-child policy. It has an increasing middle class and economic growth of seven per cent. This, indeed, is a market of untold opportunity. I am so excited that our nation, as a key exporter of quality agricultural products, quality financial services and exceptional educational services, will now be able to access that market in similar ways, and expanded ways, to our cousins from New Zealand. China is the largest importer of agricultural food and fish in the world, at $119 billion in 2014, so there is an incredible opportunity for our agricultural producers. Ratifying the agreement now is so important. It is so important that this bill goes through the Senate.

When the United Dairyfarmers of Victoria spoke in the wake of the CFMEU's Aussie jobs scare campaign that has been running over the last couple of months around the Chinese free trade agreement, the UDV were very concerned that any delay in this agreement would cost Aussie jobs. It would cost the industry, they estimated, $300 million just in 2016. That is a lot of employees, a lot of growth potential and a lot of potential flow-on benefits outside of that. I touched briefly on the CFMEU's absolutely shameful campaign around Aussie jobs which completely muddied the water on this issue. This free trade agreement, like the ones that have gone before it, would deliver jobs en masse right throughout our economy, but what is important to note is that it is regional Australia where those jobs would most keenly be felt. The CFMEU—aside from their forestry division; I will give them credit—could not give a rat's about jobs in regional Australia, and that is why they chose to go hard, in a very xenophobic way, against the Chinese free trade agreement. So I thank the Labor Party for embracing the jobs potential that this agreement brings to our economy and to our future. It sets regional Australia up for the future.

Peter Tuohey, the fabulous President of the Victorian Farmers Federation, extolled the benefits of the Chinese free trade agreement to the great ag state of Victoria. I have to disagree with Senator Macdonald about where the prime benefits of this agreement flow because they flow to the dairy industry, and the great state of dairying of this country is Victoria. The greatest export off the Melbourne ports every single day is Murray-Goulburn produce heading out to those markets across the world. Estimates are that the first year of this agreement will see over 700 jobs being created in the Victorian dairy industry. That is incredibly exciting. During the campaign by the dairy industry to get the China free trade agreement through, a fabulous north-eastern dairy farmer, Dianne Bowles, was very up-front about what this agreement would mean to her and to her family's business, which milks over 200 cows in north-east Victoria, and to potential business security. Farmers have to battle floods, they have to battle droughts and they sometimes have to battle uncertain commodity markets, but having this sort of market opportunity available, particularly to dairy and horticulture, gives them the security and stability that they really need at the moment.

Currently, Victoria exports more than $4.15 billion worth of goods to China, and that includes almost $3 billion worth of agriculture—very exciting.

I touched on dairy. This is what it actually means for dairy: that tariffs of up 20 per cent will be eliminated progressively on milk powders, ice cream, liquid milk, cream, cheese, butter et cetera. The value of the Australian product in that market cannot be overstated. The fact that it is produced within Australia, with our supply chain quality assurance, means that Chinese consumers can go to the shelf and buy their infant formula and their dairy product—indeed, they can buy their horticultural product—and be assured that these products are safe to consume and safe to feed their families. Middle-class parents—especially mothers—in China are absolutely enamoured, if you will, with Australian product, and we are looking forward to putting more and more of it on the supermarket shelves in Beijing, Guangzhou, Chengdu—you name it, we'll be there.

As to benefits to Victoria, there are benefits for horticulture, obviously. Eighty per cent of the national pear crop is grown in the Goulburn Valley; we do some decent apples and we are very good at wine grapes. All of those industries stand to benefit as a result of this agreement.

I will be brief because I know we have other things to do today. I am very, very proud of our government. I am extremely proud of our trade minister for delivering an agreement that the EU would love to have and that the US would love to have. We have been able to deliver it, not only for our agricultural industries but obviously for our educational and financial service providers as well. But agriculture is the big winner out of this agreement, and that means regional jobs in communities right around regional Australia. We are very excited, and we look forward to delivering on its potential.

Senator SINODINOS (New South Wales—Cabinet Secretary) (13:31): I rise to speak on the Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015. The bill contains amendments to the Customs Tariff Act 1995 that will implement Australia's tariff commitments in the agreement. These amendments are complementary to those contained in the Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015.

I want to begin by thanking all those who have contributed to this debate. The China-Australia Free Trade Agreement is a historic agreement for our country, and I am pleased that so many senators have acknowledged the significant opportunities it provides in many different sectors across our economy. Negotiations on the China-Australia Free Trade Agreement began in 2005 and were concluded in November 2014 during President Xi Jinping's visit to Australia. When President Xi addressed this parliament during that visit, he noted that it is estimated that in the next five years China will import more than US$10 trillion worth of goods, its outbound investment will exceed US$500 billion and Chinese tourists will make over 500 million overseas visits—an extraordinary picture of China's economic transformation, the greatest poverty-reduction initiative in world history. It also reflects the changing nature of the Australia-China business relationship. New export opportunities in the future will be found across the premium food sector, value-added manufacturing, financial services, health and aged care services, tourism and many other sectors where Australia is well placed to meet China's growing demand.

This agreement positions Australia to take advantage of these emerging opportunities now and into the future. It is a comprehensive agreement between two highly complementary economies. It has been pleasing to hear the many supportive comments from business and industry bodies regarding the FTA. For example, Brendan Pearson, Chief Executive of the Minerals Council of Australia, has called the China deal 'a watershed moment in our economic history'. Together with the trade agreements with Japan and Korea, ChAFTA will anchor the Australian economy in East Asia for many decades to come and will provide increased opportunity and prosperity for future generations of Australians. Brent Finlay, President of the National Farmers' Federation, sums up the potential opportunities on the horizon for Australia's regional and rural communities, noting that ChAFTA is a game changer for Australian agriculture. In its submission to the Joint Standing Committee on Treaties, the National Farmers' Federation said that ChAFTA would provide millions of dollars in export value to Australian farmers, including those in the red meat, grains, dairy, pork and horticultural sectors: 'The agreement recognises agriculture as one of our nation's export strengths and will open opportunities for the sector in China.'

It is clear this agreement will provide substantial benefits for our agricultural and resources exports. ChAFTA provides Australia with a competitive advantage over our major competitors, including the US, Canada and the European Union. It also levels the playing field for Australia, putting us on the same or an improved footing compared with New Zealand, Chile and South-East Asian nations that currently have free trade agreements in place with China.

The commitments in ChAFTA will allow Australian exporters to benefit from the growing demand in China for quality beef products, dairy products, wine, seafood, horticulture, processed food and other agricultural products. For our resources and energy sectors, ChAFTA eliminates all tariffs of up to eight per cent within four years, including for coal, worth around $8.3 billion within two years. ChAFTA provides greater certainty for our exporters by locking in current zero tariffs on major resource and energy products such as iron ore, gold, crude petroleum oils and liquefied natural gas. Under ChAFTA, China will eliminate tariffs on 99.9 per cent of our resources, energy and manufacturing exports to China.

ChAFTA will also deliver significant benefits for Australia's service industries. China is already our largest service export market, worth $8.2 billion in 2014, and, under this agreement, we have the potential to grow our services trade with China, creating new jobs and prosperity for Australia. China has offered Australia its best ever services commitments in a free trade agreement beyond greater China. Importantly, this includes new or significantly improved market access for Australian banks, insurers, securities and futures companies, law firms, professional services suppliers and education service exporters, as well as health, aged-care, construction, manufacturing and telecommunications service businesses. The agreement also includes a most-favoured-nation clause, under which Australia's competitive position in key service sectors vis-a-vis our competitors will be protected in the future. That is very important.

This agreement improves opportunities for investors in both countries. Chinese investment in Australia has been growing strongly in recent years, up from $2 billion 10 years ago to around $65 billion as at the end of 2014. ChAFTA will promote further growth of Chinese investment into Australia—in particular, by liberalising the Foreign Investment Review Board screening threshold for private Chinese investors in non-sensitive sectors from $252 million to $1,094 million. This agreement is bearing fruit already. In the past year we have seen increased interest from Chinese businesses and investors looking for partnerships and opportunities in this country. Australian businesses, too, are looking to seize the opportunities on offer.

The customs legislation we are debating today is the only legislative change that parliament needs to approve for CHAFTA to enter into force. The Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 contains amendments to the Customs Act. These will implement our obligations under chapter 3 on rules of origin, as set out in the China-Australia Free Trade Agreement. These rules are essential for the purposes of determining whether goods imported from China are eligible for preferential rates of customs duty under the free trade agreement.

The bill also contains amendments to include relevant obligations on Australian exporters and producers who wish to access preferential treatment under the agreement when exporting to China. Certain powers are also conferred on authorised officers to examine records and ask questions of exporters or producers of goods exported to China, in order to verify the origin of such goods.

The Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 contains amendments to the Customs Tariff Act 1995 that will implement Australia's tariff commitments as set out in the China-Australia Free Trade Agreement. The amendments in these two bills are complementary.

Associated customs regulations for foreign acquisitions and takeovers regulations and life insurance regulations will also require amendment before we bring CHAFTA into force. A ministerial determination under the Migration Act is also required. Implementing this agreement will not require widespread changes to Australia's current policy settings. It is crucial that we pass these bills, without delay, so that this agreement can enter into force as soon as possible. Many business leaders have urged early entry into force to allow the benefits to start to flow.

The government is pleased and welcomes the support that has been secured from the opposition to ensure the passage through parliament of this important implementing legislation. Through this agreement, Australia's decades long tradition of bipartisan support for freer trade is set to continue. Our discussion with Labor were both constructive and were held in good faith. I would like to acknowledge the shadow minister for trade and investment, Senator Wong, for the sterling work she has done on behalf of the opposition. The amendments to the migration regulations that we have greed with the opposition will be made shortly. To be clear, the government is committed to maintaining the definition of 'projects' contained in the guidelines of project agreements issued by the Department of Immigration and Border Protection. A project is:

… a collaborative enterprise that is carefully planned to construct infrastructure within a defined geographic area.

These changes and amendments reflect existing government policy settings.

The government is pleased to have drafted amendments that provided further clarity and comfort in regard to key issues raised by the opposition. Crucially, the provisions that we have agree with Labor will not in any way change or contravene the binding commitments we have made to China through our concluded FTA negotiations. Nor will they in any way discriminate against our largest trading partner.

I would also like to acknowledge the work of the Joint Standing Committee on Treaties and the Senate Foreign Affairs, Defence and Trade Committee in conducting their respective inquiries into CHAFTA. I would like to particularly acknowledge Senator Back's leadership in the Foreign Affairs, Defence and Trade Legislation Committee's inquiry into these bills. I also thank Senator Gallacher for chairing the FADT References Committee's inquiry into CHAFTA. I thank them for tabling the committee reports last Friday, ahead of the deadline originally set by the Senate. These inquiries, together with the JSCOT inquiry, allowed many organisations, companies and individuals in the community to have their say on this important treaty. The government welcomes the majority recommendations from each committee as binding treaty action to be taken to implement the China-Australia Free Trade Agreement. The committees made a number of other recommendations regarding the implementation of CHAFTA, after entry into force, which the government will consider closely in due course.

The China agreement rounds out the third in the trifecta of trade agreements the government has concluded with our three largest export markets. Already Australian businesses are seeing the benefits of our agreements with Korea and Japan. Together, these agreements have the potential to transform our economy. The Trans-Pacific Partnership, including 12 countries covering 40 per cent of global GDP promises to further enhance the competitiveness of our country and our economy and to deliver new markets and generate new jobs. I have pleasure in supporting these bills before the Senate.

Senator WHISH-WILSON (Tasmania) (13:42): by leave—I move the following amendment to my second reading amendment to the Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015, listed on sheet 7784:

(1) Add the word 'to' between the words 'relating' and 'Minimum Standard Treatment' in the first line of the amendment;

(2) change the word 'resource' to 'recourse' in paragraph (c) of the amendment.

The DEPUTY PRESIDENT: The question is that the amendment to the Senator Whish-Wilson's amendment on sheet 7784 be agreed to.

Question agreed to.

The DEPUTY PRESIDENT: The question now is that Senator Whish-Wilson's amendment on sheet 7784, as amended, be agreed to.

Question agreed to.

The DEPUTY PRESIDENT: The question is that the bills now be read a second time.

Senator WHISH-WILSON (Tasmania) (13:53): We are just waiting for a grey to be distributed on the amendments. I will start by talking to them. We heard in the second reading debate today much about Labor and the government coming together to do a deal for workers—Chinese workers and, of course, Australian workers—around IFAs, investment facilitation agreements. I would like to acknowledge that Labor did get some outcomes with respect to IFAs. We have not seen an IFA in a trade deal before. It was a very worrying issue for a number of workers in Australia that IFAs could potentially be a new avenue for deregulation of the labour market. However, there are still a number of loopholes in the ChAFTA that we can correct through legislation here today. The Greens plan to move some amendments that will ensure that labour market testing applies at least to all occupations that are currently covered by other labour market testing in other agreements. To step through it, we will be taking the amendments together.

The CHAIRMAN: Senator Whish-Wilson. Maybe I could advise you. You indicated you were waiting on the running sheet. There will not be a running sheet because there is only one set of amendments and they are all yours. We will just deal with yours as you see fit.

Senator WHISH-WILSON: Thank you, Chairman. With respect to the Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill, I move:

(1) Title, page 1 (line 1), after “ Customs Act 1901 ”, insert “, the Migration Act 1958 and the Migration Regulations 1994 ”.

[labour market testing; licensing requirements]

(2) Clause 1, page 1 (line 5), after “ Customs ”, insert “ and Migration ”.

[labour market testing]

(3) Clause 3, page 3 (line 2), before “Legislation”, insert “(1)”.

[licensing requirements]

(4) Clause 3, page 3 (after line 5), at the end of the clause, add:

(2) The amendment of any regulation under subsection (1) does not prevent the regulation, as so amended, from being amended or repealed by the Governor-General.

[licensing requirements]

(5) Schedule 1, page 17 (after line 17), after Part 2, insert:

Part 2A—Labour market testing

Migration Act 1958

2A After section 38B

Insert:

38C Temporary Work (Short Stay Activity) visas

(1) This section applies in relation to an applicant for a visa referred to in the regulations as a Subclass 400 (Temporary Work (Short Stay Activity)) visa if:

(a) the applicant is applying for the visa on the basis that he or she will be engaged to undertake work that is highly specialised; and

(b) the applicant will be engaged to undertake work as an installer or servicer of equipment or machinery that was supplied on the condition that it be installed or serviced by persons engaged by the person for whom the applicant is undertaking the work; and

(c) it would not be inconsistent with any international trade obligation of Australia determined under subsection 140GBA(2) to require the person for whom the applicant will undertake the work to perform testing of the Australian labour market, and give evidence and information to the Minister, in relation to the work as set out in paragraph (2)(a).

(2) It is a criterion for the visa that:

(a) the person proposing to engage the applicant to perform the work has:

(i) performed testing of the Australian labour market, in accordance with the regulations, to demonstrate whether a suitably qualified and experienced Australian citizen or Australian permanent resident is readily available to undertake the work; and

(ii) given the Minister the evidence in relation to that labour market testing, and the information about redundancies or retrenchments in a business or associated entity of the person, that is prescribed by the regulations, and

(b) having regard to that evidence, and information (if any), the Minister is satisfied that:

(i) a suitably qualified and experienced Australian citizen or Australian permanent resident is not readily available to undertake the work; and

(ii) a suitably qualified and experienced eligible temporary visa holder is not readily available to undertake the work.

(3) The Minister may, by legislative instrument, exempt applicants in a specified class from the operation of subsection (2) in relation to specified work if:

(a) the Minister is satisfied that:

(i) an event has occurred in Australia, whether naturally or otherwise, that has such a significant impact on individuals that a government response is required; and

(ii) the exemption is necessary or desirable in order to assist disaster relief or recovery; or

(b) the Minister is satisfied that:

(i) either or both a qualification prescribed by the regulations, or experience of a kind and for a period prescribed by the regulations, is required to undertake the specified work; and

(ii) the work is of a kind prescribed by the regulations.

(4) The Minister must ensure that, as soon as reasonably practicable after the commencement of this subsection, and at all later times, there are in force regulations for the purposes of subparagraphs (2)(a)(i) and (ii).

(5) Words and expressions used in this section have the same meanings as in section 140GBA.

2B Paragraph 140GBA(1)(a)

Repeal the paragraph, substitute:

(a) the approved sponsor is:

(i) a standard business sponsor (within the meaning of the regulations); or

(ii) in a class of sponsors prescribed by the regulations; or

(iii) a person (other than a Minister) who is a party to a work agreement that is entered into on or after the commencement of this subparagraph; and

[labour market testing]

(6) Schedule 1, page 17 (after line 17), after proposed item 2B, insert:

Migration Regulations 1994

2C After paragraph 457 .223(2)(d) of Schedule 2

Insert:

(da) if the applicant would be required to hold a licence, registration or membership that is mandatory to perform the occupation in Australia—either:

(i) the applicant holds that licence, registration or membership, and has given the Minister a copy of the licence, registration or membership; or

(ii) the applicant demonstrates that he or she can meet the requirements to obtain that licence, registration or membership; and

2D After paragraph 457 .223(4)(e) of Schedule 2

Insert:

(eaa) if the applicant would be required to hold a licence, registration or membership that is mandatory to perform the occupation in Australia—either:

(i) the applicant holds that licence, registration or membership, and has given the Minister a copy of the licence, registration or membership; or

(ii) the applicant demonstrates that he or she can meet the requirements to obtain that licence, registration or membership; and

2E Paragraph 8107(3)(c) of Schedule 8

Repeal the paragraph, substitute:

(c) if the holder is required to hold a licence, registration or membership that is mandatory to perform the occupation nominated in relation to the holder, in the location where the holder’s position is situated—the holder:

(i) must not perform the occupation until the holder holds the licence, registration or membership; and

(ii) must hold the licence, registration or membership within 60 days after the holder’s arrival in Australia; and

(iii) before the holder performs the occupation—must give the Department documentation of the licence, registration or membership, including any conditions or requirements to which the licence, registration or membership is subject; and

(iv) must comply with each condition or requirement to which the licence, registration or membership is subject; and

(v) must not engage in work that is inconsistent with the licence, registration or membership, including any conditions or requirements to which the licence, registration or membership is subject; and

(vi) must notify the Department, in writing, as soon as practicable of any changes to the licence, registration or membership, including any conditions or requirements to which the licence, registration or membership is subject.

I will give a bit of background. Chapter 10 of the agreement sets out specific categories of employment for which neither party shall require labour market testing for workers entering under a temporary 457 visa. That is in article 10.4 of ChAFTA. These specified categories include various classes of professional employees, which is consistent with previous trade agreements.

However, chapter 10-A also includes an exception for the requirement of labour market testing for contractual service providers for a period of up to four years. A contractual service provider is someone who has the necessary qualifications, skills and work experience accepted as meeting Australian standards. That is in Annex 10-A, 9 and 11. The agreement includes 'installers and servicers of China for a period of up to three months'. Annex 10-A, 12 to 13, says:

An installer or servicer must abide by Australian workplace standards and conditions ...

The feedback that the Greens have received from a number of stakeholders in the union movement—for example, the Electrical Trade Union, the ACTU and the CFMEU—is that the agreement that Labor had with the government did not safeguard labour market testing for contractual service providers or installers and servicers. Presumably—and I have no doubt Labor will want to talk to this—this is because they believed it would null the agreement or perhaps compel it to be re-negotiated. Instead, the ALP proposed temporary skilled migration income thresholds and other measures, which we have seen the detail on.

The Greens' amendments relate to recommendations in a report, which I think a number of us have read, by Dr Joanna Howe from Adelaide University. That report is entitled The impact of the China-Australia Free Trade Agreement on Australian job opportunities, wages and conditions. She makes two key recommendations. Her report recommends:

... the Government clearly establish in its enabling legislation that labour market testing will apply to all Chinese workers coming into Australia as contractual service suppliers or as installers and servicers via Annex 10-A in the China-Australia Free Trade Agreement.

Recommendation 2 says:

This report recommends that the requirement of labour market testing in free trade agreements be consistent with the 457 visa program. This requirement of labour market testing for certain categories of temporary migrant workers should be enshrined in the Migration Act 1958 ...

We have received some advice that this is entirely possible for us to do today. Article 10.4.3 says:

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 ...

(b)   require labour market testing, economic needs testing or other procedures ...

Annex 10-A says:

Australia requires a natural person of China seeking temporary entry to its territory under the provisions of Chapter 10 ... And this Annex to obtain appropriate immigration formalities prior to entry. Grant of temporary entry in accordance with this Annex is contingent on meeting eligibility requirements contained within Australia’s migration law and regulations, as applicable at the time of an application for grant of temporary entry. Eligibility requirements for grant of temporary entry in accordance with paragraphs 5 through 11 of this Annex include, but are not limited to, employer nomination and occupation requirements.

There are a number of amendments—six in total—but essentially they are broken down into two key areas. Amendments (1) to (5) essentially deal with labour market testing and basically put in place requirements for labour market testing for installers, servicers and contractual service providers. This sets out that labour market testing must be required for subclass 400 visa holders, which includes installers and servicers. The second section would require labour market testing to be applied to contractual service providers entering under subclass 457 visa holders. The 457 visas require a standard business sponsor, which is why the amendment addresses this issue in context.

Amendment (6), on licensing requirements, creates a dual responsibility on both the visa holder and the sponsoring employer to provide evidence of obtaining a licence within 60 days. Essentially, this puts a reverse onus of proof on those licensing requirements. Progress reported.

Senator RICE (Victoria) (15:46): I, and also on behalf of Senator Lines and Senator Madigan, move:

That the following matter be referred to the Education and Employment References Committee for inquiry and report by the third sitting day in February 2016:

The feasibility of, and options for, creating a national long service standard, and the portability of long service and other entitlements, with particular reference to:

(a) the number of Australians in insecure work;

(b) the extent and nature of labour market mobility;

(c) the objectives of portable long service leave schemes, and the key components that might apply;

(d) which sectors, industries or occupations may, or may not, benefit from such schemes;

(e) the operation of a portable long service scheme, including:

(i) how and by whom such schemes might be run,

(ii) how such schemes could be organised, be it occupational, industrial or other,

(iii) the appropriate role for the Commonwealth Government in facilitating portable long service leave schemes,

(iv) the impact of varying state and territory long service leave arrangements on a potential national long service scheme administered by the Commonwealth, and

(v) the capacity to operate such schemes within or across jurisdictions, including recognition of service; and

(f) any other related matters.

Question agreed to.

Senator RUSTON (South Australia—Assistant Minister for Agriculture and Water Resources) (17:13): I move:

That these bills may proceed without formalities, may be taken together and be now read a first time.

Question agreed to.

Bills read a first time.

Senator RUSTON (South Australia—Assistant Minister for Agriculture and Water Resources) (17:14): I move:

   That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

EDUCATION SERVICES FOR OVERSEAS STUDENTS AMENDMENT (STREAMLINING REGULATION) BILL 2015

Today I introduce the Education Services for Overseas Students Amendment (Streamlining Regulation) Bill 2015.

This Bill will streamline and focus the Education Services for Overseas Students Act (ESOS Act) which is the legislative framework assuring student protection for the international education sector. Through this Bill duplicative regulations will be removed while retaining the high level of quality assurance in Australia's international education sector. The Coalition Government is committed to ensuring Australia builds on its success as a world leader in international education.

International education is our largest non-resource export – and it continues to grow. The Australian Bureau of Statistics recently released preliminary figures showing our international education exports reached a record $18.1 billion in 2014-15. This 14.2 per cent increase on the 2013-14 financial year shows the Government's policies are succeeding in driving further success in this major industry and are generating new jobs for Australians.

International education is not just an export industry. Through our high-quality education institutions across all sectors – schools, higher education, vocational education and training (VET) and English language teaching – Australia engages with the world, particularly our nearest neighbours. International education opens doors for Australia. By building education networks we help sustain Australia's place in global relations as well as create trade and investment opportunities.

As one of the most sought-after study destinations in the world, Australia has a major role to play in global education services. We are now a key centre for learning, research and innovation.

The Bill I am bringing forward today reflects the Government's collaboration with the international education sector to reform the ESOS Act. In the development of this Bill the Government consulted extensively. Comments were sought on a discussion paper which was released in October 2014, and an exposure draft of this current Bill was made public and feedback was invited. Stakeholders who provided comment included international education institutions, students, peak education industry bodies, the national quality assurance agencies and the states and territories. They have told us they strongly support the ESOS framework, but it needs to better adapt to the contemporary international education landscape. This Bill addresses the key areas of improvement sought by our stakeholders. It also clearly demonstrates our commitment to quality and to the protection of international students.

The principle that underlies these reforms is that the quality of our education system does not depend on the amount of regulation we put in place, but on the effectiveness and appropriateness of that regulation. These important changes to the legislative framework for international educationwill retain the high level of quality assurance for international education while reducing complexity and supporting the growth and competitiveness of the industry.

In working collaboratively with international education stakeholders we will achieve a better system of quality and oversight in international education – and significant deregulatory savings for education institutions of an estimated $75.9 million a year.

I turn now to some of the specific measures in the Bill that will make a significant difference to the operation of our quality frameworks for international education.

Regulation should be necessary and effective

The Tuition Protection Scheme (TPS) is the world's most comprehensive scheme designed to protect international students. During the Government's consultations on reforming the ESOS framework, stakeholders recognised the importance of that protection to international students, and the way in which the TPS enhances Australia's reputation. While the TPS is a critical element of our world-class student protections, part of its administration imposes a significant regulatory burden on education institutions. This Bill adjusts some TPS requirements to better target risk and cut some of the unnecessary red tape that was introduced with the TPS in 2012 amendments to the ESOS Act.

Currently the ESOS Act prevents any education institution from receiving—or any student from paying—more than 50 per cent of a student's tuition fees before the course starts, except if a course is less than 24 weeks. This is an inadvertent restriction on student choice, and it will be amended so a student can choose to pay more where they wish to do so. This will benefit students who are on scholarships, or who are in a position to pay up front if they choose to.

An additional TPS related requirement is that some education institutions must keep the tuition fees paid before a course commences in a 'designated account'. This only applies to private institutions. This is a costly imposition and an unfair burden on one group in our international education sector. It limits their competitiveness and their ability to invest in innovation to improve their operations and the quality of the student learning experience. Today we propose to change that so that all education institutions operate on a more level playing field.

Some reporting requirements relating to international students have been identified as being unnecessarily burdensome, such as the requirement for institutions to report a default by an international student in an unreasonably short timeframe. Stakeholders told the Government that requirements like these were disproportionate to risk and did not allow enough time for students and institutions to try to resolve issues and confirm that a default has indeed taken place.

These reporting requirements are duplicated in other provisions of the ESOS Act relating to changes to information about students, creating an unnecessary compliance burden for institutions that has not provided any additional protection for students or necessary information for Government agencies.

The Bill focuses the reporting requirements on changes to a student's course or movements and ensures the timeframe for reporting these changes is much more appropriate. To ensure the safety and wellbeing of students under the age of 18, the Bill will maintain the shorter reporting requirements for such students where they fail to begin a course or their study is terminated.

These changes will not water down the TPS's role or its ability to operate effectively or to manage risk. They simply reduce the areas of overlap and overreach that were created in the establishment of the TPS in 2012. The Government has listened to the views of the international education sector in making these changes and we are confident they strike the right balance.

Measures to streamline the education quality architecture

Currently the Tertiary Education Quality and Standards Agency (TEQSA) and the Australian Skills Quality Authority (ASQA) are the administrators of the ESOS framework for the international higher education and the international vocational education and training sectors – respectively– through a delegation arrangement with the Secretary of the Department of Education and Training, or in some cases the Minister. The Department of Education and Training is the administrator of the ESOS framework for schools. The changes in the Bill have the effect of formalising the current arrangements, i.e. that ASQA, TEQSA and the Department of Education and Training are the agencies responsible for administering the ESOS framework, or the 'ESOS agencies', for the respective areas of the international education sector.

This will streamline and simplify regulatory arrangements by providing TEQSA and ASQA with direct responsibility for many of the activities previously delegated to them.

The ESOS agencies will have direct and clearer responsibilities under the Act. The Bill ensures the states and territories retain their important role of assessing and recommending schools for registration by the Commonwealth under the ESOS Act.

The Bill enables the Minister to direct an ESOS agency in the performance of its functions under the ESOS Act, equivalent to the Minister's power in domestic education under the Tertiary Education Quality and Standards Agency Act (TEQSA Act) and the National Vocational Education and Training Regulator Act (NVETR Act).

The Bill also reduces duplication that exists under the current arrangements. Different registration periods in the ESOS Act, the TEQSA Act and the NVETR Act create duplication in processes and unnecessary administration for many education institutions.

The amendments to the ESOS Act will allow for the registration of a provider for a maximum of seven years, with no minimum period of registration. The amendments also provide that an ESOS agency may extend a provider's period of registration for the purposes of aligning it with domestic registration timeframes.

An additional amendment will reduce the regulatory burden caused by having different registration processes at varying times by allowing an ESOS agency to use information supplied to it by an education institution to support their applications for registration under both domestic student and international student frameworks. Again this will have no impact on quality assurance, but will reduce the unnecessary regulatory burden on international education institutions.

To give further flexibility to education institutions, the Bill allows institutions to seek an internal review of decisions made by ESOS agencies where institutions do not agree with a decision on registration or re-registration. Previously, education institutions had to take their case to the Administrative Appeals Tribunal for a decision. Adding this additional avenue of review for institutions and the ESOS agency to resolve these issues will save significant time and money for all parties.

In 2013 the Review of Higher Education Regulation by Professor Kwong Lee Dow and Professor Valerie Braithwaite highlighted the need to reduce duplication across the ESOS Act, the TEQSA Act and the NVETR Act. The review found the differences between these legislative frameworks was a significant regulatory burden for education institutions. Today this Government addresses some of those key differences by aligning these Acts.

Appropriate and effective provisions to maintain quality and compliance

Some of the amendments introduced in the Bill will create more streamlined processes of quality assurance and oversight between the ESOS Act, the TEQSA Act and the NVETR Act. Agencies will have more flexibility and discretion in coordinating their responsibilities for international education under the ESOS Act with their responsibilities for education delivery to domestic students under domestic frameworks.

During the Government's stakeholder consultations on the Bill we identified that the arrangements need to be more flexible where TEQSA or ASQA take action against an education institution under domestic frameworks. Where the institution's registration under domestic frameworks ceases, or where it ceases to be accredited to deliver a particular course to domestic students, the ESOS agency will now be able also to cancel, suspend or otherwise impose a condition on that institution's registration under the ESOS Act without going through another review process. This ability to more easily align regulatory decisions in respect of an education institution under both the ESOS and domestic frameworks will improve efficiency for ESOS agencies and also provide greater transparency and equity for institutions subject to those actions.

In response to feedback from stakeholders during the Government's consultation on the exposure draft of the Bill, the Bill clearly specifies the circumstances in which an education institution is able to continue to teach—or 'teach out'—existing students once that institution's registration expires. While a provider is able to 'teach out', the Bill also makes it clear that an institution cannot recruit or enrol new students in a course after their registration expires.

These are important measures that will help to maintain Australia's reputation for quality in international education.

By way of further improvement, the Director of the TPS will be able to directly issue production notices requesting information from education institutions on their activities, and to make a recommendation directly to an ESOS agency about appropriate enforcement action against an institution.

Conclusion

The measures to streamline regulation in this Bill will help to drive the continued growth of international education. We need a strong, clear and flexible ESOS framework that works effectively and consistently with domestic quality assurance frameworks.

This Bill shows that we can cut red tape without compromising our commitment to quality or the reputation of Australia as a world-class destination for international students.

The international education community have told us very clearly that they want these reforms. They have worked with us proactively in developing these changes to the ESOS Act. We will continue to work with them on improving the ESOS framework, cutting unnecessary red tape and enhancing the quality of Australia's international education services.

EDUCATION SERVICES FOR OVERSEAS STUDENTS (REGISTRATION CHARGES) AMENDMENT (STREAMLINING REGULATION) BILL 2015

Today I introduce the Education Services for Overseas Students (Registration Charges) Amendment (Streamlining Regulation) Bill2015. This Bill is required to give effect to the Education Services for Overseas Students Amendment (Streamlining Regulation) Bill 2015 (Streamlining Regulation Bill)which I introduced earlier today.

The amendments I introduced in the Streamlining Regulation Bill remove the minimum registration period for education institutions which provide education to international students. To facilitate this change this Charges Bill makes minor consequential changes to the Education Services for Overseas Students (Registration Charges) Act 1997. The amendments in this Bill also clarify that the existing Entry to Market Charges are paid by an education institution only once for each actual year of registration.

Ordered that further consideration of the second reading of these bills be adjourned to 30 November 2015, in accordance with standing order 115(3).

Senator RUSTON (South Australia—Assistant Minister for Agriculture and Water Resources) (17:14): I move:

That this bill may proceed without formalities and be now read a first time.

Question agreed to.

Bill read a first time.

Senator RUSTON (South Australia—Assistant Minister for Agriculture and Water Resources) (17:15): I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

This bill will introduce the Government's NoJab,NoPay announcement from the 2015 Budget – an important initiative aimed at boosting childhood immunisation rates.

From 1 January 2016, the bill will ensure children fully meet immunisation requirements before their families can access the Child Care Benefit, Child Care Rebate or the Family Tax Benefit Part A supplement.

Immunisation requirements will also be extended to include children of all ages. At present, a child's vaccination status is only checked at ages one, two and five for the Family Tax Benefit Part A supplement, and up to age seven for the child care payments.

Crucially, the Government is ending the conscientious objection exemption to children's vaccinations for access to these family assistance payments.

Parents who vaccinate their children should have confidence that they can take their children to child care in particular, without the fear that their children will be at risk of contracting a serious or potentially life-threatening illness because of the conscientious objections of others.

Exceptions to the policy will apply only for valid medical reasons, such as when a general practitioner has certified that vaccinating the child would be medically contraindicated, or that vaccination is unnecessary because the child has natural immunity from having contracted the disease in question.

Families with children participating in an approved vaccine study will be taken to meet the immunisation requirements for the duration of the study – and similar rules will apply where a vaccine is temporarily unavailable.

The requirements will also be met if a recognised immunisation provider certifies that the child has an equivalent level of immunisation through an overseas vaccination programme.

Lastly, the Secretary will be able to determine that a child meets the immunisation requirements after considering any decision-making principles set out in a legislative instrument made by the Minister.

The choice made by some families not to vaccinate their children is not supported by public policy or medical research, nor should such action be supported by taxpayers in the form of family payments.

Australia now has childhood vaccination rates over 90 per cent, from one to five years of age.

Under the present arrangements, the vast majority of families receiving family payments – around 97 per cent – already meet the current immunisation requirement at the relevant age points.

However, more needs to be done to ensure we protect our children and our community from preventable diseases.

The new policy will tighten up the rules and reinforce the importance of vaccination in protecting public health, especially for children.

Ordered that further consideration of the second reading of this bill be adjourned to 11 November 2015, in accordance with standing order 115(3).

Senator RUSTON (South Australia—Assistant Minister for Agriculture and Water Resources) (17:15): I move:

That this bill may proceed without formalities and be now read a first time.

Question agreed to.

Bill read a first time.

Senator RUSTON (South Australia—Assistant Minister for Agriculture and Water Resources) (17:16): I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

This Bill amends the Superannuation Industry (Supervision) Act 1993 to introduce a higher standard of governance for superannuation funds, in line with domestic and international best practice.

The changes fulfil the Government's election commitment to align governance in superannuation more closely with the corporate governance principles applicable to ASX listed companies.

Independent board members bring different skills and expertise and they hold other directors accountable for their conduct, particularly in relation to conflicts of interest.

In this regard, superannuation is lagging behind other corporate sectors, including listed companies, banks, and life and general insurers, who all, at a minimum, either have or are recommended to have a majority of independent directors with an independent chair.

Existing superannuation fund board composition requirements are outdated and no longer reflect the size of the industry. This is an industry which currently has over $2 trillion in assets, a figure that represents more than 120 per cent of Australia's GDP. Based on current projections, Australia's superannuation industry is expected to grow to $9 trillion by 20401.

The changes in this Bill will therefore require superannuation funds to have at least one‑third independent directors, with an independent chair, and they will apply equally to all Australian Prudential Regulation Authority (APRA) regulated superannuation funds, including corporate, industry, public sector, and retail funds. There will be a three year transition period for established fund trustees to assist them to transition in an orderly manner to the new requirements.

The Bill will modernise board requirements to help ensure that directors with the best experience and expertise are represented on superannuation trustee boards; enhancing decision making and producing better outcomes for fund members.

Our key objective is to have the best people governing the retirement savings of Australians, and I'm confident these reforms will do just that.

Superannuation is now the second largest asset held by Australians after the family home.

The significance of superannuation for Australian households will only increase over time. Currently employers are required to make minimum payments to complying superannuation funds at the rate of 9.5 per cent of salary and wages to build employees' retirement savings. This contribution rate is scheduled to rise to 12 per cent by 1 July 2025.

Employees cannot generally access their superannuation until they retire and they rely on others to manage their superannuation until that time.

The Government wants to make sure that superannuation is managed with the highest possible standards of governance, in a way that is in superannuation members' best interests. This, fundamentally, is what this Bill seeks to bring about.

Having independent directors on boards is consistent with international best practice on corporate governance. For example in Canada, it is recommended that the board of directors of every corporation should be constituted with a majority of individuals who qualify as unrelated directors. In the United Kingdom, the Corporate Governance Code recommends that at least half the board should comprise non-executive directors determined by the board to be independent.

APRA regulates the superannuation industry and part of APRA's mandate is to mitigate systemic risk to the financial sector. APRA considers that one way of mitigating risk is by requiring the boards of banking and insurance entities to have a majority of independent directors. APRA recognises that where funds are being managed by agents of depositors or policyholders, independence helps ensure that decisions are made in the best interests of the depositors or policyholders.

In APRA's words, "APRA's experience, over many years and across all industries, suggests that having at least some independent directors on boards best supports sound governance outcomes… In APRA's view, the diversity of views and experience that independent directors bring supports more robust decision making by boards."2

The issue of governance of superannuation has been considered by both the previous government's Cooper review into the superannuation system in 2010 and the Financial System Inquiry (FSI) in 2014.

Both these independent reviews included widespread consultation, with views provided by industry associations, community groups, and other stakeholders, including superannuation funds, both industry and retail.

Both of these independent reviews recommended that the superannuation law be changed so that independent directors be included on the board of superannuation funds' trustees. In fact, the Cooper Review received in excess of 450 submissions over 12 months and the Murray Review received over 6000 submissions over

12 months.

In the previous government's Cooper review, the panel noted that members' interests would be best served where members are represented by people independent from management and other interests and who can provide an outside perspective.

The Cooper review recommended that at least one-third of directors on superannuation fund boards should be independent.

In the FSI, the panel noted that including independent directors was international best practice, improves decision making and helps hold non-independent directors to account for their conduct.

The FSI review went on to recommend that superannuation funds should have a majority of independent directors in order for them to be an effective influence on board decisions.

The Government carefully considered this FSI recommendation, but believes that proceeding with one-third independent directors, including an independent chair, strikes an appropriate balance while still substantially strengthening governance arrangements.

The Government is also mindful of the scale of change that would be required if a majority was mandated.

Consistent with the ASX Corporate Governance Principles, trustees without a majority of independent directors will still be required to publicly report on an 'if not, why not' basis in their annual report whether they have a majority of independent directors commencing 1 July 2019.

This will mean that funds will need to provide greater transparency about their choices concerning the composition of their boards. This requirement will be implemented through changes to the reporting requirements in the Corporations Regulations 2001.

In concluding that superannuation fund boards should have independent directors, the FSI noted the governance framework for Australian superannuation funds has shortcomings that are inconsistent with good governance principles and, in the Inquiry's view, need to be addressed.

The Government agrees — and is now proceeding to modernise board requirements through the inclusion of a greater number of independent board members.

Superannuation is complex and funds are becoming larger and increasingly sophisticated – both in relation to their internal operations and investments. It is therefore incongruous for superannuation to operate under inferior governance arrangements to those of other APRA regulated entities.

To address these shortcomings, this Bill contains a number of amendments to the Superannuation Industry (Supervision) Act 1993 (SIS Act).

This Bill will amend the SIS Act by repealing the existing Part 9 and substituting a new Part 9.

The Bill will require registrable superannuation entity corporate licensees to have at least one‑third independent directors, with an independent chair.

One of the features in the existing Part 9 of the Superannuation Industry (Supervision) Act 1993 is that it requires equal representation on trustee boards in employer‑sponsored funds, which are generally, but not exclusively, industry funds and corporate funds.

The Cooper review examined in detail the equal representation model and found that although it was an important part of the governance structure 20 years ago, 'changes in the industry over time and certain implementation practices mean that equal representation no longer seems to achieve its original stated objective'.3

The Cooper Review recommended (Recommendation 2.4) was that the SIS Act should be amended so that it is no longer mandatory for trustee boards to maintain equal representation in selecting its trustee‐directors.

The Cooper Review also noted that "The equal representation model appears to impose rigidity into fund governance practices and reduce accountability, without contributing materially to the representation objective on which it was predicated."

The changes this Bill makes are consistent with the Cooper Review recommendations and observations.

Importantly, this legislation does not restrict the composition of the remaining

two-thirds of board members. Apart from having one-third independent trustees mandated, it will be the responsibility of the board to decide how the remaining two‑thirds of directors are comprised.

The Government considers it is appropriate to leave it to boards to structure themselves in the manner they believe will serve their members' best interests.

Boards will be able to choose to have the remaining two-thirds of their directors split between member and employer representatives if they consider it appropriate. The Government is in no way preventing trustees from enshrining equal representation in their constitutions.

The Bill includes a new definition of 'independent' that will ensure a director of a superannuation fund board is able to exercise independent judgement.

The definition excludes individuals who have a substantial holding in the licensee or related entity. The definition also excludes individuals who have, or have had, within the last three years, a material business relationship with the licensee, including through their employer. It also excludes a person who is a director or executive officer of an employer sponsor, employer organisation or a group representing the interests of members that has the right to nominate or appoint directors.

The amendments will also contain a mechanism for APRA to make determinations about whether a person is able to exercise independent judgment in performing the role of director. This mechanism is necessary to ensure that there is certainty where an individual might have an unusual relationship with the licensee such that it is unclear whether the individual is 'independent' under the proposed

principles-based statutory test.

Where a person does not meet the definition of independent but the trustee considers that the person has the ability to act independently, a trustee may apply to APRA for a determination that the person is independent.

Recognising that a number of existing funds will need to reconstitute their boards as a result of these reforms, the Bill proposes a three-year transition period, applying from the date of Royal Assent to the legislation. Where an APRA compliant transition plan is in place, the current equal representation rules and the new independent requirements will not apply during that period.

The provisions within the Bill will also override both the governing rules and the constitution of a corporate trustee.

The Bill will also amend the Governance of Australian Government Superannuation Schemes Act 2011. Schedule 2 to the Bill will restructure the trustee board for the Australian government's main civilian and military superannuation schemes, the Commonwealth Superannuation Corporation (CSC Board), to comply with the new governance requirements.

As mentioned earlier, this Bill demonstrates the Government is delivering on its election commitment to align superannuation governance with ASX listed company corporate governance principles and elevates superannuation to a comparable standard that other APRA regulated entities are required to meet. The Bill mandates the need for independent directors, to ensure improved member outcomes for all superannuation fund members.

These reforms have been subject to extensive consultation over a number of years. The Cooper Review released its first issues paper, on governance, in August 2009, over six years ago.

In November 2013, the Government released its discussion paper 'Better regulation and governance, enhanced transparency and improved competition in superannuation'. It sought feedback on how best to ensure an appropriate provision for independent directors on superannuation trustee boards.

The issues were again considered by the FSI in 2014. This year, before seeking to introduce legislation into the Parliament, the Government has conducted two rounds of consultation on exposure draft legislation.

I thank the many people who have been involved in the various and exhaustive consultation processes on the reforms.

I also acknowledge the many funds from the various sectors of the diverse superannuation industry that have already moved to have more independent directors on their boards.

Full details about the amendments are contained in the explanatory memorandum and further details will also be included in APRA's Prudential Standards on governance and transition.

1 Source: 2015 Intergenerational Report Australia in 2055, p66, noting that Treasury estimated this during the Financial System Inquiry (refer to Interim Report p2-84).

2 Helen Rowell, Speech, 'The super system what is on APRA's watch-list?' AFR Banking & Wealth Summit, 29 April 2015

3 Cooper, Super System Review Final Report Part Two, page 53.

Debate adjourned.

Senator RUSTON (South Australia—Assistant Minister for Agriculture and Water Resources) (17:17): I move:

That this bill may proceed without formalities and be now read a first time.

Question agreed to.

Bill read a first time.

Senator RUSTON (South Australia—Assistant Minister for Agriculture and Water Resources) (17:17): I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

Mr President, this bill implements the Government's 2015 Budget commitment to combat multinational tax avoidance.

This delivers on our promise to ensure Australia is at the forefront of the international fight against tax evasion.

We already have some of the strongest taxation integrity rules in the world, and we are determined to make these rules stronger still.

We know that some multinationals continue to try to avoid paying tax on Australian profits. This includes the use of egregious, complex and blatantly artificial schemes like the double Irish Dutch sandwich.

This undermines the public's faith in the tax system and leaves families and small businesses to unfairly carry the tax burden.

This Government is absolutely committed to strengthening the system.

As G20 President in 2014, Australia led the global response to multinational tax avoidance. Under Australia's leadership, the first of the OECD/G20's base erosion and profit‑shifting recommendations were delivered last year.

We are continuing to work with the OECD and G20 to promote greater integrity in the international tax system and ensure entities pay tax where they have earned their profits. The OECD will report to G20 Finance Ministers in October 2015 on the outcomes and final recommendations of its action plan on base erosion and profit shifting.

Mr Speaker, Australia has been working hard at all levels to encourage our international partners to implement the OECD's recommendations. At the most recent G20 Finance Ministers meeting in Turkey, I emphasised Australia's commitment to the OECD action plan and to tackling multinational tax avoidance.

I also met with a number of my counterparts one-on-one to discuss this critically important issue and to tell them about what Australia is doing to advance the OECD/G20 agenda. I have had similar conversations with my English counterpart about what we can do with the United Kingdom to stop multinationals diverting profits.

While our international efforts are important, it is critical that we take appropriate action now to better protect Australia's tax base, economy and jobs.

Last year we took action to tighten Australia's thin capitalisation rules to limit the scope for multinationals to claim excessive debt deductions.

In the 2015 Budget, the Government announced a package of measures that will level the playing field for local businesses and ensure that competitors pay their fair share of tax.

This bill implements a new Multinational Anti-Avoidance Law, stronger penalties for large companies that engage in tax avoidance and profit shifting, and Country-by-Country reporting to give tax authorities greater visibility of multinationals' tax structures.

These three measures will apply to over 1,000 large multinationals with annual global revenue of $1 billion or more. These companies represent the highest risk to Australia's tax base. The measures are consistent with the Government's commitment to deregulation and small business.

Multinational Anti-Avoidance Law

Schedule 2 to this bill implements a new Multinational Anti‑Avoidance Law from 1 January 2016 to stop multinationals artificially avoiding a taxable presence in Australia.

This delivers on our 2015 Budget commitment to target major entities with significant Australian activities who avoid booking profits in Australia.

The ATO estimates that around 30 large multinationals are engaging in commercial activities in Australia but use contrived structures to book billions of dollars of revenue overseas and avoid Australian tax.

The new Multinational Anti-Avoidance Law will allow the Commissioner of Taxation to force them to pay tax in Australia on profits from economic activities undertaken here.

This further strengthens the draft legislation that was announced in the 2015 budget.

We have strengthened the law by removing the condition for multinationals to operate in a 'no or low' tax jurisdiction.

All significant global entities with revenues over $1 billion who book their revenue offshore will need to consider these rules and may need to review their structures. With over 1,000 multinational entities operating in Australia with revenues greater than $1 billion, this means these rules will have far reaching effect and ensure multinationals do not inappropriately slip through Australia's tax net.

This simplifies the law and makes it easier for the ATO to apply, removing the need to prove an additional requirement.

As a result if a multinational structures with a 'principal purpose' of avoiding tax the ATO will have the tools to catch them and ensure they pay their fair share.

By removing the 'no or low' tax condition and relying solely on a 'principal purpose' test we are sending a clear message that if you deliberately and artificially avoid paying Australian tax this is not acceptable.

Removing the 'no or low' tax condition will also provide additional certainty and minimise disputes around whether a company operates in a 'no or low' tax jurisdiction where it is clearly structured for a purpose of avoiding tax.

This rule will complement our existing anti-avoidance rules for multinationals by clarifying that the specific arrangements used by multinationals selling into Australia are considered to be tax avoidance.

This new measure will make it easier for the ATO to establish a case by:

catching arrangements that are designed to obtain both Australian and foreign tax benefits; and

lowering the purpose test from 'sole or dominant purpose' to 'one of the principal purposes'.

This new measure will force entities to book their revenue in Australia where they have significant sales activity here.

Where a tax avoidance scheme is identified, the Commissioner of Taxation will be able to apply the tax rules as if the multinational had booked the profit from Australian sales here in Australia.

The company will have to pay the tax they owe on these profits (plus interest), and double the existing maximum penalties for tax avoidance and profit shifting schemes.

This new measure will protect Australia's tax base by acting as a deterrent to companies from engaging in complex schemes.

Companies that pay their fair share will no longer be at a competitive disadvantage.

And this new measure is already starting to have an impact on the tax planning of multinationals.

The ATO has already been contacted to discuss how companies might restructure their activities to book their revenue in Australia and pay their fair share of tax.

Companies who think they might be affected by the new law are encouraged to contact the ATO as soon as possible.

Consistent with their voluntary disclosure policy, the ATO takes a favourable look at penalties for those companies undergoing a restructure to improve their tax compliance and cooperation.

Australia is leading the world in taking action to target these arrangements and this measure is consistent with the work being progressed by the OECD and the measures implemented by the United Kingdom in April.

Penalties

Schedule 3 to this bill doubles the penalties for large companies that enter into tax avoidance or profit shifting schemes.

The maximum penalty applicable will be 120 per cent of the amount of tax avoided under the scheme.

Stronger penalties will help deter taxpayers from taking aggressive tax positions and will apply from 1 July 2015.

Deterrence is recognised as a key element of the fight against tax avoidance behaviour.

Larger multinationals have access to greater resources for tax minimisation, greater opportunities to avoid tax through offshore activities and larger potential tax savings if they are successful in avoiding tax. Stronger penalties are required to help deter these major taxpayers from taking aggressive tax positions.

Country-by-Country

Schedule 4 to this bill implements Country-by-Country reporting from 1 January 2016. This is one of the key recommendations of the G20/OECD BEPS Action Plan and Australia will be one of the first countries to implement it.

Whilst Australia is leading the way, we expect the Country-by-Country measures to be implemented broadly by other jurisdictions.

Country-by-Country reporting will require large multinationals to report to the ATO their income and tax paid in every country in which they operate.

This will be exchanged between tax authorities to assist in the assessment of transfer pricing risk and targeting of audit enquiries.

This will allow the ATO to lift the veil on large multinationals and for the first time get an understanding of aggressive taxpayer behaviour beyond our shores that may be shifting profits that should have been booked in Australia.

These new transparency arrangements are a significant step in improving transparency for tax administrations.

For entities doing the right thing there is nothing to be worried about.

But for those large foreign multinationals shifting profit to avoid tax we are sending a clear message you are no longer able to hide.

Consistent with the OECD's guidance this Schedule will also require two more reports to help manage transfer pricing risk.

Firstly, companies will be required to lodge a master file, which will require detailed information on the multinational's organisational structure and financial activities. This will provide context to revenue authorities for the multinational's transfer pricing practices.

Secondly, companies will be required to lodge a local file, which will focus on specific information on transactions between the reporting entity and related entities in other countries. This will include the entity's detailed analysis of the transfer pricing determinations that they have made.

This Schedule provides flexibility for the Commissioner to determine the localised form of this reporting and the scope for exemptions to ensure that the measure does not impose unnecessary compliance costs on taxpayers involved in low risk transactions.

The ATO is consulting on how these reports will interact with the current reporting requirements and will issue draft guidance before the end of 2015.

Further Government Action

This Government is proud to have made significant progress on strengthening the integrity of our tax system.

We are closing the tax loophole so that GST is charged on digital products and services imported by consumers. This levels the playing field for domestic suppliers.

We will be introducing legislation later in the Spring Sittings to give effect to this measure following approval from the State and Territory governments.

Further, the government has asked the Board of Tax to commence consultation on the implementation of the OECD's anti‑hybrid rules.

This will tackle the use of different tax rules in different countries by multinationals to claim a tax deduction in one country but not pay tax in the other.

Also, the ATO has already commenced exchanging information with other tax administrations on preferential tax regimes.

This will help the ATO identify secret tax deals provided to multinationals by other countries that may contribute to tax avoidance in Australia.

On treaty abuse, the government is acting now to incorporate the OECD's recommendations into Australia's treaty practice, so that multinationals do not exploit treaties to avoid tax.

The 2015 Budget also announced that Australia will sign a multilateral international agreement to enable Common Reporting Standard information to be exchanged between tax administrations. This agreement was signed in June 2015.

The Common Reporting Standard will combat tax evasion by exposing taxpayers with hidden offshore investments.

The Government has committed to implementing the Common Reporting Standard from 2017 and signing the Multilateral Competent Authority Agreement is a further step towards implementation.

The Government has asked the Board of Taxation to work with businesses to develop a voluntary code for greater disclosure by companies of their tax information. I expect that the Board of Taxation will look at ways to provide more information to help inform the public about companies' tax information.

Together the Government and the Commissioner of Taxation are focussed on combating multinational tax avoidance and we are providing the ATO with unprecedented resources to allow the ATO to undertake more extensive enquiries and audits of multinational companies.

This additional funding is delivering results and through this programme the ATO has already raised over $400 million in additional tax, and is estimated to raise $1.1 billion in total.

Opposition position

The Government is taking a strong and balanced approach to dealing with multinational tax avoidance.

In contrast, the Opposition has proposed a number of harmful measures which they claim will deal with multinational tax avoidance – principally, limiting interest deductions through the use of a worldwide gearing test only.

Unlike the Government's actions, these proposed changes to the thin-capitalisation rules would deter investment and cost jobs.

This would adversely impact the legitimate activities of many Australian headquartered multinational companies and could actually drive them to locate offshore.

The Opposition's policies on multinational tax avoidance do not even go to the heart of the issue. Their policy, which primarily targets debt deductions, ignores the fact that the Government has already taken action to significantly tighten Australia's defences in this area.

As such, the Opposition's policy does not focus on areas where there is the greatest potential to address profit shifting by multinational companies.

As a result, Labor's policies will be both ineffective in targeting the real problem and damaging to Australia's economy.

The Government's measures are well-considered and balanced and will effectively strengthen our taxation system to ensure it is fair and sustainable.

But the fight against tax avoidance by multinationals does not end here.

We are continuing to work with the G20 and OECD to implement the two-year Base Erosion and Profit‑Shifting Action Plan to ensure companies pay tax in the jurisdictions where they earn their profit.

The OECD will report to G20 Finance Ministers in October 2015 on the outcomes and final recommendations of this Action Plan.

We will continue to take the lead in the OECD and G20 and the final recommendations will provide a strong platform for further action to strengthening the integrity of our tax system and to ensure it is fair and sustainable.

Full details of the measures are contained in the explanatory memorandum.

Debate adjourned.