Mr ALBANESE (Grayndler) (5.00 p.m.)—I rise today to speak on the issue of globalisation. The impact of globalisation on the nation-state and its effect on working people is a subjective area of analysis. However, I believe that there are problems arising from an increasingly integrated international economy that can be identified objectively. But I also believe that states acting collectively can bring about changes to the current international system for the benefit of world citizens.

Globalisation is, broadly defined, the breakdown of economic sovereignty of states and the deregulation of world market forces. Whilst nation states are moving towards the breakdown of protectionist policies such as tariffs and are embracing free trade, the reality is that most states are keeping some form of protection firmly in place. It is, for example, difficult to see the abolition of French or US government subsidies for agriculture. I believe, as argued by Robert Reich in The Work of Nations, that in a truly global economy national economic policy would give way to global economic decision making. There would be no national products, technologies, corporations or industries—in short, no distinctly separate national economies. Of course, this is clearly not the case. Globalisation may well be evolving, but is not yet complete or beyond regulation.

The underlying reason for diminishing state sovereignty is the inability of states in a largely deregulated internationalised market to control the volatility and speed of foreign exchange markets. The recent economic crisis in Asia illustrates the diminishing authority of the modern state to control serious shifts of capital, and is a warning that should be noted by all governments. Financial markets are attempting to dictate terms to sovereign governments by perpetuating the belief that government spending crowds out more efficient market driven private investment. Emeritus Professor Russell Mathews of the Australian National University has gone as far as to argue that state sovereignty over economic policy has been handed over to gamblers. I certainly do not subscribe to the `I'm all right, Jack. Forget everybody else' school of international order which sees no role for the nation state in trade or investment policies. Surely even Mr Magoo could see that if our major export destinations are experiencing financial difficulties it will have a serious effect on the Australian economy as the purchasing power of our trading partners diminishes.

Let me make this point crystal clear: globalisation offers enormous potential opportunities for the benefit of all. However, unchecked globalisation offers no protection to working people or to developing nations from the often exploitative practices of multinational corporations. It cannot be ignored that half of the world's largest economies today are corporations, not nations. Many of these corporations do not actually produce anything. John Ralston Saul pointed out on his visit to Australia this year that the sales of 200 transnational corporations represent 28.3 per cent of the world's GDP. There is nothing wrong with that, except that they employ only 0.75 per cent of the work force. The question has to be asked: how is this rational or sustainable? Just as states have assisted global economic integration via a single-minded policy, states have it in their power to regulate the global economy to ensure an equitable outcome for working people throughout the world. Make no mistake about it: if working conditions are poor in any one nation in today's globalised economy it results in downward pressure on working conditions elsewhere. It can, and does, often result in job losses.

There are two proposals in the debate to regulate the global economy that I believe need further consideration. The first is a tax on international financial transactions, commonly known as the Tobin tax. The second is a proposal for a social clause to be linked to the World Trade Organisation. I will deal with them in that order. The Tobin tax is not a new idea and has been explored on previous occasions. However, the current global economic crisis has created conditions that the Tobin tax was designed to stop. This places the proposal back onto the political agenda. I believe that it is time for the tax to be given full and proper consideration. The idea for the tax was first published in 1978 and was the brainchild of Nobel laureate in economics Professor James Tobin. He advocated a levy on international financial transactions.

The goal of the tax is to provide revenue to the United Nations or the World Bank to fund development projects while acting as a curb on currency speculation. The levy is intended to be low enough to avoid restricting trade and investment and high enough to curb the flow of hot money and its destabilising effects on sovereign economies. The main features are: the tax should be set as a fixed percentage of foreign exchange transactions—Tobin argued that a rate of approximately one per cent, or even as low as 0.5 per cent, would be effective, given that the current worldwide turnover has been estimated at greater than $US1,000 billion per day—the tax to be collected by national governments on all foreign exchange payments within their jurisdiction; the tax to be levied by all nation states on a coordinated basis; and the tax to be paid in whole or in part into a central international fund.

In the past there has been no real incentive for developed nations to consider the tax. As an incentive for states to implement the tax they could be offered a percentage of the revenue collected for their own use. This could be determined on a needs basis, thus assisting developing nations with infrastructure projects and social and investment policies. Obviously the tax provides more for developing nations than it does for developed nations. However, developed nations should see its benefits as being an insurance policy as well as a revenue raising mechanism. As a further incentive for developed nations to implement the tax, I would propose that it be sold as a package that offers developed nations a social clause linked to the World Trade Organisation.

Why do we need a social clause, and why should it be linked to the WTO? Internationalisation has seen the increasing mobility of capital at the expense of immobile labour. Relocation of capital and/or the threat of relocation to cheaper labour markets has caused downward pressure on basic wages and conditions around the globe. I firmly believe that a return to protectionism is not the solution to the problems of globalisation. However, protection of basic human rights must be secured. Although the International Labour Organisation has been largely successful in securing the ratification by states of core labour standards, unfortunately the ILO has virtually no power to enforce compliance with the standards. Its chief weapon to date has been to embarrass governments into compliance. This is hardly a satisfactory mechanism to ensure compliance, particularly when you look at the Workplace Relations Act of the Howard government which ignores the conventions of the ILO. The social clause is not about a minimum wage across the world, it is not about transferring the terms and conditions of developed nations to developing countries; it is about ensuring basic human rights.

The core ILO conventions form the basis of the social clause and are minimum human rights standards that no state can afford to ignore. The seven conventions are as follows: Nos 29 and 105, freedom from forced labour and various occupational health and safety conventions; No. 87, freedom of association; No.98, the right to organise and bargain collectively; Nos 100 and 111, freedom from discrimination in employment and occupation and equal pay for work of equal value—this core ILO standard is at present being undermined by the Howard Government's ideological approach to youth wages—and No. 138, a minimum age for the employment of children.

Many developing nations argue that to support a social clause would undermine their comparative advantage, which is their cheap labour. They argue that the effect of undermining their comparative advantage will be capital relocation to other markets. In short, an investment exodus. I do not necessarily agree with their analysis. But if developing nations have a greater percentage of a Tobin tax collected revenue this may very well offset the possible—I believe only slightly possible—negative effects of agreeing to a social clause.

In a working paper prepared for the ILO last year, Robert Kyloh outlined the mechanism being proposed by the international trade union movement to manage the implementation of a social clause. This mechanism would provide all the elements of transparency, predictability and objectivity that an effective multilateral system requires. The recent global economic crisis highlights the problems of an unregulated market, and formerly stable economies are coming to the realisation that they are not immune to the problems of an unregulated market.

International action is necessary and necessary now. An integrated global economy has plenty to offer but only if there are rules and laws that protect the most vulnerable. Australia's future prospects, and the prospects of working people and throughout the world, lie in taking a proactive position by initiating strategies that produce a more conducive international economic and social system. Under the former Labor government, Australia demonstrated the ability to form coalitions such as the Cairns Group and APEC. These coalitions provided an effective mechanism for advancing Australia's international agenda. The Tobin tax and the social clause require collective action to place them on the international agenda.

The two proposals I have detailed here today have been the subject of debate for some time. To date, it has been difficult to have a social clause that is linked to the WTO considered by developing nations. Nations such as Australia have supported developing nations in their rejection of a social clause due to a perceived notion that trade relations may suffer otherwise. However, developing nations are open to the idea of a tax on international financial transactions. Both proposals, as I have outlined them today, have a greater chance of acceptance and of ensur ing greater global economic stability and equity if considered together.

Both proposals sold as a package offer something for all stakeholders, with the exception of currency speculators. Why do we allow currency speculators to undermine sovereign economies in order to make a quick dollar? The fact is they produce very little of value. They too should pay their fair share. There will be political problems to overcome and sovereignty will be an issue, but I believe this proposal is worth consideration.