HOWES, Professor Stephen, Director, Development Policy Centre, Australian National University

Committee met at 09:48

CHAIR ( Mrs Markus ): I declare open this public hearing of the Inquiry into the Seasonal Worker Program, which is being conducted by the Joint Standing Committee on Migration. The Seasonal Worker Program is an important mechanism that supports development in the Pacific while also meeting identified labour shortages within Australia's horticultural industry. Established in 2012, the program now provides over 3,000 seasonal workers to the horticultural sector to employers, including growers, contractors and labourers.

For this inquiry the committee will examine the Seasonal Worker Program and its scope for expansion, how the program affects Australian jobs, ways in which to facilitate access for overseas women and youth workers and how the program supports development in the Pacific, and the visa regime for seasonal workers. Today we will hear from the Development Policy Centre.

I now welcome the representative from the Development Policy Centre to the hearing today, Professor Stephen Howes. I wish to advise you that in giving evidence to the committee you are protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to a committee and such action may be treated by the Senate or the House of Representatives as a contempt. It is also a contempt to give false or misleading evidence to the committee. These are public proceedings, although the committee will consider requests to have evidence heard in camera. If you object to answering a question you should state the ground for that objection and the committee will consider the matter. Finally, I wish to inform you that these proceedings are being broadcast, and a transcript of the proceedings is being made, which will be provided to you. I now invite you to make an opening statement to the committee before we proceed to questions.

Prof. Howes : Good morning, everyone. Thank you very much for the opportunity to come before this very important committee. We have been undertaking research into the Seasonal Worker Program since 2011. When I say 'we', myself, my colleagues at the ANU and also the World Bank. Although, as you said, the Seasonal Worker Program only began in 2012, we started research into the pilot program, which is also very relevant to the subject.

We have really been concerned with two key questions or two puzzles, if you like, about this scheme. One is why it is so small. You mentioned that it has got to 3,000, but that is after several years of the pilot program. If we compare it with the New Zealand scheme, the New Zealand scheme is at 8,000 or now 9,000 and it went to that cap almost immediately after just a couple of years. Although Australia has had lower caps, those caps have never been binding. It is not that the government has put on a cap limiting the growth of the scheme, it is the scheme itself that has not met the cap. So, that is one thing we have been keen to explain. It is a puzzle because on paper the two schemes are very similar in Australia and New Zealand, and the Australian horticultural sector is much bigger than the New Zealand horticultural sector, so you would expect the Australian scheme to be much bigger.

The second puzzle is why the scheme is so dominated by Tonga. Tonga is by far the main sending country. About 80 per cent of the workers come from Tonga. Of course, nothing against Tonga, good for them, but it is meant to be a Pacific scheme. Tonga was already a highly remittance dependent economy with a lot of access to labour markets, and this scheme is needed much more by countries that are more isolated, such as Vanuatu or Kiribati. Again, it is different from the New Zealand experience. New Zealand is a much more diversified set of sending countries and, in fact, Vanuatu is the biggest, followed by Tonga and Samoa.

These are the two issues we have been particularly concerned with, and in a sense it is a voluntary scheme. The government gives the rules, but it is up to the industry how it works. We went and talked to the players and it became very clear that the problem is not in terms of workers. In fact, Pacific workers would rather go to Australia than New Zealand, because they are better paid. In Australia they have a much higher minimum wage.

CHAIR: That is interesting.

Prof. Howes : So, then clearly the problem or the reason is on the demand side. It is in terms of the employers. We carried out two surveys of employers, basically with horticulturalists. Obviously talking to everyone participating in the scheme but also going through the phonebook and talking to just a sample of horticulturalists to find out why they are or why they are not using the scheme and also basic questions such as whether they had heard of the scheme. We did this first in 2011 when it was still a pilot program, and we spoke to about 180 employers. Then we repeated the exercise last year with the World Bank, speaking to as many of the same employers as we did before plus some more, as well as industry groups, taking the total to about 260.

I think these surveys give us a really good evidence base for understanding the scheme. We have submitted our reports to the committee, but I will summarise briefly. The summary finding would be that there is no aggregate labour shortage in the horticultural sector. The most common reason employers gave for not using the scheme was under the category of no need for the scheme.

To understand why there is no labour shortage, the key reason there is the backpackers. There has been a massive growth in backpackers working in horticulture from about 2000, or about the same level of seasonal workers now. That was 10 years ago for backpackers, and it is about 45,000 today. That has solved the labour shortage.

I think quite plausibly there was a labour shortage issue in horticulture around 2005, but that labour shortage has now been eliminated and that means Australian and New Zealand employers face very different decisions. For New Zealand employers they do not really have a choice. If they want their fruit picked they have to take a seasonal worker. For the Australian employer the choice is much more finely balanced. There is no doubt on average the seasonal workers are more productive and they are more reliable. There are some limited studies in Australia showing that, but there is also extensive evidence from New Zealand.

There are certainly advantages from the Seasonal Worker Program and most employers who use it are satisfied with the scheme. But on the other hand, it is more expensive. You have to pay airfare costs, for example, that you do not have to pay if you are hiring a backpacker. It is more risky. You may not know exactly who you are going to get. They may not come at exactly the right time. There is a minimum length requirement that they have to stay for, and it is also more hassle. A backpacker just turns up on your doorstep. You do not have to worry about accommodation and pastoral care, which you do with the Seasonal Worker Program. So, it is a finely balanced decision and, in fact, you can see that most employers have in fact made the decision to stick with the backpackers rather than make the transition to the Seasonal Worker Program.

The last thing I would say is that the final piece of the puzzle is to understand why backpacker numbers have skyrocketed from 2,000 to 45,000 in just 10 years. I think you have to understand the history of it. In around 2005-06 there was a lot of pressure to do something about this labour shortage in horticulture. At that time the government was not willing to introduce a seasonal worker program, and so to respond to that pressure from growers they introduced the second-year backpacker visa, whereby if you worked in a regional area in certain occupations for three months you could qualify for a second-year visa. That was intended as an incentive to get backpackers to work in regional areas, and it has worked. It has been a very powerful incentive and that is where we see these 45,000. They are the ones who apply for the second-year visa. Not all applicants for the second year-visa work on a farm, but 90 per cent do. Normally backpackers would not want to work on a farm. It is pretty tough, but they do it to get that second-year visa. That kind of points to a key reform that needs to be considered.

Just to round off in terms of why Tonga has done so well—we think it is the same sort of basic reason. It is just because the scheme has not had enormous growth. It has been quite difficult to penetrate the market. There is a strong first-mover advantage and a strong diaspora advantage—if you know someone. We know a lot of the initial farmers were expatriate Tongans themselves. There has been a strong first-mover advantage, which Tonga has been able to fully exploit, and congratulations to them. But in New Zealand where it has been an easier environment for seasonal workers to penetrate, that first-mover advantage has been much less and so you get a more diverse group of countries, including countries that do not have any prior migration experience or any prior networks, with Vanuatu being the key example of that.

I think it is understanding the different labour market context that explains the difference between Australia and New Zealand and also points in the direction of reforms that are needed if we really want to grow the Seasonal Worker Program. I would be happy to talk about those reforms, but I might leave it there for now.

Senator BACK: You certainly answered some questions. The scheme is concentrated on horticulture. In your surveys did you speak to or get evidence from any employers who might be in horticulture but more broadly in broad-acre farming? I know in my own experience we have tremendous difficulties in attracting seasonal labour for putting crops in and harvesting. I am sure the skillsets could easily be modified. An expansion of the program beyond horticulture to broad-acre farming might actually create a new demand and a new market.

Prof. Howes : That is a good question. To be honest, we did not specifically address that issue. There have been various attempts, as you might know, to expand the scheme to other sectors—aquaculture, cane, sugar and accommodation. None of those have been really successful. In fact, you could say aquaculture, cane and sugar have been completely unsuccessful in terms of almost virtually zero take-up. Accommodation has been small. That is up in the north. There has been a small amount of take-up there.

I think the reason those sectors have failed is that there have been quite a lot of restrictions around them. For example, in aquaculture, you cannot spend the night on a boat so that automatically reduces the utility, and then the skill requirements. You need a truck driver licence in the sugarcane business. That was a deterrent. If it is an unskilled area, I imagine it could work. I would be interested as to why backpackers are not taking up those jobs, and whether they are not seen as suitable.

Senator BACK: They certainly are taking them up, and if it was not for backpackers we would not be getting our crops off either, but there still is an unmet demand. That is my point.

Prof. Howes : Yes, so that would be very consistent.

Senator BACK: In fact, to be perfectly honest with you, it is actually New Zealanders who arrive in Australia during our cropping and harvesting periods, at least in my home state of Western Australia. If we took the New Zealanders out we would be in all sorts of strife.

Prof. Howes : Yes. That is very consistent with what we found. I know I can come across as a bit negative. There obviously is a niche for seasonal workers and we do find that growth every year is about 500 to 600 workers, and a positive experience of those who do use it. The scheme does have a future, but at the moment certainly the backpackers are winning. They have the numbers. They just dwarf the number of seasonal workers.

Senator BACK: Thank you.

CHAIR: Thank you so much. What you have already presented us with is quite comprehensive and answers a number of questions that we have, but can you elaborate on the potential development benefits that the program provides, what countries would obtain a greater benefit from participating in the program and what are the challenges in obtaining workers from lower participating countries? You have already in a sense probably in part answered that. How could the seasonal worker and backpacker programs be reformed or would you recommend they be reformed, if at all, to better ensure maybe a more level playing field or more opportunities for people from the Pacific?

Prof. Howes : Those are both really key questions. On the first one, in terms of development benefits, I did not really cover that off in the submission, but it has been well researched and I would be happy to pass on that research to you.

CHAIR: That would be helpful.

Prof. Howes : Because there have not been many workers coming to Australia there has been less research on the Australian side, but there was one study actually done by two New Zealand researchers of workers who come to Australia. Their estimate was that their income gain, as I recall it, was about $5,000 per person. That was the profit they made or that they were able to send home or take home. When you divide that by the number of people in the household, it was a 40 per cent gain to their household.

CHAIR: For that year?

Prof. Howes : For that year; that is right. It is a very significant gain. The New Zealand scheme has been extensively analysed and it has found similar, although somewhat smaller, benefits. As I said, basically with the Australian scheme, if you are one of the lucky ones who gets it. There have been some problems with abuse. I would not pretend that it has all been smooth sailing, but on average you do very well out of the scheme. The New Zealand scheme has been extensively analysed in terms of development benefits and it has been described by some academics as the best development scheme in the world, because it has such high benefits and then it comes at such low costs. In contrast with the aid program, you do not have to raise the funds. It is actually a benefit to the farmers who use it and that is why they use it. It has virtually zero costs. It is a win-win. That is, I guess, what makes it so attractive.

In terms of the downside of the development benefits, workers tend to return. It is not just one group of workers one year and another group the next year. It tends to be the same workers for several years. There is always some attrition and injury, and for some it becomes a lifestyle that they work hard for six months and then they take a break for the other six months. That means they may do less farming at home and they move away from the sort of traditional lifestyle, but I think that is part of development. With development that is what we see with people moving away from agriculture into industry and the service sector.

We know for these Pacific island countries they are not going to follow a conventional path of industrialisation. They do not have the market size. They are too isolated. They are too expensive. I think it makes a lot of sense for them to focus on this. This is basically labour exports. It makes a lot of sense, given the nature of their economies, that this is the sort of activity that we should be giving them opportunities for.

In terms of how to move beyond Tonga and how to get other countries that need it more to benefit, that is not an easy question to answer. I would not recommend quotas. I think it is already a highly regulated scheme and if you create more red tape you will get less take-up by farmers.

Also, the other difficulty is that the other countries that are poorer are often not as well governed. Tonga is a pretty organised country. The government plays a very constructive role in facilitating getting workers across. In a place like the Solomon Islands it has really been a disaster in terms of government support. It is not just the government. You also get private sector scams. If it is not well regulated you get agents in the Solomons sort of promising people that they will get them a visa that never arrives and so you have a lot of disappointment.

Ms VAMVAKINOU: Do people actually pay to get their visa?

Prof. Howes : Yes, that is right. People pay upfront.

Ms VAMVAKINOU: That is where the scam is?

Prof. Howes : That is the scam. That is right. That is why Vanuatu is such a good model, because it is a poor country and it did not have a tradition of labour mobility. For them this New Zealand scheme is really a breakthrough and they have managed to regulate it well. So, it can be done, but it is not easy. For the microstates, Kiribati, Nauru, Tuvalu, they are a long way away and it is more expensive for them to come and also they do not have the same tradition of agriculture. They are on coral atolls. They are not very productive. They tend to import most of their food needs and so they do not have that same tradition of a rural workforce that they can rely on or build on.

I think the only way to get more participation is to grow the scheme and as the scheme grows Tonga will reach its limits and there will be more opportunities for others to come in and then they will have to compete. We have seen, with the recent growth in the Australian scheme, more growth from Vanuatu, and that is what you would expect. I think having some support from the Australian government to help these countries improve their sending arrangements rather than quotas would be good. The key thing is to grow the scheme and with the bigger scheme there will be more room for everyone to take part.

Mr THISTLETHWAITE: Just following on from that point that you are making, are these effectively remittances? Are they remitting income back?

Prof. Howes : Yes.

Mr THISTLETHWAITE: And remittances are often either the No. 1 or No. 2 element of GDP for a lot of Pacific nations. They are a big makeup of income for those nations more generally.

Prof. Howes : Yes, except the Pacific is very divided. I think Tonga and Samoa are the two most remittance dependent economies in the world. Yes, certainly for those two. But for other countries, they do not have a lot of remittances. If you take Kiribati, Tuvalu and Nauru and then Vanuatu before the RSE, Solomons or PNG, they do not have very high remittances, and so it all comes down to labour market access. Traditionally Samoa and Tonga have had access to the New Zealand market and then through that the Australian market, but countries like Nauru, Tuvalu and Kiribati have had much more limited labour market access. What we would say is for the Pacific Island countries it is an area they should grow because they have limited opportunities elsewhere, and Samoa and Tonga shows that it can be done, but there is a long way to go for the other countries.

Mr THISTLETHWAITE: You point out on page 6 of your submission that the backpacker visa program favours OECD or rich countries over poor countries.

Prof. Howes : That is right. The initial reluctance to introduce a seasonal worker program was the argument that Australia does not have a discriminatory migration policy, so why would we have a Seasonal Worker Program for the Pacific island countries? I think it is good that has been overcome and the Seasonal Worker Program now has bipartisan support. I would say traditionally the government has not gone out and really promoted the scheme. That is also an issue. Another difference is that New Zealand has a very unified industrial peak body that promotes the scheme. We have not had that promotion in Australia, but at least this scheme does have bipartisan political support now.

I think that the backpacker visa is discriminatory. I am not saying it is bad, but if you are a Pacific island country you will not have access to the 417, which is the unregulated backpacker scheme. You may get access; like now PNG and Fiji are negotiating access to the 462 backpacker, but that is a very small scheme. It is only going to be about 100 workers a year. So, basically, if you are a Pacific islander you do not have access to this backpacker visa which allows you to come in. It is basically for OECD. You come in and you can work and you can potentially work full time for two years.

Mr THISTLETHWAITE: Given that the Pacific is one of the most underdeveloped regions within the world, with low living standards, failing to meet Millennium Development Goals in a number of areas, would you agree that there is a public policy angle in this in Australia trying to encourage more people to come from the Seasonal Worker Program rather than from backpackers, because most of our aid money is spent in the Pacific? There is a greater need in the Pacific. If you are talking about improving living standards, that is where the greater need is. It is not rich kids from OECD countries.

Prof. Howes : Yes. I would completely agree with that. I think one of the things that has held back the Seasonal Worker Program is the sense that they are taking Australian jobs, and so there are these extensive labour market testing requirements.

Ms VAMVAKINOU: It does not apply to backpackers?

Prof. Howes : It does not apply. There is no labour market testing for backpackers.

Ms VAMVAKINOU: They are actually two different schemes or they should be sold as two different schemes.

Prof. Howes : That is right.

Ms VAMVAKINOU: They are not in the same basket.

Prof. Howes : But they are actually competing in the same sector.

Ms VAMVAKINOU: That is probably where the policy failure is.

CHAIR: In your presentation you are not saying that there is not a need for these jobs to be filled and that there is not a labour market shortage. What you are saying is that the backpackers are filling the gap more so than the seasonal workers?

Prof. Howes : That is right.

Ms VAMVAKINOU: Also, the seasonal workers cannot get the jobs. Is that why we have less uptake?

CHAIR: Or it is not growing as rapidly.

Prof. Howes : That is right. There would be a labour market shortage if there were no backpackers or if we took away the second-year incentive. It is basically the seasonal workers from poor Pacific island countries competing against rich kids from OECD countries in these low skilled jobs. Given that the backpackers can work in any sector of the economy, whereas we tell seasoned workers, 'You can only work in horticulture', then why we would give backpackers a special incentive, why we would try to funnel them in to this one sector that we have allowed the Pacific islanders to work does seem an issue of policy coherence.

Ms VAMVAKINOU: What would you shift with regard to the visas for backpackers?

Prof. Howes : I think you cannot just look at the Seasonal Worker Program in isolation. You have to look at the backpacker program. The backpacker program is meant to be a program for cultural exchange. That is what it says on the website. I would eliminate the second-year visa. Of course, you will find a lot of industry opposition to that.

Senator BACK: In the rural industry, I can assure you.

Prof. Howes : Cafes do not benefit, because to get the second-year visa you have to work in a regional area, either on a farm, in a mine or construction—to get the second-year visa. If you are not prepared to abolish it, then generalise it and you could say any work for three months or any work in a regional area for three months and then you would get backpackers working more in the cafes. That is where they would rather work, and less on the farms.

Ms VAMVAKINOU: The working holiday visa people.

Prof. Howes : The working holiday are the backpackers. That is the 417.

CHAIR: So, you are just saying change this shift or the limitations where they focus?

Prof. Howes : That is right, which is currently funnelling them into horticulture. Yes, open it up a bit more. The government has made first steps in that direction in the North Australia White Paper. They said in north Australia you can now get the second-year visa if you work in horticulture or tourism.

Senator BACK: That is right.

Prof. Howes : So, that is a step in the right direction, but why stop at tourism and what is special about north Australia? It could be a policy applied to all of regional Australia.

Senator BACK: And open up also to include East Timor, which has not been the subject of discussion. My perception, having visited East Timor, is again there is an urgent need and a valuable opportunity for East Timorese. I know it is not directly related to our discussion, but what is the prospect of extending it beyond seasonal to make it a 12-month period? I am now thinking of the opportunity of particularly young East Timorese coming down and working in homes, as we see Filipinos, Indonesians and others doing in Singapore and Asia. I just see the opportunity, with our ageing population, to be able to provide employment and keep a lot of older people in their homes rather than having to go into some sort of care because of the lack of somebody in the house. Is that something you have addressed yourself to?

Prof. Howes : I think that is an excellent idea. New Zealand has something called the Pacific Access Quota, which is kind of a green card scheme with a quota for Pacific Islanders. It actually gives them permanent residency. They have to have a job. There is a massive excess demand. It is a lottery. So, if they get a job and they are successful in the lottery, they can move. The other option that you have mentioned is still restricted but beyond six months, two years, four years. Obviously if you have aged care you do not want someone coming just for six months.

Senator BACK: That is correct.

Prof. Howes : The government has made first moves in that direction with this microstates visa it has just announced, which again was linked to the North Australia White Paper, but it is targeted at Nauru, Kiribati and Tuvalu, which I think is very sensible because those countries, in particular, have very limited access and very limited other opportunities. That is the kind of program that could potentially open up areas like aged care and it could be expanded beyond the microstates.

Mr THISTLETHWAITE: In recommendation 3 you mentioned a revolving fund for employers. Can you just elaborate on that?

Prof. Howes : Yes, that is right. We asked employers who were using the scheme what were the most important reforms that could be undertaken to make the scheme more attractive. It is basic cost shifting. It is understandable employers want to shift the cost to the employees, but we think that is the kind of deal that has to be made. It is no good having a scheme that is very small. You need to grow the scheme and that may mean each worker makes a bit less. We know the scheme is still very attractive. People want to come here rather than New Zealand.

With this particular scheme, at the moment the employers have to share the cost of the international travel with the employee. The suggestion is that you could have a fund. If it is a first-time employee how can they cover the cost of the airfare? It is difficult, but they could pay that back once they have completed their work. The revolving fund could be set up either by the Australian government or by the host government and could be used to cover off international airfares, and so you actually shift that to the worker as it is for backpackers.

Mr THISTLETHWAITE: How do they do it in New Zealand?

Prof. Howes : In New Zealand they do not have a revolving fund, and it is pretty much the 500 employer contribution.

Ms VAMVAKINOU: Is a revolving fund operating anywhere else, in similar programs anywhere else in the world, or not?

Prof. Howes : No. I think different countries have different arrangements about cost sharing.

Ms VAMVAKINOU: Yes. The employer expectation is to leave the whole lot. We might need to look at what the Middle East and southern Europe are doing with some of their migrant workers.

Prof. Howes : Yes.

Ms VAMVAKINOU: Especially in aged care.

Prof. Howes : Yes. I would be happy to come back to you on that.

Ms VAMVAKINOU: Yes, if you do not mind. That would be fantastic.

Prof. Howes : The US and Canada have a scheme.

Ms VAMVAKINOU: Can you look at the size of the scheme for the aged care as well? Have you had a look at that?

Prof. Howes : No.

Ms VAMVAKINOU: Cyprus does it. Again, from what you said earlier about aged care and people living in their homes, they have trained people from the Philippines and Sri Lanka, predominantly, to go over there for periods of time. It involves travel back home once a year and so forth. I think it is a very well established scheme that would be worth looking at.

Mr THISTLETHWAITE: So, in New Zealand the cost is borne by the employer?

Prof. Howes : Yes.

Mr THISTLETHWAITE: But they have still had employers buying into it?

Prof. Howes : Yes.

Mr THISTLETHWAITE: And a good take-up rate?

Prof. Howes : Yes.

Mr THISTLETHWAITE: So, is it your view that that is because there is no competition from backpackers in New Zealand?

Prof. Howes : Yes.

Mr THISTLETHWAITE: And the way to make the Australian scheme successful is to reduce some of that competition from backpackers and alleviate some of the cost on the employer?

Prof. Howes : That is right. Yes, exactly, to reduce the cost and some of the regulatory burden on the employer. The big difference with New Zealand is the minimum wage. It has a much lower minimum wage. It does not have the 25 per cent casual loading. In Australia it is about $25 an hour. In New Zealand it is about $14 an hour. That is why the scheme is much more attractive for the Pacific Islanders to come to Australia. Basically out of that extra profit they could afford to pay the cost. Again, the government has moved in this direction. It has reduced the contribution to domestic travel, which is our other recommendation. It has not removed it entirely, but I think it has reduced it to just $100.

Mr THISTLETHWAITE: It is $100 and then the employee pays it back?

Prof. Howes : That is right. So, the employer is supposed to pay it upfront, but the rest is recovered through their payroll.

CHAIR: Could you just talk a little bit more about your recommendation about the government establishing this employer group?

Prof. Howes : That is very interesting, because through our research now we have come to know some of the employers who are actually using the scheme, and some of their blogs that we have included are really worth reading. I encourage you, if you are not already calling them as witnesses, because you would really get a good insight from them as to the strengths and weaknesses of the scheme. One of the things that they talk about a lot is superannuation. It is very complicated to set up a superannuation fund and then, of course, it is useless for the seasonal worker because maybe they will come three times or even if they come five times but they are not looking for a retirement fund. So, then you have to get the money back, you lose half of it because it is a premature withdrawal and it is incredibly bureaucratically complicated.

Senator BACK: You are so right.

Prof. Howes : So, there are these very concrete things that will come up through them. Because there is no peak body for horticulture, it is a very divided industry by geography and by sector. You need employers to lobby for the scheme, to put forward suggestions and also to promote it, to build a group around those who are actually using the program who are committed to it. The department has started along these lines and they have facilitated a group of employers who meet every few months to talk about the scheme. I think that is a very good idea and should be taken further forward.

Senator BACK: The superannuation issue is a nightmare for this group and also for backpackers. It is ridiculous. More to the point, if they ever do recover the funds—and I am speaking now about backpackers—they recover them back in their own country and so the money is not spent here in Australia. It is beyond me.

CHAIR: Obviously in the Pacific some of our aid funds go towards empowering women to earn more, because there is evidence that then of course provides greater influence on the family. For example, would women as workers or receivers of remittances provide a better outcome for their families or communities?

Prof. Howes : Yes. I think in general it would be good to have more women participating in the program. I think it is about 13 per cent that are women. I think it is something where, again, you do not want to have a quota system. It is already a very complicated and highly regulated scheme, but through the aid program and through dialogue with government we could encourage governments to send more women and, of course, a lot of women do undertake agricultural work. It is not as if they are sitting at home and just looking after the children or doing the cooking. Now, they are working in the fields, so you would think that they would be qualified.

On the other hand, I do feel that if you really want to make an impact on gender then opening it up and having similar schemes in other kinds of sectors is probably going to give you much bigger results. We have just seen this is male dominated, whereas if you go to aged care, for example, I think definitely you will find female workers coming out.

Ms VAMVAKINOU: Can I just stop on the aged care?

Prof. Howes : Yes.

Ms VAMVAKINOU: It is true that it is predominantly female. Qualifications and training would be an issue for Australia, presumably. Would people have to receive training to be able to do that sort of work?

Prof. Howes : That is right.

Ms VAMVAKINOU: Or do you see another way around that?

Prof. Howes : Yes. There is actually data there. It should be in the research. There is the APTC, the Australia-Pacific Technical College. That is also very interesting, because the history of it is that when Pacific governments were agitating for the scheme, New Zealand did it in 2006 but Australia was not keen then—for the horticultural sector we introduced the second-year backpacker visa and for the Pacific we introduced the Australia-Pacific Technical College. The idea was that you would get Australian qualifications and that would then facilitate you to come through the skilled migration program. We also had a big research project on that and we found that it certainly provided thousands of Pacific graduates with Australian qualifications, but very few have actually migrated. I think it is about two to three per cent of graduates.

Ms VAMVAKINOU: Where do they go?

Prof. Howes : Generally they do not.

Ms VAMVAKINOU: They do not go anywhere?

Prof. Howes : They stay at home. They are welcomed by their employers. They make a valued contribution in their domestic economy, but that idea that you are raising, where you have to have a qualification and how do you get the qualification, we have sort of gone halfway down that road but we have not gone fully down. It can be done and, in fact, APTC has—

Ms VAMVAKINOU: Cyprus does it. That is why I am interested. They do it very effectively to the point of cultural training and language training.

Prof. Howes : I would be interested in that scheme.

CHAIR: How would you see the link between APTC and this program being expanded to other sectors? How could that become—

Prof. Howes : In this sector you do not really need it, because it is not skilled labour.

Ms VAMVAKINOU: Yes, but for the other sector.

Prof. Howes : In fact, they have started doing aged care training. It is like a Cert III or Cert IV or something like that. They have started doing that in Tonga, so they are building up a stock of people who could come but there is no migration pathway. We need to get different policy instruments working together. We have not had enough of a coherent approach so far, whether it is backpackers versus seasonal workers or whether it is having the mismatched qualifications on migration pathways.

Ms VAMVAKINOU: You would not describe, though, an aged care program as a seasonal worker, would you?

Prof. Howes : No. I think, as the senator said, you would want to have the two years.

Ms VAMVAKINOU: You would have to have different language.

Prof. Howes : It can be temporary.

Ms VAMVAKINOU: Yes. Well, they are temporary.

Prof. Howes : Countries do it on a temporary basis but longer than six months.

Ms VAMVAKINOU: Yes, two years.

Prof. Howes : Two years or four years.

Senator BACK: I was focused more on only eight per cent of aged people go into aged care. I am more focused on those in the home.

Ms VAMVAKINOU: That is true. That is an area. And it would have to be a different type.

CHAIR: Any other questions? Could you talk a little bit more about your recommendation with regard to compliance? I think you have mentioned a crackdown on illegal—recommendation 2—behaviour. Obviously we have had a shift and the government has made some changes in terms of how we respond to that. Could you make further comments?

Prof. Howes : Yes. We identified backpackers as the main reason why the Seasoned Worker Program scheme stayed so small, but if we had to come up with a second reason it would be the issue of illegal labour. Now, that is much harder to research. You can ask someone if they use a backpacker, but you cannot ask them if they use illegal labour. We asked the employers whether they think it is prevalent in the sector, so not relating to them in particular but to the sector in general—and certainly the majority of employers respond that they think that illegal labour is prevalent in the horticultural sector. So, the industry perceives it to exist. It overlaps with the reliance on backpackers, not that backpackers are legal themselves. They may be paid in cash so they may not have to pay tax. We have heard the stories of them being underpaid and so on, so the two problems overlap.

Certainly in New Zealand, when they introduced the Seasonal Worker Program, which I think was back in 2007, they had a big crackdown on illegal labour, with the cooperation of the industry. Industry said, 'We're not going to tolerate this anymore', and that was part of the switch to the seasonal worker.

I think in Australia it is a much more dispersed sector and it is much harder to police. It is all over the country and in such remote areas so it is not as easy a challenge as it was in New Zealand. But the basic contrast is that in general the sector is very lightly regulated except for the Seasonal Worker Program, which is very heavily regulated. There have been cases of abuse, but they are quickly followed up on. They are all reported to the department. I think it is a matter of levelling the playing field by trying to crack down on illegal labour. I know the government has been making some of those moves and with the recent TV exposure I imagine the pressure is going to continue, and that will help the Seasonal Worker Program to grow.

CHAIR: Do you have something else? I can ask another question while you are looking.

Mr ZAPPIA: Just on the illegal labour, can you give me your understanding of what illegal labour is?

Prof. Howes : Yes. I was trying to get at that. It is in several forms, but I guess two main ones. One is where they do not have the proper visa to actually do the work. Perhaps they came in on a tourist visa. The other type is where it is not that they do not have the right to work but they are not being paid their proper terms and conditions. That, as I understand it, happens in two ways. Firstly, it is just with individual workers, often backpackers, where they are paid in cash or they are not given their full entitlement. The other one is where you have contract workers. The farm subcontracts to another company or individual or entity to basically pick the fruit for them and they are paid just one amount and that company then makes its own hiring arrangements. Then in those cases you often hear that the workers are not paid their full entitlements and it is a cash economy.

Mr ZAPPIA: Is it possible that some of those workers are actually workers who have overstayed their visa and are illegally in Australia?

Prof. Howes : That is right, yes. There are two categories, the ones who should not be working in the first place, and the other category is where they have the right to work but they are not being paid the proper terms and conditions. I do not think anyone knows the extent of the balance of those. My guess would be it is actually more the people who have the right to work but they are basically being exploited.

Mr THISTLETHWAITE: You said earlier that you believe there is a demand from Pacific workers to come to Australia because of our wages relative to New Zealand. There are supply constraints in that employers think that it is too costly and it is cheaper to get backpackers. Is it the case that there are Pacific workers who have been knocked back because the positions are not available? I understand they have to go through a labour hire company to apply for the positions. Is it the case that they are applying and they are just not getting the positions?

Prof. Howes : Yes. Most countries have what they call labour-ready pools, with pools of people who have been preassessed as suitable for this work. They may have been given some basic training perhaps around culture with what it is like in Australia and perhaps around work discipline. These are the work-ready pools. The work-ready pools are far in excess of the workers that are actually sent. So, yes, that is where it manifests itself and because Tonga is so much, with 80 percent; it is really countries like PNG and the Solomon Islands that are big populations, and their numbers are just in the hundreds, if that.

I would highlight that the problem is going to worsen in the short term, because Fiji is coming into the scheme. Fiji is a pretty organised country. They are going to compete very aggressively, and I think if there is further growth in the scheme it is going to go to Fiji. Again, that is good for Fiji, but Fiji is one of those countries you mentioned that already does pretty well out of it. I think it is their second highest export now after tourism.

CHAIR: So, the countries who may need it most may not actually be accessing it?

Prof. Howes : That is the case at the moment, and I think it is going to continue for some time, even with future growth, because of Fiji's entry. Again, I am not saying that Fiji should be kept out—obviously they are a Pacific Island country—but it is going to intensify the problem for the other countries.

CHAIR: We have noted that New Zealand has introduced a seasonal worker scheme for local workers. I am not saying specifically that it should be our youth, but we do have significant challenges with youth unemployment, particularly in some of our regional areas. Do you have a view on whether a similar scheme would be beneficial for Australia?

Prof. Howes : Yes. The background was because New Zealand had a cap of 8,000, which they have had pretty much from the start and which they reached I think in 2008—

CHAIR: It was quite quickly.

Prof. Howes : There has been a lot of employer pressure to relax the cap. The government reluctance was around unemployment and this fear that it was taking jobs away from New Zealanders. So, it was basically part of the compromise with the employers to increase the cap. They increased it from 8,000 to 9,000, but they introduced the scheme whereby New Zealanders could also, in a sense, be seasonal workers. I think it was only announced about a year ago.

CHAIR: It is early days.

Prof. Howes : I do not have the details of how it is working, but my sense is it is not. I do not think that it is going to be big. One of the biggest complaints of the companies or the farmers that participate in the scheme is this labour market testing, because they have to do it every year. Even if they have shown in one year that no Australians want these jobs they have to show it the next year, and so they have to advertise these jobs. They then get applications from people that are perhaps meeting their requirements to submit applications for jobs but who are not really interested in taking the jobs, and so they see it as very tedious and a waste of their time.

Mr THISTLETHWAITE: I looked at the Department of Immigration website the other day. You can test the labour market by putting it out on Facebook, so it is not really a cumbersome project and it does not cost anything for the employer if you do it that way.

Prof. Howes : I remember the employers talking about the amount of time it took to do the labour testing requirement, and I would encourage you to talk to them. Perhaps they could do it more easily. The point is there is extensive labour market testing. I am yet to come across the case of someone who did the labour market testing and then found, 'We don't need to actually go and hire the Pacific islanders.' I think a domestic scheme would make it easier for people perhaps who live in cities, because someone else will be providing their accommodation, but I do not think it would make a big difference just to wrap it up in the scheme. It is basically the same terms and conditions. I do not think there are a lot of Australians looking for these types of jobs.

Ms VAMVAKINOU: There might be a situation, if we look at some of our emerging refugee communities. I often wonder where they might fit in, especially in terms of providing relief for refugees from Syria and giving people an opportunity to work in the community. This might be an area that could be open to them.

CHAIR: They often come from agricultural backgrounds.

Ms VAMVAKINOU: Exactly. You have this potential cohort coming in. I can understand the Australian market and it is always the case that they cannot find anybody. We have not gone anywhere near the cost of labour as well, which is another convenient excuse that employers cannot find anyone locally. But putting that aside, this is meant to have a different purpose, and that is to help, which is a very good purpose. But with the emerging refugee communities, I know a lot of my constituents will go cherry-picking on the farms or used to when they first came here and then they would come back.

Prof. Howes : Yes.

Ms VAMVAKINOU: How many of them were on Centrelink doing that, I do not know. That is another case altogether, but it seems to be a common for a lot of them to do that.

Prof. Howes : Yes.

Ms VAMVAKINOU: And they are locals living here.

Prof. Howes : Yes. It is not like the seasonal workers are undercutting them. It is exactly the same terms and conditions. In fact, seasonal workers are more expensive, because you have to help them with their travel and you have to provide the accommodation. Even though you can get that reimbursed, it is a significant factor. All I am saying is that for those migrants or refugees they can already take up those jobs and there is that labour market testing requirement, and so jobs have to be advertised. I do not think setting up a special scheme for Australians would make a big difference.

Ms VAMVAKINOU: So, there is room? What I want to know is if there is room in that space to accommodate the various strands that are feeding into it.

Prof. Howes : Absolutely.

Ms VAMVAKINOU: Except, of course, the backpackers competing with the seasonal, which is almost counterproductive to the scheme itself. That is a very important realisation; it almost defeats the purpose of the seasonal worker scheme.

Prof. Howes : That is right. If you were worried about the opportunities for Australians, including migrants and refugees, you should be more worried about the backpacker scheme. As you said, there is no labour market testing for backpackers, whereas if you want to hire a Pacific islander you first of all have to do the labour market testing.

Ms VAMVAKINOU: The Working Holiday visa is impacting significantly for different reasons.

CHAIR: Any other questions? No. Thank you so much, Professor Howes, for your attendance today. I think we have asked and discussed the provision of additional material so if you could forward that on to the secretariat that would be wonderful. You will be sent a copy of the transcript of your evidence to which you can make corrections of grammar and fact.

Resolved that these proceedings be published.

Committee adjourned at 10:41