“FactChecking” the “FactCheckers”: The Chinese-Australia Free Trade Agreement

I hate Fact Checking. I think it is a ridiculous way to undertake journalism. It implies a level of objectivity that often is not there. So-called “Fact checkers” routinely ignore context and knowingly wade into complex debates where there is no independent truth.

So it is with the Conversation’s series on the Chinese Australian Free Trade Agreement. The latest in this series is authored by Stuart Rosewarme, “Factcheck: Could Foreign Workers Be Paid Less Under the China Australia FTA?“.

At the heart of the public debate on the labour migration provisions in ChAFTA is the “Investor Facilitation Agreement” (IFA) Memorandum of Understanding (MoU). The IFA is a contractual agreement between a company and the government that outlines potential concessions to the 457 visa program.

Stuart Rosewarme is checking whether this agreement will allow for foreign workers on 457 visas be paid less than Australians doing the same job. He concludes:

Michael O’Connor is correct in that there is no black-and-white statement in the MOU that stipulates that foreign workers working side by side with an Australian worker shall unconditionally receive the same conditions and pay.

Clause 2(e) of the MOU does say that Chinese firms operating in Australia must agree to “comply with all Australian laws and regulations, including applicable Australian workplace law, work safety law and relevant Australian licensing, regulation and certification standards.”

However, Clause 5 opens the door to removing those protections through negotiated “concessions”.

Mr O’Connor’s concerns have considerable merit.

The problem with Stuart Rosewarme’s piece is that he doesn’t appear to know much about how the 457 visa works, either in practice or the regulations which govern the program.

“Michael O’Connor is correct in that there is no black-and-white statement in the MOU that stipulates that foreign workers working side by side with an Australian worker shall unconditionally receive the same conditions and pay.”

Buried in Regulation 2.72 at Section 10C of the Migration Regulations is the law governing how 457 visa holders must be paid the same as Australian citizens:

(10)  If the person is a standard business sponsor**–the Minister is satisfied that:

(c)  the terms and conditions of employment of the person identified in the nomination will be no less favourable than the terms and conditions that: (i) are provided; or (ii) would be provided; to an Australian citizen or an Australian permanent resident for performing equivalent work  at the same location;

“No less favourable than the terms and conditions” is commonly referred to as ‘Market Salary Rates”. While a minority of employers can and do pay 457 visa holders less than their Australian counterparts, this is against the law. This requires improved enforcement, not more legislation or statements of intent.

Because this is the law, the IFA would have to explicitly provide a concession for 457 visa holders to be paid less than Australian workers. Possible concessions are outlined in the IFA MoU in Clause 4:

(a) the occupations covered by the IFA project agreement;

(b) English language proficiency requirements;

(c) qualifications and experience requirements; and,

(d) calculation of the terms and conditions of the Temporary Skilled Migration Income Threshold (TSMIT).

‘Market salary rates’ are not listed in the MOU as a possible concession. This means any employer who signs an IFA has to comply with Section 10C of Regulation 2.72: providing ‘no less favourable terms and conditions’ to any 457 visa holder who is performing the equivalent work at the same location as Australian citizens or Australian permanent residents.

Calls for a “black and white statement” on whether 457 visa holders will be paid the same as Australian’s deliberately confuses the audience. The law requires this and there is nothing in the IFA to allow foreign workers to be paid less than Australians. Mr. Rosewarme should have mentioned this clearly in his ‘factcheck’ and showed that, no, it is not possible for the IFA to allow companies to pay 457 visa holders below Australian rates of pay.

I have seen others argue that Clause 4(d), in relation to the Temporary Skilled Migration Income Threshold, allows companies to pay 457 visa holders less. This clause in the MoU relates to Migration Regulation 2.72, Section 10CC, creating a salary level which must be met to use the 457 visa program. The standard threshold is $53,900.

However this salary level does not work as a ‘minimum salary’ and employers cannot pay 457 visa holders $53,900 regardless of their job. The threshold determines that positions with a salary below $53,900 are not eligible for the 457 visa program. Even if an IFA outlines a reduction in the salary threshold, companies will still be required to pay 457 visa holders “no less favourably” than Australian citizens or permanent residents.

Mr. Rosewarme bases most of his argument on this line in Clause 5:

“The project company may be asked to provide additional information by DIBP in respect of its requests for concessions in the above areas.”

Clause 5 of the MoU clearly references Clause 4 as the ‘above areas’. This limits any discussion or possibility of concessions to those identified in Clause 4. This means the only concessions possible under an IFA relate to; occupations, English language, qualifications and the salary threshold. Nothing about market salary rates or wages and conditions. Nothing about broader workplace laws.

I disagree entirely with Mr Rosewarme’s “verdict”. He has not provided “facts” to back up his assertions. He has simply cobbled together a mishmash of references and assumptions, many of which are not grounded in reality.

For the Conversation to run this piece, PLUS have another “reviewer” give it the stamp of approval, shows just how inept this style of journalism and policy engagement is.

**Update: It has been pointed out to me that Regulation 2.72 10C applies to “standard business sponsors” and not work agreements. This is correct. However since the ‘no less favourable’ status was introduced in Section 10C, I understand every single work agreement has contained this same status. Further, this does not change that a work agreement/IFA would have to explicitly outline a concession from the standard program, something which is not raised in the MoU under Clause 4.

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2 thoughts on ““FactChecking” the “FactCheckers”: The Chinese-Australia Free Trade Agreement

  1. “The problem with Stuart Rosewarme’s piece is that he doesn’t appear to know much about how the 457 visa works…”

    Um just a question where in the China FTA are workers brought in under the China FTA required to have a 457 visa?

    From what I have read they will not require a 457 visa so most of what you have written here does not apply.

    (from the ABC fact check website)

    “The wording of the memorandum does not state that labour market testing must occur before
    visas are granted, nor that they will be 457 visas.”

    • Thanks for your comment Tim.

      The legislation that governs the mechanisms under the China FTA work on 457 visas. I have no idea why the ABC FactCheck said “nor will they be 457 visas” because this is how the legislation works.

      I am certain that workers associated with the China FTA will be on a 457 visa.

      Cheers, Henry

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