Home Opinion The Chinese-Australia Free Trade Agreement – An Open Letter To Bill Shorten

The Chinese-Australia Free Trade Agreement – An Open Letter To Bill Shorten

If a Chinese company, for example, can finance and build major infrastructure that might not otherwise proceed in Australia without their involvement, what is the problem with them utilising their own skilled labour to build that infrastructure?

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The Chinese-Australia Free Trade Agreement
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I applaud your (Bill Shorten’s) aspirations to protect the job opportunities of Australian workers in criticism of the Chinese-Australia Free Trade Agreement. However, I see no analogy between your recent reference to foreign labour issues on a hotel construction site and those that would apply to the development infrastructure projects Australia requires to underpin the growth of its economy. By using this example, you were being emotive and focusing only on the short-term. As the leader of Australia’s alternative government, it is the long-term impact of basic economic infrastructure that you need to focus on because that is what will bring real and sustainable benefits to Australia and its ability to employ its citizens.

If a Chinese company, for example, can finance and build major infrastructure that might not otherwise proceed in Australia without their involvement, what is the problem with them utilising their own skilled labour to build that infrastructure? Such projects may last for 3 to 5 years, but the resulting infrastructure is there for generations. A new port, for example, once constructed, will employ Australians for as long as it is economically viable and will also service exporters, thus creating a positive economic impact on a wide range of industries from agriculture, to mining and to food processing. In other words, it would create sustainable employment for the long term.

As an Australian who is also a senior manager in a Chinese enterprise engaged in the construction of major infrastructure, I understand the issues driving the desire to use their own skilled workers as much as is possible. Firstly, it is a requirement of the Chinese State Banks that are able to finance large infrastructure projects that there be a demonstrable benefit to China from the project finance they provide. This often includes the access these projects might provide to natural resources such as oil, gas, iron ore, etc., but it also includes the jobs it provides for the Chinese workers employed on such projects. The Chinese Banks desire the security that the projects they finance will be completed within budget and within the timeframe put to them in the financing proposal. Hence, they draw comfort from knowing that a large Chinese construction company is in control of the project. This is especially the case with international projects that are in foreign markets where they are less knowledgeable about the market environment and exposed to market conditions with which they are unfamiliar.

More importantly, the terms on which the Chinese construction companies operate are usually fixed price, fixed term contracts for which they are liable for significant penalties and can quickly eat up their margins if the projects are delayed. In other words, there is enormous incentive for them to wish to retain control over their workforce by utilising the skilled workers they are familiar with and who in turn are familiar with their construction methodologies and management regime. It has nothing to do with nationalism or the wish to steal Australian jobs and everything to do with business risk management.

There are many projects in Australia that would have a significant impact on the national economy and which would also be a game-changer for smaller states such as South Australia, which is presently in dire economic circumstances. These projects are therefore key to further economic growth and would likely, in the medium to long term, directly and indirectly create hundreds of thousands of jobs by putting in place the infrastructure necessary for industries to develop and expand. However, Australia doesn’t have the means on its own to finance and or provide equity in these projects, so if Chinese companies, or those from any other country for that matter, are willing to take on the risk of moving these projects forward why not let them do it on their own terms?

This doesn’t mean that Australian jobs will not be created in the short-term, but it does mean that we will not miss opportunities to put in place much-needed infrastructure. Foreign companies cannot effectively carry out construction projects in Australia without engaging the skilled inputs of Australian sub-contractors. Also, throughout the construction phase of these projects there would be a requirement for unskilled workers and it would be uneconomical to fill these positions from anywhere else other than in Australia.

Labor should not lose sight of the overriding issue, which is that if we are able to proceed with major infrastructure projects now, when our economy is under stress, opportunities for sustainable job growth will be created for current and future generations of Australians.

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Gary Andrews
Gary Andrews has had a long career in international business development and project management mostly in the field of international development assistance but also in Chamber of Commerce Management and in major infrastructure project development. He is currently based in Kuala Lumpur and working as a Business Development Director with the China Railway Engineering Corporation, the PRC's largest construction company. Gary is also studying for a Masters Degree in Technology (Project Management).