CHAPTER 2


CHAPTER 2

Key Issues

2.1        The bill received enthusiastic support from some submitters, and strident criticism in other quarters. A number of submitters supported reforms to the Enterprise Migration Agreement (EMA) program, but argued that more reforms are needed.

2.2        Generally, employer organisations opposed the bill. The Australian Chamber of Commerce and Industry (ACCI) submitted that the bill would duplicate existing conditions already required in EMA applications, and add unnecessary bureaucratic and political oversight which could have the effect of deterring investment.[1] The Business Council of Australia (BCA) described the current EMA framework as a 'critical contingency planning tool' in the face of rising costs, supply chain issues and increased competition, and noted that the current framework provided 'strong' protections.[2]

2.3        Similarly, the Victorian Employers' Chamber of Commerce and Industry (VECCI) described the measures proposed by the bill as 'simplistic, impractical and burdensome' and argued that if passed, the bill would result in 'unnecessary' and 'misguided' political and administrative interference in infrastructure projects.[3] VECCI also expressed concern that the proposals could spread beyond the resources sector and apply to infrastructure projects more generally.[4]

2.4        The Australian Mines and Metals Association (AMMA) criticised the bill on a number of grounds, including it entailing an increase in red tape for businesses. AMMA submitted that the bill was not needed as adequate safeguards are already built into EMAs.[5]

2.5        Those who supported the broad objectives of the bill provided a wide ranging and well researched discussion of the use of EMAs and migrant labour more generally. The Construction, Forestry, Mining and Energy Union (CFMEU) submitted that the bill would ensure that EMAs are only used when they are necessary to supplement the Australian labour market and not as a substitute for the employment or training of local workers.[6]

2.6        The Australian Council of Trade Unions (ACTU) supported greater scrutiny for EMAs, submitting that under current arrangements the DIAC guidelines 'do not provide a sufficient level of confidence' that adequate scrutiny is present.[7] The ACTU listed a number of other persistent concerns about EMAs, some of which are not addressed by the bill.

2.7        Unions WA supported the key objectives of the bill, and identified other areas of improvement, to ensure that protections for local jobs are 'strengthened'.[8]

2.8        Dr Joo-Cheng Tham, Associate Professor, particularly supported the amendment of the bill to expand its operation to all types of work agreements, and to provide a legislative framework for agreements, rather than couching it in a policy document.[9]

2.9        Submissions provided by the Department of Education, Employment and Workplace Relations (DEEWR) and the Department of Immigration and Citizenship (DIAC) were brief and failed to engage with either the substance of the bill or the issues raised by other submitters.[10]  Both Departments provided more detailed information in response to the committee's questions during the hearing.

Jobs for Australians

2.10      A key focus of the bill is to ensure that EMAs are only used when genuinely necessary and do not adversely affect local job opportunities and conditions. Throughout this inquiry witnesses and submitters have emphasised the primacy that must be given to Australian workers, while acknowledging that at times overseas workers will be required.[11] The bill was seen by many submitters as a good step towards achieving this balance.

2.11      During the hearing in Melbourne, Mr Dave Noonan, CFMEU, told the committee that there was general support in the Australian community for the idea that Australian workers should have the first opportunities of the mining boom, particularly as many skilled Australians are looking for work.[12]

2.12      The CFMEU were concerned that the current skilled migration trend was a departure from previous periods where people would migrate and settle in Australia. The current situation was one where:

[S]ome of the large resource and construction companies essentially argue for a skilled migration policy that means they can bring workers here for short periods of time and return them home when they are finished with them.[13]

2.13      The ACTU submitted that 'Australian citizens and permanent residents' should 'have the first, primary right to jobs in the resources sector and elsewhere'. Mr Tim Shipstone, Industrial Officer, explained that the ACTU recognised that there will be times when migrant labour is needed, but that this must be properly tested:

We do accept and recognise that in some cases there may be a need for temporary migration to fill positions where there are genuine shortages that cannot be met locally, but this needs to be properly tested to ensure that the project owners and employers in the resources sector are making every effort to employ and train locally before they go down the path of entering into EMAs in the first place, and then engaging overseas labour under EMAs to fill vacant positions.[14]

2.14      Unions WA also acknowledged that 'where genuine labour shortages exist then some use of temporary overseas labour is justified as a last resort'.[15] However, to ensure that this process is fair:

[R]igorous processes for labour market testing are needed to ensure that employment opportunities are available in a meaningful way to those already in the Australian labour market.[16]

2.15      The committee heard that where overseas workers are used, Australian workers should be given preferential treatment when there is less demand for labour down the track.[17] The CFMEU explained this reasoning:

[As] work opportunities recede, local workers should have a legislated preference in redundancy situations over overseas workers, who have been retained and granted access to the Australian labour market on the clear understanding that they are filling a temporary labour shortage in the area in which they work. Equally, local workers should have a legislated preference in redundancy situations over all other overseas workers holding temporary residence visas with work rights (for example Working Holiday visa holders).[18]

2.16      Mr Dave Noonan explained the logic behind the CFMEU's support for the redundancy provisions in the bill:

We would say that the situation ought to be very clear: if an employer has made the argument successfully under the proposed new bill that they had not been able to attract suitably skilled workers locally and in fact had to go to the overseas market to bring in temporary overseas workers for particular skilled occupations, we ought not to have a situation where Australian resident workers are being made redundant whilst workers who come on a temporary basis from overseas are being kept. Again, we think that would undermine confidence in the proper operation of a skilled migration system in Australia.[19]

2.17      In response to these arguments, DEEWR outlined the government's commitment to Australian workers:

The Australian Government is committed to ensuring that Australian job seekers are the first to benefit from investment in the resource sector. This commitment is reflected in a requirement for EMA project owners to demonstrate their workforce needs cannot be met from the Australian labour market and for project owners and companies to place vacancies in occupations covered by EMAs on the Jobs Board.[20]

2.18      The committee asked also asked DIAC to explain how it would ensure that companies with an EMA recruit and train Australian workers. DIAC advised that, in addition to the requirement that the Resources Sector Jobs Board be used, other obligations would be imposed:

These obligations will require the company to ensure that they are only using the agreement to supplement an existing Australian workforce and they continue to demonstrate a commitment to the provision of employment, training and career progression opportunities to Australians. The business will also be required to regularly demonstrate that they have met specific benchmarks for the training of their Australian employees.[21]

2.19      Compliance and monitoring of EMAs is discussed in more detail later in this chapter.

Labour market testing

2.20      Some submitters and witnesses expressed doubt that the resource sector was experiencing skills shortages to the extent that it needed to employ overseas workers. For example, Mr Noonan told the committee:

Our experience and what our members and the community tell us is that there are many, many Australians who are skilled, ready, willing and able to work in the construction industry and the construction of the resource facilities and who are not getting the opportunity to do those jobs at the moment.[22]

2.21      In order to ensure that Australian workers have a first right to jobs in the resources sector, robust labour market testing must occur. Under the current EMA guidelines, outlined in Chapter 1, only a 'commitment' to ongoing local recruitment is required. In addition to the proposals in the bill, such as an obligation to employ particular groups of job seekers and the requirement to have a local jobs plan, the committee heard that more reforms were needed to ensure that EMA applications were only granted when strictly necessary.

2.22      The ACTU, and its affiliates, submitted that a 'genuine' labour market testing regime would require EMA applicants to first prove that they have made 'every possible effort' to fill vacancies with Australian workers.[23] Such an effort would include the following measures:

  • advertising vacancies locally and nationally at genuine market rates, including mandatory use of the resources sector Jobs Board;
  • offering relocation assistance measures where required; and
  • providing information on specific measures undertaken to employ groups who are currently disadvantaged or under-represented in the workforce such as Indigenous workers, women, unemployed local job-seekers, recently retrenched workers, and older workers – all groups the NRSET report identified as a priority – and why the 457 visa positions sought under the EMA cannot be filled by increasing the participation of these groups.[24]

2.23      Skills Tasmania submitted that efforts to recruit local workers should be 'scaled according to the size of the employer and the nature of the occupation'.[25] Employers should recruit from local, regional and national labour markets and consider whether the need can be met by 'better skills utilisation within the employer's existing workforce'.[26] Skills Australia also noted that:

The employer's contribution to developing skills in the potential workforce is a matter that may be both a requirement in order to access an EMA and a condition placed on the approval of an EMA.

Skills Tasmania suggests that employers' active engagement in workforce planning at enterprise, regional and industry sector levels is an appropriate demonstration of reasonable attempts to recruit and develop suitably skills workers from within the Australian labour markets.[27]

2.24      However, the committee heard that, due to a lack of mobility in the Australian workforce, some jobs were hard to fill. ACCI submitted that:

[The] limited mobility of the Australian labour market means that job losses in the South Eastern Australian manufacturing and services sectors do not automatically translate into a boost in the available workforce for resources projects and major infrastructure developments in the northern and western parts of Australia.[28]

2.25      Mobility could be improved if labour market testing included relocation assistance. Mr Allen Hicks, Communications Electrical and Plumbing Union, suggested that incentives need to be 'advertised widely' so that workers across Australia are aware of the opportunities.[29]

2.26      Mr Kruno Kukoc, DIAC, explained the process that was followed once an EMA application is received:

Once we have an application for an EMA, we go through an interdepartmental process of the application and test those claims in a joint effort with the Department of Education, Employment and Workplace Relations, the Department of Resources, Energy and Tourism and a range of other agencies, including Treasury, before we submit the advice to the government on whether the EMA application can be approved or not.[30]

2.27      The committee understands that currently there is no process or redress for complaints from qualified Australian workers who apply for work through the jobs board and are unsuccessful. The ACTU and its affiliates called for independent oversight of the jobs board:

[T]he operation of the Jobs Board needs to be monitored to ensure it operates in accordance with the government’s stated objectives. To that end, unions recommend the establishment of an independent body to oversee the operation of the Jobs Board, including an opportunity for individual complaints, to ensure it is transparent, accountable and is delivering on jobs and training opportunities for local workers.[31]

2.28      Officers from DIAC and DEEWR indicated during the Melbourne hearing that provision had not been made to investigate these types of complaints. However, DIAC sought to assure the committee that a company's compliance with its obligation to employ Australians would be:

[M]onitored on a regular basis as to whether they are meeting those commitments. If they are not meeting those commitments, there are certain consequences for the company and all companies involved in the EMA.[32]

2.29      Mr Kukoc further advised that while DIAC consider it should be handling complaints, the department would:

[M]ake sure that if there are many complaints and if the companies are not using the jobs board and the companies do not have ongoing domestic recruitment activity, the deal may be off.[33]

2.30      The approaches outlined by DIAC and DEEWR appears to be methodical, however it is not clear whether these processes involve genuine market testing, of the kind suggested by the ACTU and outlined earlier. The committee is not convinced that the current EMA framework is sufficient to ensure that EMA holders only use migrant labour when Australian workers cannot be found. In the absence of robust labour market testing there is a real risk that qualified Australian workers will continue to miss out on opportunities to work in the resources sector. The committee is concerned that DEEWR and DIAC are relying on responses from employers and statistical data to determine skills shortages, rather than listening to anecdotal evidence from actual job applicants in the industry.

Training and apprenticeships

2.31      The committee heard concerns that the resource sector did not employ its fair share of apprentices and that there was a lack of training provided to Australian workers to assist with the transition to employment in the resources sector. In this regard, the evidence provided during this inquiry is consistent with material presented to the Senate Education, Employment and Workplace Relations References Committee during its inquiry into engineering skills shortages.[34]  

2.32      The National Resource Sector Employment Taskforce (NRSET), discussed in Chapter 1, found in 2010 that the resources sector 'currently employs considerably fewer apprentices than would be expected given its share of trade employment' and recommended that the resources sector 'significantly increase the number of apprentices it employs'.[35] Three years later, it would seem that this remains a problem.

2.33      It is true that training requirements are built into the 457 visa program, and by extension, into EMAs. Among other requirements, employers of skilled overseas workers (as part of the 457 visa program) with a business that operates in Australia must meet benchmarks relating to training Australian citizens and permanent residents to be eligible.[36] Employers who have been trading in Australia for more than 12 months may choose between different training benchmarks:

  • Training Benchmark A: the employer pays the equivalent of at least two per cent of recent payroll expenditure to an industry training fund for the training of Australian citizens or permanent residents, each year that the employer is a sponsor;[37] or
  • Training Benchmark B: the employer must provide evidence of spending the equivalent of one per cent of payroll on training for their employees who are Australian citizens or permanent residents.[38]

2.34      Eligible expenditure for the purposes of meeting Training Benchmark B includes a wide range of training, including 100 per cent of apprentice and graduate salaries, as well as expenditure on courses for more experienced staff and scholarships.[39]

2.35      However, the evidence suggests that this training requirement is insufficient. Mr Allen Hicks, submitted that resources sector is not investing enough in training, explaining to the committee that instead it recruits from other sectors:

It is my view that the resources sectors do not do enough to train. What they do is poach. Because of the higher wages and conditions that are in those areas, they poach. So rather than actually putting in and providing back to the communities that they are deriving so much out of through their profits and the like, they are not doing enough to train those young apprentices, but they will poach tradespeople that are ready to go and work on the job. That is one of the main reasons why we have a skill shortage.[40]

2.36      Unions WA submitted that the resource sector 'should contribute to training up the next generation of skilled workers' in order to benefit from programs such as EMAs.[41] This training should be meaningful:

[Investment] in skills is not simply a question of putting money in a fund. Resources companies must demonstrate their commitment to having apprentices and trainees physically present on resources projects. This will involve living allowance payments and/or wage increases to address the very high costs of living in many resource sector regions, as well as fly-in and fly-out arrangements.[42]

2.37      The ACTU suggested that the training obligations of sponsors who are employing workers under the 457 visa program could be improved by linking training requirements to the total labour costs of a project. This change would bring independent contractors into the definition of 'project workforce', which currently only includes employees, thus increasing the total amount of money required to be devoted to training.[43] Relying on research conducted by the CFMEU, the ACTU argued that this reform is necessary because:

  • In the construction industry, only 54 per cent of the total workforce is classified as employees compared to 84 per cent in all other Australian industries (ABS FOES data 2009);
  • 35 per cent of the total workforce are classified as independent contractors by the ABS, compared to only 7 per cent in all other Australian industries; and
  • up to 46 per cent of independent contractors in construction are likely to be sham contractors, i.e. effectively working as employees.[44]

2.38      The committee heard that a large number of skilled workers are unsuccessful obtaining work in the resource sector because they 'lack experience' in the mining industry.[45] At a minimum, resource companies should be required to provide training to experienced Australian workers who lack specific experience in the resources sector – particularly in light of the training commitments made under an EMA.

Parliamentary accountability

2.39      The bill proposes that each EMA should be tabled in Parliament as soon as practicable after it is made. The bill makes no allowance for commercially sensitive material to be redacted.

2.40      Some employer groups rejected the proposed tabling requirement. VECCI submitted that:

There is no justifiable reason for the tabling of EMAs in parliament. They are already adequately regulated and parties employing them ought to be afforded privacy when it comes to commercially sensitive components of them.[46]

2.41      AMMA also rejected the proposal, on the basis that commercially sensitive information 'must be kept in confidence for project owners and contractors alike'. AMMA observed that:

Under the current guidelines, the Department of Immigration & Citizenship publishes the capital expenditure and peak workforce of any project with an active EMA. However, DIAC does not disclose the number or occupations of workers that are available under a particular EMA. Nor does it disclose the particular companies that have signed labour agreements under the EMA. It is imperative that the commercially sensitive nature of these agreements be protected.

2.42      In contrast, other submitters supported the proposal to provide parliamentary accountability. Unions WA submitted that greater transparency is needed to ensure that resource companies 'are held accountable for the commitments they make on paper', particularly in relation to providing opportunities for local workers.[47] Unions WA described the bill's proposal to require tabling in Parliament as 'only a first step' and called for regular public reporting, particularly in relation to local training and employment commitments.[48] Unions WA explained that the cost was high if resource companies were not held to account, as the following example illustrates:

The inability of local steel fabrication manufacturers in the Kwinana to win contracts during the boom has contributed to the South West Area of WA having the worst youth full-time unemployment outcomes in the state (23 per cent in June 2012). In some cases competition was simply unfair; as overseas companies would award contracts to manufacturers from their own country by offering generous terms of financing that were not available to domestic manufacturers.[49] 

2.43      Mr Noonan suggested that concerns about the disclosure of commercially sensitive material could be 'easy dealt with' by redacting this material from an EMA application prior to publication:

That is a very common process in respect of commercial documents when they are published. We think it is in the interests of the community that these documents are public and transparent, because the proposition that skilled migration should be determined by secret agreements between an employer and the government undermines confidence in a proper skilled migration program—which we fully agree this nation needs.[50]

2.44      Mr Allen Hicks agreed there was scope for EMAs to be tabled in Parliament with confidential material redacted:

I think there is a capacity to table information in parliament about raw numbers without having to actually detail the commercial arrangements and how they are going to attract those people and what they are going to do. So I think the raw numbers could be satisfied without having to provide great details of information about how they are going to source that sort of stuff.[51]

2.45      Dr Tham submitted that in addition to the requirement to table each EMA in Parliament, the agreement should also be accompanied by a statement from the Minister 'with an explanation as to how the Work Agreement fulfils' the purposes of the 457 visa category.[52]

2.46      On a related point, the ACTU called for increased disclosure during the consultation phase prior to the finalisation of an EMA. The ACTU submitted that during the mandatory consultation phase, the EMA applicant should disclose, 'at a minimum', the following:

  • The number of 457 visa workers required in each occupation over each of the years covered by the proposed agreement, both skilled and semi-skilled;
  • the specific entity or entities who will be the direct employer of the 457 workers, i.e. the names of all subcontractors in the case of EMAs;
  • the wages and conditions the 457 visa workers will receive and the proposed industrial instrument;
  • how the proposed wages and conditions compare to the wages and conditions of the equivalent Australian workers and the market rate for the industry or occupation;
  • the evidence on which it is claimed that, over the proposed 5 year life of the EMA, the nominated occupations, and the number of positions for each occupation, will be required, and the evidence for the claim that these positions cannot be filled by Australian citizens and residents, including evidence of recent and ongoing recruitment efforts; and
  • all elements of the proposed project Training plan, and other social inclusion initiatives.[53]

2.47      In its submission, DIAC advised that 'due to commercially sensitive information, the entirety of these contracts cannot be publically disclosed currently'.[54] During the Melbourne hearing the committee sought to understand what type of material would be considered commercially sensitive. DIAC said that the assessment is conducted by companies, and not by the government:

[C]ommercial-in-confidence information is identified by commercial agents, business agents, and it is the business agents that identify sensitive information that put them at a competitive disadvantage or information that is sensitive in terms of their commercial operations. It is not up to this department or anyone else outside the commercial businesses to identify this commercial information.[55]

2.48      It is surprising that DIAC does not appear to be willing to judge the assessments made by companies that material is commercially sensitive. Mr Kukoc explained that as a party to the contract, the government has 'to oblige with the confidentiality provisions in the contract'.[56] However, disclosure because of the operation of law, or to comply with a request made by Parliament, would not be in breach of contract. [57]

2.49      In response to concerns expressed by the committee about transparency, DIAC advised that it is usual practice for commercial in-confidence material to be removed from publication. For example, by analogy, all government contracts with a value of $10 000 and above are listed on AusTender, and no confidential information is disclosed. Due to the nature of EMAs, they are not listed on AusTender. [58]

2.50      Following this explanation, it is clear that confidentiality concerns can be addressed by drafting appropriate clauses within the EMA itself or by legislative amendment. The better and simpler approach is to update the EMA program guidelines to require disclosure.

Monitoring and compliance

2.51      The committee heard that the current monitoring arrangements in place by DIAC and DEEWR are insufficient to protect the rights of overseas workers and to ensure that companies who employ people under the 457 visa process have taken adequate steps to recruit local workers in the first instance. While the bill does not directly deal with monitoring or compliance, adequate monitoring will help to ensure that Australian workers and migrant workers are not adversely affected by an EMA arrangement.

2.52      Robust oversight will protect not just Australian workers, but also migrant workers. Dr Tham submitted that workers from overseas who come lawfully to Australia under the 457 visa program are entitled to work rights:

[Non-citizenship] does not cut them off from common humanity and respect for their human rights. These workers are also entitled to justice at work: while not citizens in the eyes of migration law, they share in industrial citizenship. Both these statuses suggest that 457 visa workers should, in many respects, be treated no less favourable than Australian citizens and permanent residents.[59]

2.53      Mr Noonan advised that committee that the current monitoring arrangements were 'completely' inadequate:

We certainly believe that the current levels of compliance from DIAC are completely inadequate and that the resourcing of this is not as much of a focus as it should be.

We have had situations where we received complaints about particular workplaces where DIAC officers attended those workplaces and relied on translators employed by the company that the guest workers were engaged by to ask them about whether they had any problems. When you are dealing with people from mainland China, we do not think that is a serious and bona fide attempt to find out whether those people are being exploited and ripped off. We are very critical of that.[60]

2.54      The CFMEU submitted that accountability procedures could be made more robust by involving the Minister for Workplace Relations in the decision making process. During the Melbourne hearing Mr Noonan stated that specialist oversight, especially in relation to training, would be beneficial:

It is our view that clearly whilst the Department of Immigration and Citizenship has particular skills around some areas of immigration, monitoring training is not amongst them. It seems to us to bolster the case that the other minister also ought to be involved in the EMA process.[61]

2.55      The ACTU observed that adequate funding for compliance monitoring was a 'question of priorities', noting that in the 2011 budget a further $10 million was allocated to faster processing of 457 visas, but that no further funds were directed at compliance.[62] To ensure that workers on 457 visas are properly supported, the ACTU urged the government to create a new sponsorship obligation to inform each 457 visa holder in writing of their rates of pay and terms and conditions of employment, and provide a document outlining the role of DIAC, Fair Work Ombudsman and unions in pursuing underpayment claims.[63]

2.56      The committee was concerned that DIAC may not be adequately funded or experienced to carry these types of monitoring activities. Mr Kukoc advised that the role was properly resourced:

The department is already resourced for that activity. We do have sponsoring and monitoring activity. We have a range of monitoring officers. We have a range of inspectors under the 457 regime. If you look into the resources per capita take and take into account the overall size of the Australian labour force, we have more resources per capita than Fair Work Australia. Fair Work Australia is monitoring a workforce of around 10 million people. We are monitoring in the order of 70,000 457 visa holders. There have been public comments about the first EMA application. The first EMA application contains the request for up to 1,715 workers. Relative to the numbers of people who we are monitoring, we are well resourced to do that.[64]

2.57      DEEWR also advised that EMA project sites are subject to coordinated monitoring by 'DIAC, the Fair Work Ombudsman (FWO), Fair Work Building and Construction (FWBC) and relevant State and Territory work health and safety authorities.[65] DEEWR also assured the committee that:

To support these monitoring arrangements, the FWO and FWBC will establish a dedicated email address for – and undertake priority processing of all – complaints relating to alleged breaches of Fair Work Act on resource project sites where EMAs are in use.[66]

2.58      In response to requests for further detail, DIAC provided more information about the compliance procedures.[67] An EMA will be subject to quarterly reporting requirements and must provide statistical information to DIAC that covers issues such as:

  • the number of overseas workers on-site, by occupation and the type of temporary visa held;
  • the ratio of overseas workers as a proportion of the total workforce on-site;
  • salaries paid to overseas workers compared to Australian workers in the same occupation;
  • the recruitment and training of Australians, including apprentices, trainees, and graduates; and
  • use of the Resources Sector Jobs Board.[68]

2.59      DIAC advises that it will also conduct additional monitoring and reporting, including:

  • undertaking a search of its computer and information systems to locate any information held by the Department relevant to the project owner and/or approved sponsors; and
  • seeking information from Commonwealth and State and Territory Government agencies relevant to the project owner and/or approved sponsors on various issues, including:
    • use of the Resources Sector Jobs Board;
    • compliance with workplace relations legislation; and
    • compliance with work, health and safety legislation.[69]

2.60      The EMA holder will be required to provide DIAC with site access for the purposes of monitoring activities, and notify DIAC immediately if it becomes aware that an approved sponsor is breaching their sponsorship obligations.[70]

2.61      DIAC advises that work agreements under an EMA will be monitored by a specialised team of 17 DIAC officers. Monitoring may include the following activities:

  • visits to the site, either with or without notice in order to interview visa holders, other employees and representatives of the sponsor;
  • requesting records and information from the sponsor in order to determine their compliance with the sponsorship obligations; and
  • exchanging information with other Commonwealth, State and Territory agencies, in particular the Fair Work Ombudsman.[71]

2.62      The committee is pleased to hear that both DEEWR and DIAC consider that they are adequately funded to perform an oversight role. However, in order for Australian workers and migrant workers to be properly protected, there should be a review mechanism and recommendations made by the ACTU and the CFMEU should be given due consideration.

Consequences for breach

2.63      The CFMEU expressed concern about DIAC's policy on sanctioning employers who are in breach of EMA and 457 program obligations. Mr Kinnaird observed that DIAC was 'not interested in heavy punitive measures' and contrasted this approach with that taken by the Fair Work Ombudsman:

The first court case against a 457 sponsor since the 2009 worker protection act was passed was brought only a few months ago, in 2012. It was a good case. To their credit, they did get an employer who was abusing the system badly. But, in contrast to a regulator like the Fair Work Ombudsman, the department takes a view that it should not publicise too much the results of its inspections of 457 employers. It takes a view that they have a right to privacy. The Fair Work Ombudsman, for example, does not take the same view. The Fair Work Ombudsman operates under a policy that, the more it publicises action against employers in breach of the Fair Work Act, the more likely that is going to act as a deterrent against other employers breaching the act. But the Department of Immigration does not seem to hold that view, and that is another factor which I think means that 457 employers are not exactly trembling in their boots at the thought of being inspected by the department of immigration. [72]

2.64      The committee asked DIAC to provide further detail about the consequences that may follow where an EMA holder is found to be in breach of their obligations. DIAC explained that the following actions may be taken where a party to a work agreement under an EMA fails to meet a sponsorship obligation:

  • the work agreement may be suspended preventing a contracting business from sponsoring any more overseas workers;
  • the work agreement may be terminated;
  • an application may be made to a Court for a civil penalty order against the sponsor (the maximum penalty for a civil penalty order is $33 000 per contravention); and
  • the sponsor may be issued an infringement notice for each failure (for a first offence, the fine is $3 300 – these fines double for a second offence).[73]

2.65      DIAC further advised that:

The work agreement also contains clauses that provide for termination for non-compliance.

An EMA places an obligation on the project owner and contractors to preference Australian workers to overseas workers and abide by their commitments to train Australians.

Where there is evidence of widespread, ongoing and/or egregious abuse, which the Government is not satisfied the project owner has taken adequate steps to rectify, the contractual sanctions in an EMA will allow the Department to suspend, limit or cancel an EMA (and all associated work agreements).[74]

2.66      The committee considers that a rigorous monitoring and compliance regime must be in place to protect the rights not only of Australian workers seeking work through the Jobs Board, but also those of foreign workers in Australia under an EMA.

Technical issues and other proposed amendments

2.67      A number of technical issues were discussed by submitters and witnesses, and these are dealt with briefly here.

2.68      The bill purports to amend both the Migration Act 1959 and the Fair Work Act 2009. The primary decision maker under the each Act is, respectively, the Minister for Immigration and Citizenship and the Minister for Employment and Workplace Relations. ACCI submitted that, if passed, this could give rise to conflicts in decision making and issues in relation to appeals under different legislation:

It is unclear how the provisions can operate with two primary decision makers needing to be satisfied of certain matters before making a decision where one Minister’s statutory jurisdiction is enlivened only when another Minister is satisfied of certain pre-conditions. Where a participant is aggrieved by a decision, this could be agitated with different forms of judicial or tribunal review given that appeals under the Fair Work Act 2009 are not consistent with appeals under the Migration Act 1958. These unintended consequences would create uncertainty for those participants involved in the EMA scheme, which is intended to provide a level of certainty to participants and large scale projects. The two legislative frameworks are distinctive as they have different policy objectives and there is currently no similar or analogous provision which involves the Fair Work Act 2009 regulating aspects of the Migration Act 1958 or vice-versa.[75]

2.69      Neither DEEWR nor DIAC identified this proposal as a concern in submissions to the committee.

2.70      Dr Tham, identified a number of areas where the bill could be improved on technical and policy grounds. For example, Dr Tham recommended that the proposed requirement that 'all practicable attempts' should be made to employ local workers should be changed to the less onerous 'reasonable attempts'.[76] Dr Tham noted that this would be consistent with the standard in DIAC's Labour Agreement Information policy document.[77] In contrast, the CEPU described the standard proposed by the bill as 'far from onerous'.[78] Dr Tham also suggested that the term 'project workforce' should be changed to include contractors as well as general employees.

2.71      The CFMEU recommended that the phrase 'local jobs plan' in proposed section 536B (amending the Fair Work Act 2009) be defined in the bill. The CFMEU explained its reasoning:

The proposed section 536B amendment to the Fair Work Act 2009 sets out the conditions which the Workplace Relations Minister may impose on the making of a work agreement. These include (at ss (1)(a)), ‘that any employer participant has a local jobs plan’. The expression ‘local jobs plan’ does not appear to be defined in the existing legislation, the Bill or the proposed amendments to the Bill. When the Bill was introduced, it was stated that such a plan should have a particular focus on project will reduce reliance on overseas labour by targeting training at those occupations in short supply. The CFMEU would support the insertion of a definition of ‘local jobs plan’ which is consistent with these stated objectives.[79]

2.72      Neither DIAC nor DEEWR addressed these concerns in their submissions or during the hearing.

Reforms to the subclass 457 visa program

2.73      On 23 February 2013 the Minister for Immigration and Citizenship, the Hon. Brendan O'Connor MP, announced a number of significant reforms to the subclass 457 visa program. The Minister observed that the growth of the 457 visa program was 'out of step' with skills shortages and some employers were 'using 457 visas to discriminate against locals'. [80] The changes have been introduced to ensure that 'the system is working appropriately and that local workers are not disadvantaged'.[81] Under the new changes:

  • Employers must demonstrate that they are not nominating positions where a genuine shortage does not exist;
  • The English language requirements for certain positions will be raised;
  • The enforceability of existing training requirements for businesses using the program will be strengthened;
  • The market salary exemption will rise from $180 000 to $250 000[82];
  • On-hire arrangements of 457 visa workers will be restricted (this will ensure businesses seeking to recruit overseas workers do not hire out to unrelated businesses);
  • Compliance and enforcement powers will be improved to stop employers who have routinely abused the 457 system; and
  • Stakeholders will be consulted to ensure market rate provisions more effectively protect local employment. [83]

2.74      The committee welcomes the announced changes to the subclass 457 visa program and commends the Minister for taking strong action to ensure that the 457 visa process does not continue to be misused by some employers. Ongoing monitoring of the effectiveness of the changes is required. Welcome though these changes are, it is clear from the discussion above that significant amendments are still required to the operation of 457s in the context of EMAs. It is to a summary of these changes that the committee now turns.

Committee view

2.75      The evidence before the committee largely supports the key objective of the bill to establish a robust and transparent framework for the EMA process to ensure that Australian workers are protected. However, the committee heard that in order to achieve that objective a number of adjustments are required to ensure that the EMA approval process is rigorous, and appropriate review mechanisms are in place. The EMA process as it stands, even as amended by the bill, is inadequate.

2.76      The committee considers that, for the most part, weaknesses could be addressed through reforms within the existing legislative framework. However, depending on the success of the measures described below, some legislative amendment may be required in the future.

2.77      The committee's recommendations centre on four themes central to this inquiry: protecting Australian jobs, accountability, training, and workplace rights.

2.78      The committee is alarmed by evidence that some companies in the resource sector are turning away experienced, qualified Australian workers who do not have direct industry experience, while at the same time seeking to fill these vacancies with overseas labour. The committee believes that the extent of this practice could be significant and needs to be closely examined.

2.79      Action must be taken to ensure that robust labour market testing is conducted prior to the granting of an EMA. In order to meet this requirement, an EMA applicant should be required to prove that they had made all possible efforts to employ and train local workers, before looking to migrant labour. In the committee's view, this should involve a significantly higher threshold than the current requirement to demonstrate a 'commitment' to employ local workers.

2.80      To better assist employers to find local labour, the government should continue to develop and improve the Jobs Board, with a particular view to ensuring that companies participate in it, and are required to draw staff from it, to the maximum extent possible. This could be achieved, for example, by developing a range of incentives and appropriately enforced obligations for employers, including making employers who do not use the Jobs Board ineligible to access workers through the 457 visa system.

2.81      The committee sees merit in establishing a complaint mechanism for Australian workers who have applied through the Jobs Board, yet are unable to obtain employment with resource sector companies who are using migrant labour. The existing EMA framework contains training requirements. However, the committee heard that some Australian workers are refused employment because, in spite of holding relevant qualifications and experienced, they lack direct experience in the resource sector. The committee also heard that many resource sector companies prefer to 'poach' experienced workers rather than take on apprentices. The skilled migration program should be calibrated to ensure that EMA holders train local workers before resorting to migrant labour.

2.82      However, notwithstanding the recently-announced changes to the operation of the subclass 457 visa, further strengthening of obligations is desirable and appropriate. The committee supports ACTU's recommendation that the government should create a new sponsorship obligation to inform each 457 visa holder in writing of their rates of pay and terms and conditions of employment, and provide a document outlining the role of DIAC, FWO and unions in pursuing underpayment claims.

2.83      The committee accepts that EMAs, and other work agreements such as Regional Migration Agreements, are likely to contain commercially sensitive material. However, there is a clear public interest argument for publishing relevant and timely information about these work agreements, particularly in relation to labour market testing. The bill's proposal that EMAs be tabled in full does not properly balance these two competing interests. A better approach would be for EMAs, and other work agreements, to be made publically available, with commercial-in-confidence material redacted. This could be achieved in a number of ways: through legislative reform, government amendment to the EMA program guidelines, or stipulation of disclosure in the EMA deed of agreement.

2.84      Finally, the skill needs of the industry were last considered by the National Resources Sector Employment Taskforce in its 2010 report. Given subsequent developments in the resources jobs market, it is timely that an assessment of the skills needs of the sector be conducted.  Depending on the outcome of such a study, and in addition to the recommendations made in this report, it may also be appropriate to revisit the program guidelines for EMAs.

Recommendation 1

2.85      The committee recommends that the government amend the Enterprise Migration Agreement (EMA) guidelines to require that robust labour market testing be conducted prior to project owners making an EMA application. Adequate labour market testing should include the following:

  • advertising vacancies locally and nationally at genuine market rates, including mandatory use of the resources sector Jobs Board;
  • offering relocation assistance measures where required; and
  • providing information on specific measures undertaken to employ groups who are currently disadvantaged or under-represented in the workforce such as indigenous workers, women, unemployed local job-seekers, recently retrenched workers, and older, and why positions sought under the EMA cannot be filled by increasing the participation of these groups.

Recommendation 2

2.86      The committee recommends that the government continue to develop and improve the Jobs Board. Improvements should include the provision of a range of incentives and obligations to ensure that companies participate in the Jobs Board, and the exclusion of employers who do not use the Jobs Board from accessing workers through the subclass 457 visa program.

Recommendation 3

2.87      The committee recommends that the government assess the extent to which the resource sector requires Australian workers to have direct industry experience, but then seeks to employ (and train) overseas labour to fill alleged skill shortages.

Recommendation 4

2.88      The committee recommends that the government establish a complaints mechanism for Australians who are unable to obtain work with an Enterprise Migration Agreement holder, despite being available for work and possessing the requisite qualifications or the ability to be trained in the relevant qualification.

Recommendation 5

2.89      The committee recommends that the government conduct a reassessment of the skills shortages in the resources sector.

Recommendation 6

2.90      The committee recommends that the government consider changing the definition of 'project workforce' for the purposes of calculating training obligations under the subclass 457 visa program. The new definition should include employees and independent contractors.

Recommendation 7

2.91      The committee recommends that the government amend the Enterprise Migration Agreement guidelines to ensure that training of workers from other sectors be a requirement.

Recommendation 8

2.92      The committee recommends that the government create a new sponsorship obligation requiring sponsors to inform each subclass 457 visa holder in writing of their rates of pay and terms and conditions of employment, and provide a document outlining the role of the Department of Immigration and Citizenship, the Fair Work Ombudsman and unions in pursuing underpayment claims.

Recommendation 9

2.93      The committee recommends that the Enterprise Migration Agreement applicants provide timely information to unions and other stakeholders about the proposed project during the stakeholder consultation phase.

Recommendation 10

2.94      The committee recommends that the Department of Immigration and Citizenship work with the resource sector to determine a definition of commercial-in-confidence, for the purposes for redacting Enterprise Migration Agreements before public release.

Recommendation 11

2.95      The committee recommends that the government make relevant and timely information relating to Enterprise Migration Agreements, subclass 457 visas and Regional Migration Agreements publicly available.

Recommendation 12

2.96      In light of the committee's view that weaknesses in the subclass 457 system could be addressed through the reforms detailed in foregoing recommendations, the committee recommends that the bill not be proceeded with.

 

Senator Gavin Marshall
Chair, Legislation Committee

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