DISSENTING REPORT BY COALITION SENATORS

The Migration Amendment (Temporary Sponsored Visas) Bill 2013

1.1 The Explanatory Memorandum for The Migration Amendment (Temporary Sponsored Visas) Bill 2013 (Bill) states that the Bill amends the Migration Act 1958 to enhance the Government's ability to deter sponsor behaviour which is inconsistent with the policy intent of the Temporary Sponsored Visa Program (of which Subclass 457 visas are a part).

1.2 The key issues in relation to the Bill raised in the submissions to the Inquiry were in relation to:

(a) whether there is a need for labour market testing for the subclass 457 visa program; and

(b) the impact that labour market testing would have on employers using the subclass 457 visa program.

1.3 In drafting this report Coalition Senators have drawn on and referred to the information provided in their dissenting report to the Legal and Constitutional Affairs References Committee Inquiry into the Framework and operation of subclass
457 visas, Enterprise Migration Agreements and Regional Migration Agreements
(457 Inquiry) which is being tabled in conjunction with this Report.

Overview of the 457 visa program

1.4 Coalition Senators believe that Australian workers should, as a priority, be adequately resourced to enable them to be up-skilled and empowered, to gain meaningful employment.

1.5 Australian businesses overwhelmingly prefer to hire Australian workers in preference to overseas workers on the basis that it is more economical and less complicated to fill skill requirements from the local workforce.

1.6 There is a shared consensus across business and the community that Australia's skilled and semi-skilled migration program should only be utilised to supplement our domestic workforce where necessary.

1.7 Coalition Senators do not consider that an effectively managed temporary labour migration program will threaten Australian jobs. Rather, it is an important tool to secure the future of businesses and grow employment opportunities to enable business to employ more Australians.

1.8 The Australian skilled and semi-skilled migration program should be sufficiently robust to ensure that the employment opportunities of Australians must always be protected, whilst recognising that an appropriate and sustainable human capital strategy for Australia must be readily available to safeguard business from labour and skills shortages.

1.9 The 457 visa is the dominant component of Australia's temporary skilled migration program. It is designed to provide a prompt response to fluctuations in demand for skilled and semi-skilled workers where such demand cannot be met by the Australian workforce.

1.10 An effective policy for temporary skilled migration is vital to the efficient operation of the labour market and has the capacity to deliver significant economic benefits at a national and regional level.

1.11 Foreign workers on 457 visas account for approximately one percent of Australia's labour force,[1] and account for approximately 2% of our skilled workforce.

1.12 At these low levels it is both unrealistic and naive to suggest that the 457 skilled migration program is flooding the national labour market with foreign workers.

1.13 There is significant evidence to show that 457 visa holders make a positive economic contribution to the economy through the payment of personal taxes and the spending of wages, whilst in Australia.[2] It is also relevant to acknowledge that 457 visa holders are required to pay for health care insurance and are not entitled to access government welfare programs.

1.14 Australia faces an increasing labour shortage and responding to this labour challenge in a positive manner is a key productivity issue for Australia that cannot be ignored.

1.15 The ongoing demand for labour and skills and the challenges they present cannot be underestimated by Government and failure to effectively respond to identified labour shortages will negatively impact on the national economy.

1.16 The failure of the Labor Government to develop appropriate human capital strategies is all the more alarming against the background of numerous projects across the nation which could be jeopardised by labour shortages.

1.17 Included in this pipeline are projects to the value of (approximately):

Western Australia: $293.9 Billion worth of projects;
Queensland: $199.1 Billion worth of projects;
New South Wales: $84.6 Billion worth of projects;
Victoria and Tasmania: $57.6 Billion worth of projects;
South Australia: $50.1 Billion worth of projects; and
Northern Territory: $43.5 Billion worth of projects.[3]

1.18 Currently across Australia there are approximately 259 approved projects with a value of $446.4 Billion, while a pipeline of 163 less advanced projects will potentially deliver a further $282.4 billion of investment.[4]

1.19 The National Resources Sector Employment Taskforce has predicted there could be a shortage of approximately 36,000 skilled tradespeople in the resources sector of by 2015. [5]

1.20 Effectively addressing labour shortages through skilled and semi-skilled migration programs is not a new phenomenon in Australia.

1.21 The Howard Government's record of strong economic management was supported by sound policies designed to provide flexibility for Australia's migration intake and to serve the national interest. These policies included options to assist business to address skills shortages.

1.22 The Howard Government oversaw an increase in the proportion of skilled migration in Australia's permanent migration program, from around 30 per cent when it assumed office in 1996 to almost 70 per cent when it left office in 2007. The introduction by the Howard Government of the 457 temporary skilled visa program ensured greater responsiveness and flexibility in responding to fluctuating labour demands.

1.23 In contrast to the Howard Government policies which successfully addressed labour shortages through skilled and semi-skilled migration programs, the current Labor Government has burdened the 457 visa program with unnecessary red tape and has effectively locked many regional areas out of the program. As a result of the mismanagement of the 457 visa program, business has been frustrated and inconvenienced in its attempts to address labour shortages.

1.24 To accommodate Australia's growing requirements for skilled labour it is critical for the Government to recognise the need to implement sound policies that can assist in immediately addressing the labour shortages that business and industry are experiencing, in particular by making the present 457 visa program more efficient and user friendly, not by increasing more red tape and regulation.

1.25 The former Rudd Government and the current Gillard Government, in responding to union objections to the current 457 visa program, have diminished the effectiveness, reliability and integrity of Australia's skilled and semi-skilled migration program.

Lack of Consultation in relation to the Bill

1.26 Coalition Senators have grave concerns in relation to the lack of consultation on the impact of the Bill and the abuse and complete disregard by the Government of due process in relation to Senate Committee Inquiry process.

1.27 On 18 June 2013, the Senate referred the Bill to the Senate Legal and Constitutional Affairs Legislation Committee for inquiry and report.

1.28 Submissions to the Inquiry closed at midday on 20 June 2013.

1.29 The lack of adequate time for submitters to properly consider the bill and its potential impact and to provide considered comment was reflected in the submission to the Inquiry from Padma Raman, Executive Director of the Australian Human Rights Commission.

1.30 The submission stated:

Dear [Committee Secretary]

I refer to your invitation, by email at 7:56 pm yesterday Tuesday 18 June, for this Commission to make a submission to the Committee's Inquiry into the Migration Amendment (Temporary Sponsored Visas) Bill 2013, with submissions being requested by 12 pm tomorrow 20 June 2013.

I note that the Senate referred this matter for inquiry on 18 June and that the Committee is required to report by 25 June.

I must advise that the Commission is quite unable to make a submission on the substance of the Bill within this timeframe. I request, however, that you publish this email as the Commission's submission to the Inquiry.

The Commission wishes to state for the information of the Parliament, and for the public record, that an inquiry process which is so truncated as not to provide a realistic opportunity for public participation is not consistent with the requirements of Article 25 of the International Covenant on Civil and Political Rights.

Regards

Padma Raman

Executive Director, Australian Human Rights Commission[6]

1.31 The Law Council in its submission questioned why the Government was rushing the proposed changes through the Parliament without adequate consultation:

The Law Council opposes the Bill because it has been introduced hastily without adequate consultation with stakeholders and whilst the Senate's Legal and Constitutional Affairs Reference Committee is yet to deliver its findings on its May 2013 Inquiry into subclass 457 visas, Enterprise Migration Agreements and Regional Migration Agreements.

The Government appears to be rushing proposed changes through the last Parliamentary session before the September 2013 election without due consideration to the views of stakeholders.[7]

1.32 Coalition Senators note that the Explanatory Memorandum to the Bill states that consultation has taken place with various Commonwealth agencies including the Attorney-General's Department, the Department of Foreign Affairs and Trade, the Department of Education, Employment and Workplace Relations, the Fair Work Ombudsman, the Department of the Prime Minister and Cabinet, the Department of Treasury, the Department of Resources, Energy and Tourism, the Department of Finance and Deregulation, and the Office of Best Practice Regulation.

1.33 Coalition Senators also note however, the failure by the Government to consult with business, industry or any other private interests in relation to the impact of this Bill.

1.34 The Government's failure to properly consult is made all the more serious by the fact that the Explanatory Memorandum states that "the financial impact of these amendments is medium".

1.35 Minister O'Connor is not in an informed position to assert the impact of the financial impact of the Bill as consultation in relation to these financial impacts has not taken place.

1.36 Minister O'Connor's assertions on the financial impact of the Bill are no more than political rhetoric.

Deliberate campaign to undermine 457 visa program

1.37 Over recent months, the Government and elements within the union movement have run an aggressive media campaign claiming abuse in the 457 visa program and have resorted to making statements aimed at demonising both 457 visa holders and their employers.

1.38 Minister O'Connor claimed on 28 April 2013 that there have been in excess of 10,000 cases of abuse in the 457 program. As a result of these alleged rorts Minister O'Connor committed the Government to introduce legislation to crack down on the use of 457 visas.

1.39 Coalition Senators note that Minister O'Connor's claim of 10,000 cases of abuse in the 457 program equated to approximately 9 per cent of the total number of principal visa holders in Australia at 30 April 2013 being 108,810.[8]

1.40 In scrutinising the obvious exaggeration and unbelievability of
Minister O'Connor's claim of 10,000 cases of abuse in the 457 program, the
Coalition repeatedly called on Minister O'Connor and the Government to produce evidence to substantiate these claims.

1.41 Coalition Senators are unsurprised that Minister O'Connor has failed to produce any evidence.

1.42 In attempting to justify his exaggerated comments alleging abuse of the 457 visa program, Minister O'Connor referred in the House of Representatives, in March 2013, to a Department document which focussed on strengthening the integrity of the 457 visa program, provided to his Ministerial Advisory Council on Skilled Migration early this year.

1.43 The Coalition Shadow Minister, Mr Scott Morrison MP, subsequently obtained a copy of this document under Freedom of Information and challenged Minister O Connor on the veracity of his original allegations.

1.44 Contrary to Minister O Connor's false claims, the document did not suggest any widespread rorting or concerns with the program.[9]

1.45 Following the Shadow Minister's challenge to produce factual evidence that there have been in excess of 10,000 cases of abuse in the 457 program,
Minister O'Connor subsequently admitted that he had made this number up and that his allegations were not based on any authoritative statistics or other probative evidence.[10]

1.46 Coalition Senators conclude that Minister O'Connor therefore misled the Australian people with his self-serving false comments.

1.47 Coalition Senators note that the concerted negative campaign by
Minister O'Connor and a number of unions alleging abuse in the use of 457 visas was strongly criticised by industry groups, labour market experts and the Migration Council of Australia (MCA).

1.48 In May 2013, the MCA released a landmark report on the 457 visa program, including analysis based on a survey of 3800 visa holders and 1600 businesses. It found that only two per cent of foreign workers were being underpaid.[11]

1.49 As stated by Ms Carla Wilshire, Chief Executive Officer, MCA:

...the findings show that the 457 visa program is critical in keeping Australia competitive in an era when industry is global and 98 per cent of innovation happens outside of Australia'.[12]

1.50 In its submission to the 457 Inquiry, the Australian Industry Group referred to the fact that no evidence has been presented which points to widespread or systemic abuse of the 457 visa program:

The current debate over the program has unfairly focused on the relatively few employers who do not meet their obligations. In our view, those employers should face whatever sanctions are available. However, no evidence has been presented which points to widespread or systemic abuse and we strongly object to the tone of the public debate which has had the effect of vilifying both employers and those who themselves hold 457 visas.[13]

1.51 The BCA submission to the 457 Inquiry noted the harm that was being done to the 457 visa program as a result of the Government's unsubstantiated claims:

The unsubstantiated claims by the government of excessive growth and widespread rorting in the temporary skilled migrant 457 visa scheme are harming our international reputation and risk undermining a program that is vital for the economy. The facts are that there are 105,000 primary 457 visa holders performing critical roles in Australia, which is less than one per cent of the workforce, and that number fell in March as visa grants declined. [14]

1.52 BCA also called on the Government to provide its evidence of systemic rorting.[15]

1.53 The BCA also stated:

The government's changes to the 457 visa scheme announced in February were said to be in response to excessive use and so-called rorting, but with little justification presented. Individual visa holders or employers not complying with the legislation should be dealt with directly. Ad hoc changes to the rules only add cost, undermine business confidence and slow business activity.[16]

1.54 The ACCI submission to the 457 Inquiry stated:

Given the importance of skilled migration, ACCI has become increasingly alarmed at recent policy announcements and public commentary around important elements of migration. Worthy programs such as 457 visas, EMAs and RMAs have, in recent months, become subjected to a series of unsubstantiated claims of widespread rorting and have been used to invoke parochial and even racist sentiment with claims of foreign workers 'stealing' jobs from unemployed Australians. ACCI feels that a careful, considered approach, based on clear and substantiated evidence, is needed to ensure that we maintain the value and integrity of the schemes and don't further harm our reputation overseas as a good destination to do business, work or learn.[17]

1.55 The Australian Mines and Metals Association submission to the 457 Inquiry stated:

...the recent demonisation of 457 visa workers is extremely damaging. AMMA is particularly concerned at the politically charged context in which the government announced further changes to the system for 457 visas, and the lack of essential consultation with industry as a critical interest in the effective operation of both short term and ongoing skilled labour migration.

a. The depiction of skilled migrants as foreigners that need to be 'put at the back of the queue', and that Australians are being 'discriminated against', is base rhetoric that borders dog-whistling and invites allegations of industrial xenophobia.

b. These emotive claims also ignore the reality that current rules require labour to first be sourced from the local workforce.[18]

1.56 The Ernst & Young submission noted:

Recent sensational media reports about the subclass 457 visa program are unhelpful to a rational public dialogue and discussion about the appropriateness of Australia's skilled migration program. The program is important to the needs of business to fill temporary vacancies with skilled foreign workers. Records published by the Department of Immigration and Citizenship indicate that there are rare and isolated instances of concern in the program. It is essential that the current sanctions regime deal with inappropriate use of the program.[19]

1.57 The Migration Institute of Australia, in its oral evidence at the 457 Inquiry, confirmed that the actual statistics did not support Minister O'Connor's false claims:

Senator CASH: Ms Chan, you would be aware that the minister, Mr O'Connor, claimed that there were at least 10,000 rorts occurring in the 457 visa system, which was then proven to be a 'guesstimate'. Mr Sheldon of the TWU this morning threw a rounder figure of 100,000 breaches of human rights in relation to the 457 visa program. Given that you do represent almost half of the migration industry, what is your experience in relation to the allegations of rorting within the 457 visa program? And if there are rorts, are they dealt with by way of a legislative basis?

Ms Chan: We would only have the information that is provided through DIAC, and the statistics do not support either a 10,000 rort or a 100,000 rort.[20]

1.58 Perhaps the most damning evidence in relation to Minister O'Connor's false claims of widespread rorting was provided by his own Department at the public hearing of the 457 Inquiry.

1.59 The Department confirmed under questioning from Senator Cash that it did not provide Minister O'Connor with any advice that would form the basis of his false claims:

Dr Southern: We certainly did not provide advice around a number of 10,000.[21]

Claims of rorting by the CFMEU and the TWU

1.60 Evidence given by the Construction, Forestry, Energy and Mining Union (CFMEU) in its submission to the 457 Inquiry was to the effect that there were fundamental abuses or rorts of the 457 visa program:

The fundamental abuse or rort of the 457 visa program is when the Australian government authorises an employer to employ a foreign national on a 457 visa when a qualified Australian citizen or permanent resident is available and willing to do the work.[22]

1.61 The CFMEU submission went onto state that the union would 'provide to the Committee, on a confidential basis and upon request, numerous examples of the exploitation of 457 visa workers'.[23]

1.62 Coalition Senators note that the evidence provided by the CFMEU on a confidential basis to the 457 Inquiry referred to 6 cases of alleged rorting. This is hardly sufficient to justify intemperate claims of fundamental rorts and abuses.

1.63 At the public hearing for the 457 Inquiry, Mr Tony Sheldon of the Transport Workers' Union of Australia (TWU) stated that he believed there were more than 100,000 people on 457 visas having their human rights exploited:

Mr Sheldon: And you would look at the question Senator Cash rightly asked, as you are asking: is there exploitation of people on 457 visas beyond those two months? When you are talking about having a human right taken from you whereby you can be deported from the country, I would argue that the entire 100,000 plus are human rights exploited...[24]

1.64 Coalition Senators note that the total number of principal visa holders in Australia at 30 April 2013 was estimated by DIAC to be 108,810.[25]

1.65 When asked by Senator Cash how many allegations of cases of exploitation or rorting had been reported to the TWU, Mr Sheldon's evidence was that there were only 24 such cases:

Senator CASH: In your oral evidence today you did use the word 'exploiting' in relation to 457 visas. How many allegations or cases of either exploitation or rorting have been reported to the TWU?

Mr Sheldon: It is 24.[26]

1.66 The evidence of Mr Sheldon regarding his intemperate claims of exploitation of people on 457 visas appears to be similar to the exaggerated and factually inaccurate claims made by Minister O'Connor and the CFMEU.

Office of the Prime Minister – Mr John McTernan

1.67 Coalition Senators have serious concerns with an article that appeared in the Australian newspaper on 22 June 2013 under the banner headline "PM's office breeches FoI rules for spin doctor John McTernan".

1.68 The article by the Australian's National Chief Correspondent,
Hedley Thomas, states that the Prime Minister's office is "flouting Freedom of Information rules and is refusing to hand over documents relating to the hiring of her communications director John McTernan, a Scotsman on a 457 visa for foreign workers".

1.69 The article indicates that the Office of the Information Commissioner told the Weekend Australian that it had formally rejected the Office of the Prime Minister's request for more time to process the documents. Ms Gillard's office has already been granted two extensions totalling 40 days.

1.70 The article reveals that the Weekend Australia in early April 2013, sought all documents relating to the hiring of Mr McTernan in 2011 as chief spin doctor for the Prime Minister. Other documents sought relate to the efforts, if any, taken to identify a suitable person in Australia for the role, such as advertising, the engagement of recruitment agencies of direct contact with media outlets and highly qualified local journalists.

1.71 Coalition Senators are of the opinion that:

(a) given the stated reasons for this Bill being to enhance the Government's ability to deter sponsor behaviour which is inconsistent with the policy intent of the Temporary Sponsored Visa Program; and

(b) the false claims by Minister O'Connor, the largely unsubstantiated claims of the CFMEU and the TWU of widespread rorting,

the Prime Minister should immediately and without further delay authorise the release of all documents relating to the appointment of her chief spin doctor,
Mr John McTernan.

1.72 Coalition Senators are of the opinion that if the Prime Minister fails to do this, coupled with her office's failure to comply with the Freedom of Information request, the conclusion that would most reasonably follow such a failure to disclose the requested information, is that the Prime Minister is culpable in attempting to deliberately cover up, to quote Minister O'Connor, "a case of abuse" within her own office in relation to the 457 visa program.

Coalition Senators' conclusions on allegations of rorting the 457 visa program

1.73 The lack of authoritative statistical or substantive evidence provided by Minister O'Connor, the CFMEU and the TWU in their spurious claims of widespread rorting of the 457 visa program, is not consistent with the records published by the Department, which indicate that such incidents are rare and isolated within the 457 visa program.

1.74 Following the Shadow Minister's challenge to produce factual evidence that there have been in excess of 10,000 cases of abuse in the 457 program,
Minister O'Connor has subsequently admitted that he had made this number up and that his allegations were not based on any authoritative statistics or other probative evidence.[27]

1.75 Based on:

(a) the evidence of a lack of rorts in the 457 program provided to the 457 Inquiry,

(b) the fact that Minister O'Connor admitted that his claim that there has been in excess of 10,000 cases of abuse in the 457 program was false; and

(c) the fact that the CFMEU and the TWU were unable to provide authoritative statistics or substantial evidence to back up their claims of wide spread rorting,

Coalition Senators conclude that the extremely damaging statements made by
Minister O'Connor, the CFMEU and the TWU, alleging widespread rorting of the 457 visa program, were politically motivated, without foundation and designed to undermine the 457 visa program.

1.76 Coalition Senators also note that if widespread rorting was as evident as the Prime Minister and Minister O'Connor claimed, then this failing and weakness in the system has occurred on Labor's watch over the past five years.

1.77 This Government has by its own admission failed to adequately police Australia's skilled migration program.

Labor Market Testing (LMT)

1.78 The Bill introduces new LMT requirements across all skill level occupations with Minister O'Connor having the power to exempt some, but not all, higher skill level occupations.

1.79 The Bill provides that employers may be required to provide evidence that they have made attempts to fill the position locally before seeking to become a 457 visa sponsor.

1.80 Evidence to be provided would include:

advertising of the position by the employer;
participation in career expos;
fees paid for recruitment; and
results of recruitment attempts.

1.81 LMT was previously a requirement for not only subclass 457 sponsorship but also sponsorship under the Employer Nomination Scheme and Regional Sponsored Migration Scheme.

1.82 LMT was abolished in all of those areas as it was deemed to be complex, onerous and ineffective.

Evidence of an adequate inbuilt mechanism for LMT

1.83 Coalition Senators note that there is already an adequate inbuilt mechanism for LMT within the current 457 visa process.

1.84 The adequacy of the current inbuilt mechanism for LMT was supported by the evidence of AMMA to the 457 Inquiry which set out and described the basis upon which an employer is able to access the 457 visa program:

Before a position in a business can be filled with an overseas worker, the sponsor must certify that it is suitably skilled and that the qualifications and experience of the visa holder are equivalent to what would be required of an Australian employed in that occupation. Market rates and conditions that would be paid to an Australian in the same job in the same workplace must also be provided.

Sponsors incur additional costs for employing workers on 457 visas such as paying for health insurance, flights to and from Australia, and agent fees for finding the worker. These additional costs of sponsorship can amount to $60,000 per person.

457 visas are not a low cost option to avoid the costs of employing Australian residents. It would be unsound to proceed on any other basis than that employer's hire foreign workers only as a last resort. This in-built mechanism makes it unnecessary to incorporate further labour market testing into the visa application process.

Furthermore, labour market testing – insisting that employers show evidence of having recruited locally would be debilitating for employers urgently seeking to fill a position, and who are familiar with the challenges of the local employment market. Employers seek foreign workers when they urgently need skills that are not otherwise accessible to them.

Labour market testing would also be fraught with bureaucratic and administrative problems, as DIAC case officers would also have to assess the additional information provided, thereby increasing DIAC workload and inflating processing times for 457 visas. To take this a step further and be absolutely clear, deliberately inflating process times as a disincentive to using 457 visas would be: very poor governance indeed, a rank waste of public resources; and would ill serve the interests of the Australian economy and job opportunities.[28]

1.85 Coalition Senators believe that the introduction of stringent LMT ignores the reality that it is in the employer's best interests, to conduct their own labour market testing and assess the availability of local skills prior to seeking to utilise the 457 visa process.

1.86 In her oral evidence to this Inquiry Ms Caroline Lambert, Director of Employment, Education and Training from ACCI stated:

...we do not believe that the government or the unions or the department are in the best position to determine how the labour market should be tested.

Businesses need to respond to their own circumstances in regions, in industries and across the economy, depending on their own circumstances and the urgency they may have for filling a job.

Having a departmental person or the government or anyone else say that there is only one size fits all approach to labour market testing is strongly putting barriers of regulation that the economy and these businesses do not need.

Certainly, we would urge the Senate and we would urge the parliament not to support this bill without rigorous further evidence and a regulatory impact statement.[29]

1.87 Coalition Senators note the evidence from various submitters to the 457 Inquiry that Australian businesses overwhelmingly prefer to hire Australians.

1.88 Consult Australia submitted that as it more economical and less complicated to fill skills requirements from the local workforce, employers unsurprisingly conduct their own LMT, in the first instance.

1.89 Consult Australia's submission to the 457 Inquiry stated that employers consistently advise that they prefer to recruit locally available staff rather than having to seek out temporary skilled migrants:

The cost of employing a temporary skilled migrant is much larger than the cost of recruiting locally, especially in terms of the cost of the process and the cost of relocating a new employee and their family to Australia. Temporary skilled migrants require more support to settle into Australian business practices, and their families require support to ensure their experience is a positive one and they do not return home early.

This demonstrates that labour market testing is a normal procedure for employers in the built environment consulting sector. Placing new requirements on employers to document and report on labour market testing is not required, and will end up as unnecessary regulation.[30]

1.90 Consult Australia's evidence was supported by the submission of Hamilton's Migration Law to the 457 Inquiry, which stated:

...labour market testing is already conducted by employers with a range of means...Employers are entitled to determine how best to recruit to fill a vacancy given the workforce available in their particular area. The statutory form of labour market testing has already been rejected as a feature of the 457 regime as it was seen to be incompatible with the purpose of the program which is to flexibly and quickly fill short-term vacancies.[31]

1.91 The evidence of the Australian Industry Group to the 457 Inquiry also supported an employer's preference to recruit locally available staff:

Sourcing skilled labour via 457 visas attracts a significant premium over hiring locally and this ensures that in the vast majority of cases employers will only go down the 457 path when they have exhausted local options. In this way, employers themselves test the market thoroughly before choosing to hire through the 457 program. The visas are also available only for skills which are demonstrated to be in demand. Stringent testing will simply add more unnecessary bureaucracy...Delays caused by such testing could prevent a business from meeting urgent commercial needs.[32]

Evidence against the introduction of stringent labour market testing

1.92 Coalition Senators note that the Committee majority report for this Inquiry acknowledges that there was significant opposition to the introduction of a LMT condition for the subclass 457 visa program.

1.93 Coalition Senators note that both the 457 Inquiry and this Inquiry received strong and credible evidence that the introduction of stringent LMT will reverse the balance of minimal administrative burden, which is vital to the success of the 457 visa program, and reduce the ability of an employer to access skilled labour in an efficient and economical manner.

1.94 In its submission to the 457 Inquiry, the Chamber of Commerce and Industry Queensland stated its belief that LMT is ineffective, time consuming and of little value to small and medium employers.[33]

1.95 The Business Council of Australia (BCA) strongly recommended against the introduction of LMT as an onerous requirement that would impose additional, unnecessary regulatory costs on industry, and would be impractical in most cases. Footnote

1.96 BCA noted that LMT introduces complex and costly process without providing any demonstrated benefits:

Businesses overwhelmingly prefer to hire Australians first. It is cheaper and faster to fill skills requirements from the permanent local workforce. Employers are taking on additional costs of hiring, training and relocating overseas when applying for 457 visas – it is in their commercial interest to have already assessed whether there might be Australian workers available to fill the roles.

There is next to nothing to be gained from mandatory labour market testing. Labour market testing would only add more cost and delay to employers and curtail business activity.

Furthermore, the introduction of labour testing could be inconsistent with Australia's commitments under World Trade Organization and free trade agreements, as noted in the government response to the report of the Joint Standing Committee on Migration in 2009.[34]

1.97 The BCA in its submission to this Inquiry stated:

The most damaging initiative in the Bill is a return to labour market testing, which was abandoned following a major 2001 departmental review that found it was costly, ineffective and inferior to the system we have today (see the report titled In Australia's Interest: A Review of the Temporary Residence Program).[35]

1.98 The evidence of the ANU College of Law to this Inquiry was that the introduction of stringent LMT within the application processes for the 457 visa program would be inefficient and ineffective.

We believe that the introduction of Labour Market Testing condition will only add another layer of complexity, delay and administrative cost to the 457 visa scheme, without addressing the objective. These amendments are likely to deter employers from pursuing sponsorship altogether. [36]

1.99 ACCI in its submission to the 457 Inquiry submitted that the introduction of stringent LMT requirements could cause significant time delays and would only slow down access to skilled overseas workers under what is supposed to be a fast, flexible visa solution to skilled labour shortages.[37]

1.100 ACCI in its submission to this Inquiry states:

...detailed labour market testing will add to cost, time and the overall red‐tape burden incurred by businesses seeking to secure skilled labour. Of most significant concern to ACCI is the lack of a Regulatory Impact Statement examining the impact of the proposed Bill on businesses seeking to secure skilled labour.

The introduction of stringent labour market testing requirements could cause significant time delays that may see regional areas not having access to health professionals due to the time impost of conducting detailed labour market analysis.

The Legislation acknowledges that labour market testing creates time delays. Section 140GBB of the bill includes an exemption to the Labour Market Testing requirement in the event of a natural disaster in order to assist disaster relief or recovery. In his second reading of the Bill, the Minister stated that: This exemption will give the government flexibility to respond to situations of national or state emergency and would facilitate the speedy entry of overseas skilled workers without the delay caused by requiring a sponsor to undertake labour market testing.

This admission in the Bill that Labour Market Testing adds delays contradicts the 'timely access' policy rationale of the 457 visa program.[38]

Failure of government to provide a Regulation Impact Statement (RIS)

1.101 There can be no doubt that one of the most concerning aspects of this Bill is the failure by the Government to produce a RIS in relation to Schedule 2, as is required under Government policy guidelines.

1.102 The requirement for a RIS is set out on the Office of Best Practice (OBPR) website, which states:

A Regulation Impact Statement (RIS) is required, under the Australian Government's requirements, when a regulatory proposal is likely to have an impact on business or the not-for-profit sector, unless that impact is of a minor or machinery nature and does not substantially alter existing arrangements.[39]

1.103 The OPBR was consulted by the Government on this and advised that a RIS was required for the amendments contained in Schedule 2 to the Bill to determine the effects of the LMT provisions.

1.104 Despite this advice, DIAC sought a waiver from this requirement from the Prime Minister.

1.105 At the hearing for this Inquiry evidence was given that the following process was followed in relation to the RIS.[40]

1.106 On 14 May 2013, the OBPR advised the Department that in relation to Schedule 2 of the Bill, which contains the LMT provisions, a RIS was required. The Department then advised the OBPR that it would not be able to fulfil the request in the short time frame given that the Bill was to be tabled on 29 May 2013.

1.107 On 22 May 2013 Minister O'Connor wrote to the Prime Minister and asked that an exemption be given to the requirement to provide a RIS.

1.108 The Department, on notice, provided evidence that Minister O'Connor gave the following reasons for seeking an exemption from undertaking a RIS, relating to the introduction of LMT:

Given the exceptional circumstances relating to the urgency of the reforms to the Temporary Sponsored Work Visa Program; the need to realign the program to be used only where a genuine skills shortage exists; and the critical timeframe to finalise the Bill for introduction into Parliament, I am seeking your approval to exempt the LMT measure from the RIS process.[41]

1.109 On 27 May the Prime Minister granted that exemption.

1.110 Despite calls from stakeholders and the Coalition to publically state what the cited "exceptional circumstances" are for the granting of the exemption from the RIS, both the Minister and the Prime Minister have refused to provide an explanation.

1.111 This failure to observe administrative guidelines appears to be for crass political reasons and reflects badly on both Minister O'Connor and the Prime Minister.

1.112 Coalition Senators have significant concerns regarding the failure of the Government to provide a RIS in relation to Schedule 2 of the Bill given the cogent evidence of the likely detrimental impact these provisions will have on business.

1.113 The Government was advised of the concerns of business and industry in relation to the detrimental impacts of the Bill in the 'Open letter to members of the Federal Parliament regarding the Migration Amendment (Temporary Sponsored Visas) Bill 2013' (17 June 2013).

1.114 The letter was from the Migration Council of Australia and signed by: Innes Willox, Chief Executive Officer of the Australian Industry Group; Jennifer Westacott, Chief Executive of the Business Council of Australia; and Carla Wilshire, Chief Executive Officer of the Migration Council Australia.

1.115 An extract from the text of the letter setting out the concerns of business and industry is as follows:

We are writing to ask for your support in opposing the Migration Amendment (Temporary Sponsored Visas) Bill 2013 in full when it is introduced into the parliament this week.

We are greatly concerned by the lack of supporting evidence, damaging rhetoric and poor process associated with the proposed changes to the 457 visa scheme, along with the considerable risks posed for investment, job creation and economic growth. Furthermore, there has been minimal consultation with industry about these changes. The legislation risks undermining the capacity to fill identified skills gaps in a timely way without a proper assessment of whether there is a genuine problem to be solved. What is so concerning is that the government is seeking to rush these changes through the final session of parliament before the election without subjecting its claims about alleged scheme abuses and inadequacies to the rigor of its own Regulatory Impact Statement (RIS) process.

The RIS exemption for the new labour market testing requirements in the Bill cites 'exceptional circumstances'. It is unclear what these circumstances are, given that the minister's department has provided no hard evidence of a systemic problem with the scheme. The government's primary argument for a systemic problem rests on a misleading interpretation of an ambiguous survey finding in a recent Migration Council Australia report. This is not an adequate foundation for introducing costly new regulation.

A Regulatory Impact Statement, with full consultation with industry, is the appropriate way to assess whether a problem exists with the 457 visa scheme and the costs and benefits of solving any purported problems through specific actions, including regulation.

Unwarranted additional regulation of the 457 visa scheme risks penalising all employers and their employees, and undermining investment, skills transfer and development and broader job creation, to address a relatively small number of instances that may be better dealt with through other means.[42]

1.116 The very serious concerns raised in this letter were supported by evidence from a number of other submissions to this Inquiry.

1.117 The Migration Institute of Australia in its submission to this Inquiry stated:

The MIA is concerned that there has been no proper examination of the regulatory impact the proposed changes will impose on Australian business and industry, together with impacts on labour market efficiency and business productivity from the reintroduction of labour market testing in particular.

...

It is in the matter of labour market testing where the greatest impact may be on Australian businesses and industry, and yet there has been no examination of that because the Prime Minister has granted an exemption.[43]

1.118 AMMA in its submission stated that:

...the most damaging proposal in the bill – the reintroduction of LMT – was not a recommendation made by [the Ministerial Advisory Council on Skilled Migration (MACSM)]. AMMA was particularly surprised to see LMT in the bill given concerns raised in the 2008 Deegan Review that this would compromise Australia's international trade obligations.[44]

1.119 AMMA also finds that LMT would be operationally debilitating for employers urgently seeking to fill skilled positions:

Such an outcome would directly detract from the policy rationale of the 457 program: providing timely access to skilled workers in occupations where identified shortages exist.[45]

1.120 AMMA also finds that the reintroduction of LMT some 12 years after it was scrapped would a radical and regressive measure insensitive to the needs of employers and the economy and states that the LMT requirement is not only strongly opposed by industry and employers, but also the Migration Institute of Australia, the independent Migration Council of Australia and the Law Council of Australia. It was not recommended by the Government's very own Advisory Council on Skilled Migration.

1.121 In oral evidence to this Inquiry many witnesses stated that the introduction of this bill and in particular the LMT requirements would have a detrimental impact on job creation in Australia:

Mr Pryor: Yes. That is our view of the potential costs and risks of introducing this new scheme. There will be some element of a barrier being erected towards job creation in the economy. A distribution of that will depend on the different sectors and businesses themselves, but that is our view: there is a potentially significant cost and risk to job creation in the scheme.[46]

Mr Melville: The most common thing I hear from companies that get involved in this area is: 'I know that I can't find these people. I know from the local community I'm working in that they're not there'. It might be a company in a remote area of Australia or even somewhere like Ipswich. They know that there aren't people with those skills there, and saying to them that they have got to get on to a process where they advertise these positions that they know are not there and adding to their cost of employment even further is just unnecessary...

Companies have been under pressure from all sorts of things like the global financial crisis and increasing energy costs. You cannot just say that this is only a small cost. It is a small cost, but it is another small cost on top of a lot of other costs that have been going up. When you talk to our member global companies, their head offices look at Australia and ask, 'Why should we do business there?' They look at the workplace relations laws and, although the dollar has come off, they look at the cost of the high dollar, but they also look at employment costs...[47]

Ms Wilshire: I think that there is both a short-run risk to job creation and a long-term risk. The short-run risk, which has been articulated by both AAG and BCA in their evidence, is that it could change the calculus of the investments by individuals. The long-term risk is that reducing the value of the program will impact on competitiveness and the six-month framework associated with the mooted labour market testing would mean we would lag behind global trends in innovation and process improvements. In a sense it would disconnect us. One of the long-term risks to job creation is that without the flow of skilled people into Australia we risk becoming a backwater in the global economy.[48]

Ms Lambert: I certainly think that they would be deterred from using the program if you look at the proposed legislation holistically as well as, in particular, the labour market testing. Deterrence in regulation is everywhere across the economy, and further regulation just exacerbates that frustration that business has in dealing with these issues.

I think the other important thing about the labour market testing proposed is that the flexibility and responsiveness is just eliminated from the scheme. That frustration will be enormous, and so the choices for many small businesses could be that they could close. So not only are we lacking the job creation opportunities we are actually potentially forcing some businesses to close because of their inability to use what is currently a flexible and responsive scheme because of the labour market testing—again, that one-size-fits-all approach to labour market testing.[49]

Mr Bolton:...having an uncertain labour supply would certainly be a very good reason for a business not to even tender for contracts. As we see, there are huge resources contracts still going ahead across the country; there have been a few that have been shelved, but there are still a lot in the pipeline. Australian businesses faced with the prospect of an uncertain labour supply, faced with the prospect of potentially waiting for six months before they can ensure that they have the people to do the job would be a very significant barrier and, indeed, a reason for them not to even tender.

On the impacts on businesses not directly related to contracting, the possibility of a hospital being without a medical registrar for six months, the possibility of a telco being without a system engineer for six months, or the possibility of a restaurant being without a chef for six months would mean that that business is not able to do its business. That would possibly send some businesses to the wall.[50]

Coalition Senator's conclusions

1.122 The OBPR has advised the Government that a RIS is required in relation to Schedule 2 of the Bill.

1.123 The Government failed to comply with this requirement.

1.124 The failure by the Government to provide a RIS in relation to Schedule 2 of the Bill means that the Parliament is debating this proposed legislation without information before it relating to the potential cost impact on employers and in particular the flow-on effects to jobs in Australia as a result of the LMT provisions.

1.125 Due to the very serious nature of the concerns that have been raised in relation to the Government's failure to provide a RIS and the considerable risks posed by this Bill for investment, job creation and economic growth in Australia, Coalition Senators believe that this Bill should be immediately withdrawn until a RIS with full consultation with industry has been undertaken.

Minister O'Connor's misrepresentations on what LMT is

1.126 On 21 June 2013, the same day as the Inquiry into this bill, Minister O'Connor misrepresented what LMT actually is.

1.127 Minister O'Connor in response to a question asked of him at the Skilled Migration National Employer Conference in Melbourne told attendees the LMT provisions in his Government's 457 bill amounted to:

...putting an ad in the paper. That's it. There is no other undertaking required from the employer.

1.128 Under questioning from Senator Cash at the Inquiry, the Department contradicted Minister O'Connor and confirmed that the Department is yet to determine how the LMT provisions will work. DIAC also said that Minister O'Connor's statement was not provided by the Department.

Senator CASH:...What would the department do if they asked a business for evidence of labour market testing and the business responded, as per Minister O'Connor's statement, 'I put an ad in the paper'? Is that sufficient?

Mr Wilden: The way the [labour market testing] is going to work is yet to be determined in great detail...we have not looked at the micro level...

Senator CASH:...[Y]ou do not know that yet, because as per your own evidence, you have not yet looked at the micro detail[?]

Mr Wilden: We have not looked at the micro detail...

Senator CASH:...[U]pon what basis does Minister O'Connor make that statement?

Mr Wilden: I cannot speak to why the minister would have made that statement. I was not aware of the statement and it was not prepared by this office.[51]

1.129 Coalition Senators are gravely concerned that Minister O'Connor has yet again deliberately manufactured false claims in relation to a bill for which he is responsible for.

1.130 Minister O'Connor has already had to admit that in relation to his claim that there have been in excess of 10,000 cases of abuse in the 457 program he had made this number up and that his allegations were not based on any authoritative statistics or other probative evidence.

1.131 Minister O'Connor has now again been caught out deliberately providing misleading information in relation to the 457 visa program.

1.132 Based on:

(a) the fact that Minister O'Connor had to admit that his claim that there has been in excess of 10,000 cases of abuse in the 457 program was false; and

(b) the fact that Minister O'Connor has now been caught out again deliberately manufacturing false claims in relation to LMT;

Coalition Senators conclude that the statement made by Minister O'Connor at the Skilled Migration National Employer Conference in Melbourne were politically motivated, incorrect and designed to deliberately mislead stakeholders in relation to what LMT is.

Coalition Senators' conclusions on Labour Market Testing

1.133 Coalition Senators note that the 457 visa program is only accessible to those employers with a strong record of, or a demonstrated commitment to, employing local labour and, also, a demonstrated financial commitment to training Australian workers

1.134 Coalition Senators also note the compelling evidence from industry groups and labour market experts who have argued against the introduction of stringent LMT as part of the 457 visa application process.

1.135 Coalition Senators agree that the introduction of stringent LMT will undermine the rationale and purpose of the 457 visa program, which is intended to facilitate the rapid filling of employment positions during temporary skill shortages.

1.136 The ability to rapidly fill vacancies with a skilled overseas worker is an important feature in the overall success of the 457 visa program.

1.137 Coalition Senators believe the proposed regime for LMT will be cumbersome to implement and difficult to monitor, and will increase the burden of costs, regulation, obligations, compliance and enforcement on employers seeking to sponsor workers on 457 visas.

1.138 Based on the evidence provided to the Inquiry, and the false statements of Minister O'Connor and the spurious evidence of the CFMEU and TWU regarding abuse of the 457 visa program, Coalition Senators have formed the view that the
re-introduction of LMT is politically motivated and is being used as a vehicle to frustrate and discourage business from utilising the benefits that underpin the 457 visa regime.

1.139 Coalition Senators do not support the introduction of LMT.

Conclusions – Coalition Senators

1.140 Coalition Senators are concerned that the passage of the Bill is being progressed by the Government with indecent haste and without appropriate consultation with affected parties.

1.141 Coalition Senators believe that this Bill if passed will add significantly to the burden of costs, regulation, compliance and enforcement on employer sponsors using the 457 visa program.

1.142 The failure by the Government to follow the advice of its own OPBR and provide a RIS in relation to the amendments contained in Schedule 2 to the Bill and the Prime Minister's actions in granting of an exemption without any explanation as to why she did this, confirms Coalition's Senators belief that this Bill is the culmination of a deliberate union and Government campaign to discredit and undermine the 457 via programme and demonise foreign workers.

1.143 Coalition Senators also conclude based on the evidence provided to the Inquiry that:

(a) the failure by the Prime Minister to comply with a FoI request in relation to her employee Mr John McTernan and

(b) the fact that the extremely damaging statements made by Minister O'Connor, the CFMEU and the TWU alleging widespread rorting of the 457 visa program are not supported by their own evidence or any other authoritative statistics or sources; and

(c) Minister O'Connor's misleading information to the Skilled Migration National Employer Conference in Melbourne in relation to what LMT is

confirms that this Bill is politically motivated and designed to undermine the 457 visa program.

1.144 This Bill is confirmation of the excessive power, control and influence that the union movement has over the Gillard Labor Government.

1.145 Coalition Senators believe that this bill based on the evidence provided to the 457 Inquiry does not represent good public policy and is not a bill that has been drafted in Australia's national interest.

1.146 Coalition Senators recommend that the Government delay the passage of this Bill 2013 to allow a RIS assessment, proper consultation with relevant parties in relation to the Bill and in particular its impact on business and industry.

1.147 The Bill is flawed and should not be proceeded with in its current form and should be withdrawn.

Senator Gary Humphries Deputy Chair	Senator Sue Boyce

Senator Michaelia Cash

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