Adjourned debate on motion of Hon. M.J. Elliott:
 That this Counciló
 I. Opposes the Federal Government's signing of the Multilateral Agreement on Investment (MAI) until this Parliament and the people of South Australia are fully cognisant of the implications the MAI will have on policies under State jurisdiction; and
 II. Urges the State Government not to support the MAI if it is found that the governance of this State is severely impaired.

 
  The Hon. SANDRA KANCK: I have great pleasure in supporting this motion. The Multilateral Agreement on Investment (MAI) is a set of rules governing the flow of international capital through foreign investment. In particular, it sets the rules as to how Governments, including State Governments, should behave in relation to foreign invest-ment.
 There are 29 OECD countries involved in negotiating this particular treaty and there is large concern that other countries will ultimately be shanghaied into agreeing with the MAI, despite the fact that they are not even at the negotiating table, and for developing countries that is likely to have quite horrendous consequences.
 The agreement aims to free up foreign investment rules to the advantage of foreign investors. That is done by ensuring that the foreign investors are treated no less favourably than domestic investors. Under the MAI the definitions of both `discrimination' and `investment' are very wide and no industry type or sector is exempt from its coverage.
 To ensure the rights of foreign investors, provisions in the MAI will allow corporations to sue foreign Governments, including State Governments, for damages if they believe they have been discriminated against. Even though countries can and have negotiated reservations to protect some of their country's interests, these are not permanent and thus will be subject to roll-back provisions.
 Current laws, and perhaps State based laws that we take for granted, will have to be eliminated if they are in conflict with the MAI. So, despite the MAI primarily being a Federal issue, given that the agreement will also impact on State Governments it is important that this Parliament and the people of South Australia are fully aware of its existence and how it will impact on State based policy making. Even though Australia, together with the other OECD countries, began official negotiations on the MAI three years ago under the previous Labor Federal Government, I personally became aware of its existence and implications only in January this year.
 My learning of the proposed agreement was not through any sort of formal Government channels but, rather, through a member of the Economic Reform Australia (ERA), Dr John Hermann. Dr Hermann had become aware of the MAI through a fellow ERA member from Queensland, Dr Richard Sanders, who in turn had learnt about the MAI through his contact with Canadians via the Internet.
 In Canada the MAI has been publicly debated by Federal and provincial Parliaments, with many members of Parlia-ment expressing grave concerns about the proposed MAI. Perhaps one reason the Canadians are so eager to debate the MAI is because they have experienced the bitter taste of a free trade agreement through their commitment to the North American Free Trade Agreement.
 Dr Sanders, after becoming aware of the MAI via the internet, was not only concerned about its ramifications but also the secrecy surrounding the negotiations. He set about mobilising community groups known as `Stop MAI Coalitions' that have held very successful public meetings all around the country.
 As the community become activated on the issue, a number of articles started appearing in well-respected Australian newspapers expressing grave concerns about the MAI. Notably, the Australian Financial Review published an article by Geoffrey Barker called `Money, Foreign Invest-ment and the New World Order' on Monday 19 January 1998. In the Business Review Weekly of 26 January 1998 there was an article by David James titled `A Conspiracy Theory Worth Worrying About'. On 5 February the Age, in its opinion page, published two pieces: `Australia's Selfhood Vanishes in the Market' by Kenneth Davidson and `Stealthy March Towards a Single Global Economy' by Matthew Townsend, a Melbourne barrister.
 This publicity about the MAI put the Federal Government on the back foot. In an article published in the Age of 9 February titled `Potential of Treaty Deserves a Hearing' the Assistant Federal Treasurer, Rod Kemp, attempted to answer the critics. He stated:
 There have been many claims that these [MAI] negotiations have progressed in secret. There is nothing secretive about the negotiations or the MAI. Australia's participation in the negotiations was announced at the outset. Unlike the previous Labor Government, the Coalition Government has put in place a rigorous treaty making process which will ensure that binding action is not taken on the treaty until it has been subjected to proper parliamentary and public scrutiny.

Like the previous Labor Government, the Liberal Govern-ment had been quite happy to keep the negotiations out of the public's attention. However, once caught out, the Govern-ment was left trying to explain that it was not keeping the negotiations secret, although, strangely, it still refused to table a draft copy of the MAI in Federal Parliament. It needs to be put on public record that the Government finally released a copy of the draft MAI only once it became available to the public from an unofficial source via the Internet. Besides claiming that the Government was not being secretive about the MAI, in that same article Mr Kemp also stated:

 The Government has also actively consulted and continues to consult the States, industry organisations and other interested non-government organisations about the details and implications of the MAI.

This is especially interesting when one considers that my colleague the Hon. Mike Elliott asked a question of the Treasurer in this place about the MAI nine days after this article was published. On 18 February the Treasurer replied:

 I am not familiar with the detail of the MAI agreement.

This was the Treasurer's responseóone of the most senior Ministers in State Government and he was not familiar with the detail of that agreement. It must be noted that, at this time, there was talk of the agreement's being signed in May, and here we had a senior member of our Government not being aware of its detail. So much for Mr Kemp saying that all other States were being consulted! To his credit the Treasurer did promise to get advice on the MAI and bring back a detailed response, which he duly did on 11 March. In his reply the Treasurer made the following statements about the level of consultation which, on the face of it, could be seen as reassuring, and I quote:

 1. In determining its final position, the Commonwealth Government will take account of the views of State and Territory Governments.
 2. Like the Commonwealth Government, the South Australian Government will consider the full implications of the MAI before forming a final position. In the meantime we will provide the necessary information to the Commonwealth Government to ensure the inclusion of exceptions relating to South Australia's laws and policies.
 3. Departmental level consultation has occurred and the Commonwealth is now seeking views regarding the impact of the proposed agreement on South Australia and any exceptions the South Australian Government considers should be lodged.

However, as has been stated by the two members who have already spoken to this motion, the Treaties Committee's interim report on the MAI is very critical of the Govern-ment's handling of the MAI negotiations. In particu-lar, the Treaties Committee is critical about the inadequate degree of consultation with State parliaments and the lack of detailed information about how the MAI will impact on policy making generally. I might add that it is of concern that the State Government and other senior Opposition members have not yet contributed to this debate by speaking to this motion. I trust the delay is occurring because they are researching the matter and that they will recognise the potential for dire consequences which the MAI may well bring.
 It would not be good enough to discover down the track that we will lose State governanceóas has happened with the electricity market and competition policyóand for the Government to then claim that it is not its fault and blame its Federal counterparts for signing the document. Mr Rod Kemp's article appearing in the Age further states:

 The Government's position on the MAI, or any other treaty, is clear. We will not sign the MAI unless it is demonstrably in Australia's national interest. Our national interest encompasses the interests of the community as a whole . . . not just the interests of large firms.

He further states:
 The aim of the MAI is to provide a strong and comprehensive framework for international investment. The MAI would provide investors with greater certainty as to the `rules of the game' when investing in foreign countries.

Mr Kemp then went on to make a number of unsubstantiated claims. He said:

 A major benefit in the treaty is that it would help Australian companies gain greater access to foreign markets. Also, existing and future Australian investments would be more secure because of the legal protection offered by the MAI. Joining the MAI would not endanger Australia's existing laws and policies. While the proposed MAI generally requires foreign investors to be treated no less favourably than domestic investors, it will be possible for countries to make exceptions where they want to impose more stringent requirements on foreign investments than on domestic investors.
 Australia will create whatever exceptions are required to protect our laws and policies, including immigration, foreign investment (including the media and real estate) and Govern-ment grants and subsidies. Likewise, Australia will be able to protect its environmental and labour standards, Australian content in programming, the sale of public assets, fishing rights and the affairs of our indigenous people.

The Federal Treaties Committee's interim report is critical of the Federal Treasury's official submission to the commit-tee because it asserts many advantages of the MAI without providing sufficient detail on the implications.
 The Demo-crats have identified a number of key problems of the MAI, some of which I will now deal with as they relate to State based law. It is current practice for Australian governments to impose certain conditions on investment. Investors, both foreign and local, do not have carte blanche: they must abide by the rules of the country. However, under MAI such conditions could be illegal. The conditions include some of the following: restrictions on foreign ownership, for example, on real estate or privatised bodies; requirements to enter into joint ventures; environmental, human rights or labour standards; restrictive criteria on the use of natural resources; performance requirements on local content; local employment or technology transfer; and even affirmative action quotas.
 It seems all too obvious that one role of the Government is to protect its citizens, and a classic example of this is with respect to anti-smoking laws. The Tobacco Products Regula-tion Act, which was passed last year by this Parliament, states:
 In recognition of the fact that consumption of tobacco products impairs the health of the citizens of the State and places a substantial burden on the State's financial resources, the objects of this Act are:
and I quote just oneó

to reduce the incidence of smoking and other consumption of tobacco products in the population, . . . by prohibiting or limiting advertising, sponsorships and other practices designed to promote or publicise tobacco products and their consumption.

Some might be rather surprised to learn that the MAI could impact on such a commonsense and perfectly legitimate object of such legislation. Indeed, under the MAI rules, this legislation could well be challenged by large tobacco firms which could argue that the prohibition of advertising and sponsorships reduces their ability to make profits thereby expropriating the company's future earnings. As a result, they could sue the State Government for damages. If that sounds far-fetched, members might be astonished to learn that the Canadian Government, under NAFTA rules, is currently being sued by a US based multinational because the Canadian Government banned the sale of a dangerous chemical in the interests of protecting Canadian citizens. It is precisely the sheer open-endedness of the MAI and lack of detail of its powers which makes it extremely dangerous.
 Under international law, the term `expropriation' is very broad and it applies to any act where a governmental authority denies a person or company some benefit of property. The Government does not need to take title to the property; all it must do is deny the benefit of the investment to the investor. The MAI is a very generous treaty when dealing with quantifying investor compensation. An investor must receive what is termed `fair market value' for its expropriated property.
 Another big unknown of the MAI relates to public funding of health services. As with publicly funded education, governments might find themselves unable to assign public funds for public hospitals on the grounds that foreign hospitals are being discriminated against. The Federal Government has not provided precise information on these sorts of matters. I do not know whether that is because it does not have the information or it is unwilling to share it. Either way, it is a matter of concern.
 There are many South Australian laws that pursue social, environmental, labour and cultural issues. For instance, with respect to the arts, any Government policy to promote local culture over foreign culture could be seen as discriminatory under the MAI. What impact would the MAI have on our State-funded South Australian Film Corporation, which was established to promote the local film industry? Is it at risk of being banned under the proposed MAI rules? I note that the Arts Minister is listening with great interest, and I wonder whether she was consulted in February at the time the Assistant Federal Treasurer said that State Governments had been consulted on this issue. The recent decision about New Zealand content in Australian film and music may well be a portent of things to come.
 There are myriad State-funded programs aimed at promoting the development of local industry and employment such as information technology and agriculture. Would those job-promoting policies be banned under MAI? This Parlia-ment needs firm answers on these sorts of issues before the Federal Government commits to the MAI. In this State, we have the Mining Act of 1971, which regulates and controls mining operations in this State. The powers vested in the Minister via this Act are broad. For instance, sec-tion 34(6), which deals with the terms and conditions of granting a mining lease, states:

 . . . the Minister is to give proper consideration to the protection ofó
 (a) the natural beauty of any locality or place that may be affected by the conduct of operations in pursuance of the lease;
 (b) flora and fauna that may be endangered or disturbed by those operations;
 (c) buildings of architectural or historical interest, and objects and features of scientific or historical interest, that may be affected by those operations;
 (d) any Aboriginal sites or objects within the meaning of the Aboriginal Heritage Act 1988 that may be affected by those operations; and
 may take into consideration such other factors as he considers appropriate in the particular case.

All five of those points are very important and very valuable for South Australians but, under MAI, they may well be threatened. We do not know precisely how the MAI will impact on this legislation. On current understanding, these broad ministerial powers aimed at protecting the interests of South Australians will, it appears, be banned.
 These sorts of details have been left very open ended and it appears under the proposed MAI that such questions might be left to an international tribunal, which will make an assessment on purely economic grounds. Although the MAI is an international treaty being dealt with by the Federal Government, it will have enormous ramification on policy areas made in this Parliament. Therefore, it is most important that State politicians are fully aware of the consequences of the MAI and the impact it will have on our ability as State MPs to make laws in those areas under our jurisdiction.
 Foreign investment is a two-way street. Any investment we choose to have in this State should be to the benefit of South Australians as well as to the investors who may choose to invest in our State. The MAI as it stands gives an over-whelming power to multinational corporate giants, which are predominantly US-based, at the expense of democratically elected Governments. Such Governments will be impeded from making policies on behalf of their community. Arguably, in an increasingly global economy, capital already has an advantage over the general community and Government because of its mobility.
 The MAI will intensify this power by giving capital more rights than Governments, with such rights not being matched by responsibility. The Democrats believe the MAI is unfair and unbalanced because it puts the interests of multinational companies ahead of Australia's democratic sovereignty. I urge all responsible MPs in this Parliament to take the time to fully investigate the ramifications that the MAI will have on the Australian democracy.
 
 The Hon. CAROLYN PICKLES secured the adjournment of the debate.
 
 
 

 
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