Australia: Amendments agreed to ensure passage of the China-Australia Free Trade Agreement (ChAFTA)

After months of intense wrangling over the labour market implications of the China-Australia Free Trade Agreement (ChAFTA), the Turnbull Government and the Labor Opposition have reached a deal which will ensure passage of the legislation¹ implementing this vital free trade deal.

Labor's concerns about ChAFTA, reflecting those of the trade union movement, centred on threats allegedly posed to Australian jobs through easier use of 457 visas as a result of the removal of labour market testing; and the proposed arrangements for Investment Facilitation Agreements (IFAs).

In a previous In Brief, we explained that most if not all of these concerns were unfounded, by analysing the proposed arrangements in the ChAFTA treaty and supporting documents in comparison with the current 457 visa scheme for temporary skilled workers and other recent free trade agreements Australia has entered into.²

However, to ensure that ChAFTA's progress through Parliament is not impeded, the Government has agreed to a number of amendments to address some of Labor's concerns. These changes will take the form of amendments to the Migration Regulations 1994 (Cth).

LABOUR MARKET TESTING UNDER WORK AGREEMENTS AND IFAS

The Government has agreed to clarify that labour market testing – ensuring that genuine efforts have been made to recruit Australian workers before seeking to sponsor skilled workers on 457 visas – will apply to all work agreements linked to ChAFTA.³ This includes IFAs, a proposed form of agreement for major infrastructure development projects in Australia with at least 50% Chinese investment and a minimum $150 million capital expenditure.

457 visa conditions for overseas tradespersons or specialised occupations will include a requirement to obtain any licence, registration or membership required under Australian law for the relevant trade or occupation. For example, Chinese skilled workers including nurses, engineers, plumbers, welders and carpenters will be required to meet applicable federal, state or territory licensing requirements within 90 days or their 457 visa will be revoked.⁴

The Government will also require the Department of Immigration and Border Protection to provide annual reporting of the number and occupations/industries of 457 visas under ChAFTA work agreements.

TEMPORARY SKILLED MIGRATION INCOME THRESHOLD (TSMIT)

The TSMIT sets an income threshold below which employees may not be engaged on 457 visas, currently $53,900 per annum. This threshold used to be subject to annual indexation.

While Labor sought to increase the threshold to $57,000 pending the resumption of annual indexation, the Government has agreed only to a review of the current threshold; whether it should be indexed; and if so, an appropriate methodology for doing so.

LOOKING AHEAD

Interestingly, Labor is now under pressure from the union movement over the deal it has reached with the Government, which unions argue does not provide sufficient safeguards of Australian workers' interests.

However the compromise has been welcomed by the Business Council of Australia, Australian Industry Group and other employer groups. It will see ChAFTA implemented before the 31 December 2015 deadline – importantly, without the need to seek any amendments of the treaty itself, which would potentially have jeopardised this important free trade agreement with Australia's major trading partner.

Footnotes

¹ Customs Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015 and Customs Tariff Amendment (China-Australia Free Trade Agreement Implementation) Bill 2015.

² See: How does the the China-Australia Free Trade Agreement really impact Australia's labour market?

³ Work agreements are negotiated by employers with the Minister for Immigration to enable the engagement of workers under 457 visas.

⁴Phillip Coorey, "ChAFTA: China free trade deal to pass after Labor deal", Australian Financial Review, 21 October 2015.

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