COALITION SENATORS'
MINORITY REPORT

Introduction

1.1        The Coalition is committed to ensuring jobs for Australian workers.  However, there is a need for temporary workers to keep our economy strong.

1.2        The Coalition does not see temporary labour migration as a threat to Australian jobs. Rather it is an important tool to secure the future of businesses to ensure they can employ more Australians.

1.3        Safeguards are essential. The Coalition supports the sanctions and penalty regime implemented following the Deegan Review of the integrity of the Subclass 457 program.[1] There should be no tolerance for anyone who abuses the system.  An employer abusing the 457 programme can expect the same tough stance from a Coalition Government as anyone else seeking to undermine the integrity of our immigration program.

1.4        Circumstances do arise where gaps open up and skills demand cannot be met within the Australian labour market as swiftly as required by project deadlines.

1.5        To this end, the Coalition welcomed the announcement of the first Enterprise Migration Agreement by the Minister for Immigration and Citizenship when it was introduced in the 2011 Federal Budget.[2]  

1.6        The Enterprise Migration Agreement (EMA) program was conceived to help Australia overcome temporary and acute labour shortages, unable to be filled by Australian workers, in the high-performing sectors which are underpinning our economy. 

1.7        Coalition Senators note that EMAs are intended to streamline negotiation arrangements for access to overseas workers and guarantee faster processing times for subclass 457 visa applications.

1.8        Coalition Senators are deeply disappointed that despite 22 months having passed since the Government introduced EMAs, and having given in-principle approval to enter into the first EMA with Roy Hill Holdings, the Government has failed to negotiate a final agreement.  

1.9        Officials from the Department of Immigration and Citizenship (DIAC) testified at Senate Estimates that:

[A] lot of businesses are waiting for the first application to be approved to see what sorts of concessions the government has approved before they make a decision to proceed.[3]

1.10      This failure is directly impacting on jobs for more than 6,000 Australians who would be employed on this project.

Evidence

Existing protections in place

1.11      The EMA guidelines state, as part of its training plan, the project owner needs to:

• commit to training in occupations of known or anticipated shortage;
• commit to reducing reliance on labour from outside Australia over time, with particular focus on semi-skilled labour where this is approved for the EMA;
• demonstrate that training strategies are commensurate with the size of the workforce from outside Australia utilised on a project; and
• demonstrate how training targets will be enforced through its contracting model and measured and monitored over the term of the EMA.[4]

1.12      In addition, individual sub-contractors will need to meet one of the standard training benchmarks associated with the 457 program, either by:

• contributing two per cent of payroll to a relevant industry training fund
• spending one per cent of payroll on training for their Australian employees.

1.13      This contribution should be consistent with the broader training plan for the project.

1.14      The EMA guidelines also state that direct employers will need to comply with sponsorship obligations, including paying Australian market salary rates. [5] This means workers from outside Australia cannot be used to undercut Australian working conditions.

1.15      Employers who do not comply with sponsorship obligations will be subject to sanctions such as a bar on sponsoring further workers from outside Australia or termination of the labour agreement.

1.16      Where there is evidence of widespread abuse, contractual sanctions in an EMA will allow the department to suspend or cancel an EMA (and associated agreements).

1.17      The EMA guidelines stipulate workers from outside Australia will need to demonstrate English language proficiency and the skills and experience necessary to perform the occupation in Australia. Relevant licensing or registration requirements will also apply.

1.18      The DIAC website itself states that all 457 sponsors, whether under an EMA or not, have to attest to having a strong record of, or a demonstrated commitment to, employing local labour and non-discriminatory employment practices.[6] The Resources Sector Jobs Board provides a way for EMA holders to show they have made genuine attempts to recruit Australian workers before recruiting workers from outside Australia.

1.19      As with any employer, it will not be compulsory to recruit people from the board, or from any other source, where they do not meet the business’ skill requirements or applicable Australian licensing criteria.

1.20      Coalition Senators note, consistent with multiple submissions received by the Committee, that the resources sector (led by the Australian Mines and Metals Association) has for some time maintained a highly successful jobs board that has provided employers and potential employees with a medium to advertise and locate potential opportunities for employment in the resources sector.

1.21      In submissions to the committee, the Australian Chamber of Commerce and Industry (ACCI) stated that:

A new Local Jobs Board would struggle to gain the reputation and following of the existing service.  It is in the best interests of the resources industry and the Australian community more broadly, to have in place a service with proven following and usability, maintained by the industry it services.

Current government jobs boards such as jobsearch.gov.au have struggled to maintain relevance in the current jobs market and are generally considered as a fringe product, rarely used by employers.[7]

1.22      In relation to the requirement to consult local jobs board, the Victorian Employers' Chamber of Commerce and Industry (VECCI) states:

This would impose an additional administrative requirement of questionable value.  It is a case of regulatory overkill for no productive benefit.  Under current guidelines, employers are already required to illustrate their attempts to firstly employ local workers and why sufficient numbers cannot be sourced.[8]

1.23      The Australian Mines and Metals Association (AMMA) contend that:

The amendment to make usage of the local jobs board compulsory for employers is not supported by the industry.  Employers must already provide evidence that the relevant skills cannot be sourced locally.  Furthermore, employers across the sector have implemented significant recruitment campaigns with the objective of attracting local candidates.[9]

1.24      The government announced the first 'in principle' EMA for the Roy Hill project in Western Australia's Pilbara region on 25 May 2012.   Minister the Hon. Chris Bowen MP said at the time that 'the first EMA was an important development in helping meet critical skills shortages in the resources sector'.[10]

1.25      The Roy Hill project is worth $9.5 billion to Australia and will employ more than 6,000 Australians and requires just 1700 foreign skilled workers.

1.26      Under the Roy Hill agreement, the company will provide up to 2000 training places for Australians – including 230 apprentices and trainees, and preparing 110 indigenous Australians for work in construction.

1.27      The English language requirements are consistent with the 457 program, which commenced under the Howard Government – applicants must have an IELTS score of 5 across all test components.

1.28      The arrangements would be reviewed every six to twelve months and employers would be bound by migration law to provide overseas workers with 'the same terms and conditions of employment as Australian project employees'.[11]

1.29      This was all carefully engineered to protect Australian workers and act as a disincentive to the exploitation of foreign labour. 

1.30      Coalition Senators note the national recruitment drive by Roy Hill to help source local workers for the construction phase of the Roy Hill project as part of the organisation’s ongoing commitment to employing local workers and in line with the requirements of the EMA. The national recruitment drive built on the $1.4 billion investment made by Roy Hill in Western Australia and the popular local supplier expos which were conducted in Port Hedland, Newman, Kwinana and in Perth.

1.31      Coalition Senators also note with disappointment that these efforts, in addition to Roy Hill’s on-line applications, as well as other avenues including The Resource Channel online service and the Federal government’s Jobs Board, see Roy Hill no closer to a signed EMA than they were before undertaking these extensive and costly exercises.

Jobs for Australians

1.32      Coalition Senators reaffirm the Coalition’s policy position that Australian workers should be sourced, up-skilled and empowered. Our immigration program should be employed to supplement that workforce where necessary. 

1.33      Coalition Senators note the comments made by the BCA in their submission to the Senate Inquiry that:

Finding enough Australian workers with the specialised skills who are prepared to work in or move to what are often remote locations away from their families and friends can be difficult.[12]

1.34      Foreign labour on subclass 457 visas in Australia accounts for less than one per cent of Australia’s labour force.[13] Any suggestion that the subclass 457 program is flooding our labour market with foreign workers is not sustained by the evidence.

1.35      Coalition Senators strongly disagree with assertions made by the Construction, Forestry, Mining and Energy Union (CFMEU), that where overseas workers are used, Australian workers should be given preferential treatment when there is less demand for labour down the track.  Coalition Senators believe this is discriminatory and would prevent the employer from retaining the best person for the job, should that person be a 457 visa holder. 

1.36      Coalition Senators are of the opinion that companies should not be unfairly demonized for utilising short term skilled foreign labour where an Australian worker is unable to fill the position. 

1.37      Evidence provided to the Committee by the BCA indicates that companies 'prefer to employ Australians wherever possible' and that:

There is no financial incentive to employ temporary migrant workers ahead of Australians because migrant workers cannot be paid less than Australians and the administration and compliance requirements associated with employing temporary migrant workers add to costs.[14]

1.38      Coalition Senators also strongly agree with comments by AMMA in their submission that :

The amendment to confer upon Workplace Relations Minister power to prioritise and influence resource sector employment decisions is opposed by industry.  This is not a role for government.  Workforce planning and employment decisions are best left to individual employers and the industry.[15]

1.39      Coalition Senators oppose Committee Recommendation 7 – that the government should amend the EMA guidelines to ensure that training of workers from other sectors be a requirement.

1.40      Coalition Senators agree with the recommendation of the CFMEU that a definition of the phrase 'local jobs plan' would be useful.

Labour market testing

1.41      Coalition Senators are supportive of advertising locally and nationally at genuine market rates to attract suitably qualified and experienced Australian workers.  Coalition Senators however do not agree with offering relocation assistance measures where required.  This measure is both costly and ineffective.  This is supported by the report in the West Australian Newspaper of May 2012, where it was stated that despite the Federal government offering cash incentives of up to $9,000 for jobless workers to move to Western Australia, only 37 took them up on the offer over a period of 18 months.[16] 

1.42      Coalition Senators note the Australian Council of Trade Unions (ACTU) submission. The ACTU call for a 'genuine' labour market testing regime, requiring EMA applicants to first prove that they have made 'every possible effort' to fill vacancies with Australian workers, including 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.[17]

1.43      Coalition Senators are deeply concerned by this recommendation and question whether the Prime Minister made 'every possible effort' to fill the vacancy of the Director of Communications within her own office using an Australian worker, before making use of a skilled migrant on a 457 visa.[18]

1.44      Coalition Senators believe the standard of 'every possible effort' is impractical and unachievable.  It would be an additional constraint on businesses who have already demonstrated a temporary and acute labour shortage unable to be filled by domestic workers.

1.45      Coalition Senators agree that there needs to be a process and that reliable accurate data needs to be available during the EMA assessment process, but do not believe that anecdotal evidence is an appropriate measure as suggested in the Majority Report.[19]

Training and apprenticeships

1.46      Coalition Senators challenge the validity of the assertion made by the ACTU in their submission that 'up to 46 per cent of independent contractors in construction are likely to be sham contractors', as there is no evidence to support what is a deliberately inflammatory claim.[20]

1.47      Coalition Senators support the following statement by the BCA in their submission to the inquiry:

Continuing to up-skill Australian workers is a priority, but this cannot be relied on to ensure a sufficient supply of workers, particularly in the intensive construction phase of major projects in the short term.[21]

Parliamentary accountability

1.48      Coalition Senators strongly oppose the Committee Majority’s proposal that each EMA should be tabled in Parliament.  Coalition Senators therefore oppose Recommendations 10 and 11.

1.49      Coalition Senators agree with the assertions of industry bodies regarding the tabling of EMAs in the Parliament.

1.50      In their submission to the committee, VECCI states:

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.[22]

1.51      Coalition Senators support the statement by AMMA that:

The requirement to table written EMAs in Federal Parliament is not supported by industry.  Commercially sensitive information must be kept in confidence for project owners and contractors alike.[23]

1.52      Coalition Senators note concerns by Unions WA regarding greater transparency however we believe that transparency could be gained through a clear process established by DIAC for monitoring and reporting on skills development and shortages.[24]

Monitoring and compliance

1.53      Coalition Senators note and support the statement made in evidence to the Committee by Mr Kruno Kukoc, First Assistant Secretary, Migration and Visa Policy Division, regarding adequate funding and experience within DIAC to carry out monitoring activities:

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 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.[25]

1.54      Coalition Senators note and support the statement by the Department of Education, Employment and Workplace Relations (DEEWR) in response to questions on notice from the committee, that EMA projects sites are subject to coordinated monitoring by DIAC, the Fair Work Ombudsman, Fair Work Building and Construction and 'relevant State and Territory work health and safety authorities'.[26]

1.55      Coalition Senators support the current compliance regime described by DIAC in response to questioning by the committee, and notes DIAC's evidence that its oversight role is adequately resourced.[27]

1.56      Coalition Senators believe a key element of reducing business compliance costs and removing unnecessary regulation is the ability to allow our businesses to be businesses again, rather than compliance officers for the Federal Government.

1.57      Over regulation is killing business innovation, it is crowding out the most important activity a business can undertake – the development of new products, services and markets that will fuel future growth and employment and looking after their customers.

1.58      Coalition Senators agree with the statement made by ACCI in their submission to the Committee that:

The proposed conditions outlined in the Bill represent an unnecessary duplication of existing guidelines and create an additional layer of bureaucratic and political oversight that may cause significant delays in processing time, causing project delays and increasing costs for the developer.[28]

1.59      In their submission to the Inquiry, the BCA describes the types of challenges faced by Australia:

A challenge for Australia is that rising costs, supply chain issues and increased competition from other countries mean successful delivery of the investment pipeline is far from assured.  A major risk to delivery of the pipeline is the shortage of sufficient labour with the required skills, especially in the construction phase.[29]

1.60      The Business Council of Australian adds that:

EMAs are a critical contingency planning tool for resources companies facing potential skills shortages and a tough market for finance.  Having approval to bring in additional skilled workers, if required, helps companies demonstrate to financiers that they have the capacity to source sufficient workers.[30]

1.61      In the report Pipeline or pipe dream: securing Australia’s investment future, released in June 2012, the Business Council of Australia identified three key areas relating to workforce development that were of concern to them: labour mobility, skills training and retraining, and migration.[31]  

1.62      As identified in the Business Council of Australia report, Australia has a problem matching the location of growing job opportunities with our major population centres. The West Australian reported in May 2012, that despite the Federal government offering cash incentives of up to $9,000 for jobless workers to move to Western Australia, only 37 took them up on the offer over a period of 18 months.[32] 

1.63      In their submission to the committee inquiry, ACCI states:

Low labour mobility within Australia presents a significant barrier to meeting high labour demand during construction......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.

Endemic and systemic issues in the Australian labour market and across the Australian workforce more broadly often prevent workers from undertaking significant relocations for employment, especially where employment opportunities are short term, living conditions are not conducive to family relocation and there is little access to services and amenities, as is often the case with new resources developments in their construction phase.[33]

1.64      The current Labor Government does not have appropriate policies to address the current and future labour shortages in Australia.   Under Labor’s failed workforce policies the  Australian labour market is unlikely to be the stable and reliable source of labour that is required if we are to meet the future short and long terms demands of business and industry.

1.65      Coalition Senators agree that labour mobility, as recognised in the Majority Report,[34] however, Coalition Senators believe it is not the role of resource projects to engineer socio-cultural change through the provision of incentives such as relocation expenses.  Coalition Senators do support a wider canvassing of job vacancies.

1.66      Coalition Senators note and welcome DIAC’s commitment to monitor and provide advice to government regarding the applicants’ ongoing domestic recruitment activity.

Unintended consequences

1.67      Coalition Senators agree with the concerns of the Australian Chamber of Commerce and Industry, who assert in their submission:

The bill would significantly amend the Fair Work Act 2009 and create unintended consequences, particularly when the primary subject matter to be regulated is dealt with under other legislation in the form of the Migration Act 1958.....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.[35]

1.68      Delays in the negotiation and approval of EMAs directly flow into delaying job opportunities for Australian workers.

1.69      The Roy Hill project has, at the absolute maximum usage of foreign workers, a ratio of domestic to foreign workers of 5:1.  This means that every delay to the approval of the Roy Hill EMA costs the Australian economy and Australian workers jobs.  That is over 8,000 Australian workers who are missing out on jobs as a result of delays brought about by this government.  That is just the direct impact on jobs – the secondary job impacts in the services sector are also affected.  Putting more and more bureaucracy around EMAs does not just hurt the company, does not just hurt the Australian economy, it directly hurts Australian workers.

Conclusion

1.70      Enterprise Migration Agreements play a crucial role in helping us manage temporary and acute labour shortages affecting major resource projects that underpin Australia’s economy.  They provide a flexible approach to short term human capital needs, ensuring a balance in the supply of labour between Australian and foreign workers, based on the capacity of the existing workforce.

1.71      The best way to ensure an ongoing supply of jobs for Australians in the resources sector is to create a climate which encourages investment by offshore multinationals and Australian companies in developing Australian resource assets.

1.72      Any action which sends investors away from Australia will have a profound effect on our economy and employment.

1.73      Overseas workers are only considered for EMA opportunities if and when employment of suitably qualified Australians is exhausted.

1.74      Coalition Senators believe that the bill's proposed amendments to the Migration Act 1958 and the Fair Work Act 2009 are unjustified and unnecessary. Further, these proposals have the potential to jeopardise future resource development projects in Australia, and in turn jeopardise our continuing prosperity as a nation.

1.75      Coalition Senators believe the Australian Greens need not worry about any of the concerns contained within this bill, as the Labor Government will never sign an Enterprise Migration Agreement.  They are but a mirage.

Recommendation

1.76      Coalition Senators recommend that the bill not be proceeded with.

Recommendation

1.77      Coalition Senators recommend that the government implement a more timely and efficient approval process for Enterprise Migration Agreements.

 

Senator Chris Back Deputy Chair

Senator Bridget McKenzie

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