The Coalition and Labor have reached a deal to pass legislation for the China-Australia free trade agreement (Chafta), ending an intense political dispute in Canberra and clearing the way for tariff cuts before the end of the year.
The breakthrough follows the government’s offer to amend migration regulations to ensure employers have made genuine efforts to recruit Australian workers before seeking them from overseas under a work agreement.
The prime minister, Malcolm Turnbull, hailed the bipartisan deal, saying it showed the parliament could work together and marked a “great day for Australians”. The Labor leader, Bill Shorten, said the opposition had achieved “some legally enforceable grunt behind protecting Australian jobs”.
The main political parties argued the move to toughen migration regulations did not jeopardise the previously signed agreement with China, and did not discriminate against Australia’s biggest trading partner because they had broader effect.
The trade minister, Andrew Robb, said he had “stayed in touch with the Chinese” about the proposed measures and “found that they were satisfied” there was no breach of the Chafta commitments.
The proposed regulations will affect the type of work agreements that are struck as part of the proposed arrangements in Chafta for development projects worth at least $150m. The government has always argued it would impose the “labour market testing” as a matter of policy but the Labor party demanded a stronger guarantee that this measure could not be weakened.
Robb committed to amend regulations under the Migration Act to ensure that “the proposed party to the work agreement ... must have demonstrated that they have made recent and genuine efforts to recruit Australian workers in the occupation and location covered by the work agreement”.
While this falls short of enshrining the requirement in the Migration Act itself, such regulations could be struck out by parliament, providing the Senate with the ability to step in if a minister changed the measures in future.
In a letter to the shadow trade minister, Penny Wong, Robb also committed to amend project agreement and labour agreement guidelines to add extra criteria for the immigration minister to consider in approving such agreements.
“These criteria include: analysis of labour market need; training plans; overseas worker support plans; and additional conditions that may be imposed by the minister,” Robb said.
The minister has also pledged to amend regulations for the 457 visa program so that the minister must ensure the terms and conditions of employment “will be no less favourable than the terms and conditions” that would be provided to an Australian performing equivalent work at the same location. This could include looking at the terms and conditions set out in an enterprise agreement.
He has promised to consider increasing the base rate of pay for 457 visa holders and indexing it, as part of a review to begin before the end of the year. The review will consult business bodies and unions.
Robb has also pledged to toughen visa conditions to address concerns about the easing of mandatory skills assessments for licensed tradespeople such as carpenters and electricians.
Regulations will require a person to obtain the relevant licence within 90 days after arriving in Australia and must notify the department of immigration if it is refused, revoked or cancelled.
Robb and Wong reached a handshake agreement on Tuesday evening, before the plan went to the Labor caucus meeting on Wednesday morning.Announcing the breakthrough, Shorten noted it was the first anniversary of the death of Gough Whitlam, the Labor prime minister who opened diplomatic relations between Australia and China.
Shorten said Labor had always supported the potential of Chafta to benefit Australians, but had stepped in to secure legal safeguards and protections for Australian jobs, wages and conditions, and trades licensing.
“Regulations have the force of law,” he said. “This is a ratcheting up of the level of legal protection for Australian jobs.”
Wong said the deal delivered “a comprehensive package of safeguards”. She said calculating the market salary rate for an overseas worker by reference to a relevant enterprise agreement would help ensure Australian wages and conditions were not undercut in the 457 visa regime.
Robb said the “spectacular outcome” restored the Australian tradition of bipartisanship on trade liberalisation, which he saw as “a very positive development for the country” and for business confidence.
“Essentially, what we have done is seek to provide clarity and assurance in a number of areas for Labor in regard to the issues that they have raised,” the trade minister said.
“They just want to make sure that some of the measures, particularly labour market testing, is not changed just by government fiat some time in the future.”
Business groups welcomed the deal, but the union movement branded the concessions inadequate.
The Electrical Trades Union vowed to continue its campaign against Chafta, saying it had no faith that the immigration department, as it was currently resourced, had the capability to enforce the licensing requirements for 457 visa workers.
“The fact that the ALP could not achieve concessions on key areas of job security, safety and sovereignty is of significant concern to our union and its members,” said the ETU’s national secretary, Allen Hicks.
“We are left with little option but to condemn both sides of politics for what has been done today.”
Ged Kearney, the president of the Australian Council of Trade Unions, said she still had serious concerns about Chafta because the proposed protections did not go far enough. But she added that responsibility for the agreement rested with the government.
Patricia Ranald, who coordinates the Australian Fair Trade and Investment Network, said it was concerning that Chafta would include an investor-state dispute settlement mechanism giving companies an avenue to sue the government over domestic regulations.
The Greens senator Peter Whish-Wilson said his party would vote against the legislation because such the dispute clauses were dangerous and could threaten Australia’s sovereignty.
His fellow Greens MP Adam Bandt said Labor had been “sold a pup” and the deal left “a gaping hole that will allow exploitation of overseas and local workers to continue”.
China and Australia formally signed the trade agreement in Canberra in June when Tony Abbott was still the prime minister, but the associated legislation needed to pass the parliament before it took effect.
Labor had demanded “complementary” protections for Australian jobs as a condition of support, but Abbott ruled out negotiations with the opposition and sought unqualified support.
Turnbull opened the door to talks with Labor after he ousted Abbott as Liberal leader last month, and the government hinted a deal was likely when the opposition released its proposed changes last week.
On Wednesday, Turnbull sought to draw a line under the political dispute.
“I described the leader of the opposition on one occasion as just a cork bobbing along in the slip-stream of the CFMEU,” the prime minister said. “Well, I have to say today the leader of the opposition has struck out from the slip-stream and charted a course that is plainly in the national interest.”
Wong and Robb also praised each other for the “constructive” nature of the negotiations.
Robb said he was confident the government would be in a position to exchange letters with the Chinese government before the end of the year. This could achieve a first round of tariff cuts when the agreement came into force, followed by a second round on 1 January.