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FactCheck: could foreign workers be paid less under the China-Australia FTA?

China’s Minister of Commerce Dr Gao Hucheng and Australia’s Prime Minister Tony Abbott signed the China-Australia Free Trade Agreement in mid-July. AAP Image/Mick Tsikas

First off, there is no statement that says that says workers working side by side with an Australian worker shall receive the same conditions and pay. That’s nowhere in the agreement… go through the pages of the agreement and look at the Memorandum of Understanding and it doesn’t say it in black and white; nowhere in the agreement. Michael O'Connor, CFMEU National Secretary, speaking with Fran Kelly on RN Breakfast, July 13, 2015.

Unions have previously questioned the claim by the Federal Minister for Trade, Andrew Robb, that the China-Australia Free Trade Agreement (ChAFTA) guaranteed that temporary Chinese workers recruited under the terms of the agreement would be employed on the same conditions and rates of remuneration as Australian workers.

The government has negotiated a labour mobility clause as a side agreement, in a Memorandum of Understanding (MOU) that outlines the right of Chinese investors to employ temporary migrant workers on terms set out in an “Investment Facilitation Agreement” (IFA). The MOU is, nonetheless, part of the ChAFTA.

So, what does the IFA actually stipulate with respect to employment terms and conditions?

At first impression, it seems that there is nothing much to worry about. Clause 2(e) of the IFA MOU states that:

the project company agrees to comply with all Australian laws and regulations, including applicable Australian workplace law, work safety law and relevant Australian licensing, regulation and certification standards.

Acting on behalf of the project proponents, the China International Contractors Association is required to submit an undertaking to the Department of Foreign Affairs and Trade (DFAT) that the project meets these criteria.

The DFAT progresses the application by notifying the Department of Immigration and Border Control (DIBP) that an application for an IFA has been received, and the DIBP then launches negotiations with the actual project company.

According to Clause 4 of the MOU these negotiations go to the detail of: a) the occupations covered by the IFA project agreement; b) English language proficiency requirements; c) qualifications and experience; and d) calculation of the terms and conditions of the Temporary Skilled Migration Income Threshold.

“Requests for concessions”

While the very general conditions stipulated in clause 2(e) could be argued to specify some minimum, albeit vague, employment conditions, Clause 5 of the MOU provides the scope for the circumvention of standards and rates of remuneration set through enterprise agreements. Clause 5 reads:

  1. The project company may be asked to provide additional information by DIBP in respect of its requests for concessions in the above areas. Other than the areas referred to in paragraphs 4(a) through 4(d), the grant of visas will be subject to meeting all other Australian nomination and visa requirements.

So the MOU expressly opens up the opportunity for the project company to request “concessions” with respect to the employment standards designated in clause 2(e).

The MOU is silent on whether the outcome of these negotiations, the individually-negotiated IFAs, would be publicly available documents, but one would expect that the “commercial-in-confidence” principle would apply to preclude access to the actual details agreed.

The Clause 5 qualification could also permit the IFA to enable negotiations over the scale of the investment commitment to avoid the ostensibly $150 million minimum investment benchmark, to negotiate variation in the composition of the enterprises. It may also open the door to negotiations over the requirement for the investor to have a 50% stake, or “substantial interest”, in the project, or to invest in sectors and industries beyond those a Chinese business can invest in outlined in clause 2 c).

This raises the possibility that employment of temporary migrant workers associated with investments under the ChAFTA would not necessarily be restricted to infrastructure investment projects.

When asked for data to support his assertion, a spokesperson for Mr O'Connor told The Conversation that:

The requirement to comply with “applicable Australian workplace law” (in MOU Clause 11) refers simply to the obligation on direct employers on IFAs to observe minimum award wages and conditions for the concessional 457 visa workers on IFA projects… DIBP has no legal obligation to require (and in practice does not) direct employers to pay concessional 457 visa workers under a labour agreement the higher rates and conditions that Australian workers employed under an EBA would receive for doing equivalent work at the work location… Clause 4(d) in the MOU above provides for the wages of concessional 457 visa workers on IFA projects to be discounted.

The ChAFTA MOU stipulates that the “IFA will set out guaranteed occupations and the terms and conditions against which overseas workers can be nominated for a temporary skilled visa”.

One of the other key issues of contention with the 457 visa program has been whether employers should seek to recruit within Australia before moving to meet labour requirements through migration. This was addressed in a previous FactCheck article.

Clause 8 specifies that direct employers are required to “enter into a labour agreement under the IFA with the DIBP to sponsor and nominate temporary skilled workers to be engaged on the project”. These employers will be subject to the compliance requirements, as per clause 2(e), which is a positive.

Yet, as noted, “concessions” with respect to employment standards and rates of remuneration for migrant workers may well have already been conceded.


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.


I agree completely with the comments in this article. Michael O'Connor is totally correct in stating that nowhere in the MOU is there a specific requirement for foreign workers to receive the same wages and conditions as Australian workers that they may work beside.

Clause 2(e) of the MOU does require that the project company comply with all Australian laws and regulations, and this could include awards with minimum labour standards. However, this protection is qualified in two ways.

First, as the FactCheck indicates, there is a possibility of circumvention of this clause through negotiation of “concessions”. Second, as suggested by the spokesperson for Mr O'Connor, enterprise bargaining agreements (EBA) would not have the same status as awards as law or regulation, so that there is a distinct possiblity of foreign workers with award minimum conditions working alongside Australian workers under an EBA with superior conditions. – Ray Markey

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