Anxieties

'The History of Technological Anxiety and the Future of Economic Growth: Is This Time Different?' by Joel Mokyr, Chris Vickers, and Nicolas L. Ziebarth in (2015) 29(3) Journal of Economic Perspectives 31-50 comments 

Technology is widely considered the main source of economic progress, but it has also generated cultural anxiety throughout history. From generation to generation, literature has often portrayed technology as alien, incomprehensible, increasingly powerful and threatening, and possibly uncontrollable (Ellul 1967; Winner 1977). The myth of Prometheus is nothing if not a cautionary tale of these uncontrollable effects of technology. In Civilization and its Discontents, Sigmund Freud (1930 [1961], pp. 38–39) assessed what technology has done to homo sapiens, making him into a kind of God with artificial limbs, “a prosthetic God. When he puts on all his auxiliary organs he is truly magnificent; but those organs have not grown onto him and they still give him much trouble at times.”

So it is surely not without precedent that the developed world is now suffering from another bout of such angst. In fact, these worries about technological change have often appeared at times of flagging economic growth. For example, the Great Depression brought the first models of secular stagnation in Alvin Hansen’s 1938 book Full Recovery or Stagnation? Hansen drew on the macro economic ideas of John Maynard Keynes in fearing that economic growth was over, with population growth and technological innovation exhausted. Keynes was also drawn into the debate and offered a meditation on the future of technology and unemployment in his well-known essay, “Economic Possibilities for our Grandchildren".

This was originally written as a set of lectures in 1928 after a decade of dismal economic performance in the United Kingdom and then revised in 1930 to incorporate remarks about the Great Depression (Pecchi and Piga 2008, p. 2). Keynes (1930) remained optimistic about the future in the face of staggering unemployment, writing: “We are suffering, not from the rheumatics of old age, but from the growing-pains of over-rapid changes, from the painfulness of readjustment between one economic period and another. The increase of technical efficiency has been taking place faster than we can deal with the problem of labour absorption; the improvement in the standard of life has been a little too quick.” More recently, Winner’s (1977)  Autonomous Technology: Technics-out-of-Control as a Theme in Political Thought was published during the economic doldrums of the mid and late 1970s. Today, distinguished economists such as Lawrence Summers (2014), in a speech to the National Association of Business Economists, can be heard publicly musing about the possibility of secular stagnation. In his Martin Feldstein lecture, Summers (2013b) discussed a downright “neo-Luddite” (that famous protest movement against technological innovation in nineteenth century England) position on the effects of technology for long-term trends in employment.

Anxieties over technology can take on several forms, and we focus on what we view as three of the most prominent concerns. The first two worries are based on an “optimistic” view that technology will continue to grow and perhaps accelerate. First, one of the most common concerns is that technological progress will cause widespread substitution of machines for labor, which in turn could lead to technological unemployment and a further increase in inequality in the short run, even if the long-run effects are beneficial. Second, there has been anxiety over the moral implications of technological process for human welfare, broadly defined. In the case of the Industrial Revolution, the worry was about the dehumanizing effects of work, particularly the routinized nature of factory labor. In modern times, perhaps the greater fear is a world like that in Kurt Vonnegut’s 1952 novel Player Piano, where the elimination of work itself is the source of dehumanization (for example, Rifkin 1995). As Summers said (as quoted “not perfectly verbatim” in Kaminska 2014), while “[t]he premise of essentially all economics . . . is that leisure is good and work is bad. . . . economics is going to have to find a way to recognize the fundamental human satisfactions that come from making a contribution . . .” A third concern cuts in the opposite direction, suggesting that the epoch of major technological progress is behind us. In recent years, even in the face of seemingly dizzying changes in information technology, pessimists such as Gordon (2012), Vijg (2011), and Cowen (2010) have argued that our greatest worry should be economic and productivity growth that will be too slow because of, for example, insufficient technological progress in the face of “headwinds” facing western economies. Some of these so-called “headwinds,” including slow productivity and population growth, formed the basis of Hansen’s (1939) secular stagnation hypothesis. The argument of this paper is that these worries are not new to the modern era and that understanding the history provides perspective on whether this time is truly different. The next section of the paper considers the role of these three anxieties among economists, primarily focusing on the historical period from the late 18th to the early 20th century, while the final section offers some comparisons between the historical and current manifestations of these three concerns.

Corporate Personhood

'In Defense of Corporate Persons' by Kent Greenfield in (2015) 30 Constitutional Commentary 309 comments 

This essay is a critique of this attack on corporate personhood. It explains that the corporate separateness - corporate “personhood” - is an important legal principle as a matter of corporate law. What’s more, as a matter of constitutional law, corporate “personhood” deserves a more nuanced analysis than has been typically offered in arguing in favor of an amendment to overturn Citizens United. Indeed, the concept of corporate “personhood” can in fact be marshaled in arguments against corporations being able to assert constitutional rights. In the nascent category of cases brought by corporations asserting rights of religious freedom, for example, corporations typically derivatively assert the religious claims of their shareholders. Attention to corporate “personhood” would lead courts to separate the claims of shareholders from those of the corporation itself, leading to a dismissal of corporate religious claims asserted on behalf of shareholders.

Finally, it proposes that the concerns motivating the movement against corporate personhood should be ameliorated with adjustments in corporate governance rather than constitutional law. In corporate law, what we need are changes in corporate governance to make corporations more like persons, not less. Unlike persons, corporations are expected to act if they have only one goal - the production of shareholder value. People must balance a range of obligations, both moral and legal. Requiring corporations to attend to a broader range of stakeholders would make corporations more like people, would make them better citizens, and would make their political participation less problematic.

Greenfield suggests that

corporations should be seen as having robust social and public obligations that cannot be encapsulated in share prices. Now, executives have legal obligations to take account of shareholder interests. Progressive corporate scholars argue these “fiduciary duties”should be extended to employees and other corporate stakeholders.

One way to make these obligations operational is to make the decisionmaking structure of the company itself more pluralistic. In a number of European countries, for example, companies have “codetermined” board structures that require representation of both shareholders and employees.Even with these management structures, corporations continue their focus on building wealth—that is the core purpose of the corporate form—but not only for a narrow sliver of equity investors. And it works. Germany, where co-determination is strongest, is the economic powerhouse of Europe. The CEO of the German company Siemens argues that codetermination is a “comparative advantage”for Germany; the senior managing director of the U.S. investment firm Blackstone Group had said that codetermination was one of the factors that allowed Germany to avoid the worst of the financial crisis.

Notice that these governance structures reforms make corporations more like persons, not less. Human beings routinely balance a multitude of interests—I am, for example, a parent, a spouse, a teacher, a writer. Only the rare oddball behaves as if accumulating money is the paramount and unitary good. Humans have consciences; corporations do not. Left to themselves, they will behave as if profit is the only thing that matters. The best way to constrain corporations is to require them to sign onto a more robust social contract and to govern themselves more pluralistically—mechanisms designed to mimic the traits of human personhood within the corporate form.

If corporations had these traits of personhood, I would worry less about corporate involvement in the political arena. American corporations have become a vehicle for the voices and interests of a small managerial and financial elite. The cure for this is more democracy within businesses—more participation in corporate governance by workers, communities, shareholders, and consumers. If corporations were more democratic, their participation in the nation’s political debate would be of little concern.

Unfortunately, corporate personhood opponents are making these corporate governance reforms less likely. Personhood skeptics often characterize corporations as having a narrow social role; because of that narrow role, the argument goes, they owe it to shareholders to stay out of politics. The opponents of Citizens Unitedare endorsing a narrow view of business as a way to explain why corporations should be exiled from the public square. To fight corporate personhood, they are bolstering shareholder primacy.

Take for instance Justice John Paul Stevens’s dissent in Citizens United itself. He argued, among other things, that corporate speech should be limited in order to protect shareholders’investments. Shareholders are seen as owners, as “those who pay for an electioneering communication” and are assumed to have “invested in the business corporation for purely economic reasons.” Stevens argued that corporate political speech did not merit protection because:

[T]he structure of a business corporation . . . draws a line between the corporation’s economic interests and the political preferences of the individuals associated with the corporation; the corporation must engage the electoral process with the aim to enhance the profitability of the company, no matter how persuasive the arguments for a broader . . . set of priorities.

Even more revealing, Stevens cites as support a set of corporate governance principles adopted by the prestigious American Law Institute. The Principles were the product of compromise, both asking corporations to look after shareholder interests and allowing them to act with an eye toward “ethical”and “humanitarian” purposes. But Stevens quoted only the language embodying shareholder primacy: “A corporation … a view to enhancing corporate profit and shareholder gain.”

Opponents of corporate personhood are following Stevens into the shareholder rights trap. Common Cause now has a “featured campaign” for “strengtheningshareholder rights.” The Brennan Center for Justice is supporting a “shareholder protection act”and calls shareholders “the actual owners”of corporations. Professor Jamie Raskin of American University, one of the smartest and most energetic academic opponents of Citizens United, says that corporations should not be spending in elections because, “after all, it’s [shareholders’] money.” This is all shareholder primacy language brought to bear in fighting Citizens United.

Wall Street loves talk of shareholder rights. To be sure, many Americans are shareholders through our retirement accounts and the like. But “widows and orphans” are still the minority; most stock held in American businesses is owned by the very wealthy. (The richest 5% of Americans ownover 2/3 of all stock assets. The bottom 40%—125 million working class people —essentially own nothing in terms of stock.) So when opponents of Citizens United focus on shareholder rights, they are singing Wall Street’s tune.

I wish this shareholder-protective rhetoric was just that, but it is not. Corporate personhood opponents urge, as an intermediate measure short of a constitutional amendment, that corporations be required to seek shareholder approval before spending corporate money on political campaigns. There might be some benefit to such a rule, since it would help ensure executives do not spend corporate monies on issues and candidates opposing company interests. But that benefit is probably marginal, and would come at the risk of validating corporate involvement in the political process in furtherance of shareholder value and to the detriment of other stakeholders. Corporations could speak out in favor of Wall Street but not employees? That would be worse, not better.

The efforts of anti-personhood activists are not only in tension with stakeholder theory on the conceptual level. In the political arena, too, a tension exists because the energy for reform is a finite resource. I believe that, in this moment, there is an opening to question the very framework of how we view corporations and their social obligations. But we won’t get anywhere on that front if the progressive left wastes its energy fighting for a constitutional amendment that is unlikely to succeed and would either be toothless or affirmatively harmful if it did

Data Protection Economics

'The Economic Impact of the European Reform of Data Protection' by Stephane Ciriani in (2015) 97 Communications and Strategies 41-58 comments

The economic value of personal data is mainly extracted through online intermediation services and big data analytics. The largest providers of these services are US OTTs. These are global market players with a leading position in the European market. As a result, the personal data of European users are widely processed by these providers. The EU and the US have different approaches to personal data protection and data privacy. In the US, privacy is a property right whereas in the EU, it is a fundamental right, which must be provided by the government. The European Commission has proposed a reform of personal data protection, the General Data Protection Regulation (GDPR), aiming to ensure that European consumers are protected according to European law whenever their data are processed outside the EU by foreign companies. According to the European Commission, the reform will bring economy-wide benefits to the EU. However, several studies on the economic impact of the reform have led to opposing conclusions. They claim that the extraterritorial application of the European law will impose a regulatory cost burden on US providers. This burden would hurt transatlantic trade in services, and would be detrimental to the European economy.

Our analysis shows that the GDPR is not a protectionist policy. The extraterritorial application of the European law will neither hinder competition nor disrupt cross-border data flows. On the contrary, the extension of European law to the US OTTs that target European consumers will contribute to establishing a level playing field between European providers and their US competitors in the European market. Both EU and US providers would obey European laws when processing European consumers' personal data. Nevertheless, the literature examined provides no evidence that reinforced standards of protection would foster the competitiveness of European services in world markets. Moreover, studies also suggest that the costs of applying the GDPR in the EU might outweigh the efficiency gains. In conclusion, the optimal trade-off between incentives to provide innovative services and the obligation to protect privacy as a fundamental right has yet to be achieved by the European regulation.

Rather than increase administrative burden, an efficient data protection policy should base European users' protection on modernised, more dynamic principles, supporting the capability of European industry to compete and innovate on fair and efficient grounds for the benefit of European users and of the European economy.

Cautions re MyHR

The Parliamentary Joint Committee on Human Rights in its latest report has questioned the MyHR (formerly PCEHR) megaproject -

The Health Legislation Amendment (eHealth) Bill 2015 (the bill) seeks to amend the law relating to the personally controlled electronic health record system (PCEHR). The PCEHR (to be renamed 'My Health Record') provides an electronic summary of an individual's health records. Currently, under legislation governing the PCEHR, an individual's sensitive health records are only uploaded on to the register if the individual expressly consents (or 'opts-in').

The bill will enable opt-out trials to be undertaken in defined locations, whereby an individual's health records will be automatically uploaded onto the My Health Record system unless that individual takes steps to request that their information not be uploaded. The bill would allow the opt-out process to apply nationwide following a trial.

The bill seeks to simplify the privacy framework by revising the way that permissions to collect, use and disclose information are presented, and will include new permissions to reflect how entities engage with one another. The bill also seeks to introduce new criminal and civil penalties for breaches of privacy; provide that enforceable undertakings and injunctions are available; and extend mandatory data breach notification requirements.

Measures raising human rights concerns or issues are set out below.

Automatic inclusion of health records on the My Health Record system: 'opt-out' process

As set out above, the bill seeks to remove the requirement for the express consent of an individual before their personal health records are uploaded onto the PCEHR. Rather, an individual will need to expressly advise that they do not wish to participate (to 'opt-out').

The committee considers that the bill, in enabling the uploading of everyone's personal health records onto a government database without their consent, engages and limits the right to privacy.

Right to privacy

Article 17 of the International Covenant on Civil and Political Rights (ICCPR) prohibits arbitrary or unlawful interferences with an individual's privacy, family, correspondence or home. The right to privacy includes respect for informational privacy, including:  the right to respect for private and confidential information, particularly the storing, use and sharing of such information; and  the right to control the dissemination of information about one's private life.

However, this right may be subject to permissible limitations which are provided by law and are not arbitrary. In order for limitations not to be arbitrary, they must seek to achieve a legitimate objective and be reasonable, necessary and proportionate to achieving that objective.

Compatibility of the measure with the right to privacy

The statement of compatibility acknowledges that the bill limits the right to privacy, however, it concludes that the limitation on the right to privacy is reasonable, necessary and proportionate. It explains the overall objective of the My Health Record system: The objective of the system is to address the fragmentation of information across the Australian health system and provide healthcare providers the information they need to inform effective treatment decisions.

The statement of compatibility also explains that the bill responds to recommendations made from a review of the PCEHR system and addresses issues identified in the early years of operating the system.2 It explains that the opt-out model is intended to drive the use of My Health Records by healthcare providers as part of normal healthcare in Australia: Increased participation by individuals is anticipated to drive increased and meaningful use by healthcare providers. Combined with other measures to improve the usability of the system and the clinical content of My Health Records, if nearly all individuals have a My Health Record, healthcare providers will be more likely to commit to using and contributing to the My Health Record system, thereby increasing the utility of the system by increasing the amount of clinically valuable information.

The committee notes that the overall objective of the My Health Record system, in seeking to provide healthcare providers with the necessary information to inform effective treatment decisions, is likely to be considered a legitimate objective for the purposes of international human rights law. However, it is questionable whether the objective behind the bill, in amending the system to an opt-out model, would be considered a legitimate objective for the purposes of international human rights law. To be capable of justifying a proposed limitation of human rights, a legitimate objective must address a pressing or substantial concern and not simply seek an outcome regarded as desirable or convenient. Increasing the number of people using the My Health Record system, in an attempt to drive increased use by healthcare providers, may be regarded as a desirable or convenient outcome but  may not be addressing an area of public or social concern that is pressing and substantial enough to warrant limiting the right.

Even if the opt-out model, and the corresponding limitation on the right to privacy, is considered to be seeking to achieve a legitimate objective, it must also be demonstrated that the limitation is proportionate to the objective being sought.

The statement of compatibility sets out a number of safeguards in place for the use and disclosure of healthcare information held on the database, noting:

Individuals who have a My Health Record can control who can access their information and what information can be accessed, and can elect to be notified when someone accesses their My Health Record. Individuals can set the access controls on their My Health Record online or over the phone. They can limit which healthcare providers can access their My Health Record…They can effectively remove records that have been uploaded…Once they have a My Health Record an individual can cancel their registration.

The committee accepts that the safeguards contained in the My Health Record system, as a whole, are likely to mean that the limitation on the right to privacy, for those who actively register for a My Health Record and choose to have their private health records uploaded to the database, is likely to be proportionate to the overall objective of maintaining the My Health Record system.

However, the statement of compatibility gives little information about the proportionality of the proposed opt-out process. It explains that the opt-out process will be initially trialled in specific locations, meaning 'My Health Records will be created for people living in specified locations unless they say they do not want one'. Little detail is given as to how people in these specified locations will be notified that their personal health information will be automatically uploaded on a national register unless they take active steps to opt out.

Further information is provided in the explanatory memorandum (EM) to the bill as to how the opt-out arrangements might work in practice. It states: In any opt-out arrangements, it is intended that healthcare recipients would be given a reasonable amount of notice before opt-out is implemented so they could learn about the My Health Record system, and would be given a reasonable amount of time to decide whether or not to opt-out. Various methods would be made available to healthcare recipients to opt-out, for example, online, in person or by phone.

However, the bill itself does not set out any safeguards to ensure that healthcare recipients would be given reasonable notice or a reasonable amount of time to decide whether to opt-out. Rather, a person's health records would automatically be registered on the system if the System Operator 'is satisfied' that the healthcare recipient 'has been given the opportunity' not to be registered (not a 'reasonable' opportunity).

When a healthcare recipient elects not to be registered they must do so in 'the approved form' and if the rules so require it, to do so 'within a period, or on the occurrence of an event' specified in the rules. There is no requirement in the bill that this period of time be within a reasonable time after an individual is notified that their personal health records are being uploaded onto the national database–nor is there any requirement in the legislation to notify individuals that their personal health records will be automatically uploaded onto the register unless they actively opt-out.

In addition, once an individual's personal details are included on the My Health Record there is no ability for the person to erase their record from the register – all they can do is ensure that the personal health information stored on the database will not be authorised for disclosure.

The EM states that there will be 'various channels' available for people to opt-out, including online or as a tick-box on an application form to register newborns or immigrants with Medicare. However, these are not set out in the legislation.

The EM also states that for those without online access, with communication disabilities, or without the required identity documents, 'other channels will be available, such as phone and in person'. No information is given as to how this would work in practice. There are no legislative safeguards in the bill to ensure that people will be appropriately notified.

The committee's interpretation of international human rights law is that, where a measure limits a human right, discretionary or administrative safeguards alone are likely to be insufficient for the purpose of a permissible limitation. This is because administrative and discretionary safeguards are less stringent than the protection of statutory processes and can be amended at any time.

In considering whether the limitation on the right to privacy is proportionate to the stated objective it is also necessary to consider whether there are other less restrictive ways to achieve the same aim. In order to achieve the objective of having  more people register for the My Health Record system it is not clear, on the basis of the information provided, why the current opt-in model has not succeeded. The committee notes that the Regulatory Impact Statement (RIS) attached to the EM for the bill weighed up a number of legislative options. No explicit consideration of the right to privacy is included in the RIS and there is no evidence that the option set out in the bill is in fact the least rights restrictive.

The bill also provides that once the opt-out trial has taken place the Minister for Health can, by making rules, apply the opt-out model to all healthcare recipients in Australia. In making this decision the bill provides that the minister 'may' take into account the evidence obtained in applying the opt-out model and any other matter relevant to the decision. There is no requirement that the minister consider the privacy implications of this decision or whether people in the trials were given an appropriate and informed opportunity to opt-out.

The committee's assessment of the opt-out model provided for by the bill against article 17 of the International Covenant on Civil and Political Rights (right to privacy) raises questions as to whether the opt-out model is a justifiable limitation on the right to privacy.

As set out above, the opt-out model engages and limits the right to privacy. The statement of compatibility does not sufficiently justify that limitation for the purposes of international human rights law. The committee therefore seeks the advice of the Minister for Health as to: whether there is reasoning or evidence that establishes that the stated objective addresses a pressing or substantial concern or whether the proposed changes are otherwise aimed at achieving a legitimate objective; whether there is a rational connection between the limitation and that objective; and whether the limitation is a reasonable and proportionate measure for the achievement of that objective, in particular whether the opt-out model is the least rights restrictive approach and whether there are sufficient safeguards in the legislation.

Automatic inclusion of children's health records on the My Health Record system

Currently under the Personally Controlled Electronic Health Records Act 2012 a person under the age of 18 years is automatically assigned an 'authorised representative' who has the power to manage the child's health records. The authorised representative can be any person who has parental responsibility for the  child. A parent is considered to be the child's authorised representative until the child turns 18 years of age or until the child takes control of their record. A child who wishes to take control of their health record needs to satisfy the System Operator that they want to manage his or her own PCEHR and are capable of making decisions for themselves.

The committee considers that automatically uploading the private health records of all children in Australia, unless their parent chooses to opt-out of the register, engages and both promotes and limits the rights of the child.

Rights of the child

Children have special rights under human rights law taking into account their particular vulnerabilities. Children's rights are protected under a number of treaties, particularly the Convention on the Rights of the Child (CRC). All children under the age of 18 years are guaranteed these rights. The rights of children include:  the right to develop to the fullest;   the right to protection from harmful influences, abuse and exploitation;  family rights; and  the right to access health care, education and services that meet their needs.

State parties to the CRC are required to ensure to children the enjoyment of fundamental human rights and freedoms and are required to provide for special protection for children in their laws and practices. In interpreting all rights that apply to children, the following core principles apply:   rights are to be applied without discrimination; the best interests of the child are to be a primary consideration; there must be a focus on the child's right to life, survival and development, including their physical, mental, spiritual, moral, psychological and social development; and there must be respect for the child's right to express his or her views in all matters affecting them.

Compatibility of the measure with the rights of the child

The statement of compatibility for the bill recognises that the rights of the child are engaged by the bill but states:

The existing arrangements allowing parents or other appropriate people to act on behalf of a child (section 6 of the My Health Records Act) are not affected by the Bill. … [T]he privacy of children is protected as representatives such as parents and legal guardians can set the privacy controls such as removing information or restricting access to content...

The My Health Records Act continues to allow a child who is capable of making decisions for themselves to take control of their My Health Record, set access controls or cancel their registration (if already registered) if they choose to do so. The Bill will enable a child who is capable of making decisions for themselves to, like other individuals, opt themselves out of registration in the My Health Record system. …

[T]he Bill shifts the duty of authorised representatives for children from being required to act in the 'best interests' of an individual, to a duty to give effect to the 'will and preferences' of the individual. This change realises the principle that children with appropriate maturity have an equal right to make decisions and to have those decisions respected…

As noted above at [1.50] an attempt to drive increased use by healthcare providers, may be regarded as a desirable or convenient outcome but may not address an area of public or social concern that is pressing and substantial enough to warrant limiting the rights of the child.

In addition, the committee considers that the opt-out model may not be regarded as a proportionate means of achieving that objective. As discussed above, the amendments in the bill will enable the collection of all children's personal sensitive health information to be automatically included on the My Health Record, unless their authorised representative opts-out of this process, or they can prove to the Systems Operator that they should not have an authorised representative and so can opt-out themselves. Similarly to the discussion above at paragraphs [1.48] to [1.62], this significantly limits the child's right to privacy and, in so doing, limits the rights of the child. In particular, as the UN Committee on the Rights of the Child has noted, the child has the right to the protection of their confidential health-related information: In order to promote the health and development of adolescents, States parties are also encouraged to respect strictly their right to privacy and confidentiality, including with respect to advice and counselling on health matters (art. 16). Health-care providers have an obligation to keep confidential medical information concerning adolescents, bearing in mind the basic principles of the Convention. Such information may only be disclosed with the consent of the adolescent, or in the same situations applying to the violation of an adult's confidentiality. Adolescents deemed mature enough to receive counselling without the presence of a parent or other person are entitled to privacy and may request confidential services, including treatment.

Under the proposed opt-out arrangements in the bill a child must rely on their parent taking active steps to ensure the child's record is not automatically  included on the My Health Record. As set out above at paragraphs [1.54] to [1.61] there are particular problems with the way in which the current opt-out arrangements are provided for in the bill. There is also no additional information as to how a child, who wishes to take control of their own record, is able to do so. No information is given as to what a child needs to do in order to satisfy the Systems Operator that their parent should not be considered to be their authorised representative. No information is given as to what timeframe the Systems Operator makes the decision as to whether the child is capable of managing their own affairs and whether this would occur within sufficient time to allow the child to exercise their opt-out rights.

The committee notes that the bill does impose an obligation on an authorised representative to give effect to the will and preferences of the child, unless to do so would pose a serious risk to the child's personal and social wellbeing.  While this is a welcome measure, there is nothing in the legislation that makes this requirement binding, as there are no consequences in the legislation if the parent does not give effect to the child's will and preferences. In addition, even if a child does manage to become responsible for their own health records, it appears that the child's parent will be notified when that occurs.

The committee's assessment of the automatic inclusion of all children's health records on the My Health Record register against the Convention on the Rights of the Child (rights of the child) raises questions as to whether the automatic inclusion of the health records of all children on the register is compatible with the rights of the child.

As set out above, automatic inclusion of the health records of all children on the register engages and limits the rights of the child. The statement of compatibility does not sufficiently justify that limitation for the purposes of international human rights law. The committee therefore seeks the advice of the Minister for Health as to: whether there is reasoning or evidence that establishes that the stated objective addresses a pressing or substantial concern or whether the proposed changes are otherwise aimed at achieving a legitimate objective; whether there is a rational connection between the limitation and that objective; and  whether the limitation is a reasonable and proportionate measure for the achievement of that objective, in particular whether the opt-out model is the least rights restrictive approach and whether there are sufficient safeguards in the legislation to protect the rights of the child.

Automatic inclusion of the health records of persons with disabilities on the My Health Record system

Currently under the Personally Controlled Electronic Health Records Act 2012 (the PCEHR Act) a healthcare recipient can apply to the System Operator to register for the PCEHR, thereby opting-in to have their health care records included on the register. A person with disabilities can do so on an equal basis with other healthcare recipients. However, where the Systems Operator of the PCEHR is satisfied that a person aged over 18 years is not capable of making decisions for him or herself, another person will be considered to be the authorised representative of that person, and only that person will be able to manage the person's health records.

The committee considers that automatically uploading the private health records of all persons with disabilities in Australia, unless they or an authorised representative choose to opt-out of the register, engages and limits the rights of persons with disabilities.

Rights of persons with disabilities

The Convention on the Rights of Persons with Disabilities (CRPD) sets out the specific rights owed to persons with disabilities. It describes the specific elements that state parties are required to take into account to ensure the right to equality before the law for people with disabilities, on an equal basis with others, and to participate fully in society.

Article 4 of the CRPD states that in developing and implementing legislation and policies that concern issues relating to persons with disabilities, states must closely consult with and actively involve persons with disabilities, through their representative organisations.

Article 5 of the CRPD guarantees equality for all persons under and before the law and the right to equal protection of the law. It expressly prohibits all discrimination on the basis of disability.

Article 12 of the CRPD requires state parties to refrain from denying persons with disabilities their legal capacity, and to provide them with access to the support necessary to enable them to exercise their legal capacity.

Article 22 requires state parties to protect the privacy of the personal, health and rehabilitation information of persons with disabilities on an equal basis with others.

Compatibility of the measure with the rights of persons with disabilities

The statement of compatibility for the bill recognises that the rights of persons with disabilities are engaged by the bill, but states:

Consistent with Article 12, people with a disability are provided equal opportunity to participate in the My Health Record system and make decisions about access to their personal information. Continuing current arrangements, authorised representatives can support people to interact with the My Health Record system and act on behalf of the individual if they are unable to act for themselves. These arrangements allow for people with a disability to participate in the My Health Record system, control access to their personal information and withdraw participation in the My Health Record system if they choose to do so. This functionality also supports Article 22 of the CRPD protecting the privacy of people with a disability. The Bill shifts the duty of authorised representatives from being required to act in the 'best interests' of an individual, to a duty to give effect to the 'will and preferences' of the individual. This change realises the principle that people with disability have an equal right to make decisions and to have those decisions respected…

As noted above at [1.50], an attempt to drive increased use by healthcare providers, may be regarded as a desirable or convenient outcome but may not address an area of public or social concern that is pressing and substantial enough to warrant limiting the rights of persons with disabilities.

In addition, the committee considers that the opt-out model may not be regarded as a proportionate means of achieving that objective. As discussed above, the amendments in the bill will enable the collection of the personal sensitive health information of all persons with disabilities to be automatically included on the My Health Record register, unless they or their authorised representative opts-out of this process. Similar to the discussion above at paragraphs [1.48] to [1.62], this significantly limits the right to privacy of persons with disabilities. The processes proposed by the bill also do not appear to provide persons with disabilities the support necessary to enable them to exercise their legal capacity.

In particular, the current law provides that whenever the Systems Operator is satisfied that a healthcare recipient 'is not capable of making decisions for himself or herself' the Systems Operator will deem whomever they are satisfied is an appropriate person to be the healthcare recipient's authorised representative. Once an authorised representative is stated by the Systems Operator to be acting for a healthcare recipient, that authorised representative is authorised to do anything the healthcare recipient can do and the healthcare recipient is not entitled to have any role in managing their health records.

However, article 12 of the CRPD affirms that all persons with disabilities have full legal capacity. While support should be given where necessary to assist a person with disabilities to exercise their legal capacity, it cannot operate to deny the person legal capacity by substituting another person to make decisions on their behalf. The UN Committee on the Rights of Persons with Disabilities has considered the basis on which a person is often denied legal capacity, which includes where a person's decision-making skills are considered to be deficient (known as the functional approach). It has described this approach as flawed: The functional approach attempts to assess mental capacity and deny legal capacity accordingly. It is often based on whether a person can understand the nature and consequences of a decision and/or whether he or she can use or weigh the relevant information. This approach is flawed for two key reasons: (a) it is discriminatorily applied to people with disabilities; and (b) it presumes to be able to accurately assess the inner-workings of the human mind and, when the person does not pass the assessment, it then denies him or her a core human right — the right to equal recognition before the law. In all of those approaches, a person's disability and/or decision-making skills are taken as legitimate grounds for denying his or her legal capacity and lowering his or her status as a person before the law. Article 12 does not permit such discriminatory denial of legal capacity, but, rather, requires that support be provided in the exercise of legal capacity.

The current PCEHR Act, by denying a person the right to manage any of their health records as soon as the Systems Operator makes an assessment that the person lacks the capacity to make decisions for him or herself, removes the person's right to legal capacity.

The amendments in the bill, in requiring an authorised representative to make reasonable efforts to ascertain the healthcare recipient's will and preferences in relation to their My Health Record, are important in respecting the rights of persons with disabilities. However, the design of the current legislation is such that the authorised representative would always be exercising substitute decision-making, rather than supported decision-making. In addition, while the bill imposes an obligation on an authorised representative to give effect to the will and preferences of the healthcare recipient, there is nothing in the legislation that makes this requirement binding, as there are no consequences in the legislation if the authorised representative does not give effect to the person's will and preferences. The statement of compatibility states that a failure of the representative to meet these duties 'may result in their appointment being suspended or cancelled, or access to the individual's My Health Record being blocked under the My Health Records Rules'. However, it is not clear how this would work in practice.

The use of substitute decision-making through the authorised representative process in the bill is of particular concern from an international human rights law perspective. As the UN Committee on the Rights of Persons with Disabilities has explained: Substitute decision-making regimes, in addition to being incompatible with article 12 of the Convention, also potentially violate the right to privacy of persons with disabilities, as substitute decision-makers usually gain access to a wide range of personal and other information regarding the person. In establishing supported decision-making systems, States parties must ensure that those providing support in the exercise of legal capacity fully respect the right to privacy of persons with disabilities.

The Australian Law Reform Commission (ALRC) has identified a number of Commonwealth laws that are not fully compliant with article 12 of the CRPD and has made recommendations to bring legislation into line with international law. The recommendations could relevantly inform the drafting of the bill in a matter consistent with international law.

In addition, there is no information as to how persons with disabilities will be notified appropriately about their right to opt-out of the scheme. As the UN Committee on the Rights of Persons with Disabilities has noted:

Lack of accessibility to information and communication and inaccessible services may constitute barriers to the realization of legal capacity for some persons with disabilities, in practice. Therefore, States parties must make all procedures for the exercise of legal capacity, and all information and communication pertaining to it, fully accessible. States parties must review their laws and practices to ensure that the right to legal capacity and accessibility are being realized.

The committee's assessment of the automatic inclusion of the health records of all persons with disabilities on the My Health Record register against the Convention on the Rights of Persons with Disabilities (rights of persons with disabilities) raises questions as to whether the automatic inclusion of the health records of all persons with disabilities on the register is compatible with the rights of persons with disabilities.

As set out above, automatic inclusion of the health records of all persons with disabilities on the register engages and limits the rights of persons with disabilities. The statement of compatibility does not sufficiently justify that limitation for the purposes of international human rights law. The committee therefore seeks the advice of the Minister for Health as to:  whether there is reasoning or evidence that establishes that the stated objective addresses a pressing or substantial concern or whether the proposed changes are otherwise aimed at achieving a legitimate objective; whether there is a rational connection between the limitation and that objective; and whether the limitation is a reasonable and proportionate measure for the achievement of that objective, in particular whether the opt-out model is the least rights restrictive approach and whether there are sufficient safeguards in the legislation to protect the rights of persons with disabilities.

Civil penalty provisions

The bill introduces a number of new civil penalty provisions to apply when a person improperly uses or discloses personal information from the My Health Record system or fails to give up-to-date and complete information for the register.

For example, proposed new section 26 makes it an offence to, unless authorised, use or disclose identifying information from the My Health Records system. The penalty for the criminal offence is two years imprisonment or 120 penalty units (or both). Proposed new subsection 26(6) also applies a civil penalty to the same conduct, on the basis of recklessness, with an applicable civil penalty of 600 penalty units.

The committee considers that this measure engages and may limit the right to a fair trial as the civil penalty provisions may be considered to be criminal in nature under international human rights law and may not be consistent with criminal process guarantees. Right to a fair trial and fair hearing rights

The right to a fair trial and fair hearing is protected by article 14 of the ICCPR. The right applies to both criminal and civil proceedings, to cases before both courts and tribunals. The right is concerned with procedural fairness, and encompasses notions of equality in proceedings, the right to a public hearing and the requirement that hearings are conducted by an independent and impartial body.  Specific guarantees of the right to a fair trial in the determination of a criminal charge guaranteed by article 14(1) are set out in article 14(2) to (7). These include the presumption of innocence (article 14(2)) and minimum guarantees in criminal proceedings, such as the right not to incriminate oneself (article 14(3)(g)) and a guarantee against retrospective criminal laws (article 15(1)).

Compatibility of the measure with the right to a fair trial and fair hearing rights

Under international human rights law civil penalty provisions may be regarded as 'criminal' if they satisfy certain criteria. The term 'criminal' has an 'autonomous' meaning in human rights law. In other words, a penalty or other sanction may be 'criminal' for the purposes of the ICCPR even though it is considered to be 'civil' under Australian domestic law. If so, such provisions would engage the criminal process rights under articles 14 and 15 of the ICCPR.

There is a range of international and comparative jurisprudence on whether a 'civil' penalty is likely to be considered 'criminal' for the purposes of human rights law. The committee's Guidance Note 2 sets out some of the key human rights compatibility issues in relation to provisions that create offences and civil penalties.

The statement of compatibility states that the civil penalty provisions in the bill should not be classified as criminal under human rights law: Under the civil penalty provisions, proceedings are instituted by a public authority with statutory powers of enforcement in a court. A finding of culpability precedes the imposition of a penalty. This might make the penalties appear "criminal" however this is not determinative. While the provisions are deterrent in nature, these penalties generally do not apply to the public at large. Only a specific group of users, being healthcare providers and other participants in the My Health Record system with access to sensitive information will generally be impacted by these penalties. Further, the severity of the penalties is not too high, with the highest pecuniary penalty that can be imposed being only 600 units. This penalty is justified as the My Health Record system deals with privacy sensitive information and the misuse of this information needs to have proportionate penalties to the potential damage to healthcare recipients. In light of this analysis, the nature and application of the civil penalty provisions suggest that they should not be classed as criminal under human rights law.

The committee considers that a penalty of up to 600 penalty units is a substantial penalty that could result in an individual being fined up to $108 000. This is in a context where the individual made subject to the penalty may be a healthcare provider, such as a nurse, or an administrator working for a healthcare provider. The maximum civil penalty is also substantially more than the financial penalty available under the criminal offence provision, which is restricted to a maximum of 120 penalty units (or $21 600).

When assessing the severity of a pecuniary penalty the committee has regard to the amount of the penalty, the nature of the industry or sector being regulated and the maximum amount of the civil penalty that may be imposed relative to the penalty that may be imposed for a corresponding criminal offence. Having regard to these matters the committee considers that the civil penalty provisions imposing a maximum of 600 penalty units may be considered to be 'criminal' for the purposes of international human rights law.

The consequence of this is that the civil penalty provisions in the bill must be shown to be consistent with the criminal process guarantees set out in articles 14 and 15 of the ICCPR. However, civil penalty provisions are dealt with under the civil law in Australia and a civil penalty order can be imposed on the civil standard of proof – the balance of probabilities.

In addition, the committee notes that proposed new section 31C of the bill provides that each civil penalty provision under the bill is enforceable under Part 4 of the Regulatory Powers (Standard Provisions) Act 2014. This Act provides that criminal proceedings may be commenced against a person for the same, or substantially the same, conduct, even if a civil penalty order has already been made against the person. If the civil penalty provision is considered criminal in nature, this raises concerns under article 14(7) of the ICCPR which provides that no one is to be tried or punished again for an offence for which he or she has already been finally convicted or acquitted (double jeopardy).

The committee also notes that the civil penalty and offence provisions in the bill also allow for a reversal of the burden of proof, requiring the defendant to bear an evidential burden in relation to the defences in the bill. An offence provision which requires the defendant to carry an evidential or legal burden of proof with regard to the existence of some fact will engage the presumption of innocence because a defendant's failure to discharge the burden of proof may permit their conviction despite reasonable doubt as to their guilt. Neither the statement of compatibility nor the EM justifies the need for the reversal of the burden of proof.

The statement of compatibility states that the objective of the penalty regime is to protect the private sensitive information held on the My Health Record system 'and the misuse of this information needs to have proportionate penalties to the potential damage to healthcare recipients'. The committee considers that the protection of private sensitive information is a legitimate objective for the purposes of international human rights law. However, the objective behind including civil penalties of up to 600 penalty units (substantially more than the penalty available under the criminal offence provision) without the usual protections available to those charged with a criminal offence, and the reversal of the burden of proof, has not been explained in the statement of compatibility.

The statement of compatibility also does not explain how the civil penalty provisions, which are likely to be considered 'criminal' for the purposes of international human rights law, are proportionate to their objective. The committee's usual expectation where a measure may limit a human right is that the accompanying statement of compatibility provide a reasoned and evidence-based explanation of how the measure supports a legitimate objective for the purposes of international human rights law. To be capable of justifying a proposed limitation of human rights, a legitimate objective must address a pressing or substantial concern and not simply seek an outcome regarded as desirable or convenient. Additionally, a limitation must be rationally connected to, and a proportionate way to achieve, its legitimate objective in order to be justifiable in international human rights law.

The committee's assessment of the civil penalty provisions in the bill against article 14 of the International Covenant on Civil and Political Rights (right to a fair hearing) raises questions as to whether the provisions are criminal for the purposes of international human rights law and, if so, whether any limitation on the right to a fair hearing is justifiable.

As set out above, the civil penalty provisions engage and may limit the right to a fair hearing. The statement of compatibility does not sufficiently justify that limitation for the purposes of international human rights law. The committee therefore seeks the advice of the Minister for Health as to:  whether there is reasoning or evidence that establishes that the stated objective addresses a pressing or substantial concern or whether the proposed changes are otherwise aimed at achieving a legitimate objective;  whether there is a rational connection between the limitation and that objective; and  whether the limitation is a reasonable and proportionate measure for the achievement of that objective.

National Immunisation Register Regime

This week saw the Federal Court decision in Australian Competition and Consumer Commission v Homeopathy Plus! Australia Pty Limited (No 2) [2015] FCA 1090.

With that judgment in mind it is interesting to note comments on the Australian Immunisation Register Bill 2015 (Cth) and Australian Immunisation Register (Consequential and Transitional Provisions) Bill 2015 (Cth) by the Parliamentary Joint Committee on Human Rights in its latest report.

The Australian Immunisation Register Bill 2015 (the bill) creates a new legislative framework for the operation of Australian immunisation registers, and repeals existing registers established under the Health Insurance Act 1973 and the National Health Act 1953.

The Australian Immunisation Register (Consequential and Transitional Provisions) Bill 2015 provides for the consequential and transitional provisions required to support the operation of the Australian Immunisation Register Act 2015.

Together these bills provide for the expansion of immunisation registers in two stages: From 1 January 2016 the Australian Childhood Immunisation Register (ACIR) will be expanded, so as to collect and record all vaccinations given to young people under the age of 20 years (currently only vaccinations given to children aged under seven years are collected and recorded); and  From late 2016 the register will be renamed the Australian Immunisation Register (AIR) and will collect and record all vaccinations given to every person in Australia from birth to death.

Measures raising human rights concerns or issues are set out below.

Use and disclosure of personal information from the Australian Immunisation Register

Under the bills, from late 2016 all persons in Australia enrolled in medicare and, if not eligible for medicare, anyone vaccinated in Australia, will be automatically registered on the AIR. This will include the vast majority of people in Australia, including those that choose not to receive vaccinations. The AIR can include significant personal information. This includes contact details, medicare number, vaccination status, general practitioner information regarding non-vaccination status and other information relevant to vaccinations.

The committee considers that the use and disclosure of personal information engages and limits the right to privacy.

Right to privacy

Article 17 of the International Covenant on Civil and Political Rights (ICCPR) prohibits arbitrary or unlawful interferences with an individual's privacy, family, correspondence or home. The right to privacy includes respect for informational privacy, including:  the right to respect for private and confidential information, particularly the storing, use and sharing of such information; and the right to control the dissemination of information about one's private life.

However, this right may be subject to permissible limitations which are provided by law and are not arbitrary. In order for limitations not to be arbitrary, they must seek to achieve a legitimate objective and be reasonable, necessary and proportionate to achieving that objective.

Compatibility of the measure with the right to privacy

The statement of compatibility for the bill acknowledges that the bill engages the right to privacy but states:

The authorisations of used [sic] and disclosure of personal information are reasonable, appropriate and necessary for the objectives and purposes of the Bill and adequately describes persons who are requiring access to the immunisation Register to achieve the objectives of the Register. The provisions in the Bill also provide individuals with freedom to access their own personal information. The limiting provisions surrounding the access of personal information are well described. The limitations for purposes for which the information can be disclosed are a reasonable and proportionate use of individual's personal information.

The committee notes that while the statement of compatibility does not explicitly set out the objectives of the bill, the objectives of the bill appear to include facilitating the establishment of records of vaccinations which will assist with information about vaccination coverage; monitoring the effectiveness of vaccinations; identifying areas of Australia at risk during disease outbreaks; and promoting health and well-being. The committee considers that these objectives are likely to be considered legitimate objectives for the purposes of international human rights law, and the inclusion of information on the AIR is likely to be rationally connected to these objectives.

However, it is unclear whether all of the powers enabling the use, recording and disclosure of information are proportionate to achieving those objectives. In  particular, the committee is concerned about the ability of the minister (or his or her delegate) to authorise a person to use or disclose protected personal information for a purpose that the minister (or delegate) is satisfied is in the public interest. This power is in addition to the other powers under subclause 22(2), which provides detailed authorisation for the use and disclosure of protected information to specified persons or bodies and for specified purposes.

The statement of compatibility does not explain why it is necessary to include this broadly defined power. Rather, it states:

The Minister (or his or her delegate) may also disclose personal information if they are satisfied that it is in the public interest to do so. An example is where a child protection agency requests information when investigating the welfare of a child. Section 23 of the Bill creates an offence for making a record, using or disclosing personal information where not authorised. In the 2014-2015 financial year, more than 18,000 authorisations occurred for this purpose.

Under international human rights law, when considering whether a limitation on a right is proportionate to achieve the stated objective it is necessary to consider whether there are other less restrictive ways to achieve the same aim. It is not clear why it is necessary to have such a broad power to enable disclosure to any person if it is considered to be 'in the public interest', in addition to the already expansive powers to authorise the use or disclosure of information under subclause 22(3) of the bill. If the intention is to allow child protection agencies to access the information, the provision could have been drafted more narrowly. The committee also notes that the statement of compatibility says that in one year, 18 000 authorisations for disclosure were made under the existing legislation. It would assist the committee to understand more about what type of authorisations these were, to whom and for what purpose.

It is also of note that the explanatory memorandum refers to disclosure being limited to 'a specified person or to a specified class of persons',5 however, clause 22(3) is not limited in this way but allows the minister to authorise 'a person' to use or disclose protected information.

The committee's assessment of the measure authorising the use or disclosure of protected information against article 17 of the International Covenant on Civil and Political Rights (right to privacy) raises questions as to whether the measure adopts the least rights restrictive approach.

As set out above, the measure authorising the use or disclosure of protected information engages and limits the right to privacy. The statement of compatibility does not sufficiently justify that limitation for the purposes of  international human rights law. The committee therefore seeks the advice of the Minister for Health as to whether the limitation is a reasonable and proportionate measure for the achievement of that objective, in particular whether the measure is sufficiently circumscribed to ensure it operates in the least rights restrictive manner.

Reversal of the burden of proof

Clause 23 of the bill makes it an offence for a person to make a record of, disclose or otherwise use protected information if that record, use or disclosure is not authorised by the bill. Clauses 24 to 27 provide a number of exceptions to this offence, including if the use is in good faith, the person is unaware that information is commercial-in-confidence, that the disclosure was to the person to whom the information relates or to the person who provided the information. These exceptions reverse the burden of proof, requiring the defendant to bear an evidential burden if relying on these defences.

The committee considers that the reversal of the burden of proof engages and limits the right to a fair trial (presumption of innocence).

Right to a fair trial (presumption of innocence)

The right to a fair trial and fair hearing is protected by article 14 of the ICCPR. Article 14(2) of the ICCPR protects the right to be presumed innocent until proven guilty according to law. Generally, consistency with the presumption of innocence requires the prosecution to prove each element of a criminal offence beyond reasonable doubt.

An offence provision which requires the defendant to carry an evidential or legal burden of proof, commonly referred to as 'a reverse burden', with regard to the existence of some fact engages and limits the presumption of innocence. This is because a defendant's failure to discharge the burden of proof may permit their conviction despite reasonable doubt as to their guilt.

Where a statutory exception, defence or excuse to an offence is provided in proposed legislation, these defences or exceptions must be considered as part of a contextual and substantive assessment of potential limitations on the right to be presumed innocent in the context of an offence provision. Reverse burden offences will be likely to be compatible with the presumption of innocence where they are shown by legislation proponents to be reasonable, necessary and proportionate in pursuit of a legitimate objective. Claims of greater convenience or ease for the prosecution in proving a case will be insufficient, in and of themselves, to justify a limitation on the defendant's right to be presumed innocent.

Compatibility of the measure with the right to a fair trial

The statement of compatibility for the bill does not acknowledge that the right to a fair trial is engaged by these measures. The explanatory memorandum to the bill also provides no justification for these measures.

The committee's usual expectation where a measure may limit a human right is that the accompanying statement of compatibility provide a reasoned and evidence-based explanation of how the measure supports a legitimate objective for the purposes of international human rights law. This conforms with the committee's Guidance Note 1, and the Attorney-General's Department's guidance on the preparation of statements of compatibility, which states that the 'existence of a legitimate objective must be identified clearly with supporting reasons and, generally, empirical data to demonstrate that [it is] important'. To be capable of justifying a proposed limitation of human rights, a legitimate objective must address a pressing or substantial concern and not simply seek an outcome regarded as desirable or convenient. Additionally, a limitation must be rationally connected to, and a proportionate way to achieve, its legitimate objective in order to be justifiable in international human rights law.

The committee's assessment of the reversal of the burden of proof against article 14 of the International Covenant on Civil and Political Rights (right to a fair trial) raises questions as to whether the measure is justifiable.

As set out above, the reversal of the burden of proof engages and limits the right to a fair trial. The statement of compatibility does not justify that limitation for the purposes of international human rights law. The committee therefore seeks the advice of the Minister for Health as to: whether the proposed changes are aimed at achieving a legitimate objective; whether there is a rational connection between the limitation and that objective; and whether the limitation is a reasonable and proportionate measure for the achievement of that objective. 6

ChAFTA, Labour Mobility and Employment

The Impact of the China-Australia Free Trade Agreement on Australian job opportunities, wages and conditions, a report by Joanna Howe at the University of Adelaide, comments

Significant controversy surrounds the impact of the China-Australia Free Trade Agreement (ChAFTA) in a number of areas. This report focuses on two of these areas by examining the ChAFTA’s provisions on labour mobility.

The first area of controversy is whether the ChAFTA will enable Chinese workers to replace local workers in the Australian labour market. This question hinges upon whether the Australian Government can impose labour market testing to determine whether a genuine skills shortage exists in the local labour market. Without labour market testing there is no regulatory mechanism to ensure that local job opportunities are protected.

The second area of controversy is whether the ChAFTA allows for, or will result in, Chinese workers receiving poorer wages and conditions than local workers in the Australian labour market.

This report is structured in two parts. Part One considers the three provisions in the ChAFTA that provide the opportunity for Chinese workers to access the Australian labour market. The labour mobility clauses in Chapter 10 and the two memorandums concerning largescale infrastructure development projects and the annual entry of working holiday makers each facilitate this opportunity. This report identifies each of these entry pathways into the Australian labour market and examines how they will operate in practice.

Part One of the report makes a number of findings. Firstly, the report finds the ChAFTA greatly increases the access of Chinese workers to the Australian labour market. The report recommends the Australian Government use its enabling legislation to clarify that labour market testing will apply to certain categories of Chinese workers. In particular, there needs to be labour market testing in a manner that is consistent with Australia’s 457 visa program, before employers can access Chinese workers who are ‘contractual service suppliers’ or ‘installers and servicers’. Without labour market testing, there is no regulatory mechanism to prevent an employer from preferencing a Chinese worker over a local worker for these two categories. Secondly, the report also finds that there needs to be greater protection to ensure Chinese workers are not used as a way of undercutting local wages and conditions. This can be done by making it a requirement that Chinese workers be paid the applicable market salary rate and not merely the award rate for their occupational category. The market salary rate can be determined through taking into account the current major employing collective agreement registered by the Fair Work Commission in the sector and/or region, ABS average salary rate data and the Department of Employment’s Job Outlook data.

Thirdly, the report finds that the current regulatory framework for Investment Facilitation Arrangements (IFAs) requires reform in order to ensure it is a legislated framework that mandates labour market testing, market salary rates and the achievement of greater public accountability and transparency around IFAs. Part Two of the report examines two key issues concerning the ChAFTA’s impact on Australian labour standards. The first issue pertains to the role and importance of labour market testing in determining the composition of Australia’s migrant worker intake. This section finds that both the OECD and two independent Australian government reports published in the last two years suggest that it is necessary for countries to have a clear and concrete process for determining which occupations are eligible for temporary migration. It is essential, therefore, that the Australian Government relies on labour market testing to assess whether Chinese workers are filling genuine vacancies in the Australian labour market. The report recommends that Australia adopt a consistent approach to labour market testing so that workers entering Australia via a free trade agreement are subject to the same labour market testing requirements as under Australia’s 457 visa program.

The second issue concerns whether temporary migrant workers from China can and/or will be paid less or treated differently to local workers performing equivalent jobs in the Australian labour market. Although it is true that Chinese workers will be required to be employed in accordance with Australia’s employment laws and are entitled to Australian wages and conditions, it is equally true that where these workers are being exploited or being used to undercut local wages and conditions, it is highly unlikely this will be uncovered by authorities, due to the inadequacies of existing regulatory enforcement arrangements. This section explores the myriad reasons why this is so, including the significant wage differentials between China and Australia, the employer-driven nature of Australia’s temporary migrant worker program and the limited resources of our enforcement inspectorate, the Fair Work Ombudsman. It is also highly unlikely that Chinese workers themselves will raise the alarm about underpayment of wages or exploitative treatment because of structural reasons inherent in temporary migrant worker programs, relating to the precarious position of migrant workers, especially those on temporary and employer-sponsored visa arrangements.

Although advocates of the ChAFTA will point to the text of the agreement that requires Chinese workers be employed according to Australian law, and government policy which currently stipulates labour market testing for labour agreements, neither of these are sufficient to ensure that the ChAFTA’s operation in practice does not place downward pressure on Australian wages, conditions and labour standards.

Increasingly, there is an unquestioned economic philosophy that systems need to be less regulated by government and driven by the needs of employers, with market responsiveness, timeliness and flexibility as the drivers and indicators of success. Be that as it may, there is a strong case for government regulation to ensure that temporary labour migration is used to address genuine skill needs in the local labour market, without being used as a vehicle to unnecessarily increase labour supply and reduce local wages and conditions. Without clarification in the enabling legislation, the ChAFTA does not achieve the right balance between these two needs. Not only does the ChAFTA attempt to prevent the Australian government from regulating its temporary labour migration program with respect to Chinese workers to include some form of labour market testing, but it greatly increases the entry pathways for Chinese workers to enter the Australian labour market. Taken together, these two provisions make it extremely hard for the Australian Government to determine the scope and composition of its temporary migrant workforce, which is an important sovereign right and responsibility for any national government.

Thus, it is vital that the ChAFTA’s implementation be accompanied by enabling legislation that stipulates the application of labour market testing and market salary rates to Chinese workers, greater public accountability and transparency around investment facilitation arrangements and a substantial increase in the enforcement capacity and powers of the Fair Work Ombudsman.

The report features the following recommendations -

R1:  the Government clearly establish in its enabling legislation that labour market testing will apply to all Chinese workers coming into Australia as contractual service suppliers or as installers and servicers via Annex 10-A in the China-Australia Free Trade Agreement.

R2:  the requirement of labour market testing in free trade agreements be consistent with the 457 visa program. This requirement of labour market testing for certain categories of temporary migrant workers should be enshrined in the Migration Act 1958 (Cth).

R3:  This report recommends that contractual service suppliers and installers and services be subject to a market salary rates requirement as stipulated under the 457 visa program.

R4:   the Australian Government strengthen the application of labour market testing for the 457 visa, and consistent with the UK approach, adopt a model that is primarily predicated on independent labour market testing but which can be supplemented, where necessary, with employer-conducted labour market testing.

R5:   that Chinese workers receive the same wages and conditions as equivalent local workers for each occupational category specified in the investment facilitation arrangement. The process for determining the applicable local wage and employment conditions for each occupation should take into account, but is not limited to the following:

• the current major employing collective agreement registered by the Fair Work Commission in the sector and/or region; 

• ABS average salary rate data; and 

• the Department of Employment’s Job Outlook data.

R6:  the requirement for labour market testing for labour agreements signed under an investment facilitation arrangement become a legislated requirement through an amendment to the Migration Act 1958 (Cth).

R7:  once an investment facilitation arrangement is in place it must be made publicly available by the Department of Immigration on its website. This should be accompanied by a public statement stipulating:

• the concessions which are granted under the IFA with regards to wage levels, skills and English language ability

• justification of why each concession has been granted and the circumstances surrounding the grant 

• how compliance with each concession will be monitored 

• the occupations which are covered by the IFA 

• the salary rates to be paid out to workers for each occupational category under the IFA 

• the proportion of overseas workers to be employed under the arrangement compared with local workers

8: This report recommends that any labour agreements negotiated under the investment facilitation arrangement should be made publicly available by the Department of Immigration on its website. This should be accompanied by a public statement stipulating:

• the concessions which are granted under the labour agreement with regards to wage levels, skills and English language ability 

• justification of why each concession has been granted and the circumstances surrounding the grant 

• how compliance with each concession will be monitored 

• the occupations which are covered by the labour agreement 

• the salary rates to be paid out to workers for each occupational category under the labour agreement 

• the proportion of overseas workers to be employed under the arrangement compared with local workers

R9:   the Government review the Work and Holiday Visa and the Working Holiday Visa to ensure this visa scheme meets its central purpose of being for cultural exchange rather than as a general labour supply visa. In particular, this review should address the following:

• the need to protect local job opportunities; and 

• the need to protect working holiday visa holders in the Australian labour market from exploitative arrangements.

R10:   the Government substantially increase the enforcement capacity of the Fair Work Ombudsman, its powers under the Fair Work Act 2009 (Cth) and its ability to impose penalties on employers who breach Australian employment law.

R11:   the increasing of civil and criminal penalties for employers found breaching Australian law with respect to the hiring and employment of temporary migrant workers.

12:  all temporary migrant workers, including Chinese workers entering the Australia labour market via the ChAFTA, be given an induction in their own language which details their workplace rights under Australian law and advises on support services available in the event of a breach of these rights or any other workplace issue.

R13  the identities of migrant workers who report instances of exploitation to the Fair Work Ombudsman or to any other body should not be provided to the Department of Immigration and Border Protection.