Chapter 1 - Introduction
This chapter provides the context in which the discussion and debate
about temporary labour schemes takes place. Proponents of a harvest contract
labour scheme for the horticultural industry have in mind a new category of
visa to enable groups of workers, currently regarded as unskilled, to enter Australia
for periods up to nine months. There have been occasional and localised
suggestions of this kind raised in various quarters, but the idea saw its first
formal proposal in the National Farmers' Federation's (NFF) Labour Shortage
Action Plan, announced in September 2005. This plan recommends a joint
industry-government feasibility study on the introduction of a guest worker
visa program, and sets out many of the specific details which would need to be
A number of these details are covered in this report.
The reaction to this proposal was not overwhelmingly favourable.
Growers, on the whole, gave strong support. The ACTU, reportedly not
unsympathetic at the time,
has since declared itself to be 'absolutely opposed' to such a scheme,
as is the union covering most rural workers, the Australian Workers Union (AWU).
The government was plainly opposed to the idea, as later statements from the
Prime Minister, the Treasurer, the Agriculture Minister and the Foreign
Minister indicated. There has been strong support for a harvest labour scheme
from academics specialising in Pacific island affairs. Some of them have been
commissioned by industry organisations to conduct research in support of the
proposal, which has been referred to in some of the submissions to this inquiry.
The committee is not aware of any subsequent informal meetings between
the NFF and the government on this issue. In the absence of any known
government investigation of the issue, it has been taken up by this committee.
The first part of this chapter describes the place of agriculture in the
economy. The second part summarises the current migration laws applying to temporary
workers who currently enter Australia for the purposes of work, and describes
the operation of the Working Holiday Maker Scheme (WHMS). The remainder of the
chapter examines the current debate surrounding temporary foreign labour, and
briefly touches on a World Trade Organisation matter.
The horticulture industry
In terms of value, horticulture is the third largest agricultural
industry in Australia, behind beef and wheat. It has been growing steadily at
an annual rate of 6.6 per cent over the past ten years. In 2003-04,
horticulture's gross value of production totalled over $6.5 billion. The
following table illustrates the rate of growth over time:
Annual Contribution of the Horticulture Economy to GDP ($
The sector is growing, in both production and value, and predictions are
that this will continue. Production occurs across the country, but is
concentrated in the Goulburn Valley, the Murrumbidgee Irrigation Area, the
Sunraysia, and South Australia's Riverland. Significant areas of production
also include southwest Western Australia, northern Tasmania, and coastal New
South Wales and Queensland.
Banana, pineapple, mandarin, avocado and tomato production is
concentrated in Queensland. Stone fruit, oranges and grapes are frequently
grown in New South Wales, Victoria and South Australia, while vegetables,
including potatoes, and grapes and stone fruit are farmed in Tasmania. Victoria
typically produces pears, stone fruit and tomatoes. Apples and fresh vegetables
are grown across all states. The Ord River region of Western Australia and the Burdekin
River region in Queensland are centres for vegetable and tropical fruit growing.
While agriculture's share of total employment has steadily declined
since the 1960s, output has almost tripled in the same period, reflecting an
average productivity increase of around 3 per cent in recent decades, and the
fact that Australia's agriculture sector has one of the highest shares of
output of any OECD country.
Rural and related industries employ over 370 000 workers, contribute 3.2
per cent of Gross Domestic Product, and earn 24 per cent of export revenue. The
value of agricultural exports has been growing by an average of 3.5 per cent
since 1974-75. The horticulture sector also supports many rural and regional
communities through production and processing, and the associated investment
and employment in businesses supplying inputs and marketing, packaging and
As a growing sector, but one which requires largely unskilled labour to
work in rural and regional areas for short but intense periods of time each
year, it is no surprise that some producers find workers hard to find. This has
led to calls for the introduction of a special short-stay unskilled visa class
and the development of a seasonal contract labour scheme. Proponents of such a
scheme point to an opportunity for mutual benefit of both horticultural
producers and Australia's Pacific neighbours, who have abundant need of foreign
markets for the export of human capital. A successful scheme may also benefit
industries associated with horticulture, such as suppliers of fertilisers and
manufacturers of tinned fruit. However, there are a number of concerns about
how a scheme would operate, possible overstay issues, and whether such a scheme
would be viable. A fundamental question is whether a labour shortage exists to
the extent that it justifies such a scheme. This is examined in Chapter 2.
Current arrangements in relation to foreign labour
Different visa classes operate to regulate the entry of foreign labour
to Australia. Options for entering Australia for the primary purpose of work
are limited to those who hold skills, as determined by the Australian Standard
Classification of Occupations (ASCO), which orders jobs according to their
level of skill into ten categories. Appendix 4 summarises the kind of
occupations covered by each ASCO category. It should be noted from the start
that fruit picking and other orchard or plantation work is at the extreme end
of the ASCO scale and is regarded as unskilled.
The visa most commonly used to enter for work is the Temporary Business
(Long Stay) Visa, commonly known as a '457', the sub-class under which it is
granted. This visa enables employers to sponsor skilled workers for up to four
years. Requirements include sponsorship by an employer of good standing, that
the position is skilled and pays above $41 850, and that the applicant has the
skills and experience necessary for the position. Only those positions which
fall into ASCO categories 1 to 4, the four categories reflecting most skill, are
eligible to apply for a 457 visa.
However, concessions exist for employers seeking to fill positions in
regional areas, where vacant positions often fall outside the requirements of
the primary 457 visa. Under the concessionary arrangements, employees may be
engaged to fill positions falling between ASCO 5 and 7, and award wages may be
offered. The employer must demonstrate that the position is one which is
genuine, full-time, and cannot be filled locally. This concession requires an
employer to obtain endorsement of their application by a regional certifying body.
Employers may also apply to enter a labour agreement with the
Commonwealth, through the Department of Immigration and Multicultural Affairs
(DIMA), under which formal arrangements are negotiated to meet special
circumstances not covered by standard sponsorship arrangements. Such agreements
enable employers to recruit a specified number of workers from abroad in
response to an identified or emerging shortage in the domestic market. These
are valid for two to three years. Employers must demonstrate that a domestic
shortage exists and that steps have been taken to recruit locally. Employers
must make a comprehensive submission describing all the details of the proposed
The issue of 457 visas has increased rapidly in recent years. In
1996-97, just 9 600 such visas were issued, while in 2003-04, the number had
increased to 40 124. Part of the explanation for the growth is the diversification
of employment. Whereas previously this visa sub-class was taken up
predominantly by professionals, employers needing skilled tradespeople are now
taking advantage of its availability. It was submitted that such growth
reflects an international trend towards niche migration schemes intended to
overcome labour shortages in particular industries at particular times.
Occupational trainee visas, or OTVs, are available under sub-class 442,
and allow foreign nationals to undertake supervised, workplace-based training
for up to two years with a view to increasing their level of skill in an
occupation. The program should contain a workplace component of at least 70 per
cent as well as a theory component. Practical experience amounting to full-time
work is not considered occupational training for the purposes of the OTV.
Perhaps the best known examples of this type of visa holder are the now
departed Fijian tobacco farm workers, who have worked and trained in Victoria
over recent years.
In November 2005, a trades skill training visa was introduced under
sub-class 471, allowing those undertaking a new apprenticeship to work and
train in regional areas for up to five years, depending on the length of the
apprenticeship. Each of these training visas allow applicants to bring with
them family members for the duration of their stay.
Of the category of unskilled or semi-skilled foreign visitors currently
working, undoubtedly the most significant group are the working holiday makers
(WHMs), entering the country under visa sub-class 417, usually known as
backpackers. There are 18 signatory countries to the WHM scheme, and visa
holders must be aged between 18 and 30 years, and have no dependent children.
Visa holders may work for up to 6 months with any one employer, but must not
work for the whole of their visit, and may also study for up to 4 months.
Visas are generally issued only once in a lifetime, for a twelve month term,
but recent changes enable applicants to extend their visas having undertaken
seasonal harvest work for at least 3 months during their initial stay.
The Department submitted that about 15 per cent of WHM visitors undertake
seasonal harvest work during their stay. The work need not be consecutive, nor
with a single employer, but must be full time. Health and character checks are
also applicable, and the committee heard some evidence that health checks, in
particular, are onerous and time consuming for those seeking a visa extension.
Since 2000-01, the number of WHM visas granted has increased steadily, by
over 36 per cent. Over 104 000 visas were issued in 2004-05, of which about 30
000 were granted to British nationals, and nearly 18 000 to South Korean
While the WHM visa undoubtedly provides a critical source of labour for
many growers, this is not its primary purpose. The program exists mainly for
the purpose of promoting international cultural exchange by allowing young
people to travel and explore other countries and cultures. This accounts for
the restrictions on the amount of work which is permitted to WHM visa holders.
However, tacit acknowledgement has been made of the importance of backpacker
labour by the changes to the program outlined above. As is made clear in
Chapter 2, backpacker labour is, in many cases, the single largest source of
labour for seasonal producers. The question relevant to this inquiry is whether
it provides a reliable and efficient employment base for the industry, in a
regulatory context which precludes any other class of unskilled labour from
entering the market.
Current debate in regard to temporary foreign labour
The joint submission from the Department of Foreign Affairs and Trade
and AusAID (the DFAT submission) sets out the policy on guest labour schemes.
It points out that Australia has not had seasonal worker schemes in the past
and is not attracted to them. The submission goes on to say that:
Australia has a global non-discriminatory migration program
under which Pacific Islanders have the same opportunities as all others seeking
to work in Australia. The present focus of Australia's migration program is on
dealing with particular skill shortages. There are currently no mechanisms
allowing for the entry of non-skilled workers to Australia. There are, however,
opportunities for Pacific Islanders to work in Australia under existing visas
for occupational training and for long-term work attachments. We (in
conjunction with other relevant Government departments) have encouraged
Australian businesses with an interest in the region, through their business councils,
to consider how they can use these visa categories to provide greater employment
and training opportunities for Pacific Islanders in Australia.
The DFAT submission argues that Australia's membership of the World
Trade Organisation limits its ability to implement 'discriminatory' policies
which would advantage any one or more of the 149 member countries over another.
The department points out that granting special access to those from a
particular area, such as the South Pacific, may provoke challenges from other
member countries for similar treatment. This issue is more fully covered in
Chapter 3, but some immediate comment is relevant here.
In their working paper, Mares and Maclellan take issue with the DFAT
argument. First, they observe that programs already exist within Pacific Forum
countries in regard to temporary labour, for instance New Zealand's Pacific
Access program. Second, with the exception of Papua New Guinea and West Papua,
the entire population of the Pacific Islands is less than 2 million, so that
the pool of temporary workers would be small. Third, it is argued that Australia
has itself set precedents for discriminating between countries in regard to
access to its labour market, most notably in the case of the Working Holiday
Maker (WHM). Any argument that the WHM scheme was never intended to be a labour
scheme loses validity when it is observed that growers have become increasingly
reliant on backpacker labour, and that the Government has relaxed entry
conditions for the purpose of allowing backpackers who choose to work in
agriculture to apply for an additional visa in order that they may do so.
The threat to local jobs
Other arguments centre on more domestic concerns. Current labour
migration policy focuses exclusively on skilled migrants and/or those who have
significant capital to invest. Maclellan and Mares call this the 'high skill
orthodoxy', and trace its origins to the Fitzgerald Report in 1988.
Some hold a view that the entry into the labour market of workers from
abroad may pose a threat to jobs currently held by Australian nationals. While
a simple application of the laws of supply and demand may suggest that this
would occur, a closer analysis is required, not least into whether sufficient
supply of local labour exists to meet demand.
Analysis of temporary migrant labour schemes operating elsewhere
suggests that far from being a threat to jobs, the introduction of migrant
labour actually creates additional positions. Examination of the Canadian Seasonal
Agricultural Workers Program (CSAWP), of which a description can be found at Appendix
3, found that each temporary worker engaged in horticulture supports 2.6 jobs
in the supply and processing sectors, not to mention the added economic activity
that migrant spending creates.
The Foreign Agricultural Management Service (FARMS) in Canada estimates that 15
000 foreign seasonal workers coming to Ontario each year generate 84 000 direct
jobs and 63 000 indirect jobs within the province. Thus, as Mares concludes, a
scheme to bring seasonal migrant workers to Australia could contribute to
economic expansion and increase regional employment opportunities, particularly
in industries like transport, construction and food processing.
Research on the Canadian scheme suggests that country towns
benefit from the multiplier effect of spending by seasonal workers on goods and
services, particularly food, entertainment, hardware products and
telecommunications (phone cards). A shop owner in the Canadian town of Simcoe
says the effect of local spending by seasonal workers is ‘literally like
Christmas [i]n September’. Seasonal workers are intensive users of banks and
post offices (particularly to transfer money), thus assisting local communities
to maintain and even expand services which might otherwise be at risk of
closure or centralisation in urban areas. The presence of seasonal workers can
even have a revitalising effect on local church congregations.
Preibisch put a similarly positive view, reporting that:
Many of the sales generated by migrant workers stay in the
communities: the limited mobility of migrant workers constitutes them as a
captive market. A recent study estimated that migrant workers spend $82 million
in rural communities on goods and services to meet their daily consumption
needs but also on purchases they take home.
The other key potential benefit, and one that was put to the committee
more than once, is that a secure supply of labour would allow the expansion of
the horticultural industry, as confidence among producers is boosted.
Again, Mares points to the Canadian experience to illustrate the point. In
Ontario, where 85 percent of Canada’s offshore seasonal workers are employed,
horticultural output expanded by 90 percent between 1994 and 2000. Industry
groups say that without the offshore labour scheme ‘there would be no labour
force on the farm, there would be no horticulture industry in Canada.’
The roots of scepticism
The Canadian experience is well documented and known to policy makers in
this country, but foreign models, however successful, provide unconvincing
evidence to opponents of such a scheme in Australia. The committee notes that
opposition to a seasonal foreign worker scheme using Pacific workers has roots
which extend back before federation. Opposition is in line with traditional
union sentiment. The Australian Council of Trade Unions (ACTU) is wary of
labour migration, particularly when it is temporary and involves workers
travelling repeatedly between their home and host countries to work. On the other
hand, the ACTU has seen merit in exploring a migrant labour scheme in
circumstances where workers are able to take up permanent residency. To this
end, discussions have been held about piloting such a scheme in central Victoria.
Nor is opposition based on a partisan political divide. This sentiment
in favour of permanent migration over temporary or seasonal labour flows is
reflected in government statements. The Prime Minister, the Hon. John Howard MP,
has been quoted as saying that Australia has always had a 'preference for permanent
settlement or permanent migration [and that] there are some fundamental issues
as far as seasonal workers are concerned'.
Similarly, the Treasurer reinforced these sentiments as recently as July 2006
when he was quoted as saying 'We will take immigrants that can make a valuable
contribution and fill shortages that Australians can't, but I don't believe it
would be in the interests of the Pacific Island nations and I don't believe it
would be acceptable to Australia to ship workers in and out on a short-term
The basis for this sentiment is not based on the principles which
underlie other government policy. A study on labour migration conducted by the
Asian Development Bank examined the likely effect on welfare, real GDP and
wages in Australia and New Zealand should quotas on skilled and unskilled
labour from Pacific islands increase by 1 per cent of total workforce. The
paper concludes that Australia would 'gain considerably' from such an increase,
as would the Pacific source countries, and that particular benefits could be
derived from the migration of unskilled labour. The paper reported that:
In the case of unskilled labour the gains to the Pacific
Islanders living in the Pacific Islands increases as the quota is further
increased to 2 and 3 per cent respectively. Similarly the gains to Australia
and New Zealand also increase as more unskilled labour is obtained from the Pacific
Proponents of access to the labour market point out that current
economic orthodoxy embraces globalising principles across the board in regard
to productivity components and the free movement of resources. All advanced
economies embrace principles of the free market, even when these are honoured
more in the breach than the observance. Australia is not alone in balking at
the free movement of labour even though it would result in economic gain. The
committee understands and acknowledges that economic principles have to be set
against political sentiment which, in the short term at least, will prevail.
One of the more common objections to the adoption of a temporary labour
scheme is that workers will fail to fulfil their obligation to return home at
the conclusion of their placement, and will instead 'disappear' into the pool
of undocumented migrants. Much was made of this fact in the submission of the
Department of Immigration and Multiculturalism (DIMA). The committee does not
see the relevance of this information to any entry and exit compliance
procedures that would be instituted if a harvest labour scheme ever came into
operation. The committee would be confident, in that event, of DIMA producing a
workable compliance process.
Currently held fears about contract harvest workers absconding to
Darlinghurst and St Kilda are unfounded because the rationale for entry would
be entirely different. Maclellan and Mares draw on a Canadian Foreign
Agricultural Managements Service report in which only 221 of 15 123 workers who
as seasonal agricultural workers in 2004 went absent without leave. Of this 1.5
per cent, some would almost certainly have returned home early, rather than
remain illegally in Canada. Like other similar schemes, the prevalence of
overstaying is reduced through the manipulation of the entry guidelines. Male
workers who are married with children are deemed to be least likely demographic
to overstay, and in some cases, are the only class of persons eligible to
Selective enlistment is perhaps not the single most important factor in
reducing overstay rates. A number of commentators argue that workers are more
likely to return home confident in their eligibility to return to work the
following year's harvest. As noted by the United Nations in its World Economic
and Social Survey 2004:
The programme is strictly seasonal and allows for a stay in Canada
of a maximum of eight months. It does not open any right of access to more
permanent status but allows for the possibility of recirculation or re-entry
through the programme if the workers demonstrate good behaviour, in other
words, if they comply with the requirements. This partly explains the lower
number of overstayers compared with those in other similar programmes. While in
Canada, workers cannot seek alternative or additional employment or transfer
to another farm without government approval.
Maclellan and Mares draw a comparison with a scheme which ran in Britain
to offer final year university students from non-EU countries the opportunity
to work in agriculture, and which had an overstay rate of 10 per cent. In this
case, it is argued, the 'one off' nature of the opportunity elevated the
temptation to overstay.
The issue of overstaying is further discussed in Chapter 4.
The committee makes the obvious point, however, that any seasonal contract
labour scheme may include entry and exit formalities with a degree of
stringency which does not exist for current visa categories. This issue is also
dealt with in Chapter 4, though it needs to be stated that objections to the
scheme in principle cannot be justified on the basis of current compliance
Finally, the recent World Bank report gives an added perspective to this
issue, drawing on experience elsewhere in the world:
The paradox of tough border controls is that they induce
undocumented migrants to stay in the host country much longer than they might
otherwise have chosen to do by raising the financial cost and personal risk of
movement. In the 1980's the estimated length of stay of undocumented Mexican
migrants in the United States was three years; but by the late 1990's, after
the major fortification of the border, it had blown out to nine years. Migrants
fear that if they leave, then retuning may be impossible.
The committee makes the point that it is likely that the combination of
select recruitment, rigorous compliance rules, and the financial incentives
will ensure compliance, and of these three, the last is likely to be the most
More than a labour market issue
As stated elsewhere in the report, the committee does not believe that
the current labour supply is failing to meet the needs of most growers.
Nonetheless, it has set out its view on how a future scheme should operate, should
future circumstances prompt a change in policy.
Both the proponents and opponents of a foreign harvest labour scheme view
likely policy developments through the prism of the current 457 visa scheme, including
the Commonwealth departments. The main assumption was that the organisation of
a scheme would be a matter for growers, probably through grower organisations
like the state branches of the NFF, working with labour hire companies,
presumably with some direction from DIMA on gate-keeping and compliance issues.
Academics, with some knowledge of practice in other countries, and probably
having reflected for longer on such details, saw the process as more
In Chapter 4 the report sets out some principles under which any future
harvest labour scheme should operate if circumstances required it. These
underlie both mutual benefit and mutual obligation. They would need to be
grounded in bilateral agreements between Australia and participating Pacific
Forum nations. Embarking on such a scheme would be a foreign relations
initiative as much as a labour market initiative. It follows that the contract
arrangements would follow from negotiations between governments, and that the
practical management of the scheme by growers and labour contactors would need
to be subject to a higher degree of regulation than most of them may currently
envisage. That is more reason to act in good time rather than in haste.
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