ACTU Submission Review of the 457 visa program 30 April 2014

Table of Contents

1. Introduction................................................................................................................................................................ 2 2. Executive Summary.................................................................................................................................................... 3 3. The ACTU position on the temporary 457 visa program ............................................................................................. 6 4. Key features of the current regulatory framework under threat ................................................................................. 7 The early track record of the Government on these matters..................................................................................7 Labour market testing ..............................................................................................................................................8 The rationale for labour market testing .......................................................................................................................8 Apparent Government support for the principle of labour market testing.............................................................. 10 The arguments to remove labour market testing and why they should be rejected. ............................................. 12 Now is not the time to be removing labour market testing...................................................................................... 20

Market rates ........................................................................................................................................................... 22 Temporary Skilled Migration Income Threshold ................................................................................................... 24 Confining the 457 visa program to skilled occupations ...................................................................................... 25 English language standards .................................................................................................................................. 26 Additional protections under threat ...................................................................................................................... 27 5. Recommended improvements to the current regulatory framework ........................................................................ 29 Labour market testing ........................................................................................................................................... 29 Weaknesses in the current labour market testing regime....................................................................................... 29 Improved evidentiary requirements for labour market testing ................................................................................ 31 Coverage of the labour market testing provisions ................................................................................................... 33 Mandatory data collection items and reporting systems for labour market testing............................................... 36

Stronger training obligations ................................................................................................................................. 36 Better information for 457 visa holders ............................................................................................................... 39 Establish a public register of 457 visa sponsoring employers ............................................................................ 40 Effective tripartite oversight of the program ......................................................................................................... 40 Access to workers’ compensation ......................................................................................................................... 40 Access to entitlements in cases of insolvency ..................................................................................................... 40 Independent skills assessment for all 457 visa workers..................................................................................... 41 Preference for 457 visa workers in redundancy situations ................................................................................. 41 Priority access for 457 visa holders to independent permanent migration channels ....................................... 41 6. Response to individual terms of reference .............................................................................................................. 43 The level of non-compliance by sponsors, both historically and under the current regulatory framework ....... 43 Evaluate the regulatory framework of the 457 program and determine whether the existing requirements appropriately balance a need to ensure the integrity of the program with potential costs to employers in accessing the program .......................................................................................................................................... 48 Report on the scope for deregulation while maintaining integrity in the program ............................................. 49 Review and advise on the appropriateness of the current compliance and sanctions ..................................... 50 Appendix 1 ..................................................................................................................................................................... 53 Recent case studies of rorting and exploitation under 457 visas ....................................................................... 53

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1. Introduction The ACTU makes this submission in support of Australian jobs and training opportunities. The first priority for any Australian Government in reviewing the 457 visa program must be to support jobs and training for Australian citizens and permanent residents. This is particularly the case at a time when unemployment and youth unemployment are at the highest levels in 10 years and there have been a series of major job losses across the country. We are concerned therefore that a major focus of this review appears to be on finding even more ways the 457 visa program can be deregulated to remove current protections and safeguards, especially labour market testing. The Government’s preoccupation with deregulation also places in doubt other vital protections such as English language requirements for temporary 457 workers, the obligation to pay overseas 457 workers ‘market rates’, and the minimum salary threshold for 457 workers. In this submission, we call for the Government to commit to retaining these and other essential elements of the 457 visa program that operate in the interests of both Australian workers and temporary overseas workers, as well as making a range of other necessary improvements to strengthen the current regulatory framework governing the program. In support of this position, we first set out the overall union position on the temporary 457 visa program. The submission then outlines the key safeguards and protections currently in the 457 visa program that are now under threat, and identifies areas for improvement and overhaul that would support both Australian workers and temporary overseas workers. We then address each of the specific terms of reference for the review and the questions posed by the review panel. The ACTU endorses and refers the review panel to the submissions of our affiliated unions and individual union members.

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2. Executive Summary Unions support skilled migration. Our clear preference is for permanent migration where workers come to Australia independently but we recognise the 457 visa temporary skilled migration program can play a role, provided it is filling genuine skill shortages that cannot be met through the employment and training of Australians. The first priority for any Australian Government in reviewing the 457 visa program must be to support jobs and training for Australian citizens and permanent residents. Employers should not be able to gain access to the 457 visa program and temporary overseas workers until they have provided evidence of genuine attempts to fill positions locally and that no qualified Australian worker is available to do the job. That is why the labour market testing laws introduced last year are so important. There must be a legal obligation on employers to employ Australians first and that needs to be enforced rigorously. Only then can Australian workers and the Australian community have any confidence in the 457 visa program. This is particularly important at a time when unemployment is around its highest levels in a decade and there have been a series of major job losses across the country. In the face of this evidence, it is more important than ever that requests by employers to access 457 visa workers be tested against evidence of their attempts to recruit Australian workers first. Whether it is young people looking for their first job or older workers looking to get back into the workforce or to change careers, they deserve an assurance that they have will priority access to local jobs before employers can use temporary workers from overseas. For a Government that has made a number of public statements pledging support for the principle of Australian workers having priority, now is the time to deliver on that pledge. Otherwise, those statements are just meaningless platitudes. In this submission, we call on the Government to put aside its ideological focus on deregulation and spurious arguments about ‘red tape’, and commit to retaining key protections in the current regulatory framework that operate in the interests of both Australian workers and temporary overseas workers. These core protections outlined in section 3 of the submission include: • • • • •

Labour market testing English language standards The obligation to pay market rates to 457 visa workers The minimum salary threshold for 457 visa workers An eligible occupation list that is confined to skilled trades and professions in shortage, not semi-skilled and unskilled positions.

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In addition, this submission identifies key, practical, ways the Government can build on the current regulatory framework and further improve the integrity of the program. These include: •

Labour market testing o

More rigorous evidentiary requirements for job advertising and other recruitment efforts to ensure the intent of the legislation is achieved and Australian employment opportunities are protected.

o

Ensuring that coverage of labour market testing is as broad as possible. As a matter of principle, labour market testing should apply to all occupations under the 457 visa program.

o

A system of warnings and penalties to apply for hiring a 457 visa holder when an appropriately skilled Australian worker is available and there was evidence no genuine effort was made to source a suitably qualified local worker.

o

The Australian Government should not enter into any free trade agreements that trade away the right of the Australian Government and the Australian community to require that labour market testing occur and Australian workers are given first right to Australian jobs.

o

Expanding the current sponsorship obligation ‘to keep records’ to include records of labour market testing undertaken.

o

In the interests of transparency and community confidence in the 457 visa program, information and data on the operation of the labour market testing provisions should be made publically available.

•

Introducing stronger training obligations on 457 visa sponsors to train in the occupations where they are currently using 457 visa workers, and ensure that information on the domestic training effort of sponsoring employers is collected and publically available.

•

Improving the information made available to 457 visa workers on their rights and obligations, with a new sponsorship obligation to ensure that this occurs.

•

Amending the Fair Entitlements Guarantee Act 2012 to ensure 457 visa workers have equal access to their entitlements in cases where employers become insolvent

•

Guaranteeing an ongoing role for the Ministerial Advisory Council for Skilled Migration in providing effective oversight of the temporary 457 visa program.

•

Priority access for 457 visa holders to independent, permanent migration channels as a way of removing the scope for exploitation that exists when temporary overseas workers are dependent on their sponsoring employer.

•

Transferring responsibility for compliance and monitoring from the Department of Immigration and Border Protection to the Fair Work Ombudsman 4

•

A stronger focus on initial entry into the 457 visa program through the sponsorship approval process to ensure scrutiny is applied up-front rather than having to rely on sanctions once the damage has been done to workers.

•

Improved information-sharing arrangements between government agencies to bolster monitoring and compliance under the program. Details of all such arrangements and the outcomes of such arrangements should be made publically available.

The current focus of the Government on finding ways to deregulate the 457 visa program is entirely misplaced. The integrity of the 457 visa program should not be sacrificed in pursuit of an ideological push by this Government to reduce what it wilfully misrepresents as ‘red tape’. Good, effective regulation, supported by rigorous enforcement, is essential to protect and support the interests of both Australian workers and temporary overseas workers. This is particularly the case in light of the history of the 457 visa program and the many cases of rorting and exploitation of those workers that continue to arise, as evidenced in this submission. The predictable calls by employer representatives to repeal labour market testing and ‘free up’ other parts of the program should be soundly rejected by the Panel and the Government. There is no clear rationale or evidence for this deregulatory agenda, except to promote easier employer access to temporary overseas workers. Australian unions have had a long-standing interest in the 457 visa program and will continue to advocate for improvements to the program in the best interests of both Australian and overseas workers.

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3. The ACTU position on the temporary 457 visa program The ACTU and affiliated unions have had a long and significant interest in the 457 visa program. Unions have often represented qualified Australian workers whose primary rights to skilled jobs have been ignored by employers preferring 457 visa workers, as well as representing 457 visa workers whose livelihoods have been threatened by employers and agents who have taken unfair advantage of them. Our interest in the 457 visa program, and the debate that surrounds it, has always been driven by three key, interrelated, priorities. The first is to maximise jobs and training opportunities for Australians - that is, citizens and permanent residents of Australia, regardless of their background and country of origin – and ensure they have the first right to access Australian jobs. The second is to ensure that the overseas workers who are employed under the 457 visa program to meet genuine skill shortages that can’t be filled locally are treated well, that they receive their full and proper entitlements, and they are safe in the workplace – and if this does not happen, they are able to seek a remedy just as Australian workers can do, including by accessing the benefits of union membership and representation. The third is to ensure that employers are not able to take the easy option and go down the 457 visa route, without first investing in training and undertaking genuine testing of the local labour market. This is also about ensuring those employers who do the right thing are not undercut by those employers who exploit and abuse the 457 visa program and the workers under it. As we have emphasised throughout this debate, Australian unions strongly support a diverse, non-discriminatory skilled migration program. Our clear preference is that this occurs primarily through permanent migration where workers enter Australia independently. At the same time, we recognise there may be a role for some level of temporary migration to meet critical skill needs. However, there needs to be a proper, rigorous process for managing this and ensuring there are genuine skill shortages and Australian workers are not missing out. Above all, this requires that labour market testing form a central part of the regulatory framework for the 457 visa program. It is simply untenable to have a situation where employers are able to employ temporary overseas workers under the 457 visa program without any obligation to first employ Australians; yet this was the situation that prevailed from 2001 right up until 2013 when a new legal obligation to conduct labour market testing was passed by the Australian Parliament. At the same time, vigorous safeguards need to be in place to protect the interests of overseas workers under the program. These workers are often vulnerable to exploitation by virtue of being dependent on their sponsoring employer for their ongoing prospects in Australia, including, in many cases, their desire for permanent residency.

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4. Key features of the current regulatory framework under threat In this section of the submission, we outline the key features of the current regulatory framework that are under threat from a Government looking to deregulate and reduce ‘red tape’ under the 457 visa program, and explain why each of these features are critical to the integrity of the program. Our primary focus is on labour market testing, but it is important in our submission to note there are a range of other features of the 457 visa program which are there to protect workers – both Australian and 457 visa workers – and which are seemingly up for grabs through this review process. Before turning to each of those specific features, it is worth understanding the basis for our concerns about the Government’s intentions in this area.

The early track record of the Government on these matters Our concerns about the Government’s intentions with the 457 visa program are well-founded. While still in opposition, the Coalition opposed the June 2013 amendment legislation, including the provisions for labour market testing. In fact, even before the introduction of labour market testing, the now Minister Scott Morrison took the view that the regulatory framework was too onerous. In 2012 he said: “The Labor government has already imposed a significant burden on employers who hire overseas workers, including but not limited to the Migration Legislation Amendment (Worker Protection) Act 2008, which gave the Department of Immigration and Citizenship expanded powers to monitor, investigate and penalise employers for noncompliance as a sponsor. “ 1 The 2008 worker protection laws that were introduced following the Deegan Report were a modest set of reforms to help remove the worst excesses of the 457 visa program as it operated under the Howard Government, but even these, it appears, were a step too far for the now Minister. This raises real concerns about the extent to which the Government wants to remove current protections. Since coming to coming to office, the Government has indicated across the board its desire to reduce what it deems to be ‘red tape’ and has made that clear in its terms of reference for this particular review. Ahead of this review, it has already demonstrated its intentions to remove and reduce protections where it can, without public consultation, and through administrative means where possible so that there is no parliamentary or public scrutiny. There are already a number of examples of this occurring.

1

Scott Morrison, second reading speech on the Migration Amendment (Reform of Employer Sanctions) Bill 2012, 1 November 2012, Hansard, p. 12974.

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For example, in November 2013 it announced guidelines that sought to significantly water down the requirements for labour market testing. Based on these guidelines, it could mean for example that employers could meet their obligations by placing a single ad on Facebook or their own company website for a single day as far back as 12 months before they filled a position with a 457 visa worker. The shortcomings of these guidelines are discussed further in section 5. In early 2014, it pushed through changes to the English language requirements for 457 visa holders under the meat industry labour agreement. The changes mean that rather than having to achieve an English language score of IELTS 5 – ‘vocational English’, which is a very basic functional level of English – for each of reading, writing, listening and speaking, visa holders now only have to achieve an average of IELTS 5 across the 4 components. The Department and Government presented this as a minor amendment and there was no consultation with unions who represent workers in the industry. In February 2014, without any public announcement, the Government reversed a decision of the previous Government to introduce a ceiling on the number of nominations an employer could make under the terms of their sponsorship. Effectively, this means employers can now sponsor and nominate an unlimited number of 457 visa holders. The changes were made administratively with no change to the migration regulations. Applicants are still required to provide the number of persons they propose to nominate but they won’t be required to adhere to that for the duration of their sponsorship, with the relevant policy settings being amended to remove references to sponsorships ending on the event of the approved nomination ceiling being reached. Most recently, there have been reports that the Government is considering giving China special treatment under the 457 visa program to import Chinese workers into Australia on Chinesebacked projects, as part of negotiations for a future free trade agreement. Together, these early examples indicate a pattern emerging of the Government looking to reduce the protections that are in place under the 457 visa program for the benefit of both Australian and temporary overseas workers, all in the name of deregulation and reducing red tape. The broader range of matters now under threat through this review process forms the core of the current regulatory framework underpinning the 457 visa program. These matters include: • • • • •

Labour market testing Obligation to pay market rates The Temporary Skilled Migration Income Threshold (or TSMIT) Confining the 457 program to skilled occupations English language requirements

The submission now deals with each of these matters in turn:

Labour market testing The rationale for labour market testing Unions have had a long-held position that Australian workers should have the primary right to Australian jobs. If there are genuine shortages that can’t be filled, temporary migration may have 8

a role to play, but there must be some independent assessment and verification of whether employers have first made all reasonable efforts to find an Australian for the position. Until recently, the fundamental problem was that there was nothing in the legislation or elsewhere that actually required employers to even look for Australian workers first, let alone employ them, before they could access temporary overseas workers. All that employers were required to do was attest to the fact that they were committed to employing local labour. Essentially, this meant the system operated on the say-so of employers who were keen to access the program, with no independent, external scrutiny or checking that there was a genuine skills shortage and employers had tested the local labour market first. Without genuine labour market testing, no proper assessment could be made as to whether there were in fact genuine skill shortages to justify the employment of overseas labour in any given case. Unions therefore welcomed and strongly supported the passage of legislation in the previous Parliament that introduced new provisions for labour market testing; the Migration Amendment (Temporary Sponsored Visas) Act 2013. While the system introduced has its limitations, and in the next section we outline particular aspects that could be improved or made more effective, it does mean that employers seeking to use 457 visa workers now have a legal obligation, at least for those occupations which are subject to labour market testing, to look locally first and demonstrate to the satisfaction of the Minister that a suitably qualified and experienced Australian worker is not readily available to fill the position. This requires employers to provide evidence of their recruitment attempts, such as job ads and participation in job and career expos, and detail the results of such recruitment efforts. Under the legislation, employers wanting to use the program are also required to advise if any Australians have been made redundant or retrenched in the relevant occupation in the four months prior to 457 visa workers being sought and this will be a relevant consideration for the Minister in deciding whether to approve a 457 visa nomination. In addition, labour market testing must be taken after any retrenchments and redundancies have occurred. In our submission, a legal requirement for labour market testing to occur is a logical extension of the principle that the priority should always be to employ Australians first. If that principle is accepted – and, on the basis of their public statements set out below, the current Government appears to support the principle - then it follows in our submission that there needs to be a mechanism to ensure that this is actually occurring in practice. Without genuine labour market testing, it is entirely unclear how the Government and the community, not to mention affected workers, can be assured that Australian workers do in fact have priority. In our submission, it should be an entirely uncontroversial proposition that employers be required to show they have tested the local labour market and they employ Australians first before hiring overseas workers. In fact, it would surprise many people in the community that such a requirement did not already exist before June 2013.

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Apparent Government support for the principle of labour market testing From the series of public statements reproduced below, it would appear the Abbott Government supports the principle of priority for Australian workers. Senator George Brandis: “The government is fully committed to ensuring that the subclass 457 program acts as a supplement to and not a substitute for Australian workers. We have been clear that this government fully supports the principle that Australian workers take priority.” 2 Scott Morrison: “The government supports the absolute requirement that Australian workers have priority…” 3 Scott Morrison: “The Government supports the principle that Australian workers have priority…” 4 Scott Morrison: “The Coalition has always approached this issue from the starting point that wherever possible, jobs should be filled from within the Australian workforce. That is our clear commitment and that is our goal.” 5 Tony Abbott:

“there are two fundamental conditions for a 457. First there can be no readily available local to do the job and second they have got to be paid full market wages…”6 In fact, during the 2013 election campaign, the now Prime Minister, Mr Abbott, went further than the point of principle and essentially endorsed labour market testing as a key part of the regulatory framework, as this excerpt from transcript of the second Leaders’ Debate shows:

EFRA: Good evening, my name’s Efra. I'm a test analyst in the IT industry. My question is both to the Prime Minister and the Leader of the Opposition. What measures will your party take to ensure workers on 457 visas are not taking jobs that Australians could do? SPEERS: Mr Rudd, first to you. PM: On 457 visas, one of the reasons for legislative change recently in Australia by the Government was to ensure that employers in Australia using 457 visas are required to

2

Senator George Brandis, Senate Question Time, Thursday 27 March 2014, Hansard, p. 67. Scott Morrison, Tourism and Transport Forum leadership summit speech, 19 March 2014. 4 Scott Morrison, CPD Immigration Law Conference Speech, 14 March 2014. 5 Scott Morrison, Address to the Migration Institute of Australia National Conference, Canberra, 21 October 2013. 6 Tony Abbott, transcript of press conference, 19 August 2013. 3

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properly test local labour market conditions before they go overseas to find someone who fits that job. Prior to that, frankly, there were certain sectors of the economy where this was too loose. That underpins the reasons for the changes we have made. We think we've now got the balance right and now all employers are required to undertake that local testing.

SPEERS: Mr Abbott? ABBOTT: …To come on a 457 visa there's got to be labour market testing so that no Australian can readily fill the job and there's got to be payment at at least the current market wage…” 7

This exchange show that despite the fact the Coalition vehemently opposed the labour market testing laws passed in June 2013, the now Prime Minister conveniently relied on the fact that labour market testing was required as a way of allaying concerns about the impact of the 457 visa program on Australian job opportunities. Now in office, the Prime Minister has repeated the same formula in a recent media interview: “:…to come to our country on a 457 visa, the employer has got to have made strenuous efforts to employ an Australian and found there is no suitable Australian for the job” 8 If, as it insists, the Abbott Government supports the principle of Australian workers having priority now is the time to deliver on that pledge and repudiate employer calls to remove labour market testing. Any attempts by the Government now to dismantle labour market testing must be reconciled with their statements above, which, if taken at face value, provide clear support for the rights of Australian workers and support labour market testing as an important and necessary component of the program. However, unions are under no illusion as the Government’s true intentions with respect to labour market testing. As noted already, the Government opposed these laws while in Opposition. Following the election, Minister Morrison indicated that: “In relation to the 457 visa programme, we made our position very clear in the previous Parliament and you will hear more from me and Minister Cash in coming months on this front as we work through these issues” 9 Furthermore, the current Government’s claims of in-principle support for the rights of Australian workers are always tempered in the same breath by references to having to reduce the pernicious affect of ‘union red tape’. We also note the constant stream of calls from the employer community pushing for the repeal of labour market testing laws. No doubt these calls are being

7 Leaders’

Debate, 2013 election campaign, 21 August 2013. of the Prime Minister the Hon. Tony Abbott MP interview with Leon Byner, Radio FiveAA, Adelaide, 13 March

8 Transcript

2014. 9 Scott Morrison, Address to the Migration Institute of Australia National Conference, Canberra, 21 October 2013.

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made privately to the Government, as well as publically. The review panel will no doubt be presented with the same calls to repeal labour market testing. It is important then for the benefit of the review panel to address some of the commonly heard arguments against labour market testing. The arguments are generally variations on a theme that the labour market testing laws are too onerous, that employers will always employ Australians first, the cost of employing 457 visa workers from overseas are prohibitive, and the 457 visa program is demand-driven and simply responds to changes in labour market, rendering labour market testing unnecessary. The ACTU submits that the review panel should soundly reject calls to repeal the labour market testing laws and the arguments on which such calls are based.

The arguments to remove labour market testing and why they should be rejected. The labour market testing laws are too onerous and a burden on employers This has been the stock-standard response of those who oppose labour market testing. However, it is never made clear by those making this argument exactly what the massive burden is in expecting that employers will have first made attempts to recruit locally and that they can provide evidence of those local recruitment efforts? In fact, if an employer was genuine about sourcing Australian workers first, you would expect this was already occurring as a matter of course. In our submission, the current regulatory framework for labour market testing could hardly be described as onerous. There are few mandatory requirements placed on employers. Furthermore, the Government has, regrettably, already sought to water down the requirements that are in place, as noted earlier in the submission. As we refer to further in the next section, the majority of 457 visa occupations are not even covered by the labour market testing laws by virtue of various exemptions in place. It should also be remembered that the 457 visa program is not, and should not, be designed to provide an unfettered right for employers to take on temporary overseas workers. Even during periods when the program has been very poorly regulated, access to the 457 visa program has always, at least in theory, been subject to certain conditions and obligations, including an overriding tenet of the program that it is there only to fill skill shortages that cannot first be filled by Australian workers. In that sense, the labour market testing laws simply give practical (and long overdue) effect to what has always been an understood principle underpinning the program endorsed by both sides of politics. Even if the Panel concluded that the labour market testing laws imposed some burden on employers, this would have to be weighed against the need to meet a fundamental tenet of the program to protect employment opportunities of Australians.

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Employers will always look to employ Australians first Another argument often heard against labour market testing is that employers will of course always look to employ Australians first, particularly considering that it is more expensive to bring in a 457 visa worker from overseas than a local worker of the same skills and experience. Why then would an employer employ from overseas except as a last resort, the argument goes. This was an argument used by the now Prime Minister during the 2013 election campaign when he said: … because an employer has got to bring the person to the country and look after them initially it’s far more expensive to employ a 457 visa holder than it is to employ a local. It’s never advantageous, where there are available locals, to use a 457 visa holder instead. 10 In our submission, it is simply naïve to assume and blindly accept this argument that all employers will always want to employ locally first, including because it is more expensive to hire a 457 worker from overseas. It plays to what is a common misperception that employers, having exhausted all local options, are then having to comb the world to find a suitable overseas worker, when in fact the overseas worker is often on their doorstep and may already be in their employ. For this reason, it is not only naïve but factually incorrect to continue asserting that it is considerably more expensive to engage workers from overseas. In fact, with close to half of all 457 visa grants being granted onshore to workers already in Australia, and many already working for the 457 sponsor on other visa types (eg. a working holiday 417 visa), the extra costs to hire the overseas worker over an Australian citizen or permanent resident are often negligible. As data from DIAC reproduced below in chart 1 shows, in the 12 months to 31 August 2012: •

70% of all 457 visa grants went to foreign nationals who had previously held an Australian visa, many of whom would have worked for or established a relationship with their 457 sponsor;

•

43% of all 457 visa grants went to foreign nationals in Australia at the time of their visa grant, again many already working for the 457 sponsor. 11

10 Tony

Abbott, transcript of press conference, 19 August 2013.

11 DIAC unpublished data.

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Chart 1 457 visa grants, all occupations: 12 months to 31 August 2012 (a) % previously held any Australian visa (b)

70

% NO previous visa

30

% ONSHORE when granted 457 visa (c)

43

% OFFSHORE when granted 457 visa

57

ONSHORE when granted 457 visa (43%) % on visas with work rights

78

% on visas NO work rights

16

% visa work rights NOT KNOWN (d) 0

6 10

20

30

40

50

60

70

80

90

Source: DIBP published and unpublished data (a) More recent data requested, but DIBP has not provided. (b) High proportion will have established relationship with Australian-based employers. (c) High proportion will be employed by 457 sponsor at time of 457 visa nomination. (d) Includes some with work rights (eg 485 visas) and some with no work rights.

These trends are even starker in some occupational trade groups. For example, as chart two shows, in food trades and construction trades over 75% of all 457 visas go to foreign nationals already in Australia at the time of the visa grant, many already working for their 457 sponsor on other temporary visas, particularly student visas and working holiday visas.

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Chart 2 Onshore 457 primary visas as % of all 457 primary visas granted, by occupation trade group: 2012 (a) Food Trades Workers

81

Construction Trades Workers

75

Skilled Animal and Horticultural Workers

70

Other Technicians and Trades Workers

59

Average, ALL Trades Workers

53

Average, Skill Level 3

53

Electrotechnology and Telecomms Trades Workers

48

Automotive and Engineering Trades Workers

26 0

10

20

30

40

50

60

70

80

90

Source: DIAC unpublished data.

(a) Reference period is 12 months to 31 August 2012.

More recent figures show this trend to onshore visa grants increasing. In 2012-13, almost half of all visa grants were being granted onshore. Out of a total of 68 480 primary visa grants in 201213, 33 440 or 48.8% were granted on-shore. While off-shore visa grants were 12.2 % lower compared with the previous year, onshore grants were 17.8% higher. 12 The latest figures show more than half of all visa grants are now granted onshore. Out of a total of 27 330 primary visa grants in 2013-14 to December 2013, 13 300 were granted offshore, while 14 030 were granted onshore (51.3%). 13 DIAC (now DIBP) has acknowledged that the availability of a large pool of temporary visa holders in Australia, many seeking 457 visas, has changed the environment. As a senior DIAC official told a Senate Inquiry into 457 visas on 27 May 2013: “Most of the Deegan reforms were implemented in 2008-09. Since then, we have had a change in the environment – economic changes, changes in terms of the number of visa holders and those under other temporary visas in the country who have an opportunity to apply for a 457 visa. At the time when we had the 2008-09 changes implemented, we did not have this many temporary visa holders on other visas in the country. Our temporary visa program report, which was just released, shows that we have a very large number of temporary visa holders on other visas in the country and they are all eligible to apply for 457 visas if they find an employer who will sponsor them. This is where we 12 13

DIAC Subclass 457 State Territory summary report, 2012-13 to 30 June 2013, p. 1 DIAC Subclass 457 State Territory summary report, 2013-14 to 31 December 2013, p. 1

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have seen the largest growth, when the labour market is softening, in the onshore applications.” 14 On the latest figures as at 31 December 2013, there are now over 1.1 million temporary visa holders in Australia, the vast majority with work rights attached to their visa. Including New Zealand visa holders, the total number of temporary entrants is over 1.8 million. These numbers include not only the almost 200 000 457 visa workers and their spouses, but a range of other visa types which are becoming increasingly prevalent. 15 For example, the number of working holiday visa holders is on the increase. The number of working holiday makers in Australia on 31 December 2013 was 178 980, the highest number on record and an increase of over 16 000, or 10.2%, compared with just 12 months ago. The number of working holiday makers has increased by 50% since 2010. Many working holiday makers from countries hit by recession are now here primarily to work, not holiday. The increasingly easy access to temporary visa workers already in Australia demonstrates why rigorous labour market testing laws are even more important to protect Australian employment opportunities. In such cases, the employment of the overseas worker will appeal to some employers as the easy option, particularly where the worker is already employed in the workplace as if often the case and is keen to obtain an employer-sponsored permanent residence visa. It is especially important that labour market testing requirements are applied and enforced effectively in those circumstances. The oft-stated argument that employers will always seek to employ Australians first is also not borne out by survey evidence in a report by the Migration Council of Australia in 2013. The findings in that report include: •

15% of sponsoring employers surveyed said they did not find it difficult to hire or employ workers from the local labour market, yet they still employed workers under the 457 visa program – this finding suggests that some employers may be admitting they are not complying with a fundamental tenet of the 457 program that 457 visa workers should be engaged only where there is a genuine skill shortage that cannot be filled locally.

•

Only 1.1% of employers said they would ‘increase salary’ for the job if they cannot find someone who matches their preferred job specifications, while 33.5% said they would seek overseas workers - this indicates to us that many employers are not willing to pay genuine market rates to attract and retain employees and prefer to take the easy option of obtaining 457 visa workers.

•

26% of 457 visa employers said they found their 457 visa workers because the workers themselves approach the employer - this means that those employers incurred none of the search and recruitment costs that many claim make 457 visa workers more expensive than Australian workers.

14

Mr Kruno Kukoc, DIAC, Hansard p.71, 27 May 2013, Temporary entrants and New Zealand Citizens in Australia as at 31 December 2013, Department of Immigration and Border Protection, Australian Government, p.3 15

16

•

Around 20% of employers surveyed cited the benefits of sponsoring 457 visa workers being ‘increased loyalty’ and ‘great control of employees’ - this points to concerns that unions have continually raised about some employers favouring the use of 457 visa workers over Australian citizens and permanent residents because it gives them a more compliant workforce. 16

We also refer the Panel to the report of the Senate Committee for Education, Employment and Workplace Relations 17, inquiring into proposed Greens’ legislation to govern EMAs, which found further evidence some companies in the resources sector were turning away qualified Australian workers and hiring overseas workers. This is also the direct experience of many individual workers who have made their own submissions to this review. Finally, we note that even with labour market testing in place and a requirement under the law, it is still the case some employers will be looking for ways to circumvent the spirit and intent of the legislation. For example, in the days that followed the introduction of the new laws, migration experts were already pointing out there were ways around labour market testing as advertisements can be written in an incomprehensible manner, making it difficult for people to respond in the first place. 18 This reflects the experience with labour market testing in the US and Canada where there have been reports of employers going through the motions of posting jobs while ignoring skilled locals who applied. In one reported case in the US, migration lawyers were captured on film coaching companies on how to advertise locally but find no one. One stated: “ Our goal is clearly not to find a qualified and interested US worker and, you know, that in a sense that sounds funny but it's what we're trying to do here.” 19

The program is responsive to labour market changes A further, related argument used against labour market testing is that the 457 visa program is demand-driven and therefore simply responds to changes in labour demand. Essentially, the argument is that the program can manage itself without labour market testing being required because 457 visa numbers go up when the labour market tightens and skill shortages increase, and then go down when unemployment rises and skill shortages ease. This was a line of argument repeated by the new Minister soon after assuming office: “ The programme is flexible and responds to the economic cycle in line with employer demand.” 20

16

Migration Council of Australia, More than temporary: Australia’s 457 visa program, pp. 76-78, 80. The Senate Education, Employment and Workplace Relations Legislation Committee, Protecting Local Jobs (Regulating Enterprise Migration Agreements) Bill 2012, March 2013.

17

http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=eet_ctte/completed_inquiries/201013/enterprise_migration_agreements/report/index.htm 18 http://www.australiaforum.com/information/jobs/457-visa-labour-market-testing-expected-to-be-introduced-in-november.html 19 20

http://www.abc.net.au/7.30/content/2013/s3786315.htm Scott Morrison, Address to the Migration Institute of Australia National Conference, Canberra, 21 October 2013.

17

However, the evidence shows the program hasn’t operated in the way that its proponents have claimed, with 457 visa numbers continuing to grow in recent years while the labour market has softened and jobs have been lost i.e. the program numbers have been going in the opposite direction to the general labour market. For example, the close relationship between 457 visa applications and the ANZ Bank Job Ads series was previously cited as evidence that the 457 visa program was truly responsive to changes in labour demand. However, the relationship collapsed from 2011-12 onwards with 457 visa numbers going in the opposite direction to job advertising and other labour market indicators. 21 For example, in the financial year 2011-12, the number of 457 primary visa applications lodged was 33.4% higher than the same period the previous program year and the number of 457 visa holders jumped 26.4% from 72 050 to 91 050. Yet, at the same time, total job advertisements fell 9% over the year, and the number of people out of work increased by almost 40 000 as unemployment went from 4.9% up to 5.2%. In 2012-13, job ads fell 19% over the year and as at June 2013 were close to 30% below their most recent peak at the end of 2010 and just 8% higher than the lowest level reached during the Global Financial Crisis. Unemployment increased again reaching 5.7% by June 2013 with a further 77 000 people out of work compared to the same period 12 months before. Meanwhile, over the same period 457 visa applications increased by 13.5% and the number of 457 visa holders increased 18.6% from 91 050 to 107 970. In our submission, this provides clear evidence the program wasn’t working as intended or as its proponents claimed, and why labour market testing needed to be introduced. A similar picture of 457 visa numbers outstripping general employment growth emerges at an industry level. For example, in the construction industry, in the 12 months to February 2013, while Australian construction industry employment grew by only 1.1% 22, the number of 457 visa holders working in the industry actually increased by 25% (or 2,020 workers) to 14,080. 23 The 457 visa trends for the accommodation and food services sector are also instructive, particularly for the occupation of cooks. Even now as the growth of 457 visa grants have eventually begun to fall in overall terms, the number of visas granted for cooks and the broader accommodation and food services sector continue to increase. The latest DIBP figures from 31 December 2013 show: •

The largest occupation for primary 457 visa grants in 2013-14 to 31 December 2013 was cooks. Cooks represented 5.7% of all visa grants, up from 4% for the same period the year before.

•

1,550 457 visas were granted for cooks in the six months to December 2013, an increase of 7.2% on the same period the year before.

21

Annual subclass 457 State/Territory Summary Reports 2011-12 and 2012-13; ANZ Job Ads Series July 2012 and July 2013; ABS Labour Force, cat. 6202.0, seasonally adjusted. 22 ABS Labour Force Survey detailed quarterly, February 2013 (trend basis) 23 DIAC Subclass 457 State/Territory reports.

18

•

As at 31 December 2013, there were 5, 460 457 visa holders in Australia working as cooks.

•

Total visa grants for accommodation and food services (of which cooks make up close to half) increased by 10.5% in the six months to December 2013 while they decreased in all other sectors and by 23.9% overall.

The continued prominence of cooks as the top occupation for 457 visa grants follows exponential growth in previous years. Visa grants for cooks in 2012-13 increased 94.8% and a whopping 189% in 2011-12. 24 Similarly large growth occurred across the accommodation and food services sector as a whole, with 457 visa grants increasing by 137% in 2011-12 and a further 85% in 2012-13. 25 Meanwhile, various labour market data for cooks and the accommodation and food services sector show: 26 •

An occupational unemployment rate for cooks of 3.5 per cent, compared with 3.3 per cent for all Trades.

•

Negative employment growth of 4.7 per cent over the five years to November 2013, compared with an increase of 2.4 per cent for all Trades.

•

A decline in advertised vacancies of 5.3 per cent over the year to November 2013.

•

A decline in median full-time weekly earnings of 1.7 per cent, to $400 less per week than the benchmark for all Trades ($680 a week compared with $1080)

•

The Australian Government Job Outlook site indicating only moderate employment growth for cooks in coming years.

•

During the period of massive growth in 457 visa grants, employment in the accommodation and food services sector overall fell nearly 14 000 or 1.8% from May 2011 to May 2012 and grew just 4.3% (in comparison to visa growth of 85%) from May 2012 to May 2013. Total employment fell again by 4.1% from May 2013 to November 2013 as total visa grants in the sector continued to increase.

24

Annual subclass 457 State/Territory Summary Reports 2011-12 and 2012-13; Subclass 457 quarterly report: quarter ending at 31 December 2013. 25 Annual subclass 457 State/Territory Summary Reports 2011-12 and 2012-13. 26 unpublished ABS data, sourced from the Australian Workforce and Productivity Agency and online vacancy data from the Department of Employment; Australian Government Job Outlook site http://joboutlook.gov.au/occupation.aspx?search=alpha&tab=prospects&cluster=&code=8511; ABS Labour Force, cat. No. 6291.0.55.003, Detailed, Quarterly, February 2014, Table 4.

19

These broader trends match the anecdotal experience of our affiliated unions who report that they have unemployed members on their ‘out of work’ registers while 457 visa numbers in the same occupations have continued to grow. There continue to be cases reported such as that at Werribee in outer Melbourne in 2013 where 457 visa workers were literally flown in over the top of local unemployed skilled workers to work on a City West Water project. Against all this evidence, labour market testing is a sensible, appropriate, and necessary measure to ensure that, before temporary migrant workers can be employed, there is evidence that employers have made all reasonable efforts to employ Australian workers and that Australian workers are not being displaced. Our experience when consulting with labour agreement proponents under the 457 visa program suggests that when presented with some form of external scrutiny, an employer’s professed need for 457 labour is often not pressed any further.

Now is not the time to be removing labour market testing Finally, we make the point that now, more than ever, is not the time to be removing labour market testing. In February this year, Australia recorded the highest unemployment rate in over a decade. At 6.1%, this was the highest unemployment rate since July 2003. In more positive news, the unemployment rate fell to 5.8% in March 2014, although the participation rate also fell, and in trend terms unemployment remained at 6%, the highest in over a decade. 27 Of particular concern, youth unemployment is currently at its highest levels in 10 years. In October 2013 it rose to 13%, the highest rate since September 2002, and it remains at levels not seen consistently since 2002-2003. The latest ABS labour force data for March 2014 has youth unemployment currently at 12.5% in seasonally adjusted terms, which translates to 258 300 young people who are looking for work but can’t find it. 28 Youth unemployment is even higher in certain pockets of the country, as a recent report from the Brotherhood of St Laurence highlighted. 29 For example, youth unemployment in West and North West Tasmania is 21%, Cairns 20%, Northern Adelaide 19.7%, and Hume (including the Goulburn Valley and Wodonga) is 17.5%. The latest figures on long-term unemployed showed the share of unemployed who have been out of work for more than year reached 20.9%, its greatest level since 2004. 30 Unemployment, as well as underemployment, continues to be an issue in the very occupation categories where most 457 visa workers are employed; trades and technician workers, and professionals.

27

28 29

ABS 6202.0 Labour Force Australia, March 2014, April 2014. ABS, Labour Force March 2014, Australia, April 2014, cat. 6202.0. (table 17)

Australian Youth Unemployment 2014: Snapshot; Brotherhood of St Laurence. Jericho, G., Our long-term unemployment headache, the Drum, 26 February 2014 http://www.abc.net.au/news/201403-26/jericho-our-long-term-unemployment-headache/5343362 30

20

The latest DIBP figures for 2013-14 show professionals made up 46.7% of all visa grants, while technicians and trade workers made up 26.6% of all visa grants. As at 31 December 2013, there were 40, 930 professionals working on 457 visas and 25, 900 technicians and trade workers (out of a total of 90, 780 subclass 457 primary visa holders in Australia). 31 At the same time, there are currently 67 000 technicians and trades workers unemployed and 77 400 underemployed – that is, 144 400 technicians and trades workers who are looking for work or who want more work than they currently have; 8.5% of the 1.691 million trades and technician workers. There are currently 83 700 unemployed and 120 800 professionals underemployed – that is, 204 500 professionals who are looking for work or who want more work than they currently have, nearly 8% of the 2.566 million professionals. 32 In recent months, the panel would also be aware there have been a string of announcements involving major job losses across the country. This includes closures and future job losses at Qantas, Holden, Toyota, Alcoa, Forge, BP and Sensis, and the related impact on the supply chains linked to those major companies as well as the local and regional communities. These developments are not yet reflected in official unemployment figures. The claims of widespread skill shortages used to justify greater use of 457 visa workers are now far more difficult to sustain. To take the case of engineers, the Internet Vacancy Index is showing a plummet in the “count of online vacancies newly lodged on SEEK, My Career, CareerOne and Australian JobSearch” 33 for engineers of nearly 50 per cent year-on-year to March this year. Even prior to the announcements from Holden and Toyota there appeared to be a tangible softening in demand for engineers in Australia. What we are now facing is thousands more engineers looking for employment as a result of the closure of Holden and Toyota. As a further example, late last year the Australian Workforce and Productivity Agency released its third annual report into the skill needs of the resources sector. It found that the skill shortages experienced by the resources sector in recent years have now eased considerably and the proportion of occupations in shortage is at its lowest level since 2007. In particular, as the resources sector transitions from the construction phase to the operations phase there will be many trades workers becoming available to move back to the general construction and manufacturing workforce. AWPA projections indicate that employment in resources project construction will peak at 83 324 workers in 2014 and fall off dramatically to 7 708 workers by 2018. 34

31

Noting that the number for December is generally lower than for other months as visa holders take their leave overseas and are not in Australia on the reporting date. As at September 2013 the equivalent numbers were 51, 740 professionals and 31, 170 technicians and trades workers. 32 ABS, Labour Force, Australia, Detailed, Quarterly, cat. 6291.0.55.003, Table 18 and 19, February 2014 33

Department of Education, Employment and Workplace Relations. Vacancy Report. http://lmip.gov.au/default.aspx?LMIP/VacancyReport. 34

Resources sector skills needs 2013, Australian Workforce and Productivity Agency, Australian Government, p. 14.

21

We also note that the Roy Hill iron ore project in the Pilbara which was given in-principle support for an EMA in 2012 requiring more than 1500 overseas workers on concessional 457 visas (i.e. on top of standard 457 visa workers) has now indicated that it can meet its workforce needs locally. In the face of this mounting evidence, it is more important than ever that requests by employers to access 457 visa workers be tested against evidence of their attempts to recruit Australian workers first. Whether it is young people looking for their first job or older workers looking to get back into the workforce or to change careers, they deserve an assurance that they have will priority access to local jobs before employers can use temporary workers from overseas. This is why the labour market testing requirements currently in place under the 457 visa program are so important to ensure that employers have a legal obligation to employ Australians first. We now turn to other elements of the current regulatory framework that are under threat from a Government with a deregulatory agenda.

Market rates Alongside labour market testing, the obligation to pay market rates to 457 visa workers is absolutely fundamental to the integrity of the 457 visa program. This recognises that temporary overseas workers should not be used and employed in a way that undercuts Australian wages and conditions. Again, on the face of it, Mr Abbott appears to have accepted this obligation as an integral part of the current regulatory framework, as he has with labour market testing. “ …to come on a 457 visa there's got to be labour market testing so that no Australian can readily fill the job and there's got to be payment at at least the current market wage… “ 35 Mr Abbott has also previously made the point that: ...it is completely impermissible for people to be brought into this country to undercut Australian workers. It’s completely impermissible – always has been and as far as I’m concerned, it always will be”. 36 In this submission, we call on Mr Abbott to reaffirm this position and guarantee that the market rates obligation introduced by the Labor Government in 2013 will not be removed or watered down. Again, however, the track record of this Government is not encouraging. When the Coalition was last in Government, one of the most striking and fundamental issues of concern with the way the 35 36

Leaders’ Debate, 2013 election campaign, 21 August 2013. Transcript of doorstop interview, 7 February 2013.

22

program was then set up was quite simply that temporary workers could be paid less than local workers. The only obligation employers had to meet was a single minimum salary level benchmark, with no regard given for what workers in the same occupation, workplace and region were earning. In regional areas, a further 10% discount was applied on the wage benchmark that employers had to meet. This capacity to pay below market rates served as an incentive to use temporary overseas labour and suppress Australian wages, a point conceded by then Minister Vanstone. 37 As labour migration expert Martin Ruhs has noted: “ managing the demand for labour is the first critical step in developing sound policies on temporary foreign workers…employers will always have a need for foreign workers if by employing them they can lower their costs”. 38 The ACTU and other individual unions made submissions over a number of years to address this issue and remove the opportunity for temporary workers to be exploited in a way that would have the effect of driving down local wages and conditions. Our consistent position was that temporary overseas workers should be paid at the market rate – the ‘going rate’ - for workers undertaking the same or similar work. It was the Labor Government who took the first steps to rectify this situation with the requirement in the 2008 Worker Protection legislation for 457 visa workers to be paid no less than the equivalent Australian worker at their workplace. This provision was an obvious and welcomed improvement to the 457 program. However, it still fell short of a properly fair and effective ‘equivalent Australian worker’ requirement based on a true industry or occupational market rate, not merely the ‘site’ rate in place at that individual business. The problem with using only the site rate as the benchmark for the ‘equivalent Australian worker’ was apparent from the records of applications lodged for 457 visas at the time. A number of applications contained nominated base salaries for trades-level occupations that were clearly undercutting genuine market rates. This meant that the existence of skill shortages used to justify the use of 457 visas could be a case of employers unwilling to pay market rates, rather than a genuine recruitment issue caused by skills shortages. In actual fact, a model for establishing a true market rate was already available during this period and was used by DIAC in cases where there was no equivalent Australian worker in the workplace. In such cases, a nomination could be refused where the proposed salary was below the market salary rate for other equivalent employees in the region. This was determined with reference to a number of sources, including, for example, pay rates from applicable enterprise agreements in the local region, applicable industry awards, data from reputable industry remuneration surveys, ABS earnings data, and job vacancy advertisements. In our view, there was no reason why this same process could not be applied to all 457 visa applications.

37

Shaw, M. (2006) “Guest workers cut wages: Vanstone”, The Age, 8 June 2006.

38

Ruhs, M., (2006), The potential of temporary migration programmes in future international migration policy. International Labour Review, vol. 145, issue 1-2. Pp. 7-36.

23

It was with the integrity reforms introduced in 2013 that an obligation to pay genuine market rates was finally introduced, thereby giving proper affect to the principle that employers must not use 457 visa workers to undercut Australian wages and conditions. Under the current ‘market rates’ obligation, temporary overseas workers must be entitled to receive the same wages and conditions as the equivalent Australian worker in the same geographic area. This obligation must be retained and enforced rigorously. Any attempt to weaken this protection will disadvantage both Australian workers and overseas workers.

Temporary Skilled Migration Income Threshold In addition to the market rates obligation, the TSMIT provides a floor under which no 457 visa worker can be paid. The requirement to pay market rates is the first obligation that must be met, but in cases where a properly determined market rate falls below the TSMIT, then the TSMIT applies. It ensures the 457 visa program does not operate at the very lowest paid end of the labour market where the potential for exploitation of vulnerable workers is at its greatest. Occupations that have market rates below the level of the TSMIT should not be part of the 457 visa program. The TSMIT was introduced as part of the 2009 integrity reforms. As noted above, previously under the former Coalition Government the inadequate Minimum Salary Level was the only wage benchmark that had to be met. The TSMIT is currently $53 900 per annum and it is indexed annually against average weekly ordinary time earnings for full-time employees. The next increase is due July 2014. The TSMIT is set at a level designed to ensure all Subclass 457 visa holders have sufficient income to independently provide for themselves in Australia. The TSMIT helps to ensure that Subclass 457 visa holders do not impose undue costs on the Australian community or find themselves in circumstances which may put pressure on them to breach their visa conditions. This is particularly important given these workers do not have access to a range of government support available to Australian citizens and permanent residents, such as Medicare. The practical affect of the TSMIT in providing a wage floor for the 457 visa program can be seen in the Accommodation and Food Services sector, which is a large user of 457 visas and where the average nominated base salary for applications granted in 2012-13 was $55 000, just above the TSMIT. 39 Given the importance of the TSMIT to protect overseas workers and guard against undercutting of local wages, the Panel should reject renewed calls from employer groups like Restaurant and Catering Australia for the TSMIT to be lowered to enable lower skilled occupations to be filled through the 457 visa program. 40

39 40

Subclass 457 State/Territory Summary Report 2012-13, p. 7 Bita, N., Call for visas to serve up chefs, The Australian, 7 April 2014, p.2.

24

It is essential that the TSMIT be retained at its current level with annual indexation. Employers must not be able to sponsor overseas workers who will be paid less than the TSMIT. Perhaps more surprising and of greater concern than predictable calls by employer representatives such as Restaurant and Catering Australia is to hear government agencies also actively making the case for 457 visa workers to be legally paid ‘market rates’ below the TSMIT. It is reported that Austrade, the federal agency responsible for tourism, recently made this call in a submission to the Productivity Commission, claiming that tourism workers were reluctant to relocate to regional areas due to insecure work, undesirable hours and housing shortages. 41 In our submission, it is astonishing that an agency of the federal Government has endorsed a claim for lower wages for overseas workers, rather than focusing on ways to address issues of insecure work, undesirable hours and housing shortages facing Australian workers; issues that are well within the capacity of employers and governments to respond to. United Voice, the union representing cooks and chefs, reports that unpaid overtime, high injury rates, a lack of career opportunities, poor wages and conditions, and high employee turnover continue to be a feature of the tourism and hospitality sector. These are the issues that need to be addressed, rather than continuing to rely on temporary overseas workers or increasing such reliance.

Confining the 457 visa program to skilled occupations The Consolidation Skills Occupation List, or CSOL, is the list of eligible occupations for the 457 visa program. As it is, it contains over 650 occupations. It could hardly be described as a major impediment or regulatory brake on employers who wish to use the 457 visa program. The critical point about the current CSOL is that it is restricted largely to skilled occupations. This is as it should be. In our submission, the CSOL should be refined further to ensure that it contains only those occupations that are in genuine national skills shortage, but the immediate priority is that the CSOL not be expanded further to satisfy employer demands for a temporary overseas workforce to move into low-skilled areas of the labour market. For example, we have seen such calls in recent years from the trucking industry to include truck drivers on the CSOL. The tourism and hospitality sector has also been vocal in pushing for access to be opened to temporary overseas workers to fill positions across a range of occupations such as waiters, baristas, beauty therapists, housekeepers, concierges, charter and tour bus drivers, and gaming workers, many of which have market salary rates well below the TSMIT. Unions have also seen many examples where employers have nominated 457 visa workers in a skilled occupation under the CSOL but proceeded to employ the worker in lower-skilled occupations that were not eligible under the standard 457 visa program. In one tragic case, an Irish national on a 457 visa died while working as a scaffolder while ostensibly being engaged as a program administrator. 42 41

42

Bita, N., Cooking a case for foreign workers, The Australian, p. 4, 21 March 2014

http://www.news.com.au/top-stories/dampier-scaffolding-victim-was-irishman-shaun-mcbride/story-e6frfkp9-1226070079101; http://www.irishecho.com.au/2011/06/06/donegalman-killed-in-wa-work-accident/10354

25

The overall skilled migration program is, as the name suggests, about meeting the need to attract migrants in skilled occupations in the trades and the professions that cannot be met domestically. This recognises that workers employed in lower-skilled occupations are generally able to develop these skills within a shorter period of time or through on-the-job training, and therefore it is reasonable to expect that employers will obtain Australian workers from the local labour market. Bringing in semi-skilled workers from overseas also creates greater potential for exploitation by unscrupulous employers because these workers are likely to have more limited bargaining power and often have lower English language skills. Unions therefore strongly oppose any proposal for the 457 visa program to provide an open door for employers to bring in more semi-skilled or unskilled workers. For the reasons discussed above, access to such workers has until now been confined to several discrete pathways, including labour agreements and, potentially, Enterprise Migration Agreements in the resources sector, as well as the Pacific Island Workers Scheme. As it is, unions have a number of concerns with how these existing pathways currently operate, and do not support any further pathways for semi-skilled opportunities being opened up. The 457 visa program, and for that matter the permanent employer-sponsored visas, should be for skilled positions only. Further opening up migration pathways for semi-skilled and unskilled workers sends all the wrong messages to employers and the community generally and should be rejected by the Panel and the Government.

English language standards The ACTU and affiliated unions strongly support the importance of English language standards for overseas workers under the 457 visa program. Threshold English language requirements are critical in a number of ways: • • • • • • •

In ensuring good OHS in the workplace In reducing the potential for exploitation In understanding rights and responsibilities at work in enabling effective performance at work In enabling overseas workers to pass on their skills to fellow workers, in improving employability and mobility In enabling participation in the community in which they live and work

For these reasons, the ACTU supports the current minimum English language requirement of IELTS 5 (vocational English) across all four language areas, and does not support concessions being available that would lower this requirement or allow it to be waived. Unions are aware that English language requirements are another area targeted by employers keen for deregulation and ‘increased flexibility’ under the 457 visa program. For example, it was reported that Austrade was also backing demands from the tourism industry for a review of English language standards, in addition to a lower TSMIT. Restaurant and Catering Australia have gone so far as to state that English language requirements should simply be removed altogether as ‘kitchen staff did not need to speak 26

English’. 43 This would leave those employees tied more than ever to their sponsoring employer, with very limited capacity to find alternative employment if the need arose. Such claims should be rejected by the Panel and the existing English language standard be retained. If anything, the question for the Panel should be why the higher standard of IELTS 6 required for the permanent General Skilled Migration stream does not also apply to the 457 visa program. There is no clear rationale advanced for why lower English language standards should be lowered, except as a way to promote easier employer access to an even larger pool of less skilled overseas workers. We note that there has been a departmental practice of considering concessions to English language standards where the implementation of stronger OHS measures can be demonstrated. This is reportedly the approach with the recent changes to the meat industry labour agreement discussed earlier. In our submission, this only begs the question of why English language requirements would be reduced if OHS was a genuine concern. Appropriate English language standards and stringent OHS measures should go hand in hand; it shouldn’t be an either/or proposition. The type of measures that would presumably be required in support of an English language concession – such as multi-lingual information on rights and responsibilities (including where to go for assistance and the right to join a union) - should be required at all times and not just when concessions are being sought. English language standards are there for the reasons identified above and the current requirements should not be watered down in their scope or reach by any changes arising out of this review.

Additional protections under threat As part of the 2013 reforms, the then Government introduced a range of other important measures that enhanced the integrity of the program and improved protections for Australian and overseas workers. These include:

43

•

Increasing the period that 457 visa holders have to find a new sponsoring employer to 90 days. This will help address the reluctance that 457 visa holders have at present about speaking out against their current employer for fear that if they lose their job they can deported if they don’t find a new employer within just 28 days.

•

Introducing a ‘genuineness’ test in the assessment of 457 visa nominations to ensure the position being filled by a 457 visa worker is genuinely required by the employer to address skills shortages.

•

Strengthening the obligations on 457 sponsors by requiring sponsors to be solely responsible for the payment of certain costs, such as the costs of recruitment,

Bita, N., Call for visas to serve up chefs, The Australian, 7 April 2014, p. 2.

27

sponsorship and nomination, including associated migration agent fees, and prohibiting the recovery of such costs from 457 visa holders. •

Clarifying that 457 visa holders are to be engaged as direct employees of the sponsor with a written contract of employment, and they cannot be on-hired to work for another business (except through an approved labour agreement) or be engaged in employment relationships misrepresented as independent contracting arrangements.

•

A new requirement for a formal skills assessment to be conducted for all applicants for generalist occupations such as program administrator to ensure they can no longer be misused by employers to bring in workers in lower-skilled occupations not available under the 457 visa program.

•

Requiring sponsors to justify the number of nominations required as reasonable. This will require sponsors to then adhere to the agreed number of 457 visa workers contained in their initial application for the duration of their sponsorship, unless formally varied at a later date. Previously, sponsors were able to sponsor and nominate an unlimited number of 457 visa holders. As noted above, the Government has already reversed this provision so that there is again no limit on the number of 457 visa holders a sponsor can nominate.

The Government must commit to retaining these further important protections. In fact, to fail to do so would appear to contradict the position it took in Opposition when it supported many of these changes as sensible ‘housekeeping’. 44 To conclude this section of the submission, the ACTU and unions support the core elements of the current regulatory framework outlined above. The Panel should resist the calls for these important protections to be removed in the name of deregulation and spurious arguments about ‘red tape’. Instead, the focus should be on improving and strengthening the current regulatory framework, as outlined in the section of the submission that follows.

44

http://www.smh.com.au/federal-politics/political-news/coalition-supports-457-visa-changes-20130503-2iyd4.html

28

5. Recommended improvements to the current regulatory framework The previous section outlined the key elements of the current regulatory framework that are currently under threat, and why their retention is critical to the integrity of the 457 visa program. We called for the Government, as a minimum, to commit to retaining these core elements and not attempt to remove or dilute them. In this section, we identify key areas where the Government can build on the current regulatory framework and make further improvements to improve the integrity of the program. Labour market testing is again a key focus of this section of the submission, but we also identify and highlight a range of other areas where the Government should make improvements to the current framework.

Labour market testing Weaknesses in the current labour market testing regime The 2013 legislative changes made a good first step in recognising the principle of labour market testing. However, the labour market testing provisions needs to be strengthened and their scope widened to cover more skilled occupations. The implementation and enforcement of the legislation is also critical for it to be an effective protection of the rights of Australian workers to Australian jobs for which they are qualified. The initial steps taken by the Government do not augur well. Guidelines introduced in November 2013 for the ‘sensible implementation’ of the labour market testing provisions were a first attempt by the Government to water down as far as possible any requirements placed on employers to conduct labour market testing in a rigorous and effective fashion. The details announced by the Government include: •

There will be no specified mandatory period for conducting labour market testing – the ACTU argues it should be conducted for at least four weeks for it to constitute a meaningful attempt to recruit Australian workers.

•

The timeframe in which labour market testing will be valid for will be 12 months – the ACTU submits this period should be no longer than 4 months. In a dynamic labour market where economic conditions can and do change, labour market testing conducted up to a year before isn’t necessarily a reliable indication of whether local labour is available today. For example, labour market testing done in August 2008 before the GFC hit could not have been considered relevant six months later in February 2009.

•

There will be no specified minimum content for the job ads that are required as part of labour market testing or even that the job ads are in the English language – the ACTU had argued for basic mandatory information in job ads such as the job title, main duties and responsibilities, location, relevant industrial instrument, necessary skills, qualifications and experience, and the salary and conditions. 29

•

There are no requirements in terms of the mode of advertising. Potentially, an employer could meet their obligations with a single ad on Facebook or their own website, with no advertising in national or local newspapers, industry and trade magazines, the Resources Sector Jobs Board where applicable, or other job sites such as Seek.

These diluted requirements are of considerable concern, as they only serve to encourage employers looking for ways to circumvent the spirit and intent of the legislation. Faced with this attempt by the Government to neuter the intent of the legislation administratively, much will depend in practice on how rigorously the Department probes the recruitment efforts of employers who claim they are unable to find Australian citizens or permanent residents to fill available positions. The legislation as it stands requires employers to demonstrate there is no Australian readily available to perform the work (s140GB(7)) and for the Minister to be satisfied that a suitably qualified Australian citizen or permanent resident is not readily available to fill that position (s140GB3). The Department and the Government need to explain how these requirements in the legislation could be satisfied by the mere placement of a single job ad on Facebook up to 12 months before the position is being filled. The Government has also determined by way of legislative instrument a number of exemptions from labour market testing based on its assertion of international trade obligations 45 and all skill level 1 and 2 occupations are exempt with the exception of ‘protected’ nursing and engineering occupations. The result is that just 35% of 457 visa nominations are actually subject to labour market testing.

Chart 3 % of 457 visa nominations requiring LMT under Coalition legislative instruments 2013 % requiring LMT (a)

35%

% NOT requiring LMT

65% 0%

10%

20%

30%

40%

50%

60%

70%

Source: DIBP Answer to Senate Estimates QON. (a) All Skill level 3, Engineering and Nursing occupations - except where sponsor nominates Thai or Chilean nationals plus 4 other categories declared (in legislative instrument) to be LMT-exempt due to Australia's 'international trade obligations'.

45

IMMI 13/138 - Determination of International Trade Obligations relating to Labour Market Testing http://www.comlaw.gov.au/Details/F2013L01954)

30

Against that background of shortcomings with the current framework for labour market testing, we outline the key elements and improvements required to ensure an effective labour market testing regime.

Improved evidentiary requirements for labour market testing Under the legislation, the evidence of labour market testing must include information about the sponsor’s attempts to recruit suitably qualified and experienced Australian citizens to the position. This must include details of any advertising of the position that was undertaken and fees and other expenses paid for that advertising. The evidence may also include other information such as participation in job and career expos, and the details of such recruitment efforts and any positions filled as a result. The sponsor also has the option of providing other evidence such as expressions of support from relevant government authorities, and any relevant labour market research released in the previous 4 months (but a failure to provide such additional evidence or information cannot be counted against the sponsor). The Minister may also specify other types of evidence that may be provided, by way of legislative instrument. This all means that 457 sponsors lodging visa nominations in occupations subject to labour market testing are not even required, at the bare minimum, to show evidence they have advertised the nominated position. If sponsors do advertise they must provide evidence of that, but they could also choose to conduct other unspecified recruitment efforts. At the very least then, there should be a clear, mandatory obligation on sponsors to have advertised the nominated position. However, by itself, the mere placement of a job ad will not give effect to the definition of labour market testing in the legislation that requires employers to demonstrate there is no Australian readily available to perform the work (s140GBA (7)); nor would it, of itself, enable the Minister to be satisfied that a suitably qualified Australian citizen or permanent resident is not readily available to fill that position (s140GBA (3)). Moreover, even if the mere placement of a job ad was somehow considered sufficient to meet the labour market testing condition under the Act, this would only encourage those employers referred to above who wish to circumvent the intent of the legislation. This highlights the importance of identifying some minimum requirements to help ensure job ads are genuinely seeking to attract local applicants before nominations are made for 457 visa workers. Therefore, to give proper effect to the legislation, we identify the following areas that require further attention and clarification in terms of evidentiary requirements for labour market testing.

Content of job ads The legislation does not specify any details concerning the nature and content of job ads to be used as evidence of labour market testing.

31

In our submission, the minimum requirements for mandatory job ads should include the following details (similar to the UK Resident Labour Market Test 46) : • • • • • • •

The job title Main duties and responsibilities of the job The location Necessary skills, qualifications and experience Salary and conditions, including genuine market rates 47 The relevant industrial instrument that will cover the work The closing date for applications

Employers could add to these requirements if they wished.

Advertising channels In our submission, as a minimum, the requirement should be to advertise vacancies locally and nationally at genuine market rates. The mode and mechanism of advertising should be consistent with accepted industry standards, but should generally be a combination of online advertising (eg. Seek), industry and trade magazines, and regional and national newspapers. It should require mandatory advertising on the Resources Sector Jobs Board for jobs in that sector, and use of other industry or occupational-specific recruitment custom and practice, as appropriate (eg. the maritime industry employment database).

Results of job advertising Evidence of a job ad that contains meaningful information and is distributed in a way that reaches the widest possible pool of potential applicants is a good starting point to indicate that genuine labour market testing has taken place. However, to fulfil the requirements of the legislation, it is imperative that job advertising is also supported by information on what the results of that advertising were (eg. the number of applications received, the number of applicants hired, and reasons why unsuccessful applicants were not considered suitable). Under the legislation as it stands, provision of such information is not a mandatory obligation (it can be provided on a discretionary basis), but at the least, it should be required as a matter of policy in the DIAC Policy Administration Manual. We also note that this is the very sort of information that currently must be provided by those wishing to sponsor workers under a 457 visa Labour Agreement. 48 On this point, we do note that the guidelines issued by the Government in November 2013 require employers to provide information about all advertising or other recruitment efforts including where and when the advertising took place, and the geographic target audience. Employers must also provide information about the results of that advertising, including the http://workpermit.com.uk/tier-2-visa-resident-labour-market-test.htm) the definition of market rates now adopted in the Migration Regulations, based on market rates in the geographic region and not just the rate at the individual workplace. 48 DIAC discussion paper, Implementation of Labour Market Testing in the standard Temporary Work (Skilled) (subclass 457 visa program), p. 4; and see http://migrationblog.immi.gov.au/files/2013/08/STANDARD-Labour-Agreementinformation-booklet-Aug-2013.pdf, p. 9 46

47 Using

32

number of applications received, the number of applicants hired and the general reasons why the other candidates were unsuccessful. This is one positive development. This requirement should be further strengthened by providing that the current sponsorship obligation ‘to keep records’ includes records of labour market testing undertaken, including job ads, applications received, and interview records, so DIBP can verify this information. The Department and Minister must also have the ability to ask questions of prospective sponsors and delve deeper into their efforts to recruit locally, particularly in circumstances where employers are repeatedly claiming they cannot find local Australian workers. For instance, in practical terms, a situation where an employer has put an ad in the paper and simply indicates that no applications were received or no suitable Australian applicants were available should not of itself be sufficient to meet the labour market testing condition and would require further investigation to test the genuineness of those local recruitment efforts. For example, one issue often encountered by our affiliated unions during consultation over labour agreement proposals is job ads stipulating a requirement for up to 15 years’ experience in the industry. Unions will accept such requirements if there are genuine safety and quality issues demanding that level of experience for a position. However, the concern is where requirements for a position are fixed at an artificially high level, thereby (or with the specific intent of) precluding local workers who could perform the role. As it is, the reference in the legislation to ‘suitably qualified and experienced’ Australian workers has the potential to allow employers to discriminate against young Australians, by specifying unwarranted experience requirements for positions. In other more blatant examples designed to exclude local applicants, unions have reported job ads for workers of one particular national group only (eg “40 Irish power linesmen”). In our submission, the Minister should also use the provision at s140GBA (5) (b) (iii) to determine other types of evidence that may be provided. This should include evidence of relocation assistance offered to successful applicants, and evidence of specific measures to employ those currently disadvantaged or under-represented in the workforce, such as indigenous workers, women, the unemployed and recently retrenched workers, and older workers.

When and how long should labour market testing be conducted Our position is that labour market testing should be conducted for a period of at least four weeks for it to constitute a meaningful attempt to recruit Australian workers. This period of advertising should take place within the four months prior to the nomination being made. As noted above, labour market testing conducted up to 12 months ago cannot be considered a reliable enough indicator of whether local labour is available at the time when a nomination is lodged.

Coverage of the labour market testing provisions As a matter of principle, the ACTU considers that labour market testing should be applied to all occupations and positions under the 457 visa program. However, we note that the legislation contains a number of potential exemptions to the labour market testing provisions. As noted above, the impact of these exemptions thus far is that up to 65% of visa nominations have not been covered by the labour market testing requirements. 33

Set out below are several aspects of the new laws where attention is required to ensure that coverage of labour market testing is as broad as possible.

Skill and occupational exemptions It is our strong view that labour market testing should apply to all occupations and the discretionary power under the legislation for the Minister to exempt certain occupations should not be exercised. Labour market testing exemptions should be the exception, not the rule. A key reason for this is because in skill level 1 and 2 occupations, a high proportion of 457 visas are being granted onshore to foreign nationals already in Australia, many working for their 457 sponsor on another temporary visa, and nearly half of all 457 visas in these occupations are also going to persons under the age of 30. In our submission, unions and other stakeholders should be consulted before any decisions are made on such exemptions, including consultation through the Ministerial Advisory Council on Skilled Migration (MACSM). Any proposal for exemption should be accompanied by an explanation as to how the exemption would be consistent with the central purposes of the 457 visa scheme as set out in s140AA of the Act. In our submission, the scope for exemptions, if any, should have been confined to highly paid, executive level positions at ANZSCO level 1. For this purpose, we recommend a salary threshold of $250,000 per annum as an appropriate threshold for that purpose, consistent with the salary threshold for exemptions to the ‘market rates’ obligations.

Exemptions based on international trade obligations The Act provides the Minister with the power to decide that the labour market testing condition does not apply if it would be inconsistent with any international trade obligations determined by the Minister in a legislative instrument. As noted above, the Assistant Minister has already made a legislative instrument to specify a number of exemptions. Based on the terms of the legislative instrument, DIBP has identified the following exemptions that now apply: 49 “International trade obligations LMT will not need to occur where it would conflict with Australia’s international trade obligations, in any of the following circumstances:

49

•

The worker you nominate is a citizen of Chile or Thailand, or is a Citizen/Permanent Resident of New Zealand.

•

The worker you nominate is a current employee of a business that is an associated entity of your business that is located in an Association of South-East Asian Nations (ASEAN)

DIBP, Temporary Work (Skilled) (subclass 457) visa, p. 25.

34

country (Brunei, Myanmar, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam), Chile or New Zealand. •

The worker you nominate is a current employee of an associated entity of your business who operates in a country that is a member of the World Trade Organisation, where the nominated occupation is listed below as an “Executive or Senior Manager” and the nominee will be responsible for the entire or a substantial part of your company's operations in Australia.

•

Your business currently operates in a World Trade Organisation member country and is seeking to establish a business in Australia, where the nominated occupation is listed below as an “Executive or Senior Manager”.

•

The worker you nominate is a citizen of a World Trade Organisation member country and has worked for you in Australia on a full-time basis for the last two years.

This is a much broader list of exemptions for reasons of international trade obligations than was indicated by the Department in its discussion paper on labour market testing prior to the September 2013 election. The Coalition Government has offered no explanation for the alleged scope of these obligations, and should do so. One of the challenges with these labour market testing exemptions in practice will be to guard against attempts to manipulate the classification of workers so they fall into the exempted categories eg. mid-level employees ‘dressed up’ as executives and senior managers under the intra-corporate transferee’s category. Of more fundamental concern is free trade agreements that have restrictions on labour market testing that go beyond high level executives and intra-corporate transferees and extend to skilled trades workers and professionals. For example, in the case of the Chile and Thailand FTAs, DIBP have confirmed to the ACTU that businesses are exempted from the requirement to labour market test for any employee, regardless of occupation or skill level, that holds a passport for Chile and Thailand. In our submission, the Australian Government should not be entering into any free trade agreements that trade away the right of the Australian Government and the Australian community to require that labour market testing occurs and Australian workers are given first right to Australian jobs, and trade agreements should not be used for the purpose of widening exemptions to labour market testing.

Application of labour market testing to sponsors under labour agreements, Enterprise Migration Agreements and Regional Migration Agreements It should be made clear that labour market testing under the legislation applies not only to nominations by ‘standard business sponsors’ under the standard 457 visa program, but it also applies to positions nominated by ‘approved sponsors’ under any labour agreement, Enterprise Migration Agreements (EMAs) or Regional Migration Agreements (RMAs) that are entered into in future, including semi-skilled occupations not available under the standard 457 program.

35

This requires an amendment to Regulations under the Migration Act, specifically to Regulation 2.72AA –Labour Market Testing to specify that all approved sponsors are a ‘prescribed class’ of sponsors for the purpose of the labour market testing provisions. The current provisions in the respective EMA and RMA guidelines are based more on the vague notion of ‘labour market analysis’, and fall well short of the labour market testing requirements in the Act.

Application of labour market testing to existing on-shore 457 visa holders and other temporary visa holders It is important to note again that the typical view the general community may have of the 457 visa program – an employer bringing in a worker directly from overseas – is often not the reality. As outlined earlier in the submission, around 50% of 457 visas are granted on-shore in Australia. This can apply to cases where an existing 457 visa holder changes employers or extends their sponsorship with their current employer (eg. from 4 to 8 years) and a new nomination is required. More often it is the case that the person in question is on another visa type, such as a working holiday or student visa, and they make the transition to a 457 visa. It should be made very clear that labour market testing and will be enforced equally in all such circumstances.

Mandatory data collection items and reporting systems for labour market testing A full assessment of the new labour market testing provisions is difficult without any information and data on their operation thus far. To enable this assessment, and in the interests of transparency and ongoing community confidence in the program, information and data on the operation of labour market testing under the Act should be publicly available. This should include information on the types of evidence of labour market testing that sponsors are providing, and information on the number of nominations that have been rejected because of inadequate labour market testing. The data should be capable of disaggregation by industry, ANZSCO occupation, and location. We note that the CFMEU has already provided the Panel with a detailed list of the key data items that are essential for the Panel and stakeholders to make an informed assessment of how the labour market testing provisions are operating in practice. The ACTU supports and endorses the list developed by the CFMEU. Provision of such information and discussion of labour market testing should be a standing agenda item for the Ministerial Advisory Council on Skilled Migration.

Stronger training obligations The ACTU and affiliated unions have long argued for more effective training obligations to be placed on employers who wish to access the 457 visa program. In the same way that there has been a lack of direct evidence of what employers wanting to use the 457 visa program have been doing to employ Australians first, there has been a similar lack of evidence on what employers are doing to train Australians. 36

For example, at present, sponsoring employers are placed under no obligation to train in the same occupations where 457 visa workers are being used. There is no obligation to be offering apprenticeships and traineeships in areas of skill shortages where 457 labour is being sought. No data is collected on the number of apprentices and trainees that are being trained by those employers that sponsor 457 visa workers. This all means the Government and the community have no idea if employers using overseas labour are in fact making any effort to train Australian apprentices in those occupations. This is despite the stated position from successive governments that skilled migration should complement domestic training and should not be used as a substitute for training Australian workers and apprentices. At present, sponsors can met their training obligations by either: •

Paying the equivalent of at least two per cent of total payroll expenditure to an industry training fund; or

•

Paying the equivalent of at least one per cent of total payroll expenditure on the training of Australian workers and permanent residents employed by the business.

In our submission, these training benchmarks have been ineffectual. They have not been properly enforced and they have failed to ensure that employers are investing in the up-skilling of their Australian workforce, particularly in the occupations where they are using 457 visa workers. Without any data on what individual sponsors are doing to train Australians, the macro-evidence that is available suggests the use and availability of 457 visa labour can and has had a negative impact on the national training effort, particularly in terms of apprenticeship training. For example, this was a key issue highlighted by the 2010 report of the National Resources Sector Employment Taskforce. The NRSET report50 found that ready access to temporary migration, along with the capacity to offer high wages and ‘poach’, had allowed resources companies to meet their skill needs with little thought to investment in skills development. The NRSET report cited NCVER research 51 that the resource sector trained just 3.6% of Australia’s apprentices, despite employing 5.6% of the nation’s tradespeople. In response to this, the recommendation from NRSET, supported by Government, was that the resources sector needed to significantly increase the number of apprentices it employs, given that it currently employs considerably fewer than would be expected given its share of trade employment. This problem emerged most markedly during the very period where 457 visa numbers were growing most rapidly. For example, in Western Australia, amid the resources boom and continuing talk of skill shortages, there was no growth at all in apprenticeship and traineeship commencements in 50 51

Resourcing the Future: National Resources Sector Employment Taskforce Report, July 2010 in Resourcing the Future: National Resources Sector Employment Taskforce, Technical Paper, pp. 37-38

37

2011. 52 Tellingly, over the same period, 457 visa numbers in the trades in Western Australia grew exponentially, as table 1 below shows. Table 1: 457 visa numbers in the trades in Western Australia 2010-2012 Program year 2010 – 2011 at 30 June 2011

Nominated Occupation

2009-10

2010-11

Change from 09 - 10

Technicians and Trades Workers

1600

3140

Sponsor Industry

2009-10

2010-11

Construction

1220

2420

99.2%

Electricity, Gas, Water and Waste Services

160

200

25.2

Mining

1580

2200

39.3

Nominated Occupation

2010-11

2011-12

Technicians and Trades Workers

3140

6380

Sponsor Industry

2010-11

2011-12

Construction

2420

4100

68.9

Electricity, Gas, Water and Waste Services

200

350

71.6

Mining

2200

3630

64.9

96.2 Change from 09 - 10

Program year 2011 – 2012 at 30 June 2012

Change from 10 - 11 103.3 Change from 10 - 11

Source: Compiled from various DIAC Subclass 457 State/Territory Summary reports

A similar picture emerged at a national level. For example, nationally, NCVER figures show the number of people commencing apprenticeships in trade occupations fell by 5.9% in 2011 and had been on the decline since September 2010, 53 yet visa grants for trades and technicians increased by 65% in 2010-11 and more than doubled in 2011-12. 54

52 53

2011 December quarter, Apprentices and Trainees, Australian vocational education and training statistics, NCVER, 2012, p. 4

Australian vocational education and training statistics, Apprentices and Trainees, Annual 2011, NCVER, 2012, p. 5; NCVER, News and Events, Fewer Trainees start, apprentices continue to slow, 18 May 2012); NCVER, News and Events, Apprentice and trainee December quarter 2011 statistics released, 5 June 2012

54

Annual subclass 457 State/Territory Summary Reports 2010-11 and 2011-12

38

To address these issues under the 457 visa program, unions support stronger training obligations and benchmarks tied to the use of skilled migration, so that employers who have a genuine need to sponsor and bring in overseas workers to fill skill shortages are also training the future workforce, reducing their need to rely on temporary overseas workers in future. Training benchmarks for the 457 visa program were previously under active consideration by the Ministerial Advisory Council for Skilled Migration. The unions’ proposal in that forum, which we commend again to this Panel, was to strengthen the current training obligations to require a payment by employers of 457 visa trades workers equivalent to what the employer would have received in government incentive payments if they had employed an apprentice (then $4850). This meant that if the sponsoring employer did take on an apprentice, the cost to them would actually be zero. Among other things, unions also proposed that where 10 or more 457 visa workers are sought by a sponsor, Australian apprentices should make up at least 25% of the sponsor’s trade workforce. This would reflect industry best practice. Employers should also be asked for additional evidence of efforts to upskill their workforce. For example, the previous Government established a National Workforce Development Fund which enables individual enterprises to enter into a co-funding arrangement with government to support skills development for new staff and upskill existing workers. Employers wanting to source 457 visa labour could reasonably be asked what they have done to access funding from the NWDF and work with their relevant Industry Skills Council or state industry training body on local training initiatives. In addition to introducing more effective and relevant training benchmarks, it is essential that a program for monitoring and enforcing these requirements be established. This should be underpinned by concrete data on the domestic training effort by 457 visa sponsors in the occupations where 457 visa workers are being sought. For example, we endorse the proposal the CFMEU has provided to the panel to capture baseline data on apprenticeship training activity by sponsors of 457 visa workers in the trades. Along with rigorous labour market testing, these measures will help ensure that employers are not able to take the easy option and go down the 457 visa route, without first investing in training and undertaking genuine local recruitment efforts.

Better information for 457 visa holders It is essential that 457 visa holders receive timely and relevant information on their rights under immigration and workplace laws. Various resources have been developed for this purpose from both DIAC/DIBP and the FWO but the critical point is that information must be provided directly to 457 visa holders when they are granted their visa and they commence employment. The onus should not be on the visa holder themselves to find this information and navigate their way through the DIBP website, as currently seems to be the case. To ensure this happens, there should be a new, specific sponsor obligation to inform every 457 visa holder in writing of their rates of pay and terms and conditions of employment, and their rights and responsibilities under immigration and workplace law. This should include information on the role of the DIBP, the FWO and unions in pursuing underpayment claims and other 39

breaches of sponsorship obligations. Information should be provided to visa holders in all relevant languages. There should be ongoing, tripartite input into the development of such materials.

Establish a public register of 457 visa sponsoring employers A public register of all sponsoring employers should be introduced as an important transparency measure for the integrity of the 457 visa program. A similar register applies for sponsored skill migration streams in the UK. 55 It was also a recommendation of the 2008 Deegan review (in the case of employers with 20 or more 457 visa holders). 56

Effective tripartite oversight of the program The Government should provide for ongoing tripartite input and oversight of the 457 visa program. The Ministerial Advisory Council for Skilled Migration (MACSM) should continue to perform this role. We view with some concern the recent statement from the Government indicating that MACSM would be reconstituted with new terms of reference after the completion of this review. We note the existing obligation of the Minister under s140AB of the Act to ensure an ongoing role for MACSM.

Access to workers’ compensation The Commonwealth Government should seek the agreement of the states and territories to amend workers’ compensation legislation to ensure injured 457 visa workers are able to retain benefits if and when they leave Australia and return home. Currently, it is understood 457 visa holders lose these benefits upon leaving the country, except under Comcare.

Access to entitlements in cases of insolvency The Government should amend the Fair Entitlements Guarantee Act 2012 so that 457 visa holders are eligible for entitlement payments in the event that their sponsors become insolvent and have not made appropriate provision for their workers. Currently, only Australian citizens and permanent residents and citizens of New Zealand on special category visas are eligible for these payments. We note with approval that the Senate Legal and Constitutional Affairs Committee made this recommendation to extend access to 457 visa holders in its June 2013 report into the 457 visa program and the Coalition Senators in their dissenting report supported such an extension. 57 55

https://www.gov.uk/government/publications/register-of-licensed-sponsors-workers Visa subclass 457 Integrity Review, Final Report, October 2008, p. 14. 57 The Senate: Legal and Constitutional Affairs References Committee, Framework and Operation of subclass 457 visas, enterprise migration agreements and regional migration agreements, June 2013, pp.122-123. 56

40

Independent skills assessment for all 457 visa workers Unions remain very concerned that the skills and qualifications of 457 visa holders and other temporary visa holders are not formally assessed by an independent body against the AQF occupational requirements and other relevant Australian endorsed standards (except in the case of certain trades and 457 visa applicants from ‘at risk’ countries’). Currently, 457 visa holders need only satisfy their sponsor that they have the skills required. In our submission, the mandatory skills assessment that applies to all permanent GSM applicants should be the standard applied consistently to all visa types. An independent and transparent process for both skilled and semi-skilled temporary migrants is essential to ensure that qualifications gained overseas and held by temporary overseas workers meet the contemporary requirements of Australian qualifications and licensing arrangements. In licensed occupations, unions support a requirement that if the appropriate Australian licence is not obtained within 28 days, then the 457 visa should be withdrawn. This is essential to guard against unlicensed work being carried out.

Preference for 457 visa workers in redundancy situations Over the years there have been a number of examples of Australian citizens and permanent residents being made redundant while 457 visa holders doing the same work in the same workplace have remained in employment. The legislation now provides at least some recognition that this is an issue, with the requirement for any recent redundancies and retrenchments to be factored into the labour market testing process. In our submission, there should also be an express position reflected in legislation and program requirements that Australian workers have preference to retain their jobs in redundancy situations over temporary 457 visa workers. The clear logic to this is that the 457 visa program is designed to provide temporary overseas workers to fill skill shortages when the employer cannot find sufficient workers from the domestic labour market; if workers are having to be made redundant the employer is clearly no longer finding it difficult to find enough workers to perform the work and therefore the 457 visa workers are no longer required and they should be the first to go, with all entitlements owing to them.

Priority access for 457 visa holders to independent permanent migration channels One of the fundamental flaws with the 457 visa program is that visa holders remain largely dependent on their sponsoring employer for their ongoing visa status and, in the majority of cases, their desire for permanent residency. In these circumstances, the risk of exploitation is much greater as overseas workers are less prepared to speak out and take action if they are underpaid, denied their entitlements, or otherwise treated poorly, for fear of losing their job and their ability to remain in Australia. 41

This is a well-documented problem, going back to the 2008 Deegan review which reported that: “ …where a visa holder has permanent residence as a goal that person may endure, without complaint, substandard living conditions, illegal or unfair deductions from wages and other similar forms of exploitation in order not to jeopardize the goal of permanent residency. These situations are exacerbated where the visa holder is unable to meet the requirements for PR via an independent application.” 58 To provide at least some remedy to this continuing problem, unions propose that permanent migration channels not tied to employer sponsorship should be more open to 457 visa holders, including processing priority.

58

Visa subclass 457 integrity review, Final Report, October 2008, p. 49.

42

6. Response to individual terms of reference In this section, we respond to the four terms of reference for the review - to the extent this has not already been done in the preceding sections of the submission. In doing so, we also respond, where appropriate and relevant, to the additional questions the Panel has asked stakeholders to consider under each of the terms of reference.

The level of non-compliance by sponsors, both historically and under the current regulatory framework There are various sources of information to indicate the level of non-compliance by sponsors of 457 visa workers. The Department of Immigration and Border Protection and its predecessors have previously reported on the number and type of sanctions imposed on sponsoring employers. For instance, the annual subclass 457 State/Territory summary reports for each financial year reported the following: • • •

In 2008-09, 190 sanctions were issued, 1% lower than in 2007-08. In 2009-10, 164 sanctions were issued, 14% lower than the previous year. In 2010-11, 137 employers were sanctioned, 16.5% lower than the previous year.

The summary reports in more recent years have not provided this same information, but basic information on monitoring and compliance activity can still be found in the Department’s annual report, as set out below: 59 Table 2: DIBP Monitoring and Compliance Activity Measure Active sponsors (sponsors with a primary visa holder in Australia at the end of the financial year) Sponsors monitored Sponsors' sites visited Sponsors formally sanctioned Sponsors formally warned Referrals to other agencies Sponsors issued with an infringement notice Sponsors subject to pecuniary penalty by the Federal Magistrates Court

59

2010–11

2011–12

2012–13

18 520

22 450

30 090

2 091 814 140 453 61 9

1 754 856 125 449 18 49

1 857 1 238 217 302 12 68

0

1

0

DIBP Annual Report 2012-13, p. 78.

43

The Fair Work Ombudsman has also taken action against sponsoring employers under the 457 visa program for breaches of workplace law. For example, Mr Michael Campbell from the FWO told a Senate estimates hearing on 21 November 2013: ‘’ …last financial year (2012-13), we finalised 259 investigations involving subclass 457 visa workers and recovered $371 000 for those workers…(and) a number of proceedings that have been filed in court to deal with cases where we say that visa workers, both 457s and others, have been treated poorly. ” 60 However, in our submission, the number of reported cases where sanctions were imposed on sponsors does not present a true or full picture of the extent of non-compliance, particularly given the paucity of resources directed to monitoring, compliance and enforcement over a number of years and the reluctance of the Department to take action when clearly warranted. For example, at the time the previous Government’s legislative changes were introduced to the Parliament last year, there were just 32 DIAC inspectors across Australia; at the same time DIAC figures indicated there were close to 30, 000 sponsoring employers under the 457 visa program. The ACTU continues to receive disturbing reports of many other cases that constitute ‘noncompliance’ or rorting of the 457 visa program. Generally, these involve either exploitation of 457 visa workers or Australian workers being overlooked by sponsoring employers. These reports come from a variety of sources including through the ACTU’s confidential 457 visa hotline, from affiliated unions of the ACTU, and through our relationships with other community organisations such as Migrante Australia, who advocate on behalf of Filipino workers in Australia. The cases of rorting and exploitation reported to the ACTU include: •

457 visa workers being engaged where skilled and qualified Australian workers were available to do the work;

•

Breaches of employer sponsorship obligations;

•

Under-payment of workers;

•

Excessive working hours;

•

Workplace bullying;

•

Debt bondage;

•

457 visa workers nominated to work in skilled occupations and then being required by their employer to perform unskilled work on a regular or permanent basis;

60

Senator George Brandis provided this same information in response to a question in the Senate, Hansard, 27 March 2014, p. 67.

44

•

Employers offering to sponsor workers for permanent residency for a fee up to $50 000;

•

Exorbitant charges and interest payments on loans for 457 visa holders to be placed in jobs;

•

Salary deductions to pay for migrant agent fees on the promise of getting permanent residency

•

Threats from employers to not join a union, including contracts that 457 visa workers are forced to sign stipulating they can be sacked for talking to a trade union;

•

Attempts by employers to recover costs such as accommodation and food;

•

A number of cases where overseas workers have uprooted themselves to come to Australia only to find after a short time (or immediately in some cases) the job is no longer there; and

•

workers brought to Australia on the promise of getting a 457 visa after a period of English language training but forced to return home as the job never materialised and they were left with large debts for the training and the agent’s fees.

Subject to the wishes of the visa holders themselves, as appropriate the ACTU puts individuals in contact with relevant unions and government bodies, such as DIAC, the Fair Work Ombudsman and WorkCover, who can help them find out further about their rights and what further action they might be able to take to rectify the situation they find themselves in. Appendix one provides further detail of the cases reported to the ACTU, and other cases that have been reported publically. 61 In addition, the Panel also has before it now the submissions of individual workers, as well as managers and contractors in some cases, who have first hand experience of the 457 visa program, particularly where it has failed to protect employment opportunities for Australians or has led to 457 visa workers being disadvantaged. Evidence of non-compliance, poor treatment and exploitation also emerged from the survey findings in the 2013 Migration Council of Australia report referred to earlier. These include: •

2% of visa holders responding to the survey were paid well below threshold figures (i.e. earning less than $40 000 per annum compared to the then TSMIT of $51 400 per annum) and 5% did not feel their employer was meeting their obligations. Extrapolating this finding based on the total number of primary visa holders currently in Australia at the time (108, 807 as at 30 April 2013), the MCA report indicates that 5, 443 visa holders were not receiving their full and proper entitlements i.e. 5, 443 individual breaches of the 457 visa program. There is also a further 6% (6, 528) who don’t know if the employer is meeting their obligations. 62

See for example, McKenzie, N., and Schneiders, B. “Visa scheme rorting leaves foreigners in debt bondage”, The Age, p. 4, 6 June 2013. 62 Migration Council of Australia, More than temporary: Australia’s 457 visa program, p. 74. 61

45

It is important to note that the 2% of visa holders identified by the MCA report represents only the proportion of workers being extremely and grossly underpaid, not the total percentage of 457 visa workers being underpaid the wages actually required by Immigration regulations (i.e. the 457 visa market salary rate at the time), which would be a much larger figure. •

7% of visa holders (or 7, 616 individual 457 visa holders) said their working conditions were not equal to Australian colleagues. For those visa holders of non-English speaking background, this figure was higher again at 8.6%. 63

•

25% of respondents didn’t know how much they were paid or refused to say; no other question in the survey elicited this type of response. 64

It will also be the case that cases of ‘non-compliance’ that come to public attention only ever represent the tip of the iceberg, a point that was well made in the 2008 Deegan report. 65 As the ACTU knows from experience with calls to our own hotline, 457 visa workers in both white collar and blue collar occupations are often very reluctant to go to DIAC/DIBP or have the ACTU contact the Department on their behalf, for fear of losing their visa and being deported. Again, in large part, this comes down to the inherent nature of the 457 program as an employer sponsored visa. As the Migration Council of Australia report showed, about half (48%) of all 457 visa holders surveyed indicated the reason for applying was to live in Australia or become a permanent resident, and 71% intended to apply to become permanent residents after their visas expired. 66 This desire for permanent residency is perfectly understandable on the part of those visa holders, but it also makes them more susceptible to exploitation and reluctant to make any complaint that may put their employment at risk. In terms of what has happened since the new laws were introduced and came into operation, it is still very early to tell, particularly with little, if any, public information on the program being made available from DIBP or the Government in terms of how labour market testing is working, or even updated information on 457 visa numbers (the last available program numbers made available by the Department were up to December 2013). The figures up to December 2013 show a recent decline in the number of 457 visa grants, after consistently strong growth in 457 visa numbers in the years leading to the introduction of labour market testing laws in June 2013. For example: •

From 2010 to 2013 the total number of 457 visa holders in Australia increased year on year from 68 400 in June 2010 to 107 970 in June 2013, a 57% increase. (68 400 in June 2010, 72 030 in June 2011, 91 050 in June 2012, and 107 970 in June 2013)

63

Ibid., p. 72. Ibid., p. 14. 65 Visa subclass 457 integrity review, Final Report, October 2008, p. 23. 66 Op. cit., pp. 69, 71. 64

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•

The number of 457 visa grants for technicians and trades workers increased each year from 4 790 in 2009-10 to 7 930 in 2010-11, 16 510 in 2011-12, and 18 230 in 201213, a 280% increase over that period.

This increase all occurred while there was no obligation on employers to provide evidence that they had first tried to find an Australian citizen or permanent resident to do the job. By contrast, since the labour market testing laws were introduced overall visa grants have decreased by 23%, with the same decrease occurring with visa grants for technicians and trades workers. However, without further information and given that the new labour market testing requirements did not apply until November 2013 it would be premature to attribute a direct causal link in this case. Early reports from our affiliated unions on the impact of labour market testing are mixed. Some indicate it may be having a positive practical effect already. For example, AIMPE, the union representing marine power engineers, report that since labour market testing came into operation, shipping owners are putting more effort into training local staff, rather than going down the route of the 457 visa program. The AMWU (Queensland Branch) have found that local workers who have previously missed out on job opportunities are now being given a chance. However, other affiliates report that since labour market testing came into effect, the experience and qualifications specified, but not actually required, for jobs subsequently filled by 457 visa workers have suddenly increased. At the same time, the ACTU and affiliated also unions continue to come across cases where 457 visa workers are being mistreated and exploited. In relation to the particular question posed as to whether there are circumstances or situations that are more likely to lead to non-compliance in the program, there are a few additional points that can be made. One, the level of monitoring and compliance activity is clearly a key factor and this has been inadequate for some time. As noted, up until the changes introduced in 2013 there were 32 inspectors for nearly 30 000 sponsoring employers. Very few employers were subject to site visits – around 4% of all sponsoring employers received one, based on the information in table 2 above - and those that were, were often given prior warning in the experience of our affiliates. Inspectors need to have a visible presence. Employers may gripe about visits from government inspectors, but sponsors shouldn’t simply carry on secure in the knowledge they will never be inspected or held to account for their employment of 457 visa workers. Employers need to know there is at least some chance they will be subject to some form of scrutiny and this is not occurring at present. The ACTU and unions have consistently advocated for more resources to be directed towards compliance monitoring and enforcement and we welcomed the addition of 300 Fair Work inspectors through the changes introduced last year. We look forward to seeing tangible results from those additional inspectors. Two, the reluctance of DIBP, and DIAC before it, to disclose the result of any action they do take and publicise offences and penalties can foster more employer non-compliance as there are no concerns about reputational damage. 47

Third, the Government has a leadership role to play in this area and when it takes action to reduce or remove protections, as it did with its November 2013 guidelines that diluted the labour market testing requirements, this sends signals to employers that can lead to greater noncompliance.

Evaluate the regulatory framework of the 457 program and determine whether the existing requirements appropriately balance a need to ensure the integrity of the program with potential costs to employers in accessing the program In our submission, the current regulatory framework now provides a much firmer basis for ensuring the integrity of a program which has been beset by integrity problems over a number of years. In section 4 of this submission we identified some of the core elements of the current framework including labour market testing, the market rates obligation, the TSMIT, an eligible occupation list that is confined to skilled occupations, and minimum English language requirements. We reiterate our call for the Government, as a minimum, to guarantee the retention of these key features. In section 5 of the submission we identify areas of the regulatory framework that continue to be deficient. For example: •

the evidentiary requirements for labour market testing should be strengthened and the scope for exemptions from labour market testing should be tightened. In our submission, all occupations should be subject to labour market testing.

•

The current training benchmarks are not appropriate or adequate for ensuring employers are providing opportunities for Australians. They should be replaced with meaningful obligations for employers to train in the occupations where they using 457 visa workers, so that their reliance on the 457 visa program is reduced over time.

•

Improved support and information should be given to employers and visa holders on their rights and obligations, including making this a key sponsorship obligation.

•

Mandatory independent skills assessments should be introduced for all 457 visa workers

•

The program should be made more transparent, including publically available information on the operation of labour market testing and information on what sponsoring employers are doing to train Australians in the occupations where they are currently using 457 visa workers

We refer the Panel to sections 4 and 5 of the submission for further evidence and supporting arguments in support of our position on these and other matters. The fundamental point we emphasise to the Panel, in making this evaluation of the current regulatory framework, is that the integrity of the program should be paramount. That is, the focus should be to ensure the program is used only for the purpose it is intended - to provide access to temporary overseas workers but only where there are genuine temporary skill shortages that cannot be filled by Australian workers who are ready, willing and able to do the work. 48

Considerations of the cost to employers and ease of access to the program should be secondary to ensuring that employment opportunities of Australians are protected. Support for Australian jobs shouldn’t be reduced to some trade-off type equation. Based on past experience, promoting easier access to temporary migration is only more likely to mean employers don’t look to attract and train Australian workers. We also make the point again that the current regulatory framework for labour market testing could hardly be described as onerous. In effect, it simply codifies what employers would already be doing if they were genuine about sourcing Australian citizens and permanent residents first. As we highlighted earlier in the submission, it is also worth noting that the costs to employers of engaging 457 visa workers are not as significant as commonly reported and assumed, particularly because many 457 visa workers are already on-shore. Finally, a further area we ask the panel to focus on is initial entry into the 457 visa program through the sponsorship approval process. With careful scrutiny, this process provides an upfront opportunity to stop bad employers using the program rather than having to rely on sanctions after the fact once the damage has been done to workers. In our submission, the ability of employers to access the program, whether the standard 457 visa program or via labour agreements, should be subject to rigorous scrutiny of their record of compliance with relevant industrial relations, OHS, migration and taxation laws. Adverse information on a business in relation to their record in these areas should preclude them from accessing the program. For example, the Fair Work Ombudsman regularly provides details of workers being underpaid or not receiving other entitlements owing to them. Companies found to have underpaid their workers should not then be able to turn around and seek to bring in overseas workers when they have a record of not even paying minimum wages to their existing staff.

Report on the scope for deregulation while maintaining integrity in the program As submitted above, the integrity of the program must be paramount. In our submission, the focus on deregulation in the terms of reference is entirely misplaced. The integrity of the 457 visa program shouldn’t be sacrificed in pursuit of an ideological push by this Government to reduce what it sees as ‘red tape’. Good, effective regulation, supported by rigorous enforcement, is required to protect and support the interests of both Australian workers and temporary overseas workers, particularly in light of the history of the program and continuing problems that arise. As we identify in section 4 and confirmed by the questions the review panel has posed for consideration, there appear to be a number of areas where the Government is contemplating deregulating and ‘freeing up’ the 457 visa program. These include removing labour market testing, removing the market rates obligation, lowering or removing English language standards, lowering the TSMIT, and expanding the reach of the 457 visa program into semi-skilled occupations.

49

The Government has already taken initial steps along these lines, as was highlighted earlier in the submission, and various employer representatives continue to push the Government strongly in this direction. The Government needs to explain exactly how deregulation in these areas would support the integrity of the 457 visa program. For example, with labour market testing, if the Government continues to express its support for the principle that the employment and training of Australians comes first, then there needs to a regulatory mechanism to ensure this actually happens and it needs to be given some teeth. That is the express purpose of having a legal requirement for labour market testing. Otherwise it is just a meaningless platitude to profess support for the principle of Australian workers having first priority, but in practice allow employers to bypass qualified Australian workers. If it proceeds with plans to remove labour market testing, a more honest position would be for the Government to say that employers should be entitled to employ who they like, whether they are Australian or from overseas.

Review and advise on the appropriateness of the current compliance and sanctions Our response to the first term of reference indicates the ongoing concerns that unions have with the extent of non-compliance under the 457 visa program. The level of non-compliance is reflected to a limited extent in the official statistics of sanctions taken against sponsoring employers but comes through also in the cases that are reported to or uncovered by unions, and other organisations including the media. The inherent nature of the 457 visa program as an employer sponsored visa means that reported cases of rorting and exploitation are only ever the tip of the iceberg. This submission has already identified several deficiencies in the regulatory framework that if addressed would help improve compliance with the spirit and intent of the 457 visa program. One further recommendation we make is to adopt the recommendation from Senator Xenophon from the 2013 Senate Inquiry into the 457 visa program for a system of warnings and penalties to apply for hiring a 457 visa worker when an appropriately skilled Australian workers is available, and there was evidence no genuine effort was made to source a suitably qualified worker. 67 This would help rectify a glaring gap at present in the regulatory framework, where there is no sanction available for what is the most fundamental breach of the integrity of the program by an employer – engaging a 457 visa worker when a qualified Australian worker is available.

67

The Senate: Legal and Constitutional Affairs References Committee, Framework and Operation of subclass 457 visas, enterprise migration agreements and regional migration agreements, June 2013, p..129.

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Generally speaking, however, it would appear the Department has the range of sanctions and legislative powers it requires to enforce compliance with the program. Of course, if the Department itself can identify extra powers that would assist it, the panel should give these favourable consideration. The experience of our affiliated unions is that the problem lies more with the lack of resources directed to compliance activity and the preparedness of the Department itself to take necessary action against non-compliance, and when they do take action, to publicise that action widely and penalise and name employers appropriately so that it has a general deterrent affect. In the submission above, we referred to the paltry number of DIAC inspectors dedicated to monitoring and compliance under the program. This created problems even when cases of noncompliance were reported to it. For example, the ACTU was advised last year there were just two inspectors to cover the whole of the Northern Territory. This led to a situation where a matter that was reported to DIAC involving alleged under-payment of 457 visa workers at McArthur River Mine was still not complete 3 months after it was reported due to the remoteness of the site and a lack of resources. The ACTU therefore welcomed the initiative in the 2013 reforms to give powers under the Migration Act to over 300 Fair Work Inspectors, although at this stage it is too early to make an informed assessment as to its impact. In our submission, there are various other avenues that require attention in order to improve the effectiveness of current compliance and sanctions. One recommendation is for 457 visa compliance and monitoring to be shifted from DIPB to the Fair Work Ombudsman. One of the main reasons for this is the inherent conflict with DIBP administering the 457 visa program legislation and regulations, approving sponsors and visas, but then also performing the role of regulator. In our submission, the role of regulator should be separated and FWO is the appropriate workplace regulator. The FWO already has experience in dealing with workplaces with migrant workers, including 457 visa workers, and since the 2013 legislative changes Fair Work Inspectors may now exercise all the compliance powers conferred on inspectors by the Migration Act. We also submit that better information sharing between government agencies would be extremely helpful in improving the overall monitoring and compliance effort. For example, it can enable the matching of tax records from the Australian Tax Office with nominated salaries under the 457 visa program, it can help with information on the training record of 457 visa sponsors from state Training Authorities, it can facilitate access to industrial relations, OHS and workers’ compensation data from relevant authorities. Importantly, it can mean that when potential immigration breaches are detected by other agencies they can be referred to DIBP for further action.

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Our experience has been that attempts by the Department to finalise such information sharing arrangements with other agencies have been long and drawn-out, and it is not readily apparent whether and how many such arrangements have been formally entered into and how effective they have been. In the interests of transparency, DIBP should make public all formal and informal arrangements it has with other agencies and the nature and outcomes of those arrangements. Any unfinalised arrangements should be completed as soon as possible. As submitted further above, unions also call for more effort into upfront scrutiny of employers seeking sponsorship approval. The Panel also asks about workers’ rights and responsibilities in the context of current sponsorship obligations. As submitted earlier, the ACTU supports a new sponsorship obligation for this information to be made more readily available to 457 visa holders in appropriate formats. This should include hard copies of such material provided directly to the visa holder, rather than just directing them to a website. It should also include information on where to go for assistance if they are being underpaid, mistreated or exploited. On this point, we note that the Senate Inquiry into the Protecting Local Jobs (Regulating Enterprise Migration Agreements) Bill 2012 recommended 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, the Fair Work Ombudsman and unions in pursuing underpayment claims.

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Appendix 1 Recent case studies of rorting and exploitation under 457 visas Cases reported to the ACTU 457 visa confidential hotline include: •

A bakery in South Australia employing 457 visa holders on a 21 day roster working 12 hours a day with no breaks, and not paying them for public holidays. Baking students and cooks looking for sponsorship to get permanent residency were put on as delivery drivers. One worker reported: “When I was signing my contract for my job my boss asked me if I belong to a union. When I asked my boss why, he said ‘I don’t want any union representatives working into my workplace’. If they find out I joined a union I will be sacked.” The employer has asked workers for $50 000 in return for PR sponsorship.

•

Diesel mechanics from PNG who had up to $10 000 in salary deductions to pay a migration agent for their original 457 visa and on the promise of a PR visa sponsorship which has not eventuated.

•

A farm outside a Victorian regional centre where 15-20 457 visa workers are living in very cramped accommodation, working long hours and rarely leaving the site. The caller said there are OHS issues related to the use of chemicals and many of the workers are presenting at a local medical centre with various health problems.

•

A cheese factory outside Melbourne where workers are working about 100 hours a week, not only in cheese production but are then directed to perform security work as well.

•

An establishment in Melbourne where about 40% of workers are on 457 Visas. The workers understood they were being employed as Thai Masseurs, but once here have been told if they don’t have sex with clients they will be sacked.

•

A surveyor from Greece on a 457 visa who feels threatened with the loss of his job if he raises issues in the workplace, including the question of a pay rise he had verbal agreement on some time back. Many of his 457 colleagues are sacked if they raise issues, often just as they return from a period of annual leave. There is a climate of fear as if you lose your job you have to find another one or leave the country. The employer has been getting rid of 457 visa people who have been there for a while on higher wages and bringing new batches of 457 visa people on lower wages

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•

Reports of a team of Belgian 457 Visa workers working on a dredging project in WA being paid about one third of their Australian counterparts.

•

A 457 visa holder from Ireland who was put off work by their employer for no apparent reason. The employer is trying to recover the costs of the visa. The employer had agreed to pay $1500 upfront to cover the employer’s costs of obtaining the 457 visa (a cost the employer is not otherwise allowed to recover). The visa holder didn’t speak up because of fear of losing and leaving the job, with only 28 days (prior to the 2013 amendments that increased the period to 90 days) to find a new employer or face deportation.

•

A 457 visa holder who was an OHS advisor and made repeated complaints about asbestos and legionella bacteria, and enquiries about his own pay and conditions in the weeks immediately leading up to his suspension and dismissal. The visa holder had not been paid any super the whole time he was working and had recently been making enquiries about his entitlements and Australian payroll/tax status which were not in line with his visa conditions. His son was also working for the company, earning around $10/hour in an administrative role. Apparently none of the UK employees on site were being paid properly and many of them were on visitor visas without work rights, rather than 457s.

•

A construction site in south Melbourne, which relies heavily on 457 visas, where the workers are not wearing goggles or masks and the scaffolding is unsafe.

•

The case in Werribee where 457 visa workers were flown in over the top of local unemployed skilled workers to work on a City West Water project. There were subsequent complaints to the ACTU 457 hotline that workers were working 70-80 hours a week with no overtime.

•

A child care manager engaged under a 457 visa to manage a child care centre arrived in Australia to be told the centre had closed down. The worker was told by the employer that she would instead be managing a family day care operation out of the house she was also required to live in. The employer made automatic salary deductions for her rent without her genuine consent. The visa holder was required to advertise for her own pupils, otherwise there would be no job. The visa holder also reports receiving threatening emails from the employer.

•

There have also been several other cases reported to the hotline where visa holders have arrived in Australia to find the job is no longer available after they have uprooted themselves from their home country and gone to considerable expense to move to Australia.

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Other cases reported to the ACTU include: •

A 457 visa holder, a father of three, employed for painting and sandblasting, who was made to clean the office toilets, his employer’s house, cut the employer’s son’s lawns and scrape mud out of cow feed lots. He would also turn up for work only to be sent home without notice because he “wasn't needed that day”. He said the employer yelled abuse at him and he often felt frightened to go to work.

•

Another case of exploitation involved an engineer who was brought over and worked, without training, as a tube bender on machinery that was old and unfamiliar. He experienced bullying and was on the receiving end of life-threatening pranks by his foreman.

•

A case involving 21 Chinese nurses recruited by an immigration agent based in China to come to Australia on a temporary training visa, with the promise of work for them in the residential aged care sector and a 457 visa after completing a three-month English language program. Each nurse entered into a contract and paid an initial $12,000 for training fees, agent fees and other expenses. Following their training in Tennant Creek, none were offered jobs or were able to get a 457 visa. When their original 442 visa expired, the migration agent organised three month tourist visas, and offered the prospect of employment in a nursing home in Adelaide. Several nurses took up the offer and moved to Adelaide at their own cost, where they found that there was no job, just another training centre with a $7,000 fee attached. Other nurses were offered employment by a migration agent in Perth which turned out to be the same deal; more training and costs but no job. After this about half the nurses returned to China and around 10 remained in Tennant Creek. They had no job, no money, visas which were soon to expire and many were unable to pay for their flight home. A number of businesses in Tennant Creek ran raffles and other fund-raising activities in order to buy their return air tickets and, in the meantime, the nurses were housed and fed by the generosity of people of Tennant Creek.

•

A case involving several 457 visa workers on a construction site who rejected a backdated enterprise bargaining agreement pay increase because they were ‘happy’ with their current situation. This decision was linked clearly to their overwhelming desire to get Permanent Residency sponsorship from their employer. In pursuing this goal, they were being denied their proper entitlements and making themselves more attractive to unscrupulous employers looking to cut costs. This then had the added effect of undermining the position of existing Australian workers and job seekers.

•

Cases where Australian citizens/permanent residents have been made redundant while 457 visa holders performing that work have remained in employment. A recent example involved members of the Aircraft Licensed Engineers employed by John Holland Aviation Services at Tullamarine who were made redundant while 457 visa holders performing the same or similar work have been retained. The ACTU has also received reports that financial institutions have been making IT workers redundant, then outsourcing the jobs overseas. They then hire people back on 457 visas after saying they can't get Australians with the right skills. 55

•

The practice of employers nominating overseas workers in generalist occupations such as ‘project administrators’ under the 457 visa program but then employing them in semiskilled occupations such as scaffolders which are not available under the standard 457 program. In one tragic case, an Irish national, Shaun McBride, was killed working as a scaffolder on a construction site in WA despite having been nominated to perform work as a project administrator. 68

•

Reports of 457 visa workers from Korea being forced to work regular unpaid overtime on building sites in Canberra and wait up to six weeks for payment. One of the workers sponsored to work as a painter had just finished his accounting degree and said he had never worked in the trade. 69

•

A case uncovered by the AMWU, where 12 diesel fitters engaged by a Spanish company on 457 visas at McArthur River mine in the Northern Territory are being paid about half of what local on-site tradespeople employed by local labour hire firms were being paid. There are reports that 457 visa workers who questioned the company were sacked instantly then put on a plane and sent home within 48 hours. 70

•

In IT, cases have been reported where overseas workers are here on 457 visas or other visa types to learn the job so that the work can then be outsourced to those same workers back in their home country, at the expense of Australian jobs. Similar examples have been reported in the manufacturing sector.

•

A group of Filipino workers who were engaged by an employer under the 457 visa program to work as skilled welders and sheet metal workers, yet once on site did nothing more than labouring work day after day; a flagrant misuse and abuse under the program.

•

A Filipino worker who found his salary reduced by half almost two months into his job and felt he had no choice but to accept as he did not want to be out of work. The worker still received the same wage in his bank account but was forced to withdraw half of it and give the money directly to the employer. The worker has been diagnosed with depression and anxiety as a result of the bullying he has been subjected to by his employer.

68

http://www.news.com.au/top-stories/dampier-scaffolding-victim-was-irishman-shaun-mcbride/story-e6frfkp9-1226070079101; http://www.irishecho.com.au/2011/06/06/donegalman-killed-in-wa-work-accident/10354 69 70

Towell, N., Late Pay and Long Hours, Workers Say, The Canberra Times, 26 March 2013, p. 8. Callick, R., The Australian, p. 4., 8 April 2013.

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D No. 50/2014

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