Cheap politics sours policy victory

THE Gina Rinehart foreign worker saga is Labor snatching defeat from the jaws of victory.

Here was a win-win-win story for the Gillard government -- it was backing a $10 billion new project, creating 6700 new Australian jobs and delivering a world's best practice temporary migration policy.

Every box had been ticked. It was an example of Labor getting things right. It was proof of Labor being smart. It was evidence that Labor could deliver innovative business-friendly policy. And the ground had been prepared for years.

The ministers running the show, Immigration Minister Chris Bowen and Resources Minister Martin Ferguson, were tough and determined. Their policy fitted perfectly into Labor's narrative. Labor was helping business to create wealth; it was helping to spread the benefits of the resources boom by vast job creation. The concept had been devised with consultation involving unions and business as stakeholders.

And the cabinet was on board: the Enterprise Migration Agreements had been approved by cabinet a year earlier. Julia Gillard had backed the concept. Senior ministers from Wayne Swan to Greg Combet to Chris Evans were endorsing the Roy Hill deal. Let's face it: this should have been a public relations victory, not a nightmare.

What about terrible, negative Tony Abbott, the man who opposes everything? Surely the Opposition Leader could be relied upon to upset Labor's plan and ruin the announcement. Well, no. The Coalition actually backs the policy despite some internal rumblings. Abbott was not playing the wrecker. The EMAs are a bipartisan position, suggesting a rare concord in this parliament. They are an innovation backed across the political divide.

The structure of the first EMA was an ideal demonstration of Labor priorities: the deal gives life to the Roy Hill iron ore project envisaging more than 6700 so-called "Aussie jobs" (to use Labor's pathetic slogan) in the construction phase with permission for the project to sponsor up to 1715 foreign workers through the 457 visa program where Australians are not available to fill positions. The skills required involve electricians, fitters, scaffolders and boilermakers.

As Bowen said, the project is of national significance and the EMA is pivotal to its financing. It is a story of Labor resource sector co-operation. Doesn't that seem a good news event? As for the workers, the lesson from Roy Hill is that the import of foreigners and the creation of vastly more local jobs go together. The real challenge is obvious: can the local market provide 6700 Australian jobs given the mobility reticence of the labour force and the psychological as well as geographical hurdle of the Nullarbor?

The EMAs are not just about workers. They penetrate to project financing. Their role, as Bowen said, is to convince bankers and financiers that projects can be delivered on time and on budget. He says there are between 10 and 30 future projects likely to require EMAs. It is a pivotal policy for the resources boom. Bowen told parliament he was proud of the Roy Hill deal.

The third minister involved was West Australian, Gary Gray, a former ALP national secretary and former Woodside executive. He is probably the most knowledgeable caucus member on the resources sector.

What does Gray think of the policy? He told The Australian: "These EMAs provide the opportunity of world's best practice in skilled migration agreements. They are demand driven, enterprise driven and skills based. They are critical for developments and they don't displace Australian workers." Yet much of the caucus and union movement hates such language.

How, pray, could Labor stuff up such a golden policy opportunity? The real reason is apparent from the events of the past week.

The Gillard government is not trusted. It is not trusted by the resources sector. It is not even trusted by the trade unions. And without trust it has no ability to manage the resources boom. Gillard can pour as much cash as she likes into households as carbon tax compensation but it will have only marginal impact because her government is distrusted. That lack of trust got worse this week courtesy of the Prime Minister.

Asked about the EMAs, Australian Workers Union chief Paul Howes told The Australian: "In principle we support the idea of EMAs as opposed to the old system. But we weren't happy with the awarding of this EMA to Roy Hill. We fed in a lot of information to government about our views and concerns in relation to Roy Hill. I am genuinely surprised the government accepted the ambit claim for foreign workers made by the company. I am surprised the government accepted this deal without proper testing of the labour market. We don't know how this will operate. We are told they will be paid market rates of pay. But what does this mean? How do you determine that?"

The trade unions are angry with the government. They are angry with Bowen, Ferguson, Gray, Gillard's office and many others. They give Gillard an exemption: she remains their last hope. It was Gillard who jacked up when the unions complained; it was Gillard who distanced herself from her own ministers and her government's policy.

The problem is illustrated in Howes's over-the-top remarks last week and these comments to this paper: the unions distrust Labor on foreign worker policy. Of course, they distrust the resources companies even more. This is where a series of industrial battles are played out. The unions don't trust the resource companies on foreign workers or 457 visas. And they don't trust Rinehart, now established as a hate figure within Labor culture. They cannot stomach the idea that the government cut its first EMA with Rinehart.

Where is Gillard? She is stranded in the middle: she backs the foreign worker policy yet she needs to appease the unions. The consequence is further distrust between the resources sector and the government.

In her speech at the Minerals Industry dinner this week Gillard's messages were her commitment to growth and redistribution, yet they were framed in an adversarial tone. Her message was "our economy is the envy of the world" and "our mining industry is the envy of the world" and you'd better remember "this is Australia and it has a Labor government". Got it? The antagonism is this encounter was visceral.

So what went wrong this week? It is true that Bowen and Ferguson misjudged the union hostility. It is also true the announcement should have been framed differently with less emphasis on foreign workers. The deeper problem in Gillard's overreaction to the union breakout is that Labor is trapped between the needs of good policy and its compulsion for cheap politics.

Remember the 2010 election campaign. For the past 18 months Labor has been restoring a sound immigration agenda after Gillard's poll-driven assault on the Big Australia concept in the campaign and her agenda for re-election as the first Prime Minister seeking a smaller growing Australia.

Gillard has form on immigration: she was prepared to sacrifice the national interest to play politics. In the 2010 campaign she invoked the dream of "clean beaches and precious open spaces" to exploit worry about urban overcrowding in a dog whistle to xenophobia.

The Coalition was just as bad, maybe worse.

Since then in office, Labor has done much good work. It has stabilised, reformed and increased the intake. Under Bowen, it has cautiously pushed the 2012-13 intake to 190,000, a lift of 5000 on the previous year with a skilled stream of 129,250. The 457 visas for temporary workers to fill nominated vacancies in response to the market have been reformed and enhanced.

By March this year the 457 visa holders had reached an all-time high of 88,590 people. This testifies to serious skilled vacancies in Australia and the tightness of labour conditions. If current trends continue, Western Australia will become this year the biggest user of 457 visas.

The EMA concept is a refinement of 457 visas and originated during Kevin Rudd's leadership when he appointed a National Sector Employment Taskforce chaired by Gray that also included Howes. That taskforce recommended the EMA concept to assist mega-resource projects get off the ground.

Bowen issued the guidelines for the EMAs in September last year and the Roy Hill project applied either late last year or early this year.

In her letter to caucus members last week, Business Council chief Jennifer Westacott tapped into our denied realities. She said many Australians decline resource-sector jobs for "lifestyle reasons".

It is a polite description of much of southeast Australia's distaste for the industry. The ambivalence towards development is now part of Australia's progressive political culture and has a hypocritical edge: many people resent the resources sector yet resent their alleged lack of benefits from the industry.

Westacott warned caucus that "the successful delivery of these projects is far from assured". It is the same theme coming from BHP-Billiton. Gray said that only a minority of caucus came from the west and Queensland and that MPs had to be reminded constantly about the realities of the resources sector.

Gray saw the constructive side to the fracas. EMAs needed to operate "under a social licence" and Labor was now providing that. A caucus subcommittee would monitor the scheme. "I don't see this as an impediment to the policy," Gray said.

As for Bowen, he retains the ministerial powers over EMAs and, have no doubt, he will use them. As for Gillard, she presides over a broader Labor constituency divided against itself on this issue.