Richard Di Natale (Victoria, Australian Greens) Share this | Hansard source

The Trade and Foreign Investment (Protecting the Public Interest) Bill 2014 was introduced by Senator Whish-Wilson. Senator Whish-Wilson is leading the charge in informing the Australian community about, and protecting the Australian community from, the impact of secret trade deals negotiated without the scrutiny of the Australian parliament. This bill goes to the heart of what the role of government should be and what the role of corporations should be in our community.

The language in this area is very dense and very technical. The term 'ISDS' is used deliberately to ensure that most people do not understand its implications. It is actually very simple. It is simply about whether corporations should have the right to sue governments over the decisions they make. Should a corporation have the right to sue a government if that government makes a decision that affects the corporation's bottom line? That is what this is about. It is very straightforward—and it is a fundamental question. What is the role of government? Should corporations be able to penalise governments for making laws that are in the public interest but which impact on the bottom line of those corporations? It goes straight to the heart of what the role of government is. I take the Churchillian view that democracy is the worst form of government—except for all the others. I would much rather that democratically elected governments made decisions on behalf of the community rather than corporations, whose primary responsibility is to make a profit and to ensure that shareholders get a return. That is effectively what is at stake here.

Of course, when you get into these debates and you get into these polar corners, you end up with people who support trade deals and people who do not. I am not anti trade. I think international trade is a good thing. I think international trade is a tool, if used properly, that can lift people out of poverty. International trade and foreign aid together are very, very powerful tools to lift the living standards of developing countries and developed countries. But it cannot just be free trade; it also has to be fair trade. Those two things need to go together.

Again, reducing tariffs can be a good thing. In fact, it has been a good thing here in Australia, across many industries, enabling us to be a much more competitive, open economy. But this is not some divine rule that has been handed down from above on a tablet. It is interesting that it is often those industries that have benefited from protection from government, that have been able to grow and become strong, that are the greatest proponents of free and fair trade. Trade is a tool here; it is not an outcome.

What these provisions represent is basically a right for companies to make a government go before a local court or a specially arbitrated international tribunal if it believes that government has breached the terms of a trade deal. That is, if the company or investor is successful, governments are held financially liable for the losses that the company incurs. It is so pervasive that it cuts across all tiers of government. It is not just a question for the federal government; it is a question for state governments and a question for local governments.

The great shame here, and we have heard this time and time again, is that there is no transparency in this process. These deals are being negotiated in secret and the community do not understand them. It is a very technical area and it is only after a number of briefings that I have come to understand just how far reaching and pervasive some of these terms are.

We heard from the other side that actually Australia is not really going to be caught up in this. There have been very few investor-state dispute provisions targeting Australia. Let us not forget there have been over 550 claims made against governments over the past 10 years. There have already been 550 disputes, cases brought against governments, over the past 10 years. Australia has signed on to 28 agreements that include these provisions—deals with countries like China, India, Peru, Chile, Singapore and so on.

There is one situation that I want to focus on specifically because it highlights just how dangerous these investor-state dispute provisions are, and it is the issue of plain packaging. We now know that Philip Morris is suing Australia under an ISDS provision in the Hong Kong-Australia investment agreement. What they are doing is they are challenging some of the most significant public health measures introduced by any parliament—that is, our plain packaging legislation introduced by the previous government with the strong support of the Greens—to try and reduce the number of people taking up smoking. But under the 1993 Agreement between the Government of Australia and the Government of Hong Kong for the Promotion and Protection of Investments—it is called the Hong Kong agreement—we have seen a claim being brought against Australia. It is the first one that has been brought against Australia. I guarantee, if we sign on to this TPP with the ISDS provisions which we have heard about, it will not be the last.

Philip Morris's Asian division claim that Australia's tobacco plain packaging regime constitutes a breach of an agreement, and that agreement is that there is fair and equitable treatment of Philip Morris Asia's investments. They are asserting that the plain packaging legislation constitutes an unreasonable and discriminatory measure and that their investments have been deprived of full protection and security. That is exactly the point. This is one of the only products we have that, if it is used according to the manufacturer's instructions, will kill you. So the Australian government, as it has done over successive years, has taken an important measure to try and reduce smoking rates. It is what the community expect of us, and yet here we have a multinational company taking action against the Australian government because its profits are under threat. That is what this debate is about.

What we have is the Australian government making laws. They are good laws. They are laws that save people's lives, and yet we have an undemocratic entity taking action against a sovereign nation because of a threat to its investment. The question, of course, is: where does this stop? We now know that there are questions around the Pharmaceutical Benefits Scheme in this agreement, and access to affordable medicines. What about food regulation and food safety?

Let me focus on one specific area. It is the area of a new class of drugs that we call biological drugs. In the rules that we know were being discussed just this week, there were negotiations around the use of biological drugs that will, if implemented, delay access to affordable cancer treatments and new vaccines and increase the cost of PBS listed medications to Australian consumers. There are about 64 of these biological drugs now listed on the PBS. There are going to be many, many more to come. It is a very exciting area of research, generating cancer drugs, medicines for conditions like rheumatoid arthritis and multiple sclerosis and other vaccines. They are very difficult to make. The manufacture of these biological drugs is technically very, very complex. It means that they are expensive. During the period when the company makes the drug, it gets a monopoly because of the nature of the production process of the drug. You cannot simply copy it in the same way that you copy other medications.

We have a process called data exclusivity. Let me try and unpack that. Any drug that is made gets five years of something called data exclusivity. It means that, if you are a generic company and you want to copy someone else's drug, the trials that were done with the originator drug cannot be used for a minimum period of five years. It is an added layer of protection to the company that is innovating and making the drug. It says, 'If you want to copy this drug, it is going to be five years before you can use our results.' Normally in our system, with generic drugs, they do not have to repeat the clinical trials that are done by the originator, and in five years time they get access to that data. It is called data exclusivity. It is an added layer of protection to patent laws.

Under this proposed agreement, there is a plan to extend that data exclusivity. The US wants 12 years of data exclusivity. It means that, should a biological drug be manufactured to treat cancer or rheumatoid arthritis or multiple sclerosis, it will be an additional seven years before a competitor can come along and say, 'We can make this drug, but we can make it for a lot cheaper; it is going to cost the taxpayer a lot less.' That is seven years that we prevent a competitor's entry into this market. These are the champions of free trade! 'We love competition; we love it so much that we are going to stop competition for seven years by disallowing another entrant into the market.' That is what the US wants right now. In Australia, we have a five-year period. The US wants 12. What are we going to get? We simply do not know, because these deals are being negotiated in secret.

I think it is a great irony here. Competition is great. It is wonderful. It is the engine to a productive economy, unless you are a corporation who wants to use patent law, who wants to evergreen and who wants to use data exclusivity to prevent the entry of a competitor—in which case, 'We don't like it.' At the moment, this issue is being discussed very much. The Pharmaceutical Patents Review Panel has said very explicitly that there are no examples that indicate that the current protection systems are not sufficient enough to provide protection for innovator companies. I quote the Pharmaceutical Patents Review Panel:

… at this stage the case has not been made to extend data protection for biologics in Australia.

We do not know what is going to happen. We may find it goes to eight years, as I think Japan are currently talking about, or 12 years, as is the case in other countries.

This is a huge issue. Let me give you an example. There is a particular drug that is marketed as Lucentis. It is an injectable antibody. It treats macular degeneration and stops people from going blind. It was a drug with the third-highest cost to government in 2013. It cost Australian taxpayers $286.9 million in total. When the first biosimilar drug comes onto the market—that is, a generic competitor—you will get a 16 per cent statutory price reduction. That is a saving to the taxpayer of $45 million in the first year, with a whole lot more flow-on effects from price disclosure in subsequent years. That is a huge saving. On the one hand, we have a government running around like Chicken Little saying: 'Look at how unsustainable the health system is. We've gotta introduce co-payments. We've gotta make medicines more expensive.' Well, you are right; you are making them more expensive through these trade deals. That is what they are doing. If you are so concerned about the cost of medications and the cost of the PBS, why would you sign a trade deal that is going to prevent the entry of cheaper generic drugs into the market? That is what we are dealing with right now.

There are so many other areas in this agreement that we could talk about. We have heard from my colleague Senator Rachel Siewert about a whole range of environmental disputes. There are disputes in Canada where investors are challenging measures introduced on a whole range of environmental grounds. There are pine resources in Quebec. They had a moratorium on hydraulic fracturing there, which meant that the company lost their gas exploration permit, so there is a dispute going on there. There is a moratorium on offshore wind farms in Ontario, which was a silly decision by that government, but it is their decision to make. They were democratically elected; if they want a moratorium, they should be able to do it—even if I disagree with that. Then we are told that the ban is a breach of the contract for electricity supply with the Ontario Power Authority for a 20-year period, so there is another dispute. There is OceanaGold, an Australian company, who have a subsidiary in El Salvador suing the government for more than $300 million. Why? Because the government refused to grant a goldmining permit. They are being sued because they knocked back a permit for a goldmine. In Sweden, there is an energy company that has fielded a request for arbitration against Germany. Again, it is because the government made a decision—in this case, I think it was a good one—to phase out nuclear power. Here we have situation after situation where democratically-elected governments, making usually good but sometimes bad decisions, are being challenged by hugely profitable multinational corporations because they affect their profits.

We have to decide who it is that should be making decisions on behalf of the public interest. Who is it? Democratically-elected governments or corporations? I know how I would decide. Then you have to ask the question: what is it all for? The Productivity Commission in 2010 said:

The Commission received no feedback from Australian businesses or industry associations indicating that ISDS provisions were of much value or importance to them.

Another quote:

There does not appear to be an underlying economic problem that necessitates the inclusion of ISDS provisions within agreements.

Here we have our government, behind closed doors, talking to a range of countries, introducing these secret provisions that nobody wants, not even Australian business, that will have an impact on a whole range of vital sectors making decisions about plain packaging, the costs of medicines, whether a mine should be approved and the sort of energy supply we have in this country. Who do we want to be making those decisions? I know who I want. I want the people, who, every few years, I mark a little number next to their name to be accountable. I want to know that, if they get it wrong, I can go back in a few years and boot them out. I do not want some faceless person whose only obligation is to return a profit and who is not accountable to the people that he is taking action against.

I commend Senator Whish-Wilson's legislation. It is an important issue and I think it is about time we started recognising that it is governments, not corporations, that should be legislating on behalf of the public interest.