Preface
Two moments from this inquiry will be long remembered by the
committee. The first was when members, touring an isolated farm just north of
Euston on the Murray River, suddenly came across a team of grape pickers hard
at work. Taking fright at our unexpected appearance, they fled down the vine
rows toward the other end of the field. The committee had been mistaken for
immigration officers conducting a raid on illegal workers.
The second moment took place at the Snap Fresh packing
company near Bundaberg. During their visit committee members heard that local
labour had dried up, and that there was increasing reliance –up to 80 per cent
in some areas – on backpacker labour. The committee was told that we had five
years to fix up the problem of labour shortages. If it was not done by then,
they would be out of the business, in the likely company of other growers in
the district. We could look forward to buying imported vegetables.
These isolated incidents highlight only some aspects of the
precarious labour supply which growers were anxious to describe. The first
incident highlights the temptation to abuse of visa regulations. The second
incident highlights the vulnerability of the industry to an erratic labour
supply which threatens optimum profit levels in the industry.
In addition, one general impression stands out. In no
submission, in no hearing, and in no informal conversation did the committee
receive any data from growers on how they perceived the connection between
capital investment and labour supply. It appeared to be scarcely worthy of
consideration. If there is one indisputable finding of this inquiry it was the
unaccountable failure of agribusinesses to factor labour supply into investment
decisions in the horticultural industry.
The committee's approach to this inquiry was, first, to
establish whether there really is a labour shortage of such seriousness as to
threaten the prosperity of the horticultural industry, worth $6.6 billion in
2003-04. The committee's view at the beginning of the inquiry was that if
labour supply projections showed a decline to the point where prosperity levels
and investment returns were threatened, it would recommend consideration of
radical proposals to deal with the labour shortage. It now appears to the
committee that this point has not been reached. There is only scant evidence
that the industry is close to reaching a point where there is an indisputable
harvest labour shortage.
The committee recognises that labour shortages occur
intermittently, and that they occur sometimes at a point in the growing and
ripening cycle when produce reaches its optimum market value. It acknowledges
evidence of losses to producers which result from not having labour when it is
needed. Whether the current level of inefficiency in the labour supply warrants
contracting harvest labour from Pacific Island states is another matter. The
committee's view is that under current conditions it is not prepared to
recommend that such a scheme should proceed.
The timeframe and course of this inquiry has been marked by
developments and events bearing on our terms of reference, and the consequent
switching of signals to 'caution' in regard to possible solutions to labour
shortages in the horticultural industry. It is difficult for committee members
to disregard the influences which affect them as party members at this moment
in the electoral cycle. The inquiry has been affected by the Work Choices
debate and by heightened sensitivity about entry arrangements for foreign
workers other than those which exist already under skilled migration
provisions. Any exploration of policy which includes in other categories of
entry a proposal for admitting foreign workers is likely to be vulnerable to
populist sentiment at this time.
This is understood by both governments and oppositions. It
is one reason for the clearly expressed view of the government that a harvest
labour scheme which involves foreign workers is out of the question. The
reasons for this are, in part, historical, and in part, to do with employment
priorities and the 'just wage'. Such views find strong support across the
political spectrum.
Recent changes to visa regulations have been generally
welcomed by employers as a measure intended to ease skill shortages across all
industries. Of particular relevance to this inquiry has been relaxation of
conditions under which working holiday visas may be granted. Growers have
widely commended this change. The committee has also taken an interest in the
conditions under which section 457 visas have been issued. Advice from the
Department of Immigration and Multicultural Affairs is that these work visas
are issued only to those with minimum recognised levels of skill, and would
preclude harvest workers. Nonetheless, the committee recalls informal
discussions with growers in remote parts of the country about arrangements in
train to contract harvest labour from south-east Asia.
The committee notes that while employers have welcomed these
visa concessions, and accepts that it is highly unlikely to affect local employment
opportunities in rural areas, they have attracted strong union criticism. This
is mainly because of jobs which may be at risk in the construction industry and
other, essentially urban and unionised, occupations. Union attitudes to what is
proposed in this inquiry have been coloured by their experience in the urban
workforce. So far as seasonal harvest labour is concerned, the relaxation of
working visas and the introduction of 457 visas appears to be largely
irrelevant.
As this report is being drafted it is becoming apparent that
there is increasing evidence of unscrupulous exploitation of 457 visas by some
labour contract firms and their business clients. The committee commends the
introduction of the Migration Amendment (Employer Sanctions) Bill 2006 in
response to this abuse, but this may not be sufficient to stem either populist
sentiment concerning resultant threats to employment, or prevent the
exploitation of foreign workers. The committee believes that the effect of such
abuses is to discredit any proposal for an unskilled seasonal harvest labour
scheme, regardless of the particular circumstances and regulatory regime in
which it might operate.
The committee is also of the view that any future ad hoc
creation of loopholes in current regulations so as to attract more foreign
workers into horticulture may not only fail to satisfy future demand for
additional harvest labour, but will prejudice the development of more workable
policy. Such a policy – at least in reserve - might serve the national interest
more broadly should there be clear evidence of the need for imported harvest
labour in future. At the present time the committee believes that proposals to
use Pacific island contract labour are difficult to consider on their merits.
The important issue of pay and conditions of foreign workers
requires mention here although it is dealt with later in the report. Growers
repeatedly assured the committee that they were prepared to pay current award
rates to anyone who turns up for work and they pay higher wages by way of piece
rates. Foreign contract labour was not in any sense regarded as cheap labour. However,
it appeared that this was not a view shared by everyone in the industry.
Informal discussions revealed that some proponents of a foreign harvest worker
scheme anticipate being able to pay much lower than current wage rates. There
is strong advocacy for the use of Chinese labour in some areas, which should
ring alarm bells for the reason that labour hire companies in that country
often exploit their foreign contract workers, in collusion with the firms which
employ them. These potential problems would be well understood by DIMA. It is
for this reason that the committee believes that should a harvest labour scheme
be seriously considered it should be restricted to South Pacific Forum nations
and be conducted with high levels of formality and regulation.
This brings us to the south Pacific connection. Several
important submissions to the inquiry, while showing an understanding of
domestic opinions and perspectives, take a much broader view of the labour
market issue. There is strongly held opinion that the entry of Pacific nation
workers into the Australian workforce on a seasonal or temporary basis is
essential for the economic survival of Pacific nations and to the stability of
those societies. The prospect of 'failed states' in the south Pacific is seen
by some as a serious challenge to regional security.[1]
The committee believes that in the near future an Australian government may
need to put aside purely domestic considerations in order to address this
problem.
The committee has given more consideration to the current
labour needs of growers and producers than to the potential use of Pacific Island
labour. The committee had earlier agreed to request government approval for a
visit to several Pacific nations. The idea was not pursued because it became
apparent that domestic concerns and pressures were paramount in this inquiry.
The committee's first priority is dealing with labour and employment matters at
home. It is not a foreign affairs committee, and it notes that this issue was
admirably dealt with by a Senate committee in a report tabled in August 2003[2].
The committee notes, however, the strong interest shown in
the inquiry by Pacific nations, and recognises, as does the government, that
pressure for a changed policy response from an Australian government is likely
to continue. It also assumes that the Department of Foreign Affairs and Trade
is acutely aware of the tensions between domestic political pressures at home
and looming problems of instability in some Pacific states that will sooner or
later require serious attention. However, the committee is not convinced by
argument presented to it that a labour mobility agreement with Pacific island
states would be a likely breach of WTO rules. It is reassured by contrary
advice from other authorities. Like any other country, Australia would
always act in its own interest. Any obligations to WTO would be set against its
priority obligations to the stability of the South Pacific region. Even if GATS
were found to apply, Mode 4 of the General Agreement on Trade in Services
(GATS) allows WTO members to negotiate limits on foreign temporary workers on a
'most favoured nation' basis.
In summary, the committee has drawn certain conclusions from
the evidence it has gathered in relation to horticultural labour shortages and
their remedy through the use of Pacific island contract labour.
The first conclusion is that while labour supply is
sometimes precarious at the moment, depending on location, the backpacker,
'grey nomad' and other local and itinerant casual labour resources are
currently sufficient. The committee heard complaints about temporary shortages,
and of problems with timing of harvesting. There were a few unsubstantiated
estimates of financial losses, but no detail about the circumstances in which
they were incurred. The committee heard no empirical evidence that more than a
few farmers on odd occasions have been faced with leaving vegetables in the
ground, or fruit on trees and vines because of labour shortages.
That is the position now. The committee is of the view,
however, that current labour sufficiency is unlikely to be maintained in view
of heavy investment in horticulture and greatly expanded areas under
cultivation. The current local labour supply is unlikely to increase, and will
probably decline. The backpacker supply is precarious and subject to the
vagaries of economic and political events abroad. This is scarcely a sound
labour market basis for sustaining an industry which has experienced an
accelerated rate of investment over the past five years.
The committee concludes that
prudence requires the government to make contingency plans for introducing
contract harvest labour as early as five years hence. Governments should not be
caught by sudden events and developments which would result in hasty ad hoc
arrangements, the result of having to make policy on the run. Finally, the
committee concludes, on the basis of submissions made, that should a temporary
labour scheme become necessary, this labour should come from the South Pacific,
under the safeguard of treaties with Pacific nations, and with
intergovernmental supervision of contracts, work conditions and other
arrangements necessary to protect the interests of the seasonal workforce. The
committee has set out its views on such arrangements in Chapter 4.
Unusually, this report makes no formal recommendation in
regard to Pacific island seasonal contract labour. It does not, for instance, recommend
a trial program - as suggested in a number of submissions - for the reason that
much more serious discussion about policy and planning practicalities would
need to be done before any trial could be properly evaluated. Chapter 4 deals
with a number of these issues, and there would be many more which the committee
has not identified. Nonetheless, the committee believes that the prospect for
some mobility of harvest labour from Pacific states may become more likely in
future. To argue, as some ministers have, that this is inappropriate because it
has not occurred before (except under vastly different circumstances nearly a
century ago) is to deny the possibility that any policy is subject to change if
circumstances require it. The committee sees no point in recommending a less
dogmatic approach to this issue: it simply urges the government to have some
work done which follows up on the issues canvassed in this report.
The committee commends this report to the Senate.
Senator Judith Troeth
Chairman
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