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Legal and Constitutional Affairs Legislation Committee
21/06/2013

CHAN, Ms Angela, National and NSW/ACT President and Chair, Skills Policy and Procedures Committee, Migration Institute of Australia Ltd

PARCELL, Mr Wayne, PSM, Director, Migration Institute of Australia Ltd

[11.16]

CHAIR: I now welcome representatives from the Migration Institute of Australia. Good morning to you both. We have a submission from the Migration Institute of Australia which we have numbered 20 on our website. I am going to ask you to provide some comments and then we will go to questions.

Ms Chan : Thank you very much. We appreciate the opportunity of coming here today, given the short notice. We have put in a submission.

The institute is concerned about the fact that we do live in a democratic society, and we are concerned that this bill has not complied with Australia's best practice for regulation requirements and that there has been inadequate assessment by the Office of Best Practice Regulation. I know that there have been other organisations who have raised exactly that point here today. There is no publicly available information to suggest that there was any real consideration of the regulatory impact of the measures proposed in this bill on Australian businesses and industry. The Prime Minister's reasons for granting an exemption should be made public.

While there is a skills shortage in Australia we believe that there will always be a need for a 457 visa program. We support the government in their Gonski reforms. However, we see that there must also be a continued commitment from state, federal and local governments and from employers to ensure that Australians are trained and that skills are maintained. However, as I said, until there is a standard that is set, and until we can reach the level where skills can be acquired in Australia in a timely manner, then these 457 visas will be required. I also note that in their very short letter the Australian Human Rights Commission said:

… an inquiry process which is so truncated as not to provide a realistic opportunity for public participation is not consistent with the requirements of Article 25 of the International Covenant on Civil and Political Rights.

Trying to push this legislation through parliament does worry me, and that the committee is requesting further information of organisations. I know this is not your fault, but to expect people to provide information on such short notice is just not reasonable or acceptable.

I also note that people talked about the report on 7:30 last night. Unfortunately, I think we are all at a disadvantage that we do not have the opportunity of knowing exactly what this company does do, except that Tata Group employs 300,000 employees worldwide and that they employed something like 200 people on 457 visas in Australia. If you work that out, that is 0.01 per cent of their total workforce worldwide, so we have to look at things in perspective.

We have made recommendations to this committee. As far as labour market testing is concerned, we have recommended that labour market testing be undertaken only after all the stakeholders have been properly consulted and that proper processes be put in place. For example, you may require a different type of labour market testing for different occupations. The actual occupations that are covered by the consolidated skilled occupation list are over 600 in number. Not one type of labour market testing is going to suit all of them. We are also concerned about the costs which are involved and the time lag. We agree with the ACTU that six months would appear to be a very lengthy period of time and that it is going to make it very difficult if employers have to look at advertising within that period, test the market and then make timely commercial decisions.

In principle, we support extending the period from 28 days to 90 days for 457 visa holders. However, we also believe that DIAC will need to provide a special visa for these people so that they can also keep working during this period, because otherwise you are going to have people who for 90 days will be unemployed and could fall into financial hardship. That will then require that schedule 3 of the act also be amended.

As far as recovering costs from employees by the employer is concerned, there are some costs which are not arguable. However, if you are looking at labour market testing, imposing potentially high costs for advertising and having to seek the advice of a Commonwealth or state instrumentality, we do not know what the requirements are going to be. If it works on the basis that you have a regional certifying body—such as you have throughout Australia now—that provides expert advice to the department on whether there is a need in the regional area, that could cost an employer an additional $300 to $500. We are speaking about these costs, which are non-recoverable, being imposed on the employer, but in these situations the employer is not always the one who is the problem. In many instances, some people might come here and simply decide that they do not want to work. They are all different. We are talking about human beings, and sometimes situations do not work out. But gee whiz! If you have someone here on a 457 visa and you want to sponsor them for a four-year period, and then they up and run after six months when you have tried your hardest to be a good employer, then that is a significant cost that the employer has to bear. It is one that I have seen in contracts prior to all of this happening, because I have been involved in migration since 1988 and this was not an issue then. Some costs are recoverable by employers if the employees—especially in the high-paid positions—do not honour their agreements or simply walk and find somewhere else to work, which does happen. That is the reality of it.

CHAIR: Ms Chan, I am conscious of the fact we want to get to questions.

Ms Chan : I just want to mention a couple more things. Considering the impact on employers if they are in breach of their sponsorship undertaking if the department finds out or the Fair Work inspectors find that out, we believe that it needs to be assessed by somebody who is at least at a director's level, if they are going to sanction or bar or cancel a sponsorship, because the resultant effect of that is that eventually the visa applicants will also lose their right to be sponsored by that employer.

CHAIR: Thank you. In your submission, just before your first recommendation, you say that, based on the current DIAC statistics available, the number of primary applications lodged would mean a figure of around 27 per cent. I have two questions for you. You have no statistics yourself that you have been keeping?

Ms Chan : No. We are a not-for-profit organisation. We have to rely on the statistics that are publicly available and that the government can—

CHAIR: You do not get them from your members?

Ms Chan : Not unless we specifically survey them.

CHAIR: Do you know what that 27 per cent figure would be then? Are we talking around 25,000?

Ms Chan : Well, of 108,000 I presume, so yes.

CHAIR: I just wanted to clarify that. Also, you say that labour market testing should only be carried out after direct consultation with the relevant stakeholders. Who would they be? Are you talking about, in the case of, say, Ballarat, stakeholders in the Hay area? Are we talking about Darwin? Are we talking about stakeholders in Darwin, the Territory or nationally? What do you envisage there?

Ms Chan : There is a problem. I heard previously your concern about employers trying to find workers in the regional areas of the Northern Territory. Do they advertise or don't they advertise? Who do they advertise with? I think that there needs to be proper consultation with employer groups, unions and regional certifying bodies so that you can put a sensible program in place to test the market. You are going to have a different market testing, I believe, for people in the city, for employers in the city, than for those who are in regional and rural areas of Australia.

CHAIR: Is that really the case though, these days, with significant fly-in fly-out and movement around this country? Surely every job should be advertised and tested rather than putting limits around some jobs or some areas or making excuses for not doing it?

Ms Chan : I do not disagree with advertising for the positions.

Senator PRATT: That is what labour market testing is.

Ms Chan : I understand what labour market testing is. We are not saying that labour market testing should not be done. We are saying that it should only be done after there is proper consultation to put a proper program in place so that we are not doing it willy-nilly. How do they intend to test the market? Placing an ad?

Senator PRATT: I thought you were the one who—

Ms Chan : Placing the ad in national newspapers is what they used to do 10 to 15 years ago. Labour market testing also required people to lodge the position with the CES, and they had to sign it off. It caused delays. I do not think that it has improved the skill levels of Australians because you have undertaken labour market testing.

CHAIR: Let us go to questions.

Senator PRATT: I certainly have questions, Chair. I will pick up from where we are. The department's submission to this inquiry talks about labour market testing, and it sounds—to be honest, Ms Chan—as if you are almost arguing for a more onerous version of it. My understanding is that the definitions of labour market testing under this bill are different from as it existed in the past, and that is because our recruitment practices have indeed substantially changed. The department characterises it as: sponsors will be required to provide evidence of advertising and outcomes of any recruitment action that identified that Australian citizens or permanent residents were not available or suitably skilled for the nominated position. That sounds like what employers should be doing anyway, and what they do anyway, in the main, before they decide that they want to apply for a sponsored visa.

Ms Chan : We are talking about legislating for labour market testing. The legislation is simply that. It is that you either do it or you do not do it and this is what you have to do. What you have just said is no different to what labour market testing used to be 15 years ago. It is the same, whether there is a different labour market. It is exactly the same process. Working in the industry since 1988, I do not believe that it is the most efficient way. People should really bite the bullet and instead of saying, 'You have to advertise, advertising, advertise,' let's talk about exactly what you want to achieve here.

Senator PRATT: Are you for or against labour market testing?

Ms Chan : I am not arguing against labour market testing, except to say that, if it is to be carried out, then it should be carried out in the best possible way so that everyone achieves the best possible results.

Senator PRATT: And that it is characterised in a way that is in line with ordinary recruitment practices. Essentially, you need to have a demonstration of what should ordinarily be done in a recruitment context at a local level that is suitable to whether you are in a regional area or whether you are in a city and has been done according to your local service level.

Ms Chan : You could do that by way of a tailored framework.

Senator CASH: I will turn to the potential unintended consequences of the legislation and, in particular, the impact on business of labour market testing. Is it a possible effect that industry would be deterred from making applications for 457 visa holders as a result of this regulation?

Ms Chan : I will defer to Mr Parcell, because he is a partner of Ernst & Young.

Mr Parcell : I can speak to the experience that we have with our clients. In a year, we might deal with 5,000 visa applications, and the experience that I have dealing with different clients of different scale businesses in different industries is that, yes, many of those will come to us to say: 'We've tried to locate a suitable candidate to fill a role. We haven't been able to locate one. We'd like you to organise us a position nomination visa application to sponsor someone.'

The primary cause of them coming to us is usually the inability to obtain someone locally. I cannot speak for every individual employer in the country about whether they do or do not test the labour market. I can speak to the experience of our 5,000 or so visa applications, which is that employers appear to be looking to fill a gap that they cannot fill locally. There is usually an element of immediacy there.

Many of the employers in the industry sectors that we deal with would find a six-month period to be so onerous that it would probably lead to them not proceeding with particular contracts or jobs. Certainly, by necessity, they would need to turn their mind to a different way of dealing with the shortage. Whether that could be dealt with in a six-month or shorter period is a matter that would depend on the particular industry sector and the particular occupation.

Senator CASH: Is there an inherent tension between what is proposed by the minister in relation to the labour market testing and the six-month period and the actual stated purpose of the 457 visa program, which I understand is meant to be a demand driven program that is, allegedly, responsive to the needs for labour in this country?

Mr Parcell : That is right. It is my understanding that the program was designed to deal with short-term, immediate need. If there is a significant closure or stricture put upon the program, I expect—and I am sure that the departmental officers could give you more detail on this—that it will lead to the pressure being released in some other part of the program. In other words, the department will then see the pressure moved to the business visitor program, perhaps in the subclass 600 series or perhaps in the subclass 400 series. What the government and the department may see is a shift in where the pressure will move in terms of employers' need to meet that demand.

Senator CASH: This morning Minister O'Connor gave a keynote address at the Skilled Migration National Employer Conference in Melbourne. In response to a question from an attendee regarding labour market testing, Minister O'Connor stated as follows: 'Let's not distract and pretend that labour market testing is difficult. It sounds like a very complex term, but labour market testing is putting an ad in the paper. That's it. There are no other undertakings required from the employer.' Is that labour market testing, as is currently proposed by the legislation?

Mr Parcell : It is not my understanding.

Senator CASH: What is your understanding of it?

Mr Parcell : My understanding would be that you would need to conduct that advertising and then obviously deal with the applications that come in. Then in providing evidence to the department at the time of lodging the application, some six months later would be the outcome of that process that you went through and, if it is anything like the labour market testing of some 15-odd years ago, you then explain to the department why each of the candidates was not selected and provide reasons for that. In the past it was a matter of deleting people's names, some sort of identifying particulars, so if the department wanted to pursue the issue with the employer they could do so. It is a relatively intensive process, but I believe that the real issue here is the time frame of a six-month period before perhaps that role could be filled and, by the time the employer got to that six-month period, the need for that position may well and truly be gone.

Ms Chan : Could I also add that the legislation also says that there will be a need to obtain expressions of support from Commonwealth, state and territory government authorities with responsibility for employment matters. Again, that is like going back to the old CES or it could be a similar thing with the regional certifying bodies.

Senator CASH: So for the minister to state in answer to a question this morning at the Skilled Migration National Employer Conference that—and I quote—'labour market testing is putting an ad in the paper. That's it. There are no other undertakings required from the employer' would be wrong?

Ms Chan : That is not correct.

Mr Parcell : With great respect I expect that, to some extent, it is a simplification of the issue. My experience as a departmental officer and in private practice has been that the process is a little more intensive than that, particularly when explaining to the department what the employer has done. My experience many years ago as an officer was that the same sorts of arguments were put to us then that employers were rorting the labour market testing arrangements.

Senator CASH: Based on what Minister O'Connor said this morning, if it is just a case of placing an ad in the paper the good news is that, 24 hours later, you can go and recruit the person, not six months later. In relation to the practical implications—

Senator Pratt: That is a misstatement of the—

Senator CASH: of labour market testing and, in particular, in relation to your role in Ernst & Young, what will be the practical implications if this proposal is introduced on your clients in terms of accessing skilled labour?

Mr Parcell : For those clients who wish to pursue the applications, I expect that some of those will ask us to assist them with that process in perhaps dealing with the applications, putting together the details of those candidates who were not successful. There may be occasions where perhaps they have advertised but there are insufficient applicants or applicants that they believe were inappropriate or unsuitable. They may say to us, if the legislation permits: 'Assist us in writing submissions to the department as to why we should perhaps be exempted from the requirement.'

Senator CASH: Does that all take time?

Mr Parcell : That will certainly take time and, at our billable rate, it will certainly be a little expensive for some people.

Senator CASH: In terms of time frames what does that do to your client's need for labour in relation to a particular position and the impact on their business?

Mr Parcell : Once again, if we are talking time frames of a six-month period, if it is not an exempted occupation, then it may well be that the employer will need to make an earlier decision upfront as to whether or not to even pursue that process if in six months time the opportunity for the contract or the particular engagement they are looking to deal with might be past.

Senator CASH: In terms of the failure by the government to undertake a regulatory impact statement, do you have any concerns about that failure?

Mr Parcell : My concern would be that the issues have not been examined sufficiently closely to determine the real economic impact on employers, given that the program is intended and was designed to be a fast response program to fill short-term skills needs.

Ms Chan : We are talking about not only big business here; we are also talking about small business enterprises. A lot of these costs will impact enormously on these small businesses, who would probably prefer to grow than not, and maybe that worker will affect the business as far as whether they decide to grow or not. We are talking about not only employers that employee thousands of people; we are talking about employers that might only employ five, 10, 20 or 50 people.

Senator CAMERON: You represent migration companies—

Ms Chan : Registered migration agents.

Senator CAMERON: Who make their living by bringing workers to Australia.

Ms Chan : We make our living by giving advice to people. And It is not necessarily all workers. We do other work. We do family work and refugee work.

Senator CAMERON: This bill has some fundamental tenets. You are experts in the 457 visa system, aren't you?

Ms Chan : We understand the system, yes.

Senator CAMERON: What are the fundamental tenets of the 457 visa system? What is it designed to do?

Ms Chan : It is designed to provide highly skilled labour to Australia and it is demand driven on a timely basis.

Senator CAMERON: No it isn't.

Ms Chan : Okay, then I stand corrected.

Senator CAMERON: I thought you guys were the experts. This is what the department says: it is to enable a business to sponsor a skilled overseas worker if they cannot find an appropriate skilled Australian citizen or permanent resident to fill a skilled position. Do you agree with that?

Ms Chan : I agree with that.

Senator CAMERON: That is one part. The second part is to ensure that the working conditions of a sponsored visa holder are no less favourable than those provided to an Australian worker and that overseas workers are not exploited.

Ms Chan : That is correct.

Senator CAMERON: Those two fundamental tenets are reasonable?

Ms Chan : Yes.

Senator CAMERON: One of the drivers in the first tenet is 'if you cannot find an appropriately skilled Australian citizen'. The legislation, the bill that we are looking at now, is driven by that fundamental tenet, isn't it?

Ms Chan : If you say so.

Senator CAMERON: I am asking you. You are the expert. Have you read the bill?

Ms Chan : I have.

Senator CAMERON: Does the bill fulfil that tenet?

Ms Chan : I am not quite sure what you are asking.

Senator CAMERON: I am asking a simple question. There are two fundamental tenets to the 457 visa system. Does this bill fill one of those tenets?

Ms Chan : If you really want to look at how a bill should be fulfilling tenets, you have to look at the overall system, you have to look at the overall effects on the community, you have to look at what you are trying to achieve and the outcomes. So I do not think I can give that a simple yes or no answer.

Senator CAMERON: Let us go to section 140GBA. Subclause (3) says, 'The labour market testing condition is satisfied if', and then it has (a), (b), (c) and (d). What problems are involved in either (a), (b), (c) or (d)?

Ms Chan : I think you have to read this in conjunction with the explanatory memorandum, which unfortunately I do not have in front of me, which sets out how all of this should be done.

Senator CAMERON: Why shouldn't the minister satisfy himself or herself that a suitably qualified and experienced Australian citizen or Australian permanent resident is not readily available to fill the nominated position?

Ms Chan : Why shouldn't he?

Senator CAMERON: Yes. Or do you agree that he should do that?

Ms Chan : As I said previously, we are not objecting to the labour market testing. What we are saying is that you need to look at how it is carried out. There are different ways of assessing whether there is a suitable Australian to work in a particular occupation and there might be other factors extrinsic to that, such as the location, the experience that is required—there are a whole lot of things. I am not sitting here pretending to be a labour market expert either.

Senator CAMERON: The bill talks about qualifications, it does not talk about experience. If you have a young Australian who has served an apprenticeship in the trade that I have—a fitter—how can that young Australian ever get access to broader experience if an employer says: 'You are not suitable because you don't have experience. I will go to the Philippines, I will go to China, I will go to the UK and I will find somebody on a 457 visa, and you will not get access to that experience'? What will happen to portability of skills in this country if we simply do that?

Ms Chan : I do not disagree with you, Senator. I think that when you leave school you should be entitled to a traineeship or an apprenticeship or that there is some type of back-up for you; that if you cannot go on to further education you need to be able to have access to work.

Senator CAMERON: That is not the issue. I am talking about someone who has had access to work, who has had training in a skill that is recognised—as, say, a fitter or boilermaker or rigger or electrician—so they have worked and have the basics of their trade. If you simply bring people from overseas and do not allow that young Australian to have access to experience then they become unemployable eventually, don't they?

Ms Chan : That is correct. I have no problems with that. But I think you also have to recognise that with any 457 sponsorship there is still a requirement that there be a genuine need for that position.

Senator CAMERON: But there are no checks on that, really. You have to concede that, haven't you?

Ms Chan : There are monitoring procedures that the department does have.

Senator CAMERON: There is no enforceability, is there?

Ms Chan : If they are in breach of their undertaking, yes.

Senator CAMERON: It means nothing.

Ms Chan : No, they can be banned, they can have their sponsorship cancelled, they can have their sponsorship barred. As I said before, any resultant effect of that is that the visa holder will lose their position within the company, and any other workers who work for that company.

Senator CAMERON: That is fine, but there are not enough inspectors to even start on that, are there?

Ms Chan : You would like it tougher, yes.

Senator CAMERON: Absolutely.

CHAIR: Senator Cash, you have one follow-up question.

Senator CASH: Ms Chan, I have a question in relation to the propositions that Senator Cameron put to you about what he says the 457 visa program is. I am also looking at the department's website as we speak, and my understanding is that the department also says that the subclass 457 visa program is uncapped, demand driven and designed to respond to the needs of the Australian economy. Is that your understanding of what the department says the 457 visa program is? If it is your understanding, how does the labour market testing impact on the department's statement?

Ms Chan : I cannot speak on behalf of the department but it is my understanding of how the 457 program is driven—that it is demand driven. As far as the labour market testing goes, I think we can all run around in circles all day and talk about whether we should or whether we should not. I go back to the fact that it is demand driven and that whatever labour market testing is required it has to be done in a timely manner and it also has to be suitable for that particular position or that particular industry.

CHAIR: Ms Chan, I will ask the last question. This bill is about greater flexibility in labour market testing. So I am having trouble in understanding why you have got some problems with that.

Ms Chan : I do not understand how it is more flexible. How does it provide greater flexibility?

CHAIR: You believe there are no benefits in making this more flexible for employers? There are no more additional forms to fill out; they can advertise in a range of ways. You do not think that is going to be a better system than what is currently in place?

Ms Chan : I am sorry. Are you saying that this is what is going to happen if this legislation is passed, that it will be easier for employers to employ?

CHAIR: There will be no new forms to fill out. There will be greater flexibility. So I am wondering why you think it will be an issue.

Ms Chan : I do not understand.

Mr Parcell : Chair, we are having difficulty understanding. Your proposition is that the proposed legislation will not introduce any new forms or new requirements other than the employers' evidence—their activity in terms of what labour market testing they have undertaken. I guess the proposition we would put to you on behalf of the Migration Institute of Australia is that, as the legislation appears to us, there appears to be less flexibility for employers, particularly in terms of time in that a period of six months may need to elapse before an employer can proceed to sponsor a person if a suitably qualified Australian was not readily available.

CHAIR: We do not have time, really, to explain some of those anomalies. That is a bit unfortunate. I thank you both for your time this morning.

Ms Chan : Thank you very much chair and senators—and good luck!